Tempting Tuesday - Waiting on the Fed
by Phil - March 16th, 2010 8:13 am
The dollar is diving and the futures are flying this morning!
Word is that the Fed will remain doveish in their 2:15 statement today with no sign of tightening in the near future. That has (as of 7:30) rallied gold 1.5% to $1,115 and oil is back over $80 and copper is $3.35 again while the Euro jumps back to $1.375 and even the British Pound squeezes the hell out of the shorts as it flies from $1.497 at 3:30 to $1.514 (1%) in 4 hours, which is a pretty big move for FOREX!
The EU also helped themselves by laying out a groundwork for a financial lifeline to debt-stricken Greece, breaking a taboo against aid to cash-strapped governments in order to avert a crisis for the euro. Officials from the 16 countries using the currency worked out a strategy for emergency loans in case Greece’s plan for 4.8 billion euros ($6.6 billion) in tax increases and wage cuts fails to stave off fiscal disaster. “We clarified the technical arrangements that would enable us to take coordinated action which could be swiftly put into place in the event it is necessary,” Luxembourg Prime Minister Jean-Claude Juncker told reporters late yesterday after leading a meeting of Euro-area finance officials in Brussels.
The EU is also meeting to discuss ways to reign in hedge funds and credit-default swaps but the revised bill from Chris Dodd is now so watered down by compromise that it no longer requires regulators to agree that excluding a swap from being cleared “is necessary and appropriate for the reduction of systemic risk.” So what’s the point? The problem is that there are $605 TRILLION Dollars of CDS’s written against a Global GDP of $50Tn. Usually, it’s a red flag for the police when a person insures their home for 12 times what it’s worth, right?
Hexagon Securities LLC and at least 19 other financial firms are pressing regulators to force swaps clearinghouses to lower entry barriers in order to improve competition in a $605 trillion derivatives market dominated by the world’s biggest banks. They also seek tougher conflict-of-interest laws to ensure that a bank’s derivatives desk doesn’t influence clearinghouse decisions that could shut out new competitors. ROFL - move to Russia, you Commies! This is America, where big banks rule and "firms with less than $5Bn net worth" drool! See, my daughters taught me that one - wins every argument!
Speaking of people who rule our lives - Saudi Oil Minister,…
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Weekend Wrap-Up, Still Trying to Get Bullish
by Phil - March 14th, 2010 5:20 am
I’m having writer’s block this weekend.
Usually when I can’t think of what to write it helps me to go over our portfolios so I started this morning reviewing the Buy List but I didn’t get far because it was silly. Of 43 plays on the buy list, 39 are doing well - too well in fact to the point where it’s hard for me, in good conscience, not to say let’s kill the whole thing and get back to cash as we’re up about 20% in 2 months and that’s just ridiculous - most people would call that a good year and go on vacation.
The Buy List was 100% bullish and we did catch a good bottom on our early February entries. I was gung ho bullish then because I felt comfortable that the 10,000 line on the Dow would prevail and that we were good for a run back to the top (10,700), following, more or less, the pattern we had in 2004 (see original post for charts). Well that’s pretty much what’s happened since then but that’s not making me happy because I see no reason we won’t complete that pattern and begin falling off a cliff shortly.
As you all know, I’m not a big fan of TA, or patterns for that matter but the reason I started looking for patterns was to try to get a handle on how long market could really keep going up before falling victim to exhaustion. To me it seemed we weren’t at that point on Feb 6th but now that we’ve put in that big push back up - if we can’t punch up to new highs on all our indexes then I do think it’s time for the markets to take a break.
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Clearly I’ve been too bearish for the past couple of weeks and we are now 224 points over 10,400 on the Dow which is where I turned bearish as the January data made me lose faith in our ability to get back to 10,700. I should have stuck to the TA because we’re a lot closer to 10,700 than we are to 10,400. With the Russell and Nasdaq exploding to their own new highs. You can see though, from the above chart, why I do want to wait to see the NYSE, Dow and S&P confirm this move up - it’s not far now!
