Good Morning All,
ReGenesis:
...and so it was written that the value of the investment spectrum would rise for eight weeks and upon the ninth week of its generational adventure...it would rest.
It now appears that this market run reached a short term peak on May 7, the date of the "bank stress test" announcement. It would also seem likely that the sideways movement that predominated week 10 has acted as a refuelling stop for the next upward surge, so even though all the evidence is not yet in, a close above 920 on the S&P 500 would go along way toward reassuring this observor that the "go away in May" theory will be abrogated in 2009.
This eleventh week began with a furious upsurge that has since spent a day of recollection (the TSX was closed Monday, so yesterday was catch-up). In Asia, markets have also shown resilience, with India rising nearly 20% in two days. The ICCI bank (symbol IBN) has now tripled since mid March. In America the tech stocks, which had led the post-November recovery, took a much-needed break in week eight before showing some life late last week. So as previously mentioned...let's look for the confirmation as we are once again on the cusp of change. ..."
and chapters could turn into books"...
Jimmy again.
Wednesday, May 20, 2009
Wednesday, May 13, 2009
May 13th
Good Morning All,
Nine and a half weeks have passed since the March rally began, and after a really good run to the upside many stocks and the broad indexes are looking a little peaked. The tech sector (my particular favourite) has been undergoing some serious profit taking since the end of week eight, while agriculture and biotech stocks have continued to soar. Joining them, since the announcement of the bank stress tests of last week, have been a number of smaller bank operations and regional entities: CNB, COOP, FITB, SUPR and RF to name a few.
Many investors have remained on the sidelines throughout the rally as their disbelief in markets has been coloured by their reading of current economic headlines. I will not argue the point with the doomsters, beyond mentioning that stock and commodity markets traded to all time highs during 2007 in the face of dire long-term predictions by a few who knew that housing prices had peaked in 2005, and that bank asset statements were fundamentally flawed. It would appear to this observer that a 14,000 DOW or TSX was far riskier than the 6,500 levels we so recently visited. Now we are listening to the many....who don't know dick.
I have written of a five- to eight-week rally that would go away in May for a little while before it resumed its upward course to a 1050-1150 S&P mid-summer high. We have now passed the eight week window and a sideways correction has taken hold; the question before us "is how long will this last and how deep will the move be?" This conundrum cannot be answered with great conviction based on fundamentals at this stage, so we will have to fall back on technicals. For this I will rely on moving averages and David Nichols' "Fractal Report" wherein he states that a breaking close below 893 on the S&P500 would create a short term sell signal. I think this could take us to the 790 level, thereby recreating yet another generational opportunity. If, on the other hand, markets hold and then trade above 930 on this index, the race upward will resume and the momentum trade will be bullish.
Commentary to come at another time.
"If I could just get it on paper, I'd tell you what I think I did." Jimmy Buffett
Nine and a half weeks have passed since the March rally began, and after a really good run to the upside many stocks and the broad indexes are looking a little peaked. The tech sector (my particular favourite) has been undergoing some serious profit taking since the end of week eight, while agriculture and biotech stocks have continued to soar. Joining them, since the announcement of the bank stress tests of last week, have been a number of smaller bank operations and regional entities: CNB, COOP, FITB, SUPR and RF to name a few.
Many investors have remained on the sidelines throughout the rally as their disbelief in markets has been coloured by their reading of current economic headlines. I will not argue the point with the doomsters, beyond mentioning that stock and commodity markets traded to all time highs during 2007 in the face of dire long-term predictions by a few who knew that housing prices had peaked in 2005, and that bank asset statements were fundamentally flawed. It would appear to this observer that a 14,000 DOW or TSX was far riskier than the 6,500 levels we so recently visited. Now we are listening to the many....who don't know dick.
I have written of a five- to eight-week rally that would go away in May for a little while before it resumed its upward course to a 1050-1150 S&P mid-summer high. We have now passed the eight week window and a sideways correction has taken hold; the question before us "is how long will this last and how deep will the move be?" This conundrum cannot be answered with great conviction based on fundamentals at this stage, so we will have to fall back on technicals. For this I will rely on moving averages and David Nichols' "Fractal Report" wherein he states that a breaking close below 893 on the S&P500 would create a short term sell signal. I think this could take us to the 790 level, thereby recreating yet another generational opportunity. If, on the other hand, markets hold and then trade above 930 on this index, the race upward will resume and the momentum trade will be bullish.
Commentary to come at another time.
