Replies to post #7868 on Your Economy (No Politics) (YE1)

[nlightn]

once again BW,...your *brillant* neurons are healthy and firing. your clear, to the point addressing of the issues is well received.

thanks !

[ilovedastock]

AWESOME SUMMARY, BW! Thank you. IMO, we may be in an interesting period where the macroeconomic data is able to keep a wall of worry going for quite some time.

[Bullwinkle]

~:~Market Trend Update for the Week Ahead~:~



OVERVIEW:
NFL playoffs and weekends full of football, got to love it! Although my teams are not in the running, football is by far my favorite sport and congrats to those fans whose teams move on to the championships next week… Anyway, it’s that time once again and as mentioned in the last update, we were overbought and I felt as though we may see some choppy to sideways movement with an upward bias. I think it is safe to say that’s pretty much what we got. The week started out strong, but flattened by mid-week and for the most part finished out right where we started. Overbought conditions were not solely responsible for this week’s action as an increasing concern over Iran coupled with a weak economic backdrop and 3-day holiday played a big part in this week’s action. With the Iran issue being beaten like a drum, we saw the price of Oil stay up and Gold move onto 25-year highs. The U$D continued to show weakness and the overall market just seemed to be in a malaise after mid-week. We also got a glimpse of some earnings reports and they were not so good as AA posted a disappointing Qtrly profit, DD warned of a 4th Qtr shortfall and DNA which reported strong profit, saw sales for their key blockbuster drug Avastin come in below estimates. The earnings reports are just beginning, so we will see what transpires. As we move forward I tend to believe we will see more of this kind of reports and market behavior…

The CoT data shows a slight up-trend in open interest and a build in Commercial Short interest on the majors. Gold remains little changed with Commercial Shorts lining up against Large Spec longs for a number of months now and Oil saw a decline in overall interest. You can go here to view the CoT data graphs #msg-9171642 -- Equity Fund flows as detailed by AMG Data Services reported Equity funds net cash inflows totaling $3.925B in the week ended January 11 with 64% ($2.514B) going to Non-domestic funds, as more international funds reported inflows (813) than any week since 9/3/03. Excluding ETF activity International funds reported net cash inflows of $2.227B to all developed and emerging regions, including and excluding ETF’s. Largest ETF Inflows were $381M to the iShares Russell 2000 Index fund and $305M to the iShares Dow Jones US Real Estate Index fund. Largest ETF Outflows were -$703M from the Nasdaq-100 Index Tracking fund. Money Market funds reported net inflows of $2.828B. The AMG report can be viewed in full at #msg-9261965 and another interesting piece on record money fund inflows at #msg-9226503 … As for Oil, Gold and the U$D, we saw Oil hover around $64bbl, Gold went to $557, the U$D sits between 88-89 and the CRB is at 337. Treasury yields continue to soften with 2yrs @ 4.34%, 5yrs @ 4.28%, 10yrs @ 4.35%, 20yrs @ 4.59% and 30yrs @ 4.53% …


ECONOMIC #’s:
Mixed messages for the most part, but what good there was is far too small to make a difference…

Consumer Credit – Nov = -600M vs –8.4B expected +5.0B
#msg-9208443

Wholesale Inventories – Nov = 0.4% vs 0.2% expected 0.5%
#msg-9208449

Import Prices – Dec = 0.0% vs –0.2% expected N/A
Export Prices – Dec = 0.1% vs –0.9% expected N/A
#msg-9228307

Trade Balance – Nov = -64.2B vs –68.1B expected –66.0B
#msg-9234616

Treasury Budget – Dec = +11.0B vs –2.9B expected +4.2B
#msg-9243893

MBA Mortgage Applications – 1/06 = Up +9.3%%, Refi’s rose +9.9%%
#msg-9223132

Oil Inventories – 1/06 as reported by the DoE / API:
(Crude bbls= -2.9M / -5.4M) (Gas bbls = +4.5M / +5.4M) (Distillates bbls = +4.9M / +6.1M)
#msg-9223109

Initial Claims – week of 1/06 = 309K vs 291K expected 320K
#msg-9234696

Core PPI – Dec = 0.1% vs 0.1% expected 0.2%
PPI – Dec = 0.0% vs -0.7% expected 0.4%
#msg-9258214

Retail Sales – Dec = 0.7% vs 0.8% expected 1.0%
Retail Sales excl auto – Dec = 0.2% vs -0.3% expected 0.4%
#msg-9258244

Business Inventories – Nov = 0.5% vs 0.4% expected 0.4%
#msg-9258228


ECONOMIC CALENDAR For The Week Ahead: http://biz.yahoo.com/c/ec/200603.html


These days it’s more and more difficult to know just what or whom you can trust. Furthermore, it takes a lot of digging to get to the true nature of things. I basically take most with a grain of salt, but when it comes to the news media and those in power I take a different view. While this would not be a good way to approach everyday life, I question authority and more times than not when I view between the lines I see that being skeptical has proven to be a valuable tool. I would love to just give my unconditional trust to these entities I spoke of and the easiest thing to do would be to bury my head and ignore what is taking place in our world, but I am an analytical person by nature and my persona will not allow me to do this. When I see something that either disturbs me or does not make sense I pick it apart to find out what makes it tick. Invariably more times than not I find that the underlying corollary leads back to money.
Having said that I would like to point out a few issues that I believe are reminiscent of what I speak.