We’re finally getting the hang of the Wonderland Market though it’s actually quite simple…
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Toppy Tuesday - Happy Anniversary Bull Market!
by Phil - March 9th, 2010 8:26 am
It’s hard to believe that just one year ago today investors thought the world was ending!
Well, not all investors - we were BUYBUYBUYing at the time, as I recapped back in September whan we did our "Market Crash - Year One Review." Click on Cramer’s picture for the Daily Show’s March 4th, 2009 review of the magical moments that led us down to the bottom and here’s another great video from the evening broadcast on March 9th and, of course, there is my own legendary appearance on LiveStock from March 6th, but that’s summarized in the crash link, so save yourself 3 hours, although the first 10 minutes are worth it for people who want to learn about our buy/write strategy as I explained the logic of it as I recommended FAS at $2.41 using those hedges.
And what a wild year it has been as we’ve made an epic recovery. The only question is - have we come too far too fast? Should we be up 75% from our March 9th lows? We are still down 25% from our highs but let’s keep in mind that we made those highs thinking AIG was MAKING money, that FNM and FRE were great stocks for your retirement portfolio, that Kirk Kirkorean was going to rescue GM, that BZH wasn’t some kind of scam, that BSC, LEH et al were "the smartest guys in the room." I urge you to click on Cramer and listen to the idiocy of the analysts who would tell you everything is all right even as it was all falling apart around them - why does everyone suddenly trust them again?
How could we not love this market? Markets do this sort of thing all the time don’t they? It’s all part of the "efficient pricing model" that always lets you know what a stock is truly worth like when GE was "worth" $30 in 2008 and "worth" $6 in 2009 and is now "worth" $16. This is not some biotech folks - this is GE, they’ve been around for 100 years and they have $170Bn in global sales. Did they really drop 80% in value in 2009? No. That’s why it was easy to pick a bottom - the valuations got ridiculous and, as fundamentalists, we siezed on the opportunity to BUYBUYBUY despite the negative sentiment.
Now, we are in a very different situation. Now we have the MSM telling us to BUYBUYBUY…
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Monday Market Movement
by Phil - March 8th, 2010 8:27 am
Asia exploded out of the gate today!
The Hang Seng is up 2% at 21,196, gaining 408 points on the day along with a 2% gain on the Nikkei (216 points), taking them over the 10,500 mark to 10,585 as they play catch-up to the Dow, which topped out at 10,566 last week. The BSE keeps going higher, adding 0.6% for the day, back over 17,000 at 17,108 and the Shanghia added 0.7%, finishing the day at 3,053.
The Hang Seng’s incredible morning gap up and 100-point follow-through, though impressive, is only a "good start" to getting that index back on the road to recovery as they had topped out at 23,000 in November and flirted with 22,500 in early January so we’ll need some sustained conviction before we get all bullish on China but, for today, we can just say "WOW" - it’s amazing how much a market can move when it’s closed!
![[iceland]](http://si.wsj.net/public/resources/images/OB-HT711_icelan_F_20100306222632.jpg)
We’re closed as well but our pre-markets are looking strong although Europe is kind of flat-lining. They are all upset because the 300,000 people who live in Iceland took a vote and decided they didn’t have $5.3Bn to bail out failed Icebank, which kind of leaves the EU investors, who deposited money into an internet savings account that promised 8% returns, in a bit of a lurch becuase (surprisingly, I’m sure) it turns out the bank took a lot of risks to get those returns and (even more surprisingly) THEY BLEW IT! Even more surprisingly to European investors, 93% of the voters said: "No thank you, we will not agree to pay $17,666 per person (about $58,000 per family) to make foreign investors whole."