"If I could just get it on paper, I'd tell you what I think I did." Jimmy Buffett
Thursday, May 7, 2009
May 7 2009
Good Morning All,
Markets have continued to soar well past the breakout number of S&P 870 and brought us closer to yet another resistance level in the 940's. The release of the delayed "stress test" results will take place at the close of business today and this much discussed news may well be used as an excuse for profit taking. Contrarily it may also be used as a starting point for my much vaunted "blow off" rally. The question will be answered shortly, so we will watch today's action with great interest.
As readers are aware, the enclosed list was first published last November/December but it is not a complete view of my suggestions. There have been and continue to be countless other plays, the most important of which are sector ETF's. In the U.S. the FAS and FAZ best represent the bull and bear financials, while the TNA and TZA accomplish the same thing for the small caps.
Commentary
Just a brief mention on the Rove/Cheney view that torture was not just an acceptable practice but an effective one. In the post WW ll period, the Nuremberg trials did not try privates and non-commissioned officers; they went after those who developed and orchestrated the policies of the" holocaust". We are not suggesting that the deeds are similar, even though 4 million displaced Iraqis might disagree; we simply wish to point out that the only people doing time for the crimes in Abu Ghraib and other locations have been the foot soldiers. Those who rewrote the U.S. Constitution have gotten off scot free.
One of the worst decisions ever made by an American President was Gerry Ford's pardon of Richard Nixon; this pardon did not heal America; the wound it left has since festered into the manifestations most recently seen in the Bush administration...we can do anything we like because we will be pardoned....This is precisely why Obama needs to convene a bipartisan investigative committee....this present "reverse Nuremberg" must not be allowed to continue.
And while I am on my anti-libertarian rant...what is wrong with the fact that the wealthiest 2% of Americans pay 80% of the income tax collected; after all they own 80% of the wealth. See the list below and you may join them.
Markets have continued to soar well past the breakout number of S&P 870 and brought us closer to yet another resistance level in the 940's. The release of the delayed "stress test" results will take place at the close of business today and this much discussed news may well be used as an excuse for profit taking. Contrarily it may also be used as a starting point for my much vaunted "blow off" rally. The question will be answered shortly, so we will watch today's action with great interest.
As readers are aware, the enclosed list was first published last November/December but it is not a complete view of my suggestions. There have been and continue to be countless other plays, the most important of which are sector ETF's. In the U.S. the FAS and FAZ best represent the bull and bear financials, while the TNA and TZA accomplish the same thing for the small caps.
Commentary
Just a brief mention on the Rove/Cheney view that torture was not just an acceptable practice but an effective one. In the post WW ll period, the Nuremberg trials did not try privates and non-commissioned officers; they went after those who developed and orchestrated the policies of the" holocaust". We are not suggesting that the deeds are similar, even though 4 million displaced Iraqis might disagree; we simply wish to point out that the only people doing time for the crimes in Abu Ghraib and other locations have been the foot soldiers. Those who rewrote the U.S. Constitution have gotten off scot free.
One of the worst decisions ever made by an American President was Gerry Ford's pardon of Richard Nixon; this pardon did not heal America; the wound it left has since festered into the manifestations most recently seen in the Bush administration...we can do anything we like because we will be pardoned....This is precisely why Obama needs to convene a bipartisan investigative committee....this present "reverse Nuremberg" must not be allowed to continue.
And while I am on my anti-libertarian rant...what is wrong with the fact that the wealthiest 2% of Americans pay 80% of the income tax collected; after all they own 80% of the wealth. See the list below and you may join them.
Monday, May 4, 2009
May 4 edition
Good Morning All,
Commentary
Just pretend for a moment that you had been taking a vacation on the proverbial planet of choice these past ten years, and upon returning you opened the Wall Street Journal and tuned in your new flat screen TV to CNBC or the Fox News Network. Wow, you would have to think....what kind of moron is this Obama guy. In just a little over 100 days he has not only destroyed the world economy, he has set about persecuting hard working, innocent, underpaid BANKERS and fully competent auto executives. Worse still, he is running up huge deficits and blaming the previous administration for his "inherited" problems. And soon he might even convene an investigative committee on the conduct of something called "the war on terror".
I am aware that most of the people who bother to read this letter are not members of the extreme right, although some of you poor souls may remain Republican apologists; nor would I suspect that many of you subscribe to the absurdities of libertarianism, an ideology that ranks behind anarchism in my less than humble view. With this in mind, let us appreciate the dilemma that faces those who must wield power within America and upon the international stage. Let us also understand that it will not be failed ideology (oxymoron) that will provide new and vital solutions to this unique situation...but a pragmatic application of high intellect and good judgement.