The 1st is that I see CFO turnover is at an all time high. I also see that CEO and board member pay and bonuses are also at an all time high. Are CFO’s that incapable of doing the job they have been hired to do that their turnover rate leads the industry amongst white-collared professionals? Or could it be that the books need to be cooked and they refuse? Maybe the books get cooked and then they are let go, just the fall guy of sorts… I really don’t know what is going on, but I have seen a CFO let go because the company wasn’t making their numbers, not because of anything the CFO had done. As a matter of fact, he may have been doing too good of a job to reveal the actual numbers while the big cats continued upon their way with insider sales, bonuses and side deals for the board members. I have seen first hand how many are not included in the prospering. Is it any wonder why wages have been flat or declining through this whole supposed economic boom? The fat get fatter and the rest are supposed to be grateful that they have a job at all. Having a job is just not enough sometimes…

The 2nd is the Hurricanes vs. 9/11. Here we have some terrible events of a large order of magnitude. It has been expressed by the mouthpieces I referred to earlier that 9/11 was responsible for pushing the US economy into a recession. Granted 9/11 was a horrific event, but the economic order of magnitude is small in comparison to that of hurricane Katrina & Rita. So how is it that these two storms, which wiped out whole cities across multiple states, not just some buildings and surrounding neighborhoods have a positive effect on the economy? This is what is being touted. These storms, as terrible as they were have had a positive effect on GDP and job growth. Do you really believe that? Well they haven’t and as a matter of fact if it could lead to more swindling of tax dollars than 9/11 has, then we would be hearing about the hurricanes on a regular basis. We have an instance that was and still to this day being milked for all it’s worth in the form of 9/11, the gift that keeps on giving. This event opened the door for the powers that be to perpetuate a cause, taxation without representation and under the guise of fighting a war on terror. Not raise taxes? You are paying you just don’t realize it and that money is not going where you think it is…

The 3rd is 9/11, which led us into a war in Iraq and now quite possibly Iran. Justified or not, it is the perpetuation that I spoke of earlier. This thing has a life of its own due to the lucrative incentive of control, oil and money. Doesn’t anybody find it the least bit ironic that the USA has found a new patsy, uhm, I mean ally in the war on terror? Exit Tony Blair and enter Angela Merkel. Can you blame her for aligning with the USA where Schroeder would not? A newly appointed leader whose economy is in a shambles looking to seize an opportunity to not only align itself with the USA, but to take advantage of the Iran crisis which may very well end up in a war and rebuilding mission. Through the mouthpiece, we are hearing about Iran on a regular basis and this is only the beginning. Is it just a coincidence that Germany was one of the nations in talks with Iran about their nuclear ambitions? Or how about the considerable increase in chatter just prior to the launch of a Petro-Euro based oil purchase system in March? The groundwork for this attack on Iran has been being laid for years from 9/11 terrorists meeting in Iran to loose border insurgents to IED shaped charges, but the ultimate excuse for an attack is nuclear weapons. If not for the Iranian uranium enrichment program, another of the many excuses would most likely be made because the case needs to be made to the US and world communities by March that this is a “Red Alert”…

Here We Go Again…


WHAT CAN WE EXPECT NOW?:
This coming week we have a trade shortened week due to MLK Jr holiday and an Ops Expiry week to boot. I tend to believe we will see more of the same choppy sideways market, but with a downward bias as opposed to an upward one. We see that the VXN is experiencing a mini spike of sorts and Max Pain numbers are relatively low compared to where we stand today. For instance, we will use the proxies for the COMP, SPX and DJIA -- QQQQ, SPY and DIA. The Q’s are @42.98, but MP is @40 and SPY is @128.68, but MP is @127 and DIA is @109.54, but MP is @104. There is quite a discrepancy in these numbers and if Max Pain has any meaning at all, then we have some correcting to do. We also see that a Bradley Turn date scheduled for on/around Jan 15the came into play this weekend. Whether or not you believe in this cycle, it either took place the week before or will be determined in the week ahead. Of course it could also be a nonevent although it appears as though Bradley has already spoken. Top it all off with world events; economic/geo-political and what we have here is a precipice for more weakness in the week ahead. Uncertainty is beginning to creep into the markets psyche be it the Fed change, Iran, earnings and slowing growth via housing and consumer spending. It may be a little premature to say this, but if earnings are anything less than stellar, a top may be in for the majors… As for the U$D, Gold and Oil, we most likely continue to follow the same path. I expect to see U$D weakness due to liquidity ills and poor investor interest in treasuries, Oil continues to move on the worries of Iran and Gold most likely builds on both of these concerns.

Technically Speaking, Bullish Advisors are at 56.8% with Bearish Advisors at 22.1%. The VIX remains in the 11’s, but VXN is up to 16. The CBOE EPC Ratio ended the week at .586 with a 21DMA of .562 and TPC ratio at .781 with a 21DMA of .769. The RSI 5-Days are Neutral across the board. The PC ratios, VIX/VXN, $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s all can be viewed below along with the major indices…

Sentiment and Contrary Opinion Charts #msg-9171686
































NOTE:


CORE: SRPIX, ENPIX

SPECULATIVE: DNDN

SCALP TRADE: ABLE, GEOI & CMVT (opened position on Monday the 9th)

SWING: USPIX, €uro & ¥en Currency


Disclaimer:
This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and attempt to identify trends and create a track record through the positions that I hold. I am not a day trader and invest mostly in funds or baskets of stocks, perform occasional swing trades and have recently gotten into scalping. Data presented may not be 100% accurate as I do make mistakes, so please perform your own due diligence and verification.