WSW, Wedneday, 21 December, 2011

General Comment

I’m in the middle of changing the format of these WSW postings, so this one will be a bit of a hybrid between old and new. The “old” has a lot of embedded charts (that I suspect many folks may not actually be learning how to read…). The new has many of them embedded in “infrastructure postings” at the end of a link; that have the charts, and information about the individual tickers and how to read them.

In this way, folks who want to see what I’m talking about can ‘hit the link’ and everyone else can skip the graphics download and just ‘see what I say’.

Let me know if this ‘works for you’ or is a PITA.

What prompted this is that BigCharts looks to have changed a service provider, so all the links in prior WSW postings are broken as are all the links in the “Racing Stocks” tab up top. To protect against this in the future, I’m concentrating the ‘live charts’ in topic specific infrastructure postings where I can change it once in one place.

Ideas of the Week

There is a bunch of them scattered through the posting below.

At this point it looks like the Momentum section has some nice ideas. Heavy industrials in the USA along with some home oriented stocks and tires.

Early positions in base metals and “cold fusion” metals ;-)

Perhaps a bit of Japanese yen as a parking space for cash. CZZ, the Brazilian sugar and alcohol company looks like it has bottomed.

RCL and CCL Cruise Liners look bottomed.

REITS showing signs of life with good dividends too.

Exiting bonds, they are ‘toppy’ and upward progress has slowed. Looking at a TIP to WIP rotation from a ‘well up’ to a ‘bottom fish’.

There are one or two other bit scattered through…

News Flow

Recent “News Flow” has shifted a little. Instead of being the “Greek Crisis” it is now the “Euro Crisis”. The UK has declined to participate in spreading the risk to Yet More Other Peoples Money ( YMOPM ?), as socialisms always do when they run out of cash, by declining to participate in the IMF bailout plan. Good on you, UK! Hopefully the USA will have the same resolve. Canada has also declined to join the insanity of Son Of Koyoto and said “No $C Billions for You!” to the AGW-Leaches. Good On You, Canada!

So there is a bit of hope for the Anglo world, even if Australia has decided to commit economic Hari-Kari with a combination of higher mining taxes and Carbon Quatloo trading and taxes. (Often called an ETS – Emissions Trading Scheme) Also the USA continues it’s Rush To Regulate with massive new powers being sought by the EPA, thus assuring that any recovery here will be murdered in it’s cradle. Oh Well, Russia looks to be relatively free and stable in comparison…

The European Central Bank, ECB, has done another “kick the can down the road” with a load of easy money borrowing by the banks at about 1% rate. The news pundits are assuring that there will not be any, as they call it, “Backdoor Bazooka” out of this. The Backdoor Bazooka has to do with the Carry Trade. Borrow cheap money, invest in essentially risk free assets, book profit. They are being assured, though, that the much higher number of banks than expected that rushed to get the ‘nearly free’ money most assuredly DID need it and would never think of borrowing 1% money to buy 4% EuroBonds and pocket the difference… no sireee… never even think of it… that’s what hedge funds do…

Uh Huh…

With that said, here was my comment from, about 3 months ago. Swap “Greece” to “Eurozone” and it’s still pretty much the same. I think the EuroZone as a whole may have a net balance of production and consumption, but even the ECB can-kick doesn’t fix the structural issues of ‘makers and takers’ that represents; so those stresses still persist.

The “news flow” is all about the Greek Crisis. With good cause. Greece is doing the hard path of “austerity” and the Greeks are not liking it. The jury is still out on how this will end, but the SHTF moment is coming (no matter how much they “kick the can down the road”). Not only is Germany getting tired of funding Greek excess, but the IMF and other lenders, too, have said “No more cash without balanced books.” Greece has huge debt, but also does not take in enough revenue to fund the government expenditures even if it were not in debt. (Unlike Italy who is in debt, but has enough revenue to break even, just not enough to get out of debt.)

There is another “Summit” scheduled for about a month from now, so this story continues to “have legs”. (Why am I starting to develop aversion and mild paranoia over the word “Summit”? Hmmmm…. Well, as long as it’s a sustainable summit ;-)

Conclusions and Likely Actions

About the same as last time. Still a high cash position, but nibbling at little bits. The US Bonds chart looks a bit toppy, so easing out of Treasuries is likely a good thing. Eurozone stuff continues to look like Eurotrash stuff… And “emerging” is more like “from a coma” than anything else.

Last Time:

Gently easing into selected positions. Nothing very risky, and ready to get out in a hurry if needed. Holding some cash and selling bonds, mostly, along with [holding] a few long term holdings (like BRKA). Adding positions in selected issues as their chart says “OK”. Emphasis out of Europe related…

Found some interesting things to investigate further, but still in the ‘do your homework’ phase (noted in line below) and I’ve finally added the Mo’-MO momentum section. Some interesting individual names there to investigate and vet too.

So some things, like Macy’s and Starbucks have nice charts. It’s a ‘stock picking world’ and I’m reluctant to endorse individual stocks as they can be subject to rapid changes of fate as other players buy or sell large positions. ( I’d not want to say “Macys looks good” just in time for one of my admirers like, oh, Soros, to decide to short a $Billion of it ;-) So some of my trades will be in individual issues I do not mention. Those I mention will likely be just as good, but larger stocks or indexes that would take much more money to move.

For now, though, the “momentum” is mostly in the “just lay there and quiver” side of things for most of the markets. “Take a Break for Christmas” is probably a decent way to go. At this time of year many trade houses ‘clear their books’ and settle, going into the holidays “flat”, so not much likely to happen until January anyway.

Pointer To Other Topics

Some general comments on how long term investing differs from trading and my thoughts on things to do for the long term investor, start with this page:

http://chiefio.wordpress.com/2011/06/12/lti-long-term-investing/

If you are expecting global warming stuff, it’s under the “AGW” categories in the right hand margin. Things specific to the NCDC data and GIStemp are under categories with those in their names.

This posting is about the other thing I do, looking at investment markets. Prior postings in this series are available here: http://chiefio.wordpress.com/category/wall-street-week/

Posts with some relevance to trades, but not in the format of a full WSW analysis, are available under this category:

http://chiefio.wordpress.com/category/economics-trading-and-money/

The “Infrastructure Charts” for stocks, bonds, commodities, etc are in the Stock Charts category:

http://chiefio.wordpress.com/category/stock-charts/

That is a bit of a play on words as “stock” can mean stock in a company, stock of goods, or as in photography, a set of standard images. To that extent, a chart of ‘the usual bond ETFs’ is something like a stock of goods, and a stock picture… ;-)

The Nature of the Charts Here

The charts in this posting, or the linked infrastructure postings, are usually live charts, so my comments will describe how it is now, but in a week it will be showing new data and a new week. If I capture a “static image” I usually label it as such. You can tell by looking at the date bars on the bottom of a graph.

I typically use the live charts since I think it is more important to be in touch with what the market is doing NOW than to preserve the historical chart, this is, IMHO, a reasonable choice. Just don’t be surprised if the chart I describe is not the one you see a few weeks from now! If you would like to see the historical chart, you may enter custom date ranges on the charting tool at www.bigcharts.com

Wall Street Week -
Wednesday, 21 December, 2011

Long Term Context

I’m promoting this chart to the top for a while, as it is now in control. Look closely at what it’s saying.

This is a very long duration chart (5 years) of NYSE. It will not change much from week to week (just one tick mark) so guides longer term attitude.

5 Years, NYSE

5 years, NYSE

Price is still below the SMA lines. Bear Market, be out of stocks. For traders, you can trade-in and buy the dips, then ride them back up. At this point, that ‘dip’ has reached the SMA stack. Time for traders to step out, too. (At least on this time scale).

