Replies to post #9182 on Your Economy (No Politics) (YE1)

[otraque]

If ever Al-Queda penetrated into the heart of al Abqaiq and got off a big Kaboom that shut down the site for even a month, spike in crude would be beyond my imagining.

But i feel there is a lot more then just the Saud's protecting this site.

The U.S. private security personnel must be there in the thousands.

Also have little doubt the off shore port must have an armada protecting it, just as with the off shore Iraqi port( guarded by British Navy,Australian Navy and the U.S Navy.)

I personally see only one way Al-Queda can succeed, and that is penetrate the security forces themselves, they need insiders, iow .

[otraque]

<<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 Crosscurrents Trading volume versus price gain keeps widening to where there is now a major major gap.
Thus what they call their price efficiency measure, is getting more and more inefficient, this is an indicator the bull is sweating itself to death to keep this market up--but the bull still is hanging in there, nonetheless. We wait:)

[Bullwinkle]

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



OVERVIEW:
The indices started out with a bang and ended with a sputter accompanied by a lot of volatility in between. I suspect we have not seen the last of this type of action, which has become the hallmark for market activity as of late. We saw new highs tested and some new highs set. Treasury spreads tightened and yields moved higher, Silver hit a 22-year high and Gold reestablished itself, the U$D weakened and Brent crude outpaced Light Sweet crude, imagine that. What would the week be without Fed rate talk, the talking heads twisted in the wind as every day brings a change of sentiment as to how many more rate hikes are in the pipeline. With every econ data point comes a mixed signal and those who care to opine find themselves changing their stance on a regular basis, almost daily. It is really quite the spectacle… This week we saw the DJIA fall off of its highs as the SPX and COMP tested old highs. The R2k blazed a trail of its own along with the Transports, which moved higher even though the price of Oil is moving up. These are strange times indeed, many divergences between indices and indicators alike. Not a whole lot makes sense and it is my belief that for exactly this reason the majors manage to hold their respective ranges, through nonsensical craziness. There’s really no better way to describe it. I imagine that sooner or later the markets will come to its senses once reality finally sinks in, but for now anything goes. Climbing a wall of worry? Please, the markets are too volatile and participants have too short of a memory for that to be taking place. Between the Fed agenda, institutional robots, Hedge fund and Mutual fund managers, foreign investors and retail investors trying to make a quick buck, what we have is a free-for-all. Maybe volatility is a day-traders best friend, but I have to be frank with you, I do not envy those trading this manic depressant market.

The CoT data shows open interest continuing to trend higher on the majors as is the Commercial Short positions, most notably on the SPX and NDX. Gold open interest remains above the centerline and trending back up with Commercial Shorts continuing to line up against Large Spec Longs. Oil open interest has shot up with Commercial Long positions increasing. 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 $1.962B in the week ended March 1st with 70% ($1.378B) going to funds investing in Non-domestic securities. Excluding ETF activity, International funds reported net inflows totaling $1.116B as net inflows reported by all Emerging and Developed regions. Largest ETF inflows were $630M to the SPDR Trust Series I and largest ETF outflows of -$663M from the DIAMONDS fund. Excluding ETF activity Taxable Bond funds reported net cash inflows totaling $1.000B and Money Market funds reported net outflows totaling -$14.969B. The full report can be viewed at #msg-9997253 A couple of articles worth review are World ETF’s at #msg-9934322 and Foreign Stock Fund bets at #msg-9934290 -- As for Oil, Gold and the U$D, we saw Oil continue to gain strength and close above $63bbl at $63.67. Gold in a similar trend closed out the week at $565.26 and the U$D having turned down off of 90 finishing the week at 89.62… The CRB continued its uptrend and closed out the week at 331. Treasury yields rose and the spread actually tightened a bit this week with 2yrs@4.73%, 5yrs@4.70%, 10yrs@4.68%, 20yrs@4.66% and 30yrs@4.65%. The Yield Curve can be viewed at #msg-9997510 …


ECONOMIC #’s:
These are not good numbers by any measure with the housing #’s being the most noteworthy…

New Home Sales – Jan = 1.233M vs 1.298M w/expectations of 1.270M
#msg-9949361

Existing Home Sales – Jan = 6.56M vs 6.75M w/expectations of 6.60M
#msg-9949308

Construction Spending – Jan = 0.2% vs 1.0% w/expectations of 1.2%
#msg-9949390

MBA Mortgage Applications – 3/1 = Buy & Refi Apps declined 1.2% w/Purchases down 1.9%
#msg-9949126