What I find most funny about this is that the UK and the Netherlands had the nerve to ask Icelanders to repay this money. $5.3Bn is 1/2 of Iceland’s GDP - that would be like countries who lost money in the Lehman collapse asking US taxpayers to kick in $6.5Tn to make them whole. What do you think our vote would be? Sure we are numb to our own debt level but are we that numb? Possibly so as we seem to be happily buying oil at $80 a barrel again - sending $321Bn American dollars out of the country in exchange for a product we burn up and need again the next day. I wrote about this disaster over the weekend so no need to re-hash it…
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America’s Commodity Crisis - 2010 Edition
by ilene - March 6th, 2010 1:18 pm
America’s Commodity Crisis - 2010 Edition
By Phil
Commodities are a TAX. They are the worst kind of tax because they flatly (not progressively) charge every man woman and child in this country more money for the same food, fuel, shelter and clothing that they had to have last week in order to live. It doesn’t matter if those people are trying to save or trying to tighten their belts or trying to get out of debt - high commodity prices are a shake-down that rips money out of the pockets of the middle class and funnels it to the very, very small class of commodity producers, commodity speculators and the people who finance them and collect the fees.
Over 99% of the people in this country do not own mines or oil wells (and I’m not counting small farmers because they are literally raped by speculators and bankers, often leaving them worse-off than the consumers) or huge plantations and they do not buy futures contracts on margin with cash they borrow at prime plus 0.5% nor do they own tankers filled with 2M barrels of crude that they arbitrage along the crack spread, looking for an opportune moment to deliver their goods (hopefully during a crisis) at a maximum profit.
So 99% of the people in this country don’t even own a commodity ETF - they have no way to profit from high commodity prices and they need to eat, and they need to buy clothing and have shelter and they need fuel to heat or cool their homes and go from place to place. There is a word for people like that, at the bottom end of a transaction they have no control over - VICTIMS!
The American people are the victims of a $2.5Tn commodity scam - 50 times bigger than the Madoff scandal, pretty much one Madoff PER WEEK yet they sit there and take it because those same commodity pushers are major advertisers in the media - so there are no stories about it and the commodity pushers are massive campaign contributors with armies of lobbyists so our Government does nothing about it other than show up to parties and go on junkets. In fact, do you know who the single largest hoarder of oil was in the last decade? It was the US Government as George the Second purchased 240 MILLION barrels of oil AT ANY PRICE, creating a spike…
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America’s Commodity Crisis - 2010 Edition
by Phil - March 5th, 2010 7:07 pm
Ouch!
We did not expect to break higher this week. After a stellar week last week where we had 49 winners in 56 trades, I’m dreading this week’s review as I really feel like my picks were too bearish overall. Of course, the bulk of our trading is in bullish long-term positions that are doing very well but that doesn’t mean I don’t like to win the short game as well. As I said at the close of last week’s review: "I’ll be in a foul mood if we have a commodity rally that moves the Dow up on Monday but it will be my own fault - as I often say to members - CASH is so much more flexible!" And you know what - we did have a commodity rally and I AM in a foul mood!
Commodities are a TAX. They are the worst kind of tax because they flatly (not progressively) charge every man woman and child in this country more money for the same food, fuel, shelter and clothing that they had to have last week in order to live. It doesn’t matter if those people are trying to save or trying to tighten their belts or trying to get out of debt - high commodity prices are a shake-down that rips money out of the pockets of the middle class and funnels it to the very, very small class of commodity producers, commodity speculators and the people who finance them and collect the fees.
Over 99% of the people in this country do not own mines or oil wells (and I’m not counting small farmers because they are literally raped by speculators and bankers, often leaving them worse-off than the consumers) or huge plantations and they do not buy futures contracts on margin with cash they borrow at prime plus 0.5% nor do they own tankers filled with 2M barrels of crude that they arbitrage along the crack spread, looking for an opportune moment to deliver their goods (hopefully during a crisis) at a maximum profit.
So 99% of the people in this country don’t even own a commodity ETF - they have no way to profit from high commodity prices and they need to eat, and they need to buy clothing and have shelter and they need fuel to heat or cool their homes and go from place to place. There is a word for people like that, at…
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Jobless Friday - US, Japan and Europe Add More Stimulus
by Phil - March 5th, 2010 7:43 am
Wheee - more free money!