The SMA lines have now turned from a weave to an inverted order. Price under fastest-to-slowest Simple Moving Average. A confirmed Bear Market configuration. You can be short this market, very short this market, or neutral. To be long this market, you must work at some other very short time scale, such as 10 day hourly, but not at the time scale of investors. Not yet.

MACD is below zero and with ‘blue on top’. Indicating a ‘positive run’ underway, but inside a negative (below zero) context. Slow Stochastic has near the middle, but looking indecisive (top blue segment just a bit ‘sideways’).

A month ago I’d said:

That ‘swing trade’ from the spike down in October is reaching an end. I’d not be buying in at this point, wait for the Slow Stochastic to reach a low again.

That would have given a bit of gain in that tiny ripple up after the last low of the Slow Stochastic. At this point the frequency will likely be high enough that the timing driven trades must move to faster charts.

DMI reading is the same as last month:

DMI is ‘red on top’, but we’ve had the red cross below the black line. The black line is inflected down. All in all, it’s saying a negative bias ending, but not a lot of positive bias yet present. We need blue on top to have a positive long term investment bias. For now it’s just a ‘traders market’. (You can still make money then. But you need to either go to a faster time scale and trade the ripples, or buy “deep value” stocks on the cheap, or for very selected issues, buy momentum stocks fighting the tide… Broad Index investing ‘has issues’ in this context.)

So even if a faster chart, like a 1 year daily, says “buy”, that is buy for a swing trade of days or weeks, not investing for years. Not until this chart confirms it. (I still make the buy, but plan to sell on indications from the one year chart, only changing that expectation when this chart changes to agree to hold…)

As prices return to the middle of the SMA stack, we are at greatest risk of a new plunge. We are roughly in the same chart configuration as about Feb of 2008 (click on the chart for a bigger version where you can read the dates). Yes, we could have a Miracle Rescue that prevents another news driven meltdown. For now, though, the risks are larger than the probable gain.

There is no “numerology” nor “voodoo” in this. The price motion captures the decisions of all the fundamental analysts, news hounds, manipulators, hedge fund managers, et.al. All we are doing is standardizing how we read that “tell” on what they are thinking (through how they move the prices).

This chart is TLT vs SPY, as the S&P 500 is the basic investment vehicle for most folks (unless you really want to pick sectors or individual stocks, you ought to start with a “SPY / Bond” oscillator, as on this long term chart. TLT is long term US Treasuries, so gives a good view of the major alternative where cash runs during times of doubt. If you plotted a line 1/2 between those two, you would get the performance of a portfolio that was 1/2 in each. A pretty good basic strategy for times that are hard to judge. They form a natural hedge pair during spikes, for example.

TLT vs SPY (20 year Treasury Bonds vs Stocks) with RSI, MACD and DMI

TLT vs SPY (20 year Treasury Bonds vs Stocks) with RSI, MACD and DMI

This chart is interesting as you can see how volatility spikes at BOND market tops (the opposite of stocks, where volatility spikes are at bottoms) and bond volatility drops lower during times of bottoming actions.

Last time I’d said:

Ok, the indicators. RSI on 80. Saying “top soon, prepare to be out”. MACD well above zero, but looking like a crossover “soon”. Again saying ‘get ready to leave’. DMI with ‘blue on top’ saying ‘be in bonds’, but it has crossed over the black ADX line. While ADX has not inflected, it has gone flat. Not yet saying ‘be out, just be out’, but it’s certainly not time to be buying in (and I’d be scaling out of large positions right now, as that takes time. Scaling out being selling a position in several pieces over a week or three… or sometimes months.) That bond volatility has been very high lately also argues for this being a bond top, of sorts. Prices are well above the SMA stack, so will converge with it. Selling now and buying back into bonds on an SMA touch ought to be a decent trade plan.

That is generally still my sentiment. RSI has now had a ‘Touch 90′ moment and this present ‘peak’ is lower. That is often the “first last call” for a trade. MACD has made a ‘bird beak’ by going sideways instead of a crossover downside. OK, that can mean a longer term bull market, it can also mean ‘it has been a nice run and the last rubes are getting on the bus a bit late’. At a minimum, put stop loss orders in place. The top of this ADX (black) line roll over is wider and broader than the last two, but nothing lasts forever. The return to the SMA stack must come (either prices down, or averages catch up). It is very rare for ADX to stay flat sideways for long periods. The best bet is “take the profit and run” come back at the SMA stack touch.

If not stocks and not bonds, then what?

Well, there are times when the right place to be is in cash, minimizing risk and preserving buying power.

The Dollar Lately

Time to measure our Rubber Ruler.

The currency charts are now on the Bonds and Currencies chart here:

http://chiefio.wordpress.com/2011/12/20/bonds-overview-charts/

To my eye they say $US is doing pretty well (after sliding for a while in the last couple of years). US Business reports have been better than the Rest Of World too. Japanese yen FXY also is a decent place to park cash as is DBV (though it is an odd hedge bet, long 3 currencies and short 3 currencies from the G10 group).

So the $US is strong and the safe place to be for now. It has been rising lately (inside a several year drift down) so we need to allow for that in charts of ‘overseas’ tickers. WIP (and some other more risky emerging currencies and bonds) look like a ‘bottom soon’ and might be worth ‘scaling in’ with small amounts.

OK, our ruler is “OK but a tad biased low over the longer term”, up the last few months. Shorting the Euro with EUO has been good, but that trade is getting a bit long in the tooth. I’d likely swap from that 2 x leverage to the UUP instead at this point and lock in some gain while keeping some upside potential from that next “Summit”…

Were Bonds a good idea?

The bonds charts are now on the Bonds and Currencies chart here:

http://chiefio.wordpress.com/2011/12/20/bonds-overview-charts/

It looks to me like long duration US Treasuries have started flattening (same thing I said last month) and it’s likely time to start edging out, easing toward the door. Rotation into some over depressed currencies and / or bonds looks more promising of upside, with risk already priced in. Not a big hurry, so I’d clip any dividend payments before exiting a fund, bu that rise in TLT over several months is not really sustainable long term, so will either go flat or roll down. No, not time to short, yet… Just that the panic run from the Euro to US Treasuries is likely slowing down now.

WIP looks like a ‘near bottom experience’ is underway. DMI is now ‘blue on top’ and we have a set of ‘failure to advance to the downside’ bottom spikes “crash, bang, tinkle”… (Yes, I use that as a thing to look for. 3 down dribbles on the floor… C.B.Tinkle…)

RSI is rising with higher lows off of a 20. MACD “blue on top” approaching zero from below. Price merging with the SMA lines that look to be making a ‘bottom weave’. All in all, starting to edge some money into WIP looks acceptable as a ‘bottom fish’. Not yet a confirmed bottom (price must cross the SMA stack, touch from above, and continue up – SMA stack reorders to fastest on top, slowest on bottom), but there is often good money to be made catching that confirmation with a ‘swing trade’ then choosing to exit or hold on a ‘fail to confirm’ vs a ‘confirm’.

World Inflation Protected Securities - 1 year daily

World Inflation Protected Securities - 1 year daily

That is the kind of chart you look for when ‘bottom fishing’.