GDP (prelim) – Q4 = 1.6% vs 1.1% w/expectations of 1.6%
Chain Deflator – Q4 = 3.3% vs 3.0% w/expectations of 3.0%
#msg-9930775

Chicago PMI – Feb = 54.9 vs 58.5 w/expectations of 58.5
#msg-9930842

ISM Index – Feb = 56.7 vs 54.8 w/expectations of 55.5
#msg-9949420

ISM Services – Feb = 60.1 vs 56.8 w/expectations of 58.0
#msg-10004308

Auto/Truck Sales – For the Big 3 in Feb and YTD
GM - Autos fell 14.0% and Trucks rose 5.0% (overall sales for the year are up 1.0%)
F - Autos rose 11.0% and Trucks fell 7.0% (overall sales for the year are flat)
DCX - Autos rose 18.0% and Trucks fell 3.0% (overall sales for the year are up 4.0%)
#msg-9949223

Oil Inventories – 2/24 per DoE and API
Crude = DoE +1.6M bbls / API +2.5M bbls
Gas = DoE +300K bbls / API +213K bbls
Dist = DoE -1.5M bbls / API -1.4M bbls
#msg-9949061

Personal Income – Jan = 0.7% vs 0.5% w/expectations of 0.6%
Personal Spending – Jan = 0.9% vs 0.7% w/expectations of 1.0%
#msg-9949249

Initial Jobless Claims – 2/25 = 294K vs 279K w/expectations of 285K
#msg-9970324

Consumer Confidence – Feb = 101.7 vs 106.8 w/expectations of 104.0
#msg-9930872

Michigan Sentiment – Feb = 86.7 vs 87.4 w/expectations of 87.5
#msg-10004332

U.S. Retailers' Sales Gains Slow #msg-9977021

ECONOMIC CALENDAR For The Week Ahead: http://biz.yahoo.com/c/ec/200610.html


I have one thing to say about the supposed wealth effect … BS … I look at the housing market in much the same way as I do the stock market, until gains are locked in they are only paper gains. Borrowing against trumped up property values does not make you wealthy, only further in debt. How can people be wealthier with more debt? Unless you have your own printing press or are fortunate enough to own your home outright (or whatever property for that matter), then you don’t own it, the bank does. This does not translate into wealth no matter how you cut it. It is only an “effect” not a reality, hence “wealth effect”. When was the last time you heard the term “Ownership Society”? Yeah, I thought so… Ever wonder why that is? Wealth effect is the new catch phrase, ownership society lost its cliché. But hey, what can possibly go wrong? This time is different, right? It’s a new economy. Warren Buffet is clueless. The markets are looking to extend trading hours. Heck, the Nasdaq has it’s own stock and soon so will the big board. On top of that, stocks are cheap and junk stocks are going up too! Could it get any better? Wait, there’s more… Margin debt is at a high and money is rushing into the markets. Besides that, Liquidity is being pumped 24/7 and interest rates are on the rise. Didn’t you know we are in a new bull market? Home prices will rise for the next 10-years. Can it get any better than this? Does any of this sound familiar to you? I think the saying goes something like this; History does not repeat, people fail to recall history…

I think many Americans are gambling. Gambling is fun when done in moderation and never betting more than one can afford to lose. Unfortunately many get in over their head thinking that one can get rich quickly. It is this illusion that our government would like you to believe when it comes to your finances. Borrow, spend and gamble your way to riches, everyone is doing it why not you? This brings me to a little analogy of finance and the game of poker. The biggest poker game in history is playing out before our very eyes, a game of Texas hold ‘em (how apropos, eh?)... Now before I explain the game I must let you know that the Casino never loses, they only sponsor the game and collect a fee from each player for their spot at the table. This is not a onetime fee either, it must be paid for every 30-minutes you sit and play. Any player can get up or get out at anytime, but fees and losses are never refunded, it just does not work that way. Now for those of you who are not familiar with what Texas hold ‘em is, it is a 7-card poker game. In this game of poker the players get 2 cards down (otherwise known as hole cards) and then place a bet. This is followed by 3 cards, which are dealt face up in the middle of the table (community cards) and are used by each of the players to make up a 5-card hand. This is then followed by another bet. Then a flip of another card in the middle of the table followed by yet another bet. Then a final flip of a card into the middle of the table and the final bet. Now of these 7 cards (5 being that of community cards, all face up in the middle of the table) it is your mission to make the best 5-card hand possible and win the game. The first 3 cards turned up in the middle are referred to as the “flop”, the next card flipped is called the “turn” and the final flip of the last card is known as the “river” (i.e. the flop, the turn, the river). Remember these terms as they will be referenced later…

