Sunday, February 26, 2012



The Commerce Department said Friday that new-home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 321,000 homes. That followed four straight months of gains in which home sales rose 10 percent. The gains came after the government upwardly revised October, November and December's figures. December's annual sales pace of 324,000 was the highest in a year. Even with more sales, just 304,000 new homes were sold in 2011 -- the fewest on records dating back to 1963. And new homes are selling well below the 700,000-per-year rate that economists equate with healthy markets. But - not to worry just read Bloomberg as they reported the figures this way "Purchases of new homes in the U.S. exceeded forecasts in January after climbing a month earlier to a one-year high, more evidence the housing market is stabilizing. " graphs - RTTNews

The National Association of Realtors said on Wednesday existing home sales increased 4.3 percent to an annual rate of 4.57 million units last month, the fastest pace since May 2010. Sales were up across all four regions of the country, with the West recording the biggest gain -- an 8.8 percent increase.

As a result of ongoing geopolitical tensions (e.g. Iran) as well a spotty but generally improving global economy, the price of crude oil continues to trend higher. Since the end of September, the cost of one barrel of crude oil has increased by over $30. With oil prices trending higher, it is not all that surprising to find that gasoline prices are following suit. The average US price for a gallon of unleaded is up $1.87 per gallon since the financial crisis low. Over the past two months, gasoline prices have resumed their upward trend with an increase of $0.35 per gallon. There a couple points of interest from today's chart. For one, Middle East crises are often associated with major swings in the price of gasoline. Also, gasoline price spikes have often occurred prior to an economic downturn. In the end, gasoline prices have rarely been higher than current levels and considering the fragility of the current global economy, gasoline/oil prices are something to watch going forward.

This past week's top sectors.

This past week's indices - the small caps were slightly lower.

The monthly cash charts show that at the moment we are sitting at the high for the month across the board after a 5-month climb, except for oil which took a 2-month breather. The NASDAQ has broken above its multiyear highs while the Dow having broken last year's high is still under the high from 2007. The general market volume has not increased significantly and most traders look to volume as a demonstration of strength so are still treating this excellent rally as questionable so have missed much of these gains. Perhaps if the S&P 500 will move over last year's high and some volume will come in it will encourage more buying. You can see however that it's top Bollinger band is at 1425 and if reached may put at least a short-term stop to the rally. Oil is reaching its high from last year which is also right at the top Bollinger band at $115.

By midweek as seen on this 60 min chart, the indices had dropped to the lower Bollinger band as seems to happen every week, and became a good buying opportunity as they all then ran to the top Bollinger bands.

The monthly Dow chart a little bit longer term overview to show the look of the breakout so far and the declining volume each month.

The daily chart with RSI at 62 so not overbought and the top Bollinger band is at 13,179.

This 10 minute renko chart shows the morning dip on Thursday and the rise from about 9:30 and then the range the following day.

This Dow futures chart having short term Fibonacci projections on the right shows it has remained above the 161.8% projection. It now has at least a 60% chance of reaching the longer term 127.2% which is at 13,313.

This shorter term Dow futures chart with Fibonacci projections as shown. So the next trade above that 13,000 level may run right up to the 161.8% as shown.

Understandably with the rise in gasoline prices the transports have been falling this past week.

There was some movement into utilities this week as they bounced on Friday but are still contained in this range established in November.

The NASDAQ monthly also shows, decreasing volume though RSI is just at 63 and when it reached a high in 2007 RSI was over 70. Note that the histogram has just turned positive

The weekly chart with its 12 point gain.

On the NASDAQ 60 min chart there was a very brief touching or crossing of the moving averages but they remain on a buy and now one can use this lower channel trendline as a cautionary stop.

You may remember that the NASDAQ summation index is not terribly fast to respond so can have some whipsaws but do note that despite the new highs this week they have crossed over which is a warning and must be reversed pretty soon as often these crossovers can result in multi-week or month moves.

The past week it was a short one and there wasn't a big gain in the and this is but noticed that the number of new highs as shown on this moving average have not really increased in the past week. On the positive side the number of new lows have also not increased.

The NASDAQ 100 futures having broken above the 2600 level now has short term Fibonacci projection levels as shown.