Base Metals vs. Precious Metals

I did an interim posting on metals here:

http://chiefio.wordpress.com/2011/12/14/metals-prices-say/

So I’m not going to repeat it here. Hit the link. Bottom line: Not much happening in metals, but MAYBE a ‘bottom soon’ in selected base metals. (NOT Tin, but the DBB ‘basket’ and some others like Nickle / Copper). It would be better to roll those silver and gold positions into the base metals, IMHO. I’m leaving a metals chart here for one posting so you can see it without taking two link clicks:

Metals 6 month chart

Metals 6 month chart

DBB  - Base Metals ETF
GLD  - Gold (physical metal) ETF
JJU  - Aluminum ETN
JJN  - Nickel ETN
JJC  - Copper ETN
JJP  - Precious Metals ETN
ld   - Lead ETN
JJT  - Tin ETN
SLV  - Silver (physical metal) ETF
PALL - Palladium (physical metal) ETF

Base Metals infrastructure chart posting is here:

http://chiefio.wordpress.com/2011/12/14/base-metals-vs-gold-and-silver/

Last time I’d said:

A mixed bag. Silver in a nice run. Looks OK to be in (perhaps I’ll do a new SLV detail posting…) but I don’t like the way it flattened at the end… Platinum looks good too. Copper did a ‘pop and drop’ while Palladium did a ‘pop and hold’. I’d buy Palladium ahead of copper on that basis. OK, looks to me like the more ‘rare’ metals are doing better than the more common ones. Palladium and Platinum over copper and tin.

The Palladium was a good idea. On Silver I was too optimistic. Platinum, too was just wrong. I just lumped it in with Palladium without doing a specific chart on it, and it’s headed down with gold. Here is a specific comparison of Platinum PPLT to Palladium PALL to gold GLD:

Platinum vs Paladium vs Gold

Platinum vs Paladium vs Gold

You can see that Palladium rose relative to Platinum, that has a shape more like the descending part of the gold line. It did not have as much of a bubble as gold, but is falling with it as folks exit the precious metals in general and move into base metals.

The rest of what I said wasn’t too far off:

Nickle just laying there on a bottom (but it looks like a bottom that is holding) right next to tin (the green line). The DBB basket indicators are looking like “bottom is in” but upward run not started yet. Long term investors can likely take positions in metals with some safety at this point. It would be good to look at the metals miners, too. As metals prices rise, their stocks will too.

Nickle has held, as has copper. Tin has dribbled on down some. DBB continues to hold that bottom. So that general statement has been correct, modulo not specifying that tin would diverge.

So looks like the “Cold Fusion” metals are rising faster than the others ;-) Nickel and Palladium…

A closer look at gold:

The precious metals infrastructure chart is here:

http://chiefio.wordpress.com/2011/12/13/gld-gold-vs-silver-and-currencies/

I don’t have a ‘volume and volatility’ chart nor one with the miners on it in that link, so I’m keeping this chart here for now:

Here’s a little look with a couple of other indicators. Volume+, Volatility Fast, and Momentum. I’ve also put PSAR (the little red dots) on the upper graph. This is a 6 month daily chart so you can see the daily volume bars better.

GLD with Volume, Volatility, and Momentum

GLD with Volume, Volatility, and Momentum

Last time I’d said:

Volume is just dead. Volatility spiky, but fading. Momentum on the skids, headed to a zero cross to negative. Pretty much says “not interested in Gold”… We’ve also got a weaving disordered SMA stack too. Not nearly as interesting as the base metals, or the mixed industrial / precious metals of Platinum and Palladium, IMHO.

Which was just great!… except for that lumping in Platinum without doing a SPECIFIC chart on it… An error of assumption on my part.

Since then we’ve had gold take another plunge, on a volume spike, momentum is clearly negative, and the upside volume just dries up. Exit gold, roll into other metals. That’s what it says to me.

Ag Commodities

Last time I’d said we were in a downtrend. That has continued. HOWEVER, look at that DMI / ADX indication. BOTH red and black ‘kinked down’ and blue ‘kinked up’. Not a confirmed new positive run, but the early indication. “Trade in” is fine. We’ll get a confirm later if it’s going to be a longer term bull run.

Ag Commodities 6 month chart

Ag Commodities 6 month chart

RSI at ‘near 20′ and MACD with a new ‘blue on top’ even if a ways below zero, also say ‘trade in’. We need a ‘higher low’ on RSI and MACD at or very near a zero crossover into positive for this to be anything but a counter trend rally, but for now, the Ag Trade is a space to watch more closely.

Closeup On Sugar and Brazil

For a while now I'd said the sugar trade in Brazil looked interesting, we now have a chart with something of a 'confirm' on it:

CZZ Cosan - Brazilian Sugar vs BZF Real,  EWZ Brazil and SPY S&P 500,

We’ve got price bouncing off the TOP of the SMA stack, we’ve got RSI with ‘higher lows’ off of a ‘near 20 experience’ and we’ve got MACD above zero (so a bull run indication). EWZ looks ‘bottomed’ as well (though with that Platinum experience fresh in mind, I think I’ll wait for a dedicated chart on it before making claims). DMI is a bit of a worry, with “red on top” still and a weak ADX, so momentum is low. Sugar prices had a big spike up, then a ‘ring down’, so may not support much more movement going forward until they rise more steadily. Still, if you want to own stock in Brazilian land about the size of West Germany with sugar and fuel production, it’s a nice diversification.

I note a down blip anomaly on the Brazilian Real ticker. Don’t know if that is a data error artifact ( it looks like other ones they have had at BigCharts before) or some actual currency panic / change. Likely the data artifact or it would have been all over the news flow. Worth checking, though (if it doesn’t correct in the next day or two) before shoving money at Brazil.

Monthly Running Stock Sectors

So what “won” and “lost” over the last month? (though remember, they may not be the winners next month… it’s just to provide ‘context’).

One Month

Once again, this list is a bit misleading as you had to time the entry just right to capture this one up month as we are in a ‘ringing’ status on the SPY, so exact time of entry and exit from that sin wave matters, but it WAS possible to make money if you did.

10 Best Performing Industries 
Industry Name 	Percent Change (over time selected)
Dow Jones U.S. Tires Index 	35.06%
Dow Jones U.S. Home Improvement Retailers Index 	27.14%
Dow Jones U.S. Home Construction Index 	26.67%
Dow Jones U.S. Hotel & Lodging REIT Index 	26.14%
Dow Jones U.S. Pipelines Index 	26.10%
Dow Jones U.S. Building Materials & Fixtures Index 	21.94%
Dow Jones U.S. Transportation Services Index 	18.81%
Dow Jones U.S. Industrial Suppliers Index 	18.80%
Dow Jones U.S. Railroads Index 	18.59%
Dow Jones U.S. Industrial Machinery Index 	15.84%

Christmas Retail… and Industrial Recovery. OK, need to look at IRT and IYJ. Heavy industrials being bought by someone (I’d speculate folks in other currencies running to a more stable and relatively cheap dollar.) I can work with that.

Not much of a change from last posting, so this trend ‘has legs’.

Generally, an ‘industrial recovery’ trade. Metals, with some emphasis on industrial metals like platinum and steel, oil, piplelines, and some construction (homes and industrial suppliers). Some more tires and a bit of the end of vacation season. As Europeans flooding to US Hotels on vacation has likely hit a pause, I’d be careful about the hotels going forward… But the theme of ‘industry will export with a weaker dollar’ looks to have legs.

A slightly different mix, and the Vacation Trade ended with fall. We’re into the Christmas Retail trade now that usually ends in January. That industrial trade will likely run a while longer.

How about the losers?

10 Worst Performing Industries 
Industry Name 	Percent Change (over time selected)
Dow Jones U.S. Aluminum Index 	-17.23%
Dow Jones U.S. Platinum & Precious Metals Index 	-11.71%
Dow Jones U.S. Coal Index 	-10.81%
Dow Jones U.S. Gambling Index 	-10.42%
Dow Jones U.S. Mining Index 	-10.13%
Dow Jones U.S. Gold Mining Index 	-9.29%
Dow Jones U.S. Travel & Tourism Index 	-6.18%
Dow Jones U.S. Medical Supplies Index 	-3.10%
Dow Jones U.S. Mortgage REIT Index 	-2.79%
Dow Jones U.S. Mobile Telecommunications Index 	-2.14%

Folks running from precious metals (ALL of them, including Platinum…) along with the energy intensive Aluminum. The travel and tourism season ends, and we’ve got some issues in Mobile Phones as the AT&T merger deal fell through. Coal dropping is a bit odd, wonder what the EPA announced…

Up / down ratio is not too bad, net positive. (Modulo that picking the right part of the sin wave problem…)

Looks like there are some things that can work here, but need a bit of selectivity and in heavy assets heavy industry sectors.

