Replies to post #8943 on Your Economy (No Politics) (YE1)

[Ace Hanlon]

As usual an excellent weekly post!

[nlightn]

BW,...once again, excellence in print.

i so agree with many of the points you have brought out. many. especially the Cheney situation,... you placed a human grasp of the situation which brings the incidence into view very clearly.

with the possibillity if war abrewin' the commodities markets will be opening up some good buying opp's.

thanks for your thoughts and clarity.

[otraque]

Thanks BW, much appreciated here.otraque(eom)

[Bullwinkle]

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



OVERVIEW:
Another eventful week which had no shortage of volatility and politically charged events such as the release of the FNM Rudman report, civil unrest in Iraq, pipeline bombings in Saudi Arabia, Nigerian kidnappings, Dubai port scam, Prophet Muhammad cartoon riots continue across many regions, exploding mosques, burning flags and let’s see just how much more crap we can pile on here. All in all we essentially ended the week right where we started on the majors with Oil and Gold climbing and the U$D running flat. The CRB found support, Transports made another new high and Treasury yields continue to spread by as much as 20bpts. Then we get news that there is more money coming into the market right now than at any other time since 1999-2000 bubblemania. Interesting, no? If more money is coming in you would not know it by the market action. So where is ALL this money going? One thing is for sure, it is not finding its way into Tech stocks. Most likely diversified investment strategies which sees a majority of equity fund money finding its way into foreign investment, currencies, commodities, ETF’s and the like. A little article on this rush to buy stocks at #msg-9857172

The CoT data shows open interest continues to trend higher on the majors as is the Commercial Short positions. Gold open interest remains above the centerline, but trending down with Commercial Shorts lining up against Large Spec Longs. Oil open interest has come down hard with some Commercial Long positions on the build. You can go here to view the CoT data graphs #msg-9171642 -- Equity Fund flows as detailed by AMG Data Services reported Equity funds (xETF’s) net cash inflows totaled $3.193B in the week ended February 22 with 49% ($1.559 Bil) going to funds investing in Non-domestic securities. Excluding ETF activity, International funds reported net inflows totaling $1.200B as net inflows were reported by all Emerging and Developed regions. The largest ETF inflows were $2.0B to the Select Sector SPDRs Energy, $1.1B to the SPDR Trust Series I, $1.1B to the iShares S&P 500 Index and $806M to the iShares Russell 2000 Index. The largest ETF outflows were -$468M from the DIAMONDS fund. Money Market funds reported net inflows totaling $25.284B, the largest inflows to the sector since 12/7/05. The full report can be viewed at #msg-9875818 -- As for Oil, Gold and the U$D, we saw Oil gain on pipeline disruption fears and closing out the week just shy of $63bbl with Gold in a similar trend closing out the week at $559 and the U$D bumping resistance and closing out the week at 90.64… The CRB found support at the 200DMA and closed out the week at 329. Treasury yields continue to spread with 2yrs@4.71%, 5yrs@4.63%, 10yrs@4.57%, 20yrs@4.54% and 30yrs@4.52%. The Yield Curve can be viewed at #msg-9875940 …


ECONOMIC #’s:
Mixed results as usual... How the markets can find mixed results year after year as bullish is one for the ages.

Leading Economic Indicators (LEI) – Jan = 1.1% vs 0.3% w/expectations of 0.5%
#msg-9821358

CPI – Jan = 0.7% vs -0.1% w/expectations of 0.5%
Core CPI – Jan = 0.2% vs 0.1% w/expectations of 0.2%
#msg-9830207

Durable Orders – Jan = -10.2% vs 2.5% w/expectations of –2.0%
#msg-9874646

Help Wanted Index – Jan = 37 vs 39 w/expectations of 40
#msg-9874627

Initial Jobless Claims – 2/18 = 278K vs 298K w/expectations of 300K
#msg-9858406

MBA Mortgage Applications – 2/18 rose 0.8% to buy homes and refinance
#msg-9830035

Oil Inventories – 2/18 per DoE and API
Crude = DoE +4.9M bbls / API -1.4M bbls
Gas = DoE +100K bbls / API -1.9M bbls
Dist = DoE -1.9M bbls / API -1.3M bbls
#msg-9858380