Being a short term 15 min chart the moving averages can be a volatile but note that on Thursday the crossover came as the price moved above the downtrend line which worked out for a short term gain as it is inside this up trending parallel channel.

VIX again closed lower ending the week at 17.31.

The semiconductor index in a pretty tight range moving up and down closed down less than 2% remains above the trendline.

The New York stock exchange index on the top continued higher though in the bottom we see the number of new highs minus new lows have not turned back up significantly.

85% of all stocks on the New York stock exchange are now trading over their 50 day moving average.

The S&P 500 lazy the chart shows the price level back up to 2011 highs with the weekly RS I at 63. It is been a good run since did by at 1208. We updated the point gains from the summer of 2009 and generally the moves have been all along enough in duration that there was only one losing trade and the total amount is about 725 points or $36,000 per contract.

Last week two weeks ago we saw a test of the lower parallel channel trendline and again this week as well and the close was just at or under it. If we don't get a rally soon it will remain under it which doesn't necessarily mean a big drop but is a caution when it moves out of a channel. It's been in for two months.

This S&P 500 ultra long from our stock charts public page can also be used as an general market indicator even if you don't trade it. Watching the parallel channel trend lines and moving averages crossovers can spot the net potential points to take profits or to reverse trades.

On the ultra short side this would be a long trade if we do get a decent pullback.

As we saw with the Dow futures here the S&P 500 futures with some short term Fibonacci projections overhead that would come into play with a close over 1370.

A longer view of the monthly Russell 2000 chart and its three month in-a-row gains and about 42 points to go to get back to the all-time high.

The daily chart shows the tight range it is been in and overhead resistance.

And this Russell 60 min chart shows the February range.

The banking index has also been a non-starter lately had now is back close to its 20 day moving average.

With the price of gas going higher it was rather expected that retail may start some declines as we have often heard retailers speak of lower sales during times of high gasoline prices.

The Dow Jones world stock index gained two. One percent this week closing very near the underside of this formerly broken trendline which may provide resistance now.

The FTSE did gain half a percent this week and is a bit above the recent range but has yet to break this significantly.

The Shanghai exchange remained strong adding 3 1/2% this week making clearly above the more recent congestion and taking RSI back over 50. This is a positive move for the other markets in general with resistance now at the 50 week EMA which is near the top Bollinger band.

A little bit lower than the 50 week EMA above is the 200 day EMA at 2483 and this may give resistance as it did last summer. RSI on the daily chart is very near to 70.

We have often shown with stocks that as they approach a moving average and may have trouble breaking over it. They instead use the trick of just gapping up over resistance. We can see that our commodity ETF did just that this week, gapping over the 200 week EMA and closing the week up 3.9% on increased volume.

Crude oil which last week closed just act the downtrend line ran over at closing at $109. If it can hold the trendline been the logical first target will be the $114 level from last year.

This is a closer view on the weekly chart of oil. It is above the top Bollinger band but if it takes a bit of time it can push-up the bands like it did last year starting in late February. It does however need higher value as it had last time.

Here a gold futures chart with short term Fibonacci levels on the right and also the Fibonacci retrace levels from that 2011 high with the 78.6% retrace at 108, which may also give intermediate resistance.

Natural gas made that low six weeks ago with a quick test the following week as RSI had gone under 30 for a longer-term position this area is logical as the stop is nearby and if it is the start of the longer-term reversal obviously would be a good entry point. The histogram is only slightly negative and with only a little movement higher we will see a MACD crossover.a

Gold Closed above the 1767 resistance and now has it at 1804.

Here just a closer view of that gold. Of those gold levels.

On this gold futures chart you see the close just under the 61.8% retracement level.

Shorter-term gold futures shows the move to the 127.2% projection which gave enough resistance that it's been consolidating below that level. A close back above their could take it to the 161.8% as shown.

This gold ETF closed right at that top parallel channel line with some increase in volume but not is much as earlier in the year.

The GDX candlestick 60 min chart dropped below its 20 day MA but has held above the 50. Though this is short term as the Williams indicator above and the RSI indicator below their top lines.

As you know the GTX mechanical had shifted back to buy and each time when the signals change. We hope the trend lasts so we don't have whipsaws which eats away at the buildup gains and less we are taking partial profits. Along the way.