Any change vs. “lately”?

Weekly Running Stock Sectors

The best and worst of the week? Do they tell a different story on the short term trade?

The ‘up / down ratio’ is about flat. Looking at those percents, if you owned the whole basket, not much happened. It’s a flat market, but with selected winners.

10 Best Performing Industries 
Industry Name 	Percent Change (over time selected)
Dow Jones U.S. Residential REIT Index 	6.61%
Dow Jones U.S. Airlines Index 	6.59%
Dow Jones U.S. Home Improvement Retailers Index 	6.21%
Dow Jones U.S. Brewers Index 	5.79%
Dow Jones U.S. Industrial & Office REIT Index 	5.40%
Dow Jones U.S. Retail REIT Index 	5.38%
Dow Jones U.S. Diversified REIT Index 	5.25%
Dow Jones U.S. Industrial Suppliers Index 	5.01%
Dow Jones U.S. Real Estate Investment Trusts Index 	4.78%
Dow Jones U.S. Real Estate Index 	4.67%

To repeat: NEVER own an airline.. American filed bankruptcy, so this is likely a ‘relief rally’ from that. Like Russian Roulette?…

Residential REITs, eh? Apartments doing better? Hmmm… then we have Office REITs too. I suspect that foreign money buying America cheap.

OK, time for more depth on REITS. I’ll put that in a stand alone posting and link it back here a bit later.

Then the industrial suppliers to those heavy industries above (knock on effect) and we see the home improvement retailers again.

10 Worst Performing Industries
Industry Name	Percent Change (over time selected)
Dow Jones U.S. Platinum & Precious Metals Index 	-5.19%
Dow Jones U.S. Recreational Products Index 	-1.84%
Dow Jones U.S. Leisure Goods Index 	-1.64%
Dow Jones U.S. Footwear Index 	-1.64%
Dow Jones U.S. Toys Index 	-1.64%
Dow Jones U.S. Clothing & Accessories Index 	-1.61%
Dow Jones U.S. Recreational Services Index 	-1.60%
Dow Jones U.S. Coal Index 	-1.51%
Dow Jones U.S. Aluminum Index 	-1.34%
Dow Jones U.S. Business Support Services Index 	-1.33%

Up / Down ratio still good at this level too. Risk of a foobar more than offset by good industries. Got it…

Looks like the Christmas Retail ending a bit early… Leisure, shoes, toys, clothing, recreation…

Aluminum and Precious metals we’ve already seen.

Coal still getting whacked? I wonder why…

Talk about timing, as I typed that CNBC announced new rules from EPA that strangle coal power plants even more.

Businesses not investing in training (well, duh.. hire someone from India instead and lobby for H1B visas)

Here is a chart of selected things from the above list. Looks like generally “good to go” even if I’m a bit late picking them out:

Selected stocks and ETFs compared to SPY

Selected stocks and ETFs compared to SPY

IYJ  - Industrials ETF
IRT  - Retail ETF
SPY  - S&P 500 ETF your benchmark
PALL - Palladium physical metal ETF
IJT  - Small Cap Growth ETF
CBT  - Cooper Tire
GT   - Goodyear Tire and Rubber
HD   - Home Depot
LOW  - Loew's
PIR  - Pier 1 Imports

PIR one looks a bit tired to me, but several of the others have nice ‘lower left to upper right’ patterns. There is some momentum to find in those lists above…

Momentum Trades

This is a new section and will be a bit of ‘under construction’ for a while. But at least if I put it here, I’ll be motivated to make it better ;-)

First off, the caveat page. Know how to exit before you enter a momentum trade:

http://chiefio.wordpress.com/2011/10/26/when-momentum-fails/

This is NOT buy and hold investing, OK?

The general approach is to find lists of stocks going up, then look at their chart for ‘what is in a good configuration and likely to continue’, then wait for an entry. That last part can be particularly frustrating in stocks with a strong momentum as the ‘dips’ either never come, or come at the eventual blow off top of an exhausted big momentum run. So sometimes I’ll just ‘scale in’ to momentum stocks. Buy some each dip, and exit all of it on a topping indication.

This posting gives an overview of the method of picking:

http://chiefio.wordpress.com/2011/07/20/alpha-bubbles-and-lists/

FINVIZ Daily Bubbles chart listed these as the most Mo’-Mo stocks last month (and many more near them, like X as a bottom fish in U.S. Steel). We’re going to leave this chart here for a while so we can see how that selection method does.:

FINVIZ Bubbles Momentum Chart

FINVIZ Bubbles Momentum Chart

CRM  -  Salesforce.com
AVY  -  Avery Dennison Company
TIF  -  Tiffany
LOW  -  Lowe's
BAC   -  Banc Of America
TSN  -  Tyson Foods
SNA  -  Snap On Tools
QCOM -  Qualcom
GLW  -  Corning Glassworks
ETN  -  Eaton

CRM Tanked and TIF rolled over too, but the bulk had some upward momentum. BAC Bank of America, continues to slowly implode under Goverment Help… OK, buy as a basket and / or put stop loss orders under them to prune the losers. Looks like a usable technique / method as long as you protect against the “pop and drop” outliers.

Last time I said:

All in all, it looks like a decent list (though I have my doubts about BAC unless you take a 5 year point of view on it…)

At this point I’m wondering if even 5 years is enough…

I did notice, in making this update, that on the prior posting I’d clipped a ‘C’ off the end of the BofA ticker and used BA – Boeing. The Boeing chart looks rather good, so put BA on that list of ‘MO’ stocks.

How did the 3 month version do?

FINVIZ 3 Month Chart

FINVIZ 3 Month bubbles stocks

FINVIZ 3 Month bubbles stocks

GR   - Goodrich Corp
FFIV - F5 Networks
SNDK - Sandisk
RHT  - Red Hat
TSO  - Tesoro
EP   - El Paso
GWW  - WW Granger
KLAC - KLA Tencor
ORLY - O'Reilly Automotive Parts
FAST - Fastenal

Not so good. Looks like by the time 3 months of momentum are ‘in the bag’ the stocks are pretty tired. Just about time for a ‘go flat’. So I’m going to ‘tune up’ the FINVIZ approach and put up a stand alone posting for them, too.

I think I’ll try a time scale between those two, perhaps a one week scale. For now, this will have to do on the ‘getting started’ with Mo’-MO at FINVIZ.

Barchart Top 100 did?

How about the Barchart Top 100?