Markets
There is no such thing as a single market bottom. Techs and Agri stocks had theirs way back in November, whereas mines, oils, banks, materials and other sectors appear to have found depth at various times during the first quarter of this year. Indexes, on the other hand, seem to have put it all together on March 9th, the point from which our now eight week old rally began.
So as we enter week nine and the month of May, it might be wise to retrieve caution from the wind. There remains a strong likelihood that Friday's close above 875 on the S&P 500 could lead to a fast acceleration toward 950 before Thursday's "bank stress announcement", but a STRAIGHT run to my summer target between 1050 and 1150 seems less probable. Discipline suggests a few weeks of "go away in May" declines should take hold late this week or early next. Low volumes are fast becoming an issue and require monitoring.
"Life and ink, they run out at the same time, or so said my old friend the squid" Jimmy Buffett
Commentary
Just pretend for a moment that you had been taking a vacation on the proverbial planet of choice these past ten years, and upon returning you opened the Wall Street Journal and tuned in your new flat screen TV to CNBC or the Fox News Network. Wow, you would have to think....what kind of moron is this Obama guy. In just a little over 100 days he has not only destroyed the world economy, he has set about persecuting hard working, innocent, underpaid BANKERS and fully competent auto executives. Worse still, he is running up huge deficits and blaming the previous administration for his "inherited" problems. And soon he might even convene an investigative committee on the conduct of something called "the war on terror".
I am aware that most of the people who bother to read this letter are not members of the extreme right, although some of you poor souls may remain Republican apologists; nor would I suspect that many of you subscribe to the absurdities of libertarianism, an ideology that ranks behind anarchism in my less than humble view. With this in mind, let us appreciate the dilemma that faces those who must wield power within America and upon the international stage. Let us also understand that it will not be failed ideology (oxymoron) that will provide new and vital solutions to this unique situation...but a pragmatic application of high intellect and good judgement.
Markets
There is no such thing as a single market bottom. Techs and Agri stocks had theirs way back in November, whereas mines, oils, banks, materials and other sectors appear to have found depth at various times during the first quarter of this year. Indexes, on the other hand, seem to have put it all together on March 9th, the point from which our now eight week old rally began.
So as we enter week nine and the month of May, it might be wise to retrieve caution from the wind. There remains a strong likelihood that Friday's close above 875 on the S&P 500 could lead to a fast acceleration toward 950 before Thursday's "bank stress announcement", but a STRAIGHT run to my summer target between 1050 and 1150 seems less probable. Discipline suggests a few weeks of "go away in May" declines should take hold late this week or early next. Low volumes are fast becoming an issue and require monitoring.
"Life and ink, they run out at the same time, or so said my old friend the squid" Jimmy Buffett
Tuesday, April 28, 2009
April 28th Edition
Good Morning All,
Just when we thought that a certain species had left Washington and parts of Wall Street, it appears their progeny has surfaced in the form of a nasty 'flu bug. Thusly (sic) we began week eight of the tremendous post disaster upswing, one which many have incidentally dismissed as "just a rally in a bear market". Call it what you will, I have enjoyed this generational opportunity and I hope that at least some of you have participated either through my suggestions or those of your own derivation.
Although I do not pretend to be either a medical doctor or virologist, I can still count and read, leading me to conclude (hopefully I might add) that ten days from now the news networks will be otherwise occupied. As for the market effect of the "swine 'flu", cynic that I am, I believe it has provided yet another trading opportunity. We shall begin the day in a downward path and look towards a Tuesday turnaround as we head toward the government release of the stress tests on May 4. Techs continue to lead the way, look for the S&P 500 to broach 1020 by summer, after a May pullback.
Just when we thought that a certain species had left Washington and parts of Wall Street, it appears their progeny has surfaced in the form of a nasty 'flu bug. Thusly (sic) we began week eight of the tremendous post disaster upswing, one which many have incidentally dismissed as "just a rally in a bear market". Call it what you will, I have enjoyed this generational opportunity and I hope that at least some of you have participated either through my suggestions or those of your own derivation.
Although I do not pretend to be either a medical doctor or virologist, I can still count and read, leading me to conclude (hopefully I might add) that ten days from now the news networks will be otherwise occupied. As for the market effect of the "swine 'flu", cynic that I am, I believe it has provided yet another trading opportunity. We shall begin the day in a downward path and look towards a Tuesday turnaround as we head toward the government release of the stress tests on May 4. Techs continue to lead the way, look for the S&P 500 to broach 1020 by summer, after a May pullback.