The money train left the station just ahead of the US market close yesterday when the House passed a $15Bn Jobs Bill although it remains to be seen if Jim Bunning will pass it. China doesn’t need Bunning’s permission to hand out free money and they will be "allocating 63.2 Billion Yuan" to fight high housing prices by SUBSIDIZING low-cost housing. Come to think of it - I object to that! Someone in China needs a lesson in some basic economics…
The big boost this morning came from Japan, where bonds hit the highest level of the year after the Nikkei newspaper said the central bank at its March 16 meeting may discuss additional monetary easing steps. It doesn’t matter whether this report is true or not as it already did it’s job and shot the Nikkei up 223 points for the day, erasing two week’s worth of losses in a single session. It’s hard for the BOJ to get easier than our own Fed but Chicago Fed President Charles Evans said yesterday he needs evidence of “highly sustainable” growth before supporting tighter monetary policy, while James Bullard of the St. Louis Fed said the central bank should remain “accommodative” - these are, of course, the Fed’s code words for MORE FREE MONEY!
Of course, our Futures are up 1% from yesterday’s low and the commodity markets LOVE IT and oil is back at $80.65 with copper back at $3.40 despite "weak" demand in China, where stockpiles of copper are now at 7-year highs and even Goldman Sachs has withdrawn their buy recommendation on coppper because of concern that economic recovery in developed markets isn’t on “solid footing.” “About 60 percent of China’s copper is used in the power industry, and our sales to wire-and-cable users reflected that demand is rather weak,” Chairman Wei Jianghong said, while attending the National People’s Congress.
“The demand is not very strong in the first place,” Jiangxi Copper Chairman Li said in Beijing while at the congress. “But a lot of people have long positions in the market, so I think in the first half of this year, copper prices will be good.” Copper stockpiles in China jumped to 149,478 tons for the week ended Feb. 26, 28 percent more than the week ended Feb. 12, according to the Shanghai Futures Exchange. Demand from China for global supplies may weaken because prices on the Shanghai Futures Exchange are now close to those in London, discouraging arbitrage trading, Goldman Sachs analysts…
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Weekly Market Report
by Chart School - March 1st, 2010 3:21 pm
Weekly Market Report for February 28th, 2010 - March 6th, 2010
Courtesy of InTheMoneyStocks
The S&P 500 closed the week lower by less than 5 points. The broad based index has recovered 60 points from it’s February 5th pivot low. The 1150 level was the January high and is still resistance. The current pattern on the chart can go either way. It is possible that last week was a pause before another push higher. However, it is also possible that it is a short term retrace pattern before another move down. Technically the chart is still strong as the weekly 20 moving average is still significantly above the weekly 50 moving average and this signals that the trend is still up on the weekly chart. Should the SPX decline there is still weekly suppport at the 1050 level.
The SPDR Gold Shares ETF GLD finished the week basically flat this past week. The action was volatile throughout the week as the GLD traded as low as 106.60 and as high as 109.97. It is important to remember that gold is a double edge sword trade. Investors buy gold often as a play against the U.S. Dollar and most fiat currencies. They also buy gold as play aginst overall market fear. Technically the GLD is still in very good shape as the weekly 20 moving average is still above the weekly 50 and 200 moving averages. The one short term bearish case that can be made against the GLD is that it is possibly making lower highs and this must be watched. The dollar should also be monitored closely as gold and the dollar generally trade inverse to each other.
The U.S. Oil Fund ETF(USO) finished the week basically where it began. The USO is now nearing the high range that it has been in since June 2009. Until the the USO breaks out or below the range these levels should serve as good resistance and support. While the USO is trading above it’s weekly 50 moving average it is still not technically very convincing. However, as long as the USO stays above the weekly 50 moving average it can trade higher.
The U.S. Dollar remains one of the most important charts that must be followed and watched. When the dollar declines it gives a lift to most commodity and inflationary stocks. Since the late November rise in the dollar the stock market has paused and pulled…
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Thank GDP It’s Friday!
by Phil - February 26th, 2010 8:27 am
Wow, a 6% GDP!