The top of their list last month was:

Sym 	Name 	                Weighted
                                Alpha 	        Last 	Change 	Percent High 	Low 	Time 	
SIMO 	Silicon Motion Techn 	+313.10 	19.88 	+1.40 	+7.58% 	19.90 	18.15 	11/14/11 	   
QCOR 	Questcor Pharmaceuti 	+210.91 	43.35 	+0.21 	+0.49% 	44.41 	42.96 	11/14/11 	   
EGAN 	Egain Comm Cp 	        +201.70 	5.94 	+0.39 	+7.03% 	5.94 	5.21 	11/14/11 	   
PZZI 	Pizza Inn 	        +189.04 	6.05 	+0.05 	+0.83% 	6.30 	5.86 	11/14/11 	   
ARIA 	Ariad Pharmaceutical 	+180.06 	11.01 	+0.08 	+0.73% 	11.11 	10.77 	11/14/11 	   
VRUS 	Pharmasset 	        +168.21 	68.93 	+1.13 	+1.67% 	69.37 	65.96 	16:00 	   
GLNG 	Golar Lng Limited 	+164.59 	42.36 	+1.46 	+3.57% 	43.40 	40.56 	11/14/11 	   
SPPI 	Spectrum Pharmaceuti 	+159.82 	12.50 	+0.48 	+3.99% 	12.66 	11.98 	11/14/11 	   
COG 	Cabot Oil & Gas Corp +141.90 	86.31 	-1.75 	-1.99% 	87.55 	84.94 	11/14/11 	   
EDAC 	Edac Technologies 	+137.50 	9.11 	+0.04 	+0.44% 	9.27 	8.77 	11/14/11 	   
VHI 	Valhi           	+130.06 	58.03 	-0.09 	-0.15% 	58.75 	56.93 	11/14/11 	   
HSTM 	Healthstream    	+129.33 	16.05 	-0.07 	-0.43% 	16.59 	15.88 	11/14/11 	   
DPZ 	Domino's Pizza Inc 	+125.85 	32.60 	+0.23 	+0.71% 	33.00 	32.30 	11/14/11 	   
SIFY 	Sify Technologies 	+125.72 	4.77 	-0.01 	-0.21% 	4.95 	4.71 	11/14/11 	   
RIC 	Richmont Mines  	+120.50 	11.97 	-0.33 	-2.68% 	12.32 	11.75 	11/14/11 	   
FTK 	Flotek Industries 	+119.37 	8.63 	+0.39 	+4.73% 	8.82 	8.12 	11/14/11 	   
PHMD 	Photomedex      	+114.03 	12.83 	-0.22 	-1.69% 	13.10 	12.83 	11/14/11 	   
MAKO 	Mako Surgical   	+113.40 	33.98 	+1.13 	+3.44% 	34.21 	32.27 	11/14/11 	   
STMP 	Stamps.Com Inc. 	+110.49 	28.38 	+0.06 	+0.21% 	29.36 	28.01 	11/14/11 	   
AMPE 	Ampio Pharmaceutical 	+109.33 	6.85 	-0.22 	-3.11% 	7.06 	6.76 	11/14/11 	   
RGR 	Sturm Ruger & Compan +106.16 	32.08 	-0.15 	-0.47% 	32.52 	31.64 	11/14/11 	   
PSMT 	Pricesmart 	        +104.83 	67.92 	+0.06 	+0.09% 	68.62 	66.92 	11/14/11 	   
TNH 	Terra Nitrogen Compa 	+104.60 	174.74 	-0.48 	-0.27% 	176.95 	174.00 	11/14/11 	   
ULTA 	Ulta Salon Cosmetics 	+104.16 	71.78 	-0.57 	-0.79% 	73.40 	71.21 	16:00 	   

A couple of names there are familiar, like TNH. So lets look at a chart of some of these.

Barchart.com Top 100 top 10

Barchart.com Top 100 top 10

Gee, much nicer chart. OK, more emphasis on Barchart Top 100, less on Finviz.

Last time I’d said:

Generally nice looking charts, and more or less what you want to see, rising lower left to upper right.

I note that RSI is getting a bit high (as it does on big movers) for SIMO and that EGAN has had quite a ‘blow off top’ pop and plunge. Clearly there needs to be a bit of ‘post charting vetting’ before you buy one of these things…

Those two that I singled out also are the two with the most ‘issues’ on this months chart. SIMO looks like it is running into overhead resistance (as a high RSI would predict) and EGAN had additional instability and a plunge before getting back to the rising line. Some of the others flattened a bit but generally the basket did OK. A bit of selection for individual charts being good and leaving out thinly traded stocks and / or looking at financials, this will work. It, too, may get a stand alone chart / link treatment.

For now, the current list is:

Sym 	Name 	                Weighted
                                Alpha 	        Last 	Change 	Percent High 	Low 	Time 
SIMO 	Silicon Motion Techn 	+281.00 	20.39 	-0.44 	-2.11% 	20.85 	20.05 	12/21/11 	   
VRUS 	Pharmasset      	+208.27 	125.30 	-0.15 	-0.12% 	125.95 	125.03 	12/21/11 	   
QCOR 	Questcor Pharmaceuti 	+176.54 	43.33 	-1.28 	-2.87% 	45.51 	42.84 	12/21/11 	   
EDAC 	Edac Technologies 	+167.00 	10.64 	+0.23 	+2.21% 	10.69 	10.35 	12/21/11 	   
PCYC 	Pharmacyclics 	        +166.37 	15.46 	+0.24 	+1.58% 	15.50 	14.83 	12/21/11 	   
GLNG 	Golar Lng Limited 	+164.35 	44.60 	+0.19 	+0.43% 	44.97 	43.52 	12/21/11 	   
HSTM 	Healthstream    	+159.06 	18.80 	+0.33 	+1.79% 	19.32 	18.25 	12/21/11 	   
PHMD 	Photomedex      	+154.90 	15.39 	-0.22 	-1.41% 	15.52 	15.11 	12/21/11 	   
SPPI 	Spectrum Pharmaceuti 	+154.40 	14.83 	+0.33 	+2.28% 	14.88 	14.12 	12/21/11 	   
PZZI 	Pizza Inn       	+149.30 	5.62 	+0.26 	+4.85% 	5.74 	5.39 	12/21/11 	   
EGAN 	Egain Comm Cp    	+142.70 	6.70 	-0.14 	-2.05% 	6.87 	6.55 	12/21/11 	   
LQDT 	Liquidity Services 	+137.25 	37.05 	-1.05 	-2.76% 	38.06 	36.84 	12/21/11 	   
SARA 	Saratoga Res Inc 	+137.04 	6.68 	+0.12 	+1.83% 	6.81 	6.42 	12/21/11 	   
CYAN 	Cyanotech Corp. 	+129.70 	8.91 	+0.25 	+2.89% 	9.19 	8.68 	12/21/11 	   
ARIA 	Ariad Pharmaceutical 	+123.50 	11.60 	-0.12 	-1.02% 	11.75 	11.26 	12/21/11 	   
VHI 	Valhi           	+122.41 	57.97 	-1.90 	-3.17% 	59.50 	57.07 	12/21/11 	   
RGR 	Sturm Ruger & Compan 	+119.76 	34.31 	+1.29 	+3.91% 	34.48 	32.45 	12/21/11 	   
PERF 	Perfumania Holdings 	+114.71 	19.70 	-0.04 	-0.20% 	19.70 	19.44 	12/21/11 	   
ASUR 	Asure Software Inc 	+113.10 	6.26 	-0.15 	-2.34% 	6.50 	6.26 	12/21/11 	   
ELN 	Elan Corporation Plc 	+110.40 	12.89 	-0.04 	-0.31% 	13.01 	12.73 	12/21/11 	   
FTK 	Flotek Industries 	+110.30 	9.80 	-0.09 	-0.91% 	9.91 	9.42 	12/21/11 	   
DPZ 	Domino's Pizza Inc 	+107.70 	33.60 	+0.12 	+0.36% 	33.72 	33.05 	12/21/11 	   
MDW 	Midway Gold Corp. 	+107.41 	2.45 	-0.07 	-2.78% 	2.58 	2.45 	12/21/11 	   
TMF 	Direxion 30-Yr Treas 	+104.30 	67.45 	-2.85 	-4.05% 	70.66 	67.33 	12/21/11 	   
AETI 	American Electric 	+102.90 	4.53 	unch 	unch 	4.58 	4.32 	12/21/11 	   
AGX 	Argan            	+102.20 	17.38 	+0.05 	+0.29% 	17.55 	17.18 	12/21/11 	   
STAA 	Staar Surgical Compa 	+101.60 	10.93 	+0.02 	+0.18% 	11.08 	10.63 	12/21/11 	   
ADES 	Ada-Es          	+100.40 	22.68 	-0.23 	-1.00% 	23.00 	22.20 	12/21/11 	   
ARSD 	Arabian American Dev 	+97.90 	8.23 	-0.14 	-1.67% 	8.37 	8.20 	12/21/11 	   
AKRX 	Akorn           	+97.30 	10.99 	-0.17 	-1.52% 	11.10 	10.72 	12/21/11 	   
SPSC 	Sps Commerce     	+97.10 	26.86 	+0.62 	+2.36% 	27.89 	26.39 	12/21/11 	   
ONTY 	Oncothyreon Inc . 	+94.10 	7.84 	+0.13 	+1.69% 	7.93 	7.62 	12/21/11 	   
COG 	Cabot Oil & Gas Corp 	+92.70 	77.35 	+0.23 	+0.30% 	77.57 	75.15 	12/21/11 	   
RIC 	Richmont Mines   	+92.40 	11.07 	-0.15 	-1.34% 	11.42 	10.90 	12/21/11 	   
MG 	Mistras Group Inc 	+86.39 	24.29 	+1.07 	+4.61% 	24.36 	22.75 	12/21/11 	   
TGE 	Tgc Industries   	+85.50 	7.66 	+0.34 	+4.64% 	7.75 	7.04 	12/21/11 	   
AMPE 	Ampio Pharmaceutical 	+84.50 	4.35 	-0.96 	-18.08% 	5.03 	4.14 	12/21/11 	   
PATK 	Patrick Industries 	+83.10 	3.37 	-0.28 	-7.67% 	3.70 	3.37 	12/21/11 	   
ASPS 	Altisource Portfolio 	+83.00 	49.72 	-0.18 	-0.36% 	49.89 	49.42 	12/21/11 	   
ANLY 	Analysts Internation 	+82.40 	5.46 	-0.26 	-4.55% 	5.80 	5.40 	12/21/11 	   
CONN 	Conn's          	+81.60 	10.26 	-0.93 	-8.31% 	11.12 	10.23 	12/21/11 	   
AVD 	American Vanguard 	+81.40 	14.00 	+0.25 	+1.82% 	14.15 	13.60 	12/21/11 	   
PSMT 	Pricesmart      	+80.56 	68.51 	-2.07 	-2.93% 	70.86 	67.75 	12/21/11 	   
ADLR 	Adolor Corp.     	+79.10 	4.77 	+0.01 	+0.21% 	4.83 	4.67 	12/09/11 	   
SCSS 	Select Comfort Corp. 	+78.59 	21.76 	+0.36 	+1.68% 	21.89 	20.95 	12/21/11 	   
ATRO 	Astronics Corp. 	+78.40 	37.84 	+0.65 	+1.75% 	38.00 	36.34 	16:00 	   
HANS 	Hansen Natural Corp. 	+78.06 	96.92 	-0.21 	-0.22% 	97.42 	95.60 	12/21/11 	   
PVSA 	Parkvale Financial 	+77.57 	24.23 	-0.06 	-0.25% 	24.25 	23.67 	12/21/11 	   
SONO 	Sonosite        	+77.50 	53.85 	+0.03 	+0.06% 	53.91 	53.72 	12/21/11 	   
CBST 	Cubist Pharmaceutica 	+77.40 	39.93 	-0.12 	-0.30% 	40.18 	39.24 	12/21/11 	   
SURG 	Synergetics Usa 	+76.00 	7.24 	+0.12 	+1.69% 	7.27 	6.68 	12/21/11 	   
BGS 	B&G Foods Holdings 	+75.70 	24.23 	+0.62 	+2.63% 	24.38 	23.44 	12/21/11 	   
UBT 	Ultra 20+ Year Treas 	+75.60 	130.46 	-3.40 	-2.54% 	133.79 	130.08 	12/21/11 	   
CRIS 	Curis           	+75.10 	4.34 	+0.25 	+6.11% 	4.39 	4.02 	12/21/11 	   
SIFY 	Sify Technologies 	+74.82 	4.27 	+0.09 	+2.15% 	4.52 	4.10 	12/21/11 	   
EP 	El Paso Corp.    	+73.20 	25.79 	+0.24 	+0.94% 	25.81 	25.37 	12/21/11 	   
CRBC 	Citizens Republic 	+72.70 	11.10 	unch 	unch 	11.22 	10.98 	12/21/11 	   
SUSS 	Susser Holdings Corp 	+71.30 	22.40 	+0.35 	+1.59% 	22.40 	22.00 	12/21/11 	   
EROCW 	Eagle Rock Energy 	+70.60 	5.03 	+0.21 	+4.36% 	5.10 	4.90 	12/21/11 	   
GCO 	Genesco Inc.    	+70.28 	62.17 	+1.38 	+2.27% 	62.31 	59.07 	12/21/11 	   
STMP 	Stamps.Com Inc. 	+68.80 	25.63 	-0.75 	-2.84% 	26.42 	24.95 	12/21/11 	   
JAZZ 	Jazz Pharmaceuticals 	+67.73 	37.55 	+0.09 	+0.24% 	37.64 	36.29 	12/21/11 	   
AEA 	Advance America Cash 	+67.10 	8.93 	+0.07 	+0.79% 	8.98 	8.66 	12/21/11 	   
ACHN 	Achillion Pharmaceut 	+67.00 	7.94 	+0.22 	+2.85% 	7.96 	7.28 	12/21/11 	   
CAMP 	Calamp          	+66.80 	4.72 	-0.05 	-1.05% 	4.79 	4.65 	12/21/11 	   
KCI 	Kinetic Concepts 	+65.90 	68.47 	+0.01 	+0.01% 	68.50 	68.47 	11/04/11 	   
ALXN 	Alexion Pharmaceutic 	+65.80 	67.54 	-1.45 	-2.10% 	69.95 	66.62 	12/21/11 	   
SUG 	Southern Union Compa 	+65.50 	42.06 	-0.14 	-0.33% 	42.22 	41.96 	12/21/11 	   
EDMC 	Education Management 	+65.50 	24.87 	+0.66 	+2.73% 	25.19 	24.10 	12/21/11 	   
ULTA 	Ulta Salon Cosmetics 	+64.00 	65.87 	-1.10 	-1.64% 	67.64 	65.04 	12/21/11 	   
ECGI 	Envoy Capital Group 	+63.80 	1.93 	-0.02 	-1.03% 	1.94 	1.77 	12/21/11 	   
CLUB 	Town Sports Internat 	+63.10 	7.68 	+0.12 	+1.59% 	7.73 	7.40 	12/21/11 	   
ABMD 	Abiomed         	+62.90 	17.90 	-0.29 	-1.59% 	18.25 	17.76 	12/21/11 	   
ELGX 	Endologix Inc   	+62.60 	11.57 	-0.06 	-0.52% 	11.63 	11.16 	12/21/11 	   
CRMT 	America's Car-Mart 	+61.40 	40.00 	-0.06 	-0.15% 	40.44 	39.07 	12/21/11 	   
BIIB 	Biogen Idec Inc 	+61.00 	111.49 	+0.76 	+0.69% 	111.96 	110.48 	12/21/11 	   
SMP 	Standard Motor Produ 	+60.60 	20.06 	+0.07 	+0.35% 	20.13 	19.66 	12/21/11 	   
CALP 	Caliper Life Science 	+60.20 	10.49 	unch 	unch 	10.50 	10.48 	11/07/11 	   
FICO 	Fair Isaac And Compa 	+59.90 	36.40 	-0.76 	-2.05% 	36.94 	35.48 	12/21/11 	   
WLBPZ 	Westmoreland Coal 	+59.76 	26.50 	unch 	unch 	26.50 	25.03 	12/20/11 	   
USLM 	United States Lime 	+59.30 	59.63 	-0.44 	-0.73% 	60.30 	59.30 	12/21/11 	   
WTT 	Wireless Telecom Gro 	+58.50 	1.16 	unch 	unch 	1.20 	1.15 	12/21/11 	   
ALLT 	Allot Communications 	+57.10 	16.59 	-0.41 	-2.41% 	16.94 	16.25 	12/21/11 	   
AIRM 	Air Methods Corp. 	+56.20 	87.19 	+0.82 	+0.95% 	87.78 	84.33 	12/21/11 	   
TLLP 	Tesoro Logistics Lp 	+55.90 	33.38 	+0.69 	+2.11% 	34.00 	32.50 	12/21/11 	   
SPNC 	The Spectranetics 	+55.80 	7.72 	+0.25 	+3.35% 	7.77 	7.27 	12/21/11 	   
LAD 	Lithia Motors    	+55.76 	22.65 	-0.28 	-1.22% 	23.14 	21.73 	12/21/11 	   
KOG 	Kodiak Oil      	+55.53 	9.18 	+0.14 	+1.55% 	9.20 	8.83 	12/21/11 	   
TRLG 	True Religion Appare 	+53.90 	34.94 	+0.18 	+0.52% 	34.96 	33.99 	12/21/11 	   
GTLS 	Chart Industries 	+53.83 	55.30 	-2.29 	-3.98% 	57.45 	54.42 	12/21/11 	   
FEIC 	Fei Company     	+52.60 	40.86 	-0.18 	-0.44% 	41.26 	39.40 	12/21/11 	   
EVEP 	Ev Energy Partners 	+52.20 	65.74 	+0.50 	+0.77% 	66.00 	64.87 	12/21/11 	   
SNSTA 	Sonesta Internationa 	+51.40 	31.25 	+0.24 	+0.77% 	31.25 	31.00 	12/21/11 	   
TNH 	Terra Nitrogen Compa 	+51.10 	154.65 	-1.95 	-1.25% 	157.00 	154.01 	12/21/11 	   
OKS 	Oneok Partners L.P. 	+50.90 	56.06 	-1.01 	-1.77% 	57.48 	55.85 	12/21/11 	   
EDV 	Vg Extended Duration 	+50.50 	118.35 	-5.69 	-4.59% 	120.55 	118.06 	12/21/11 	   
XTXI 	Crosstex Energy 	+50.16 	13.19 	+0.22 	+1.70% 	13.31 	12.62 	12/21/11 	   
CBM 	Cambrex Corp.    	+50.00 	7.45 	-0.05 	-0.67% 	7.50 	7.35 	12/21/11 	   
OSUR 	Orasure Technologies 	+50.00 	9.50 	unch 	unch 	9.62 	9.29 	12/21/11 	   
SWI 	Solarwinds      	+48.90 	29.00 	-1.58 	-5.17% 	30.42 	27.90 	12/21/11 	   