Monday, April 20, 2009
April 20th Edition
Good Morning All,
During the heady pre inauguration days, I promised you a broad market rally that would last five to eight weeks and would be led by the technology sector. Well as things turned out, the predicted rally did not immediately make itself present, as the February pullback quickly proved by taking indexes significantly lower. It was only after this fear and loathing of all things investment related returned, that markets prepared themselves for the delayed upswing. On March 9th the fun began and the first week of the move took many by surprise. After four weeks, pundits were reporting that this had been the strongest such move since 1933; and after six weeks, the most powerful since 1938. For all but the "historically challenged" it need not be noted that these past events took place during the "Great Depression".
As we now enter week seven of our suggested time frame, it may be time to review what prompted the move and to question its strength and sustainability. First and foremost we must repeat the oldest of market truisms. "when everyone is bearish it means they have already sold and hold cash, when everyone is bullish, they hold stock and little cash". The former are potential buyers, the latter will one day be sellers. Remember also, that CASH is never a permanent, or even a near permanent position for investment managers.
Secondly, the market was waiting for a resolution to the "bad bank" problem; the government actions for which proved to be the March catalyst. These were the conditions that turned market sentiment and the follow-through of weeks two and three provided the all important momentum change. So what now?
As we begin week seven, the same old worries seem to be resurfacing, even though earnings reports have been less onerous than most thought. If it can be said that the fear of "systemic risk", ie. the bank failures, has been either mitigated or eliminated by time and timely actions on the part of government agencies....then the only thing left to worry about is a recession, and frankly speaking ...recessions do end. Thus today's early decline, or rout if you like, is most probably a serious bout of profit taking after the six week, nearly uninterrupted, runup. It may prove to be more than that but don't look for a retest of the old lows because we have come a long way. A careful view might be to step aside until the smoke clears, a more adventurous one might involve staying around for a blow off rally up to 1020 S&P 500.
Fear not , I will not reprint my stock list today...although you might wish to refer to it.
Commentary:
The recent media attention given to Iran, North Korea, Cuba and Venezuela would be humerous if it were not so serious to the radical right. NONE of these countries pose a threat to the United States. The combined might of China, Japan, Europe, Russia and the United States will oppose any perceived aggression of which the worst of them may dream. President Obama has taken great steps towards unifying this alliance of the powerful; and will be so accredited by history.
The most present danger to America and its President lies not from without.....but from within.
During the heady pre inauguration days, I promised you a broad market rally that would last five to eight weeks and would be led by the technology sector. Well as things turned out, the predicted rally did not immediately make itself present, as the February pullback quickly proved by taking indexes significantly lower. It was only after this fear and loathing of all things investment related returned, that markets prepared themselves for the delayed upswing. On March 9th the fun began and the first week of the move took many by surprise. After four weeks, pundits were reporting that this had been the strongest such move since 1933; and after six weeks, the most powerful since 1938. For all but the "historically challenged" it need not be noted that these past events took place during the "Great Depression".
As we now enter week seven of our suggested time frame, it may be time to review what prompted the move and to question its strength and sustainability. First and foremost we must repeat the oldest of market truisms. "when everyone is bearish it means they have already sold and hold cash, when everyone is bullish, they hold stock and little cash". The former are potential buyers, the latter will one day be sellers. Remember also, that CASH is never a permanent, or even a near permanent position for investment managers.
Secondly, the market was waiting for a resolution to the "bad bank" problem; the government actions for which proved to be the March catalyst. These were the conditions that turned market sentiment and the follow-through of weeks two and three provided the all important momentum change. So what now?
As we begin week seven, the same old worries seem to be resurfacing, even though earnings reports have been less onerous than most thought. If it can be said that the fear of "systemic risk", ie. the bank failures, has been either mitigated or eliminated by time and timely actions on the part of government agencies....then the only thing left to worry about is a recession, and frankly speaking ...recessions do end. Thus today's early decline, or rout if you like, is most probably a serious bout of profit taking after the six week, nearly uninterrupted, runup. It may prove to be more than that but don't look for a retest of the old lows because we have come a long way. A careful view might be to step aside until the smoke clears, a more adventurous one might involve staying around for a blow off rally up to 1020 S&P 500.
Fear not , I will not reprint my stock list today...although you might wish to refer to it.
Commentary:
The recent media attention given to Iran, North Korea, Cuba and Venezuela would be humerous if it were not so serious to the radical right. NONE of these countries pose a threat to the United States. The combined might of China, Japan, Europe, Russia and the United States will oppose any perceived aggression of which the worst of them may dream. President Obama has taken great steps towards unifying this alliance of the powerful; and will be so accredited by history.