I’m guessing as it’s only 7:30 but WOW! What an amazing economy this must be in the fantasy-land where they concoct these numbers. Let’s see, we have 138M working people so we must have added 8.6M jobs, right? NO??? Well, then the people who are working must be putting in a lot of overtime, right? No? I know, everybody must be making 6% more money than last year! No? Well, then it must be coming through in benefits, right? No? Hmm, this is a hard game isn’t it? I KNOW!!! Housing prices - with China-like GDP growth our housing market must be red hot and surely our homes are up 6% in value! No? Damn, I feel like I’m playing deal or no deal and I picked the case with the penny…
Just like our discussion about what total BS the CPI was - GDP is no different. GDP is the sum of Consumption, Investment, Government Spending and Net Exports which means a combination of inflation and government spending can boost our GDP even as real consumption falls and the rising dollar papers over export losses. In other words - I buy $100Bn worth of Toyotas (5M at $20,000 each) from Japan with the dollar at 85 Yen. Now the dollar rises to 93 Yen and I’m "only" buying $90Bn worth of Toyotas (5M at $18,000 each) and our GDP for that segment is up 10%. Wow - FANTASTIC!
Are we happy? Are more Americans working? Is there more shipping? Are there more sales at the Toyota dealership? No. Is Japan happy? Not at all, they are getting less money for the same cars. Another group that hasn’t been happy are the oil exporters, who shipped us an average of 10.5 Million barrels a day at an average price of $60 last year ($630M) and are now shipping us just 8.5Mbd at $80 last week ($680M). Sure they are still getting their $680M a day by choking off production and creating false supply shortages, but they miss the days when they were able to charge us $100 for 11Mbd.
Don’t worry my OPEC pals, JPM and the other oil manipulators are working very hard to make sure you once again have Billions of more American dollars that you can funnel to terrorists and this Democratic Congress turns the same blind eye to the shenanigans as the previous administration did so happy days will soon be here again as our leaders have the unmitigated gall to get up…
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Bottled Water Syndrome
by ilene - February 7th, 2010 11:30 pm
The Drinking Water Profiteers
Bottled Water Syndrome
Courtesy of JOSEPH NEVINS writing at CounterPunch
In mid-January, I received a mass email asking me to donate $10 for bottled water and other supplies for participants in an important immigrant rights march in Phoenix. Given the ever-repressive and cruel political climate in Arizona for immigrants (especially unauthorized ones), I was unequivocally in support of the mobilization. Nonetheless I was taken aback by a request to contribute even nominally to an effort to buy bottles of water for what turned out to be, according to some estimates, more than 20,000 people.
Certainly there are other ways—ecologically sustainable and less expensive ones—to provide water for such a multitude. How, why, and to what effects bottled water became the preferred way to do so for myriad people and places far beyond a single event in Phoenix is the focus of Elizabeth Royte’s powerful and compelling book, Bottlemania: Big Business, Local Springs and the Battle Over America’s Drinking Water.
I’ve never been a fan of bottled water, considering it ecologically damaging—in the United States alone 30-40 million single-serve bottles per day end up as litter or in landfills—and economically foolhardy, another capitalistic trick to con us into purchasing something from profiteers that we don’t shouldn’t have to. But as Royte powerfully illustrates, the increasing commodification of drinking water is far more complex, and dangerous, than at least I appreciated.
Until recently, the sale of single-serve bottles of water was rare. While the United States had regional bottled water companies as early as the nineteenth century, such entities mainly supplied homes and offices with large containers of the life-sustaining liquid (for water coolers, for instance). This situation began to change in the 1980s with the entry of Perrier into the U.S. market and its successful television advertising which stressed that a little luxury—a bottle of the French water—was available to everyone.
Other companies, like Evian and Vittel, followed, employing the likes of Madonna and fashion models, to help equate bottled water with personal health, fitness, and glamour. That, combined with the invention of polyethylene terephthalate (PET) plastic—which made water easily portable—helped the U.S. bottled-water industry boom: between 1990 and 1997 its annual sales increased from $115 million to $4 billion. (By 2006, the figure was $10.8 billion; globally bottled water’s income was $60 billion.)
This dramatic increase is the outgrowth of “one of the greatest marketing coups of the twentieth and…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(