A lot to choose from…

Still, all in all, it does look to do a decent job of sorting out the ‘upper left to lower right’ stocks.

OK, that’s all the Mo’-MO I can do in this posting. Folks ought to mine the lists at those sites and chart up the candidates, then ‘vet’ them for things like, oh, over $2 price and not having flaky financials. Basically start with the bigger names that you know and avoid the strange names with penny stock pump and plunge behaviours. In any case, it does look like a good way to find individual names with some momentum behind them, and for the FINVIZ daily to find some bottoming reversals.

I’m going to finish this posting and make new momentum mining postings a bit later on the basis that it’s better to get this out there than to hold it up and the list of prior momentum ‘picks’ looks like it’s very similar to the new list.

General Stock Markets Overview

The broad stock markets charts are here:

http://chiefio.wordpress.com/2011/12/15/global-stocks-survey/

My general observation is just the the US S&P 500 looks a lot better than the European and Emerging markets (at this time…)

If we start a real recovery for any length of time, that will change. But for now it is a ‘little bit of risk on’ and that has the USA go up first. Earlier today I put an evaluation into a comment on the Open Talk thread. I’m just going to reproduce it here:

I’m shifting method, so the recent financial postings have been more infrastructure than analysis (the “Metals Say?” posing was analysis – the others just the charts with description of how to read them)

I’ve put interim analysis in minor comments here. So there wasn’t much to read in the bonds posting (other than how to read the chart and what drives those tickers so you can interpret them better).

The intent being to replace the “Racing Stocks” tab that pretty much nobody used with links instead. Then the WSW posting becomes shorter and faster to make as it just lists a set of links to those infrastructure posts and my analysis of them.

My references to the money move into bonds has been more oblique than saying “X $ moved to bonds”. I’ve talked about “risk on” vs “risk off” and said we are still in a “risk off” world. That implies moving from stocks to bonds, but does not state it explicitly.

IMHO, the move to bonds has only a small connection to demographics. The money volume is dominated by the very rich, not the large number of very small accounts. Demographic trends also have slow and steady onset, where this had fast and step function onset. (Though there is a slower frequency move to bonds of a couple of years duration).

IMHO, it has more to do with the “Yet Another Financial Meltdown” in the news and the possibility of another Financial Implosion in the banking system.

Once that issue resolves, and with any kind of economic recovery, you will see a lot of money flood out of bonds into stocks. (Usually just about the first Fed rate hike that causes bond funds to report price drops – that is, the first time the monthly report shows your bond account lost you money). The question is just: When will that happen?

At present it looks like “Not soon”. (So we end up at the same conclusion from different directions…) Europe will not have a ‘magic bullet’ fix. America will be in a malaise of sorts economically until either the election is over OR it is very clear the Republican candidate is going to win. With the Republicans giving us a choice between the village idiot, the nasty has-been, the rerunning-rerun suit, and the 7 dwarves: it’s very possible that could be a long while…

At this point my suspicion is that the best fishing hole is likely US High Dividend stocks. “Paid to wait” but without the bond to stocks cycle risk.

The other strategies that look good are bottom fishing very long cycle and / or finding selected high growth momentum stocks. Basically, when the average gives you nothing to work with, go inside it to smaller details.

Related to this is that as you reach ever higher rates of swing from pops up to dips down, eventually that wave passes (as you pass from swing trading, through day trading…) and we return to long cycle slow frequencies. So at some point the strategy has to swap from “trade for now” to vely long slow “trade for years”. The time scope has to move back out to decade scale… On that scale, bottom fishing is a very good skill / strategy as is inherent growth. But are we there yet?

The news flow is still about surprise risks, sovereign risks, political risks, etc. Fast cycle events. We’re not having reports of consistent economic and job growth from intrinsic growth. Until that, we stay fast cycle.

I suspect that as long as the White House and Congress is dominated by market hating socialists and the Eurozone is reaping the consequences of the same: we’re going to stay like we are now…

So I’m expecting that things will not change significantly until about June.

Then again, “expecting at the market” is not very productive and watching the chars to tell you what all the OTHER money is doing works better, so I watch the charts. This is, after all, a game of Liars Poker…

http://www.investopedia.com/terms/l/liars-poker.asp#axzz1hC0FS5Qj

I would soften that just a bit, in light of the above momentum and selected sectors charts. You can find islands of value starting to rise now. So to bottom fish and momentum ride in those areas ought to be OK.

10 Day Hourly Fast Trader Chart

Bunch of wobble going nowhere the last few days for the broad SPY market. Bit of rise now, so maybe a bit of a Santa Clause Rally.

Eventually I’ll put this in a linked chart as well.

Trader Chart - Longs and Shorts of Index Funds  10 day hourly interval

Trader Chart - Longs and Shorts of Index Funds 10 day hourly interval

What about Brazil? Also India and China.

Still not taking off.