The most present danger to America and its President lies not from without.....but from within.
Wednesday, April 1, 2009
April 1st Edition
Good Morning All,
.....and welcome to Financial Fool's Day, you know, the one wherein the G20 leaders all meet to figure out who or what, and is or was, responsible for the mess we are in. Few of these present guys were present at the creation of our collective idiocy but fewer still were alert enough to either speak up or act as the debacle unwound. Either way, it is now up to their collective courage and intellect to solve the current problem and more important still, to put in place, proper and enforceable regulations that will (touch wood or G.W.'s head) prevent a future collapse from occurring....well at least diminish the chances of such.
Although there will be much finger pointing during the days to come, little of this activity will be of consequence; what will be important is the "collective" recognition that there are, and will forever be, people in every generation who believe in the creed so aptly stated in the 1987 movie Wall Street that "greed is good". I use this quote not just because it rings so very well, but also because it wonderfully captures the essence of the much ballyhooed "Reagan Revolution", a time during which the seeds of our crisis were sown. The Reagan legacy was all about smaller government and deregulation....the market place, Republicans believed then and continue to espouse now, is the solution to every problem, as it will level the playing field for all, creating prosperity across the globe. Ah the joys of trickle down economics.. eh !
I continue to abuse myself by spending far too much time watching the ideologues on CNBC, and despite the now famous send up by comedian, cum political commentator Jon Stewart, they remain largely unabashed by such criticism. One of theirs' and Wall Street's most interesting rants seems to surround the concept that Main Street, the Democrats and a number of other newly ordained populists are indulging themselves in a form of class warfare. Wow, what a concept that would be....or come to think of it...isn't that precisely what these guys have been waging against the disappearing middle class, lo these many years.
Markets finally staged my long predicted three week rally and after a Monday pause for recollection, moved up on Tuesday. We may spend a little time in the new trading range but the mid term bias should be upward, despite bad economic news and the coming earnings data. When markets go up in the face of bad news, they are showing a clear sign of seller exhaustion. This may only be a "bear market rally" but as history shows, these events can be both broad ranging and profitable. Intel (under 15) yields 3.8% and has no financial problems while Alcoa at sevenish has many, but trades for nearly nothing at these levels.
There are now web sites that proclaim "let the revolution begin" a sure sign of the times. I will however stick to my more moderate mantra; "let's get on with the renaissance".
.....and welcome to Financial Fool's Day, you know, the one wherein the G20 leaders all meet to figure out who or what, and is or was, responsible for the mess we are in. Few of these present guys were present at the creation of our collective idiocy but fewer still were alert enough to either speak up or act as the debacle unwound. Either way, it is now up to their collective courage and intellect to solve the current problem and more important still, to put in place, proper and enforceable regulations that will (touch wood or G.W.'s head) prevent a future collapse from occurring....well at least diminish the chances of such.
Although there will be much finger pointing during the days to come, little of this activity will be of consequence; what will be important is the "collective" recognition that there are, and will forever be, people in every generation who believe in the creed so aptly stated in the 1987 movie Wall Street that "greed is good". I use this quote not just because it rings so very well, but also because it wonderfully captures the essence of the much ballyhooed "Reagan Revolution", a time during which the seeds of our crisis were sown. The Reagan legacy was all about smaller government and deregulation....the market place, Republicans believed then and continue to espouse now, is the solution to every problem, as it will level the playing field for all, creating prosperity across the globe. Ah the joys of trickle down economics.. eh !
I continue to abuse myself by spending far too much time watching the ideologues on CNBC, and despite the now famous send up by comedian, cum political commentator Jon Stewart, they remain largely unabashed by such criticism. One of theirs' and Wall Street's most interesting rants seems to surround the concept that Main Street, the Democrats and a number of other newly ordained populists are indulging themselves in a form of class warfare. Wow, what a concept that would be....or come to think of it...isn't that precisely what these guys have been waging against the disappearing middle class, lo these many years.
Markets finally staged my long predicted three week rally and after a Monday pause for recollection, moved up on Tuesday. We may spend a little time in the new trading range but the mid term bias should be upward, despite bad economic news and the coming earnings data. When markets go up in the face of bad news, they are showing a clear sign of seller exhaustion. This may only be a "bear market rally" but as history shows, these events can be both broad ranging and profitable. Intel (under 15) yields 3.8% and has no financial problems while Alcoa at sevenish has many, but trades for nearly nothing at these levels.
There are now web sites that proclaim "let the revolution begin" a sure sign of the times. I will however stick to my more moderate mantra; "let's get on with the renaissance".
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