FOMC Minutes http://www.federalreserve.gov/FOMC/minutes/20060131.htm

ECONOMIC CALENDAR For The Week Ahead: http://biz.yahoo.com/c/ec/200609.html


As I am sure you have noticed, the world as a whole is becoming more and more unsafe. This week alone we see civil unrest in Iraq, an oil pipeline bombing attempt in Saudi Arabia, hostage taking in Nigeria and escalating violence in multiple countries due to the Prophet Muhammad cartoons. There is a right way and a wrong way to have approached a war on terrorism, squandering the world’s goodwill by chasing ghosts in Iraq was not the right way to go about fighting terrorism. We now have a quagmire far worse than that of Viet-Nam on our hands. We have thoroughly stirred a hornets nest that reaches far beyond one continent as radical militant Islamists are not restricted to that of the Middle East. Before things come unhinged we had better rethink our strategy and I mean in a hurry because it is getting uglier by the day. This is a war we cannot afford to lose, there is so much more than our credibility on the line.

What would another week be without another scandal? This is getting ridiculous wouldn’t you agree? You must know where I am going with this. Last year we had a similar situation where CNOOC, a Chinese government ran organization sought to buy Unocal. The difference here being is this was a well known issue discussed openly in the public domain. The transaction was eventually denied because of concerns that China may gain strategic energy reserves and military technology. Now we have a decent relationship with China, no? I mean we do huge amounts of trade with them, they buy our debt, I would say we have a working relationship. Still there are some things that you would not trust in others' hands and understandably so… Enter the UAE and DP World where we have a similar situation or do we? Forget for a moment that it is of an Arab affiliation and that the UAE was home to a couple of the 9/11 hijackers. Let’s just focus on the fact that it is a government owned operation (like CNOOC), that port security is a strategically sensitive issue (as were in the CNOOC deal), but this the deal was done secretly, had a shortened review and the President says he had no prior knowledge of the deal. How can our President (who cannot speak without raising concerns about terrorism) claim to not have knowledge of such a deal and then turn around and blindly defend it? How is this consistent with the President's stand on national security? When compared to that of the CNOOC deal it is pretty clear that this deal should not be allowed. As I said, I am not taking into account any phobia’s about DP World being an Arab owned company or that the UAE was home to a couple of 9/11 hijackers. I am just looking at this in an apples-to-apples comparison to that of the CNOOC deal. How such an important deal could be brokered without the President’s knowledge is hard to believe. Was the President asleep at the wheel yet again? Once again there is much more to this than meets the eye; it’s all about political ties and big money. So what else is new? Pretty scary stuff when an insider deal can put American security on the backburner.

This administration lacks intelligence and I am not talking about the CIA/FBI type of intelligence…


WHAT CAN WE EXPECT NOW?:
I don’t really have much to add to this week’s expectations, my sentiment has not changed much from the last update in which I see bullish pattern formations coupled with bearish diverging indicators on all of the majors. More volatility in stored with the caveat that a resolution should be close at hand and while my feeling is that the bias will be to the downside, we will just have to wait and see what transpires. The talking heads are grasping at straws for a positive spin, but it has been an exercise in futility with such a hodgepodge of unrelenting news events rolling in by the day. While I just assume see a blow off top followed by a decent correction to reset current conditions, we have a tug-o-war between the powers that be and what the market would naturally do if it weren’t so heavily manipulated. As for the U$D, Gold and Oil – My outlook continues to be bullish on Oil, Gold and Commodities in general with a more conservative view on the U$D which has continued to hold the 90 area, but overhead resistance in the 90 area should keep the dollar in check. I am sorry if I am rather non-descript in my expectations for the week ahead, but I tend to believe we are setting up for a bigger move. Which way is the question…

Technically Speaking and for one reason or another the Bullish/Bearish Advisors have yet to be updated since 2/7, but AAII Sentiment as of 2/22 is coming in at Bullish 43.2%, Bearish 28.4% and Neutral 28.4%… The VIX and VXN are oscillating near 12 & 15 respectively. The CBOE EPC Ratio ended the week at .64 and TPC ratio at .93. The RSI 5-Days are Overbought on the DJIA, nearly so on the SPX and Neutral on the COMP. The P/C ratios, VIX/VXN, $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), 200DMA stocks and Bullish %'s all can be viewed below along with the major indices…

Sentiment and Contrary Opinion Charts #msg-9171686
































NOTE:


CORE: NXG, ENPIX, PRGNX, USPIX, €uro & ¥en

SPECULATIVE: DNDN, AGIX

SCALP TRADE:

SWING: GSX, GEOI, CUP

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. I am not a day trader and invest mostly in funds or baskets of stocks, perform occasional swing trades and some scalps. Data presented may not be 100% accurate as I do make mistakes, so please perform your own due diligence.