The silver monthly chart just points out the close right at resistance levels. However you'll note this move in the last couple of months has kept RSI above 50 and has moved the Williams indicator from just slightly below.

The silver futures chart with a break above the downtrend line but remains still under horizontal resistance. A close above 36 would then give a better than even odds that it will move to the 127.2% Fibonacci projection at $38.37.

It would be nice if silver does break above those levels as there is at least a six dollar gained now on our mechanical silver trade which went long at the turn of the year.

Last week copper looked cautionary as it closed below its 50 week EMA though it did put in a good 3.5% bounce this week.

Platinum however did break cleanly above resistance rising 5.3% this week.

Palladium was up 3.5% but it has not broken to new highs of the year. Do note that it did have increased volume this week.

The euro futures continued a rally closing above the 50% retracement towards its high from last October. It is now near the downtrend line worth watching for a break or a failure there.

If the US dollar were to rally the market may decline. Note that the Williams indicator is now below 80 and in past rallies it was at a similar location. Also notice that RSI though is at 37 and in the past it went below or near 30 before some major rallies. The dollar closed at 78.35 which is one penny under the earlier low this year which started a small rally. The other price to note is 78, as that is the 200 day EMA.

And the daily dollar futures charts looking quite week though Williams is oversold but RSI not so much. It is however just now under the lower Bollinger band. So watch as mentioned above for any quick trips to 78 is that may be a short term balance area.

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Friday, February 24, 2012


Good Morning. One of the most interesting/difficult aspects of trying to manage money in the stock market is the fact that the game is always changing. And I'm here to say that one of the most dramatic changes I've ever witnessed in my 24+ years in this business has occurred in the past four months. In short, never before has the importance of being flexible been more evident as this market morphed from a violent, bucking bronco that moved hundreds of points on the latest headline or rumor out of Europe into a steady-Eddie, Energizer Bunny.

Ever since I started managing "other people's money" in 1987, I've felt it was important to have a investment process that was repeatable. And for me the first step in the process has always been to identify the environment that you are dealing with. The thinking is that if you know what type of beast you are doing battle with; you might have a shot at choosing the right weapon with which to fight.

For example, investors have likely learned (the hard way) that utilizing the same pedal-to-the-metal approach that was all the rage in the late 1990's was a recipe for disaster during the ensuing Tech Bubble Bear that took a massive toll on tech and growth stocks from 2000-2003. So, while margined dotcom's were the weapons of choice in 1999, it was cash, value stocks, and bonds that made for better holdings for the next three years.

In looking at the current market environment, it is clear that the market environment has changed. The violence that was so pervasive from late-July through mid-December is gone. In its place is a relentless march higher with nary a hiccup seen over the past ten weeks. From an historical perspective, we saw the bull that began on March 10, 2009 end in a violent fashion last August when what will be technically defined as a cyclical bear market occurred. And since the S&P has now moved up more than 24% from the October low, it is important to recognize that we've now got a cyclical bull market on our hands.

So, does this mean we can start doing something else besides watching every headline out of Europe, China and the Fed? And can we perhaps just let our chips ride this wonderful wave for a while? Or will the current joyride end with a bang once Dow 13,000 is eclipsed?

In all honesty, I'm not sure (again, I'm sorry to report that my crystal ball is in the shop). What I can say is that the average cyclical bull market that occurs within the context of a secular bear cycle (the one that began in 2000), tends to last about a year. And in terms of what we might be able to expect out of this bull move - from a big-picture standpoint - it is worth noting that the median gain for cyclical bulls within secular bears is something north of 75% and the average gain is over 105%.

But, before you run out and start buying UPRO's on margin, we should remember that history is only a guide. If one looks closely at the data, you will find that the actual returns for all the cyclical bulls that occur within a secular bear are all over the map. For example, since 1960 there have been five cyclical bulls with returns greater than 85% (two over 100% and one over 290%) and six bulls that sported returns of less than 35%. Thus, given that this market changed costumes so quickly and that there are still a few macro issues out there, one could argue that the current bull may not make it to the mean or median columns.