Last time I’d said:

Oddly, looking rather like a bottom…

Still looks about the same, but we are getting some separation. IDX Indonesia and EWW Mexico looking like the best of the bunch, but still basically flat. Worth ‘watching the ripple’ to see if the bottom holds. I’ll leave this chart here for this posting, even though something very similar is in the link. Why? So it’s easy to keep an eye on IDX ;-) EWM – Malaysia looks interesting too, though it is not on the chart.

Brazil the EWZ ETF vs the BZF currency ETF

Brazil ETF vs Currency Race

EWZ  - Brazil
GLD  - Gold fund
BZF  - Brazilian Real currency
IDX  - Indonesia
FXI  - China
EWA  - Australia
EPI  - India - WIsdom Tree fund
EWC  - Canada
EWW  - Mexico
GUR  - Middle East Fund

Indicators still saying “stay out” for Brazil in general with ‘red on top’ and MACD below zero; but with RSI having “lower lows” and with price weaving with the SMA stack in a bottoming weave, it looks like downside has stopped. Just a little ‘resolve to the upside’ and we’ll be good to go. Then again, with renewed active socialist action by their president it could just lay there…

Sectors

Eventually this will become a list of links to individual sector chart postings, with comments added only as things are interesting. For now it is just the particular sectors I was interested in during the last couple of WSW postings.

So what happened in the Tech Market relative to world markets?

Generally ‘best of the bunch’ but looking like it’s gone flat lately. We have a Slow Stochastic “buy” signal for a counter trend rally ‘swing trade’, but not a lot of momentum overall, so when Slow Stochastic rolls over again, bail. Personally, I’m not seeing enough to make it worth the effort.

Tech vs Other Markets

Tech vs Other Markets

QQQQ  Nasdaq 100 mostly Tech companies
DIA  Dow Jones 30 Industrials
SPY  S & P 500 largest companies in the U.S.A.
MDY  Midcap  (Middle sized in terms of market capitalization)
RUT  Russel 2000 - a collection of 2000 companies from small to large.
EWZ  Brazil fund
EWA  Australia fund
EWO  Austria fund
EWW  Mexico fund

The Ag and Ag Related Stocks

Ag Trade 6 Month Daily Interval Mixed Players

Ag Trade 6 Month Daily Interval Mixed Players

Pretty dismal looking. But if you look at the indicators we have a MACD crossover to “blue on top” and DMI ADX as a kink in both the black and red lines. That is an early bottom indication. With RSI at near 20, that’s the whole set. Probably a good time to start shopping for Spring Ag buys.

Last time I’d said:

TNH is looking a bit toppy, but with an 8% dividend I’ll need to see proof before I give up on it and stop ‘buying the dips’.

And it dutifully took a dip and then stabilized sideways. TNH now yielding over 10% and I think I’ll pick up some more at those prices. With cold weather coming, farmers will be hard pressed, but will likely get prices high enough to fund more spending on fertilizers. Need to check the news flow on it first to make sure nothing is wrong…

TNH - Terra Nitrogen

TNH - Terra Nitrogen

Oil And Fuels?

Last time I’d said:

At any rate, it’s looking like the Oil Trade is on and running. Natural gas continues to plunge on excess supply (so much for ‘energy shortage’…) which means US Chemical companies have cheap feed stock and US Electrical Generators have low fuel costs. They are worth a look. Coal does a plunge / bottom bounce. Probably why coal companies tanked… that and the Obama Put on coal. Watch coal for an election bounce if a Republican looks to be leading.

That was pretty much correct. Looks like more of the same now. But at a couple of months into a run, it’s usually getting a bit old. The indicators on oil say that trade is ending / ended.

USO Oil, KOL coal, UNG Nat Gas, UGA Gasoline, UHN Heating Oil,  with a Golden ruler

USO Oil, KOL coal, UNG Nat Gas, UGA Gasoline, UHN Heating Oil, with a Golden ruler

Odd, very odd. Coal and Natural Gas have disconnected from oil. Oil is rising while gasoline and heating oil are basically flat. What the heck does that all mean…

Margins at refiners will get compressed, probably time to be out of refiners (and might make a decent short). I suppose Iran sabre rattling about shutting the gulf could be it…

We’re up to our eyeballs in coal and nat gas, but not making CTL and GTL factories. Oh, yeah, an anti-growth anti-energy anti-capitalist “watermellon” Green in the White House with a UN Agenda 21 Socialist / Fascist driven “Sustainable Development” (which are code words for economic collapse non-development) plan for Amerika.
It all makes sense now…

http://chiefio.wordpress.com/2011/12/18/foia-agenda-21/

So looks like there is a roughly 2 month rolling oscillator ‘swing trade’ that can be done in gasoline and heating oil, trend trade crude oil, and buy natural gas to heat your home (investing not so much…) Coal to be avoided until Obama gone. (But need to look at Chinese Bulk Shipping companies as they will be shipping it all to China to burn there…)

What About Oils?

Not oil per se, but the companies that produce and process it.

Some Selected Global Oils:

The Oil Majors Race

The Oil Majors Race

XOM  Exxon Mobil - Largest, U.S. / Global
COP  Conoco Philips - U.S.  with Russian exposure
CVX  Chevron Texaco - U.S.
PBR  Petrobras - Brazil
PCZ  Petro Canada HAS NOW MERGED WITH SU SUNCOR
BP   British Petroleum
STO  Norway
E    Eni Italy
TOT  Total - France
RDSA Royal Dutch Shell
IMO  Imperial Oil - Canada Oil and Oil Sands
SU   Suncor - Canadian Oil Sands
SSL  Sasol - South African Synthetic Oil Company

Not surprisingly, with turmoil in the Middle East and crude rising, XOM Exxon and CVX Chevron are rising nicely.

A couple of months back I’d said something that’s looking better and better:

Hmmm…. Exxon and CVX look “bottomed”. Perhaps time for long term value investors to accumulate some. BP and some of the other tickers too. The higher leveraged oil sands companies are still dropping, though. (SU for example).

Some Oil Related Comparisions

Oil Services Companies

Oil Services Companies

FTK – Flowtech is rising nicely. Looks like Oil Services has some winners in it, but some selectivity needed. I’d guess those that are OOTUS (Out Of The US) and have lower Sovereign Risk from the EPA and Obama. Looks like an Oil Services posting would be a good thing.

SEE the SEA! Ocean Transports

Shipping Comparison

Shipping Comparison

A sloppy mess that looks sort of bottomed overall, but with a lot of separation between tickers. As usual, RCL / CCL worth more than bulk haulers. Guess hauling rich people around pays more than hauling coal ;-)

It looks like the bottom is holding, then again, it looked like the last bottom / flat area was holding too… That, btw, is why The Rule is that the price has to cross the SMA stack and return to it from the topside, then fail to penetrate it, to declare a confirmed bottom. So still waiting on shippers. With China slowing, shipping will have hard times. You can see what that looks like in RCL / CCL below. I’d called a likely ‘bottom’ in them over the last 2 months (“Bottoming is a process, not a point.”) It continues to look like a well established bottom and a decent time to “bottom fish”.

Royal Caribbean Cruise Lines, Carnival C.L., and SPY S&P 500

Royal Caribbean Cruise Lines, Carnival C.L., and SPY S&P 500

REITS race – Real Estate Investment Trusts

Last time I’d said:

What I said last time was “Continuing weak.” and it has, and is. We do have some indications of a ‘bottom’ in that we’ve got, for BXP, RSI with a ‘lower high after a near 20 moment’. We have price over the SMA stack and we’ve got MACD above zero. I’d make this a ‘buy the dip’ moment for long term investors wanting dividends and some inflation hedge in real estate. Yes, a bit of risk as the ‘dip’ and bounce were a bit violent (hedge fund folks again?) and yes, you need to run a chart for each fund to find the best and time each individually. Still, it looks like the shorts have exited.

Looks like that was just about right. We’re getting some separation now