With many Americans gambling with their futures, taking up debt and borrowing beyond their means, I see a similarity between that game of hold ‘em and the current status of those who are “all in” the present day game of refinance, borrow and spend. Think of it this way, the two down cards (hole cards) you were dealt are the property you possess. These are your cards as long as you stay in. Then consider each bet as borrowed funds as you dig into your pocket to stay in the game. Then consider each turning of the cards as being that of our current state of affairs; an economy portrayed as healthy and enticing a player to match the bets in order to stay in for what might be better cards down the road and ultimately a better hand. I view the “flop” as negative savings, this is where you see the most cards and get an idea if whether or not you are willing to stay in. Then comes the “turn” or hook, view this as the new bankruptcy laws that ere recently changed to benefit the banks and the casino. Then the “river” card, usually a make or break card. If by this time you don’t make a winning hand you watch your money go down the river.

The game of Texas hold ‘em is generally played with 4-6 players, sometimes as many as 8 players. Make no mistakes about it, there will only be one winner. These are the odds I believe that will play out in the months and years ahead. 1 in 4, 6, maybe even 8 will be left standing while the rest get cleaned out! The winners will be the ones who obviously had the best cards, but even more so than that, could afford to play and had a better grip of the game as a whole. My point being here is that there is an unseemly game being played with peoples lives where these players are not fully aware of what it is they are doing or the consequences of their actions. Most of these players will be wiped out and there debts will not go away. The new bankruptcy law ties in those who refied and borrowed against their homes. If for some reason you can’t pay this money back, it will follow you for the rest of your life until it is paid. I am not sure too many people realize this. Unless you are prepared and well versed in the game, you should be victorious, but most will lose. In the game of Texas hold’em most do…

Good luck players…


WHAT CAN WE EXPECT NOW?:
Once again I don’t really have much to add to this week’s expectations, my sentiment has not changed much over the last couple of weeks. There is something taking place and I am not exactly sure what to make of it. My feeling is that the more we hang in this range, the more of a chance that we breakout. It is not often that we hang in a range and then decline. If memory serves me, we generally make a move up off of trendless ranges. As stated before, formations are somewhat bullish, but a diverging backdrop exists. Sooner or later those negative divergences will play out. The technical picture does not support a sustained move. As I said last week, I just assume see a blow off top followed by a decent correction to reset current conditions. I am leaning towards this scenario as becoming a reality. I do not have an actual timeframe other than “soon”. Sorry I cannot be more descriptive, but I do think this is coming to a head that lasts just long enough to sucker in some more participants before the fleecing begins. This is what I envision, although we may be double topping on the COMP and SPX with the DJIA leading the way down. I cannot rule out the next move from here has not begun. There really is no way of telling what will transpire, but I think if the momentum starts to head downward, it may be difficult to stop due to the many many issues that sit before us from geo-political backdrop, this administrations troubles, another earning reports session upon us and housing which is most definitely slowing. Once the consumption pulls back, stick a fork in it this run is done. Also keep in mind the Iranian oil bourse goes into effect as of the 20th. This should not be ignored as it could have a significant impact. There are a lot of things to take into account and the month of March should provide some fireworks. Time will tell… For a sneak preview of March events go to #msg-9933665 As for the U$D, Gold and Oil – My outlook continues to be bullish on Oil, Gold and Commodities in general. It would not surprise me to see new highs in the metals shortly, Oil test $65bbl and the U$D continue to weaken. This is what looks to be in the cards for the week ahead…

For my outlook on U$D, XEU and GOLD, I posted charts with my targets here #msg-9998968

Technically Speaking and for one reason or another VTO has not updated the Bullish/Bearish Advisors. So after this posting I will drop VTO and in its place AAII Sentiment or at least until the problem is resolved. AAII sentiment as of 3/1 is coming in at Bullish 40.95%, Bearish 29.13% and Neutral 29.92%… The VIX and VXN are oscillating near 12 & 16 respectively, but a definite lower support line can be drawn and is in an uptrend, which can be easily identified in the charts. Whether this has any meaning is unknown, but worth keeping an eye on… The CBOE EPC Ratio ended the week at .66 and TPC ratio at .87. The RSI 5-Days remain Overbought on the DJIA, nearly so on the SPX and Neutral on the COMP. The P/C ratios, VIX/VXN, Summation, McClellan, Highs/Lows, Advance/Decline, 200DMA stocks and Bullish %'s can all 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.