However, I like to stick with what is instead of worrying about what could be. Therefore, we need to recognize that the market has changed from a news-driven bear to a new cyclical bull. And the key going forward will be to try and identify anything to indicate that our current bull is about to make yet another quick costume change

Wednesday, February 22, 2012


Good Morning. I continue to get questions as the reason behind the current run for the roses in the stock market. What about Greece, they ask. Aren't there huge problems with the bailout deal that was finally arranged on Tuesday? What if the private bond holders don't go along with the debt swap? Isn't there a risk that the Germans won't approve the deal? And won't we eventually see a default? What about the rest of Europe? And what about those big problems in Portugal? And on and on and...

Unfortunately, the answers to the questions make those asking them even more befuddled. Yes, there are problems with the bailout deal. Yes, there is a risk that the private bond holders might just walk away after taking it in the shorts yet again. Yes, there is the risk that the Germans and Fins may vote no when asked to approve the money for Greece's bailout loans. And yes, there are other debt bombs lurking in Europe and all over the world, for that matter.

However, the point I try to make to those asking these very good questions is that the focus on the stock market is constantly moving. Sure, the questions are valid, I say. But, I proceed to add that the stock market has moved on - and so should they. It's not that the issues at hand don't matter; they do - just not to the guys and gals running the big money around the world.

If you've been paying attention, the action in the stock market for the better part of the past three months has made this clear. No longer does a rumor out of Nicolas Sarkozy's office move the market 1%. No longer does the German's insistence on more austerity ruin the mood of a good day. Nope, it appears that the days of the Dow moving hundreds of points in a matter of minutes based on news out of Europe may be behind us.

In order to drive the point home, I toss in the idea that the big declines seen in the stock market in 2010 and again in 2011 were the result of worries that a credit event in Europe would create another "Lehman moment" and put the global banking system at risk. So, given that there is no imminent risk of a credit event and that the banks of the world are now stronger than they were last year (and the year before that), stocks have moved on to more mundane things like earnings, valuations, economics and the rest of the basic fundamentals.

My final point to those seeking an opinion or two from yours truly is that the big money is accumulating stocks - and that perhaps they should be doing the same (but only on dips, of course). Remember, hedge funds, which are arguably the biggest driving force in the market these days, came into 2011 underinvested. I saw a report Tuesday that as of the end of November, hedge funds held about 50% less equity exposure than normal (80% vs. 130%). And with the probability of the much feared Lehman moment dwindling this year, the hedgies appear to be moving their equity exposure back up towards more normal levels. According to Hedge Fund Research, after the third worst year on record in 2011, hedge funds are making money again this year - not quite as much as the market mind you, but the momentum of returns seems to be building.

Does this mean that stocks won't encounter a pullback anytime soon or that the current relentless move higher will continue for weeks to come? Of course not. Stocks are extended and are certainly ripe for a setback in the near-term. However, unless there is something meaningful behind the next pullback in stock prices, investors who find themselves underinvested may want to think about doing what the hedgies are doing - moving on.

Friday, February 17, 2012


Good Morning. During the majority of last year, it seemed that all (yes ALL) the news was bad. Greece was surely going to default, which was going to trigger vast unknown quantities of CDS, which, this time, would tank the global banking system, which, in turn, would send us back to the middle ages bartering for goods and services with grains and livestock, and protecting our homes with guns. In a nutshell, the news flow and the macro outlook was a nightmare as no one could imagine anything positive ever happening again.

As I recall, even if Greece was somehow spared and a "messy default" avoided, the domino effect from the rest of the PIGIS would take over and the world as we know it would cease to exist. And if by some off chance the defaults could be avoided in Europe, then the recessions resulting from the mess this crisis had created would surely plunge even the best economies of the world into something that would make the Great Depression in the U.S. look like a cake walk.

As I have written any number of times over the past six months, the negativity had become so thick you probably couldn't cut it with even the sharpest knife. A pall of gloom engulfed the markets and just about everybody on the planet knew we were doomed. It appeared that the leaders of Europe were powerless to fight the contagion that would surely spread throughout the world. And while politicians talked a good line about working together, it became apparent near the holidays that no other country was willing to buck up and lend the trillions needed to "save Europe."

However, as we were allowing our brains to be invaded by the pervasive negative feedback loop, one very simple fact was forgotten. You see, even during the worst of times, good things can occasionally happen. Although even the good news was ignored last year, this year appears to be a horse of a completely different color.

Thus far in 2012, the good news has come in bunches and from the strangest places such as the U.S. housing market (which to hear the bears tell it should be heading down still), corporate earnings, economic output, and yes, even the jobs market. To be sure, things are not peachy keen by any stretch of the imagination. But at the same time, things are FAR better than the doom that dominated the markets near the end of last year.

Thus, the most important lessons to be heeded in 2012 are: (1) Good things can happen - no matter how dark the night may appear, and (2) Investors simply must be flexible enough to change with the times (or at the very least, follow systems that can force them to adapt - even if they don't want to).

Am I saying that things are wonderful in the global economy and that we've embarked on a new secular bull market. Uh, no. But I am saying that when the market discounts the worst and then the sky doesn't actually fall (I know, I know, it's coming, just wait), again, good things can happen. Remember, the stock market is a discounting mechanism of future expectations. And right now, stock prices appear to be suggesting that the U.S. economy is growing, that the deal in Greece is going to get done, that the ECB DID know what it was doing with the LTRO, that there won't be a 'Lehman moment' in Europe, and that Apple may sell more of its products than anyone - including the late Steve Jobs - ever dreamed of.

The key point this morning is that something that everyone knows (such as how the world was going to end because Greece was going to default) isn't really worth knowing in the market. In short, by the time "everyone" knows what's going on, the market has already discounted the potential outcome. And then if something good actually does come along, traders scramble to get back on the right side of the macro view and an unstoppable melt-up ensues.

So, while stocks are indeed overbought and a pullback could occur at any time and for any reason, the fact that the S&P 500 is up +23.5% from its low means that according to the most common definition, this is a new bull market. And as such, one should be flexible enough to play the game accordingly. You never know, good things might just continue to happen.

Saturday, February 11, 2012


Hi ,

We have done a good job stockpicking this year !

Symbol CP Chng % Price Gain since 1/1/12 % Gain Since 1/1/12 Entry
DE 87.55 -0.38 -0.43 8.43 11% 79.12
CF 180.15 -5.18 -2.8 30.40 20% 149.75
POT 44.7 -1.17 -2.55 1.96 5% 42.74
CRM 128.44 2.83 2.25 24.26 23% 104.18
USG 13.99 -0.7 -4.77 3.45 33% 10.54
RIO 59.33 -1.42 -2.34 7.77 15% 51.56
FCX 44.94 -1.48 -3.19 6.67 17% 38.27
VALE 25.75 -0.45 -1.72 3.13 14% 22.62
SYMC 17.78 -0.24 -1.33 1.79 11% 15.99
GLW 13.6 -0.19 -1.38 0.35 3% 13.25
PTEN 17.98 -0.47 -2.55 -2.38 -12% 20.36
FXI 38.93 -1.16 -2.89 2.12 6% 36.81
NFLX 123.93 -0.91 -0.73 53.65 76% 70.28
SCCO 33.69 -1.14 -3.27 2.53 8% 31.16
PCL 39.18 -0.17 -0.43 2.11 6% 37.07
UBS 13.9 -0.55 -3.81 1.60 13% 12.3
LUK 29.18 -0.24 -0.82 5.72 24% 23.46
MAN 44.96 -0.87 -1.9 8.19 22% 36.77
BX 16.04 -0.55 -3.32 1.66 12% 14.38
LVS 51.59 -0.96 -1.83 7.90 18% 43.69
Short Avg 16%
2/11/2012 14:24:09

Tuesday, February 7, 2012

Sunday, February 5, 2012


New unemployment claims in the U.S. fell to a lower level than most experts had expected according to figures released by the Labor Department. For the week ending January 28, the DOL reported a seasonally adjusted level of 367,000 initial claims for unemployment. That marks a decrease of 12,000 from the previous week's revised figure of 379,000 - slightly higher than the 377,000 initially reported. graphs - RTTNews

Payrolls expanded by much more than economists had predicted in January, while the unemployment rate declined. The U.S. economy added 243,000 jobs in January, according to statistics released by the Department of Labor on Friday. Economists had expected an increase of 135,000

The report showed that the unemployment rate came in at 8.3 percent. Economists were looking for the jobless rate to hold steady at 8.5 percent

The Institute for Supply Management-Chicago Inc. said this week its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth. Economists forecast the gauge would rise to 63.

Orders to factories rose in December, supported by a rebound in business investment in capital goods. In addition, service companies grew at the fastest pace in 11 months in January as companies started hiring to keep up with rising demand. Factory orders rose 1.1 percent in December after gaining 2.2 percent in November, the Commerce Department reported Friday. For the year, total orders were up 12.1 percent after a gain of 12.9 percent in 2010.

The Institute for Supply Management said Friday that its index of non-manufacturing activity jumped to 56.8 percent in January from 53 percent in December. The survey's employment index soared to its highest level since February 2006. Any reading above 50 indicates expansion.

Friday, the Labor Department reported that nonfarm payrolls (jobs) increased by a significant 243,000 in January. This chart provides some perspective on the US job market. Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery (i.e. the end of 2001 to the end of 2007), job growth was unable to get back up to its long-term trend (first time since 1961). More recently, the number of nonfarm payrolls has been working its way higher but at a pace that is not fast enough to close the gap on its 1961 to 2001 trend. In fact, the current number of US jobs is still below its 2001 peak.

This past week's top sectors.

This past week's indices - the small caps gained the most.

The monthly charts are still looking quite bullish. The NASDAQ has broken to multi-year highs, the Dow not far from moving towards that 13,000 mark from 2010. If it breaks to the upside there it could also eventually test the 2007 highs at 14,200. The S&P 500 needs to move over 1380 and the Russell 2000 is nearing its all-time highs as well.

On the 60 min chart we see how bullish the indices have been, breaking out over the top band, going sideways and then running back up to it again. It is very bullish when they push the bands up in this way and you want to see that the Center Bollinger band holds on pullbacks.

A standalone view of the Dow monthly chart and the overhead challenge towards the 2007 high.

The weekly chart shows it just moving back inside the ascending parallel channel.

The daily shows how close it is to closing over the 2010 highs. The MACD is flattening out and the histogram rather flat. The RSI is close to overbought territory but when it made its 2010 high it was a bit over 70.

The 10 min renko chart shows the steep move up at the start of the day on Friday when the jobs report numbers came out. Then it stayed flat for most of the day.

There are two sets of Fibonacci projections on this two-day-per-bar Dow futures chart. The first projection based off the last dip had a 161.8% target that was reached on Friday. The longer term projection is based from the 2011 low and has the first 127.2% target at 13,313.

A closer view on the 120 min chart shows that big move and the breakout of trendline Friday morning and how the Fibonacci level was also R3 pivot and both together gave too much resistance to allow it to move higher

The transports moved up only half a percent this past week, still well under the top weekly Bollinger band.

Utilities stayed in a tight range right on dual moving averages.

The black chart monthly view of the NASDAQ showing that December volume was up over the November volume. It was not by a lot, but enough to help it along to close in this new territory by a bit.

And the weekly chart shows it about midway inside the parallel channel so plenty of room to move for a while. It is short term overbought but RSI also has room to run.

The moving average of number of new high son the Nasdaq made an impressive run to and slightly over the peak it hit in July. This is just what you want to see in a bull market.

The NASDAQ summation index is now almost 100 points away from its five day EMA as the index rapidly moved to new high levels.

The NASDAQ 100 closed right at the top Bollinger band So a bit of a pullback this week could be expected. You can see it's rapid rise this year has basically been pushing that band up. At 78 the RSI is short term overbought.

The daily NASDAQ 100 futures with two sets of Fibonacci projection levels both short and longer-term.

The volatility index closed the week at 17.

The semiconductor index is back over the trendline and shorter-term horizontal resistance.

The moving average of the number of new highs minus new lows on the NYSE (lower section) continued to climb and very near former resistance from February of last year. The NYSE itself however has broken above resistance.

89% of all stocks on the NYSE are now trading over their 50 day moving average. This is quite bullish though it is at levels where we often have begun some pullback in the past but it has can remain above these levels for a month or more.

The lazy S&P 500 is 136 points above the last buy and within pennies of the 1345 resistance level. RSI on this weekly chart is only at 61 so it has room to run.

The weekly chart shows it closing at its high and right at former resistance.

Here a closer view on a daily chart and you see it at the top Bollinger band with RSI over 70. Putting it in overbought territory short term.

On the 60 min chart RSI is also high but medium term it is only at about the center of this ascending parallel channel.

The S&P 500 ETF 2X long dipped to sell and below the channel for a couple of days and then switched back to a buy for February.

The S&P 500 futures chart showing both longer and short term Fibonacci projection levels if it breaks over the the 1357 resistance.

Here a 120 min chart with its move to R3 Pivot on Friday, which coincided with this 127.2% projection. In this timeframe, we see the 161.8% just over 1350.

The standalone Russell 2000 monthly chart showing its current relation to its all-time high set in 2011. The histogram in this timeframe is still slightly negative and the MACD is just about to cross over bullishly. If those happen, this could start a larger move on a breakout above the all-time high.

On the daily chart we see the close over the top Bollinger band with RSI over 70 so a candidate for an overbought pullback.

The move on Friday brought the Russell back up and over this 60 min parallel channel it has been in since mid December. Note that it also took it very close to the measured move of the inverse head and shoulders we pointed out in December

The 15 min Russell 2000 faster to respond, had a crossover on its MACD and RSI dropped back under 70 by the close on Friday.

The 3X bullish ETF for the Russell broke above its ascending parallel channel and moved to a secondary one above which was also at the R3 Pivot Friday its RSI remained at elevated levels at the close.

The retail sector ETF continued its move higher closing at its high for the week.

The banking sector got a boost this week, moving over resistance as shown. This pattern shows a possible resistance projection at 48 at the 161.8% projection.

A closer view of the breakout on Friday as it moved up over 3%.

The 10 year treasury note yield moved up strongly on Friday closing at the 50 day EMA - yield of 1.94%.

The Dow Jones world market index gained 2.4% for the week and above horizontal resistance.

The emerging market ETF also closed well above resistance as a continuation from last week's move over the 50 week EM a.

Thursday, February 2, 2012


Recently released transcripts from the Federal Reserve’s Open Market Committee meetings between 2000 and 2006 indicate a comparable increase in the rise in housing market prices and subsequent laughter amongst the committee members.

Blogger Kyle Akin of The Daily Stag Hunt did an interesting study of the FOMC meetings. Akin tracked the number of times the official record contained a pause for laughter among the group. He found that the FOMC averaged 16.5 pauses for fits of giggles per meeting in 2001.

By 2006, the Case-Shiller 20 City Home Price Index peaked, interest rates were low, the stock market was booming and housing prices were exploding; meanwhile, the FOMC cracked up a recorded 44 times each meeting.

The blogger noted one particular outburst when Vice Chairman Timothy Geithner spoke to former chairman Alan Greenspan during his final meeting:

“With the near-term monetary policy path that’s now priced into the market, we think the economy is likely to grow slightly above trend in ’06 and close to trend in ’07.”

In hindsight, Obama’s current U.S. Secretary of Treasury could not have been more incorrect.

The Fed’s chipper atmosphere mirrored the cheerful complacency on Wall Street and Main Street.

But then there was 2008: the greatest financial crisis since The Great Depression developed; the housing market crashed and burned and the value of derivatives evaporated. According to the S&P/Case-Shiller Home Price Index, at its lowest point, home prices fell nearly 20 percent in a single month.

Though FOMC minutes are released three weeks following the group’s gatherings, full transcripts that record details are not available to the public for five years thereafter.

While we cannot know for certain, it might be reasonable to assume a hush has fallen over the formerly funny FOMC crowd since 2008.

Even after a brief 2010 recovery, home have continued to fall despite present Chairman Ben Bernanke’s best efforts to boost the market with low interest rates. It is estimated that this past November’s Case-Shiller Index will show an additional 3% drop.

Hilarious or humorless? Regardless, the true point of interest is the Fed’s increased transparency, ultimately.

Unfortunately, “we can never know within a reasonable period of time if the FOMC actually knows what it is doing… [and] we are not laughing,” Alan Newman said in response to the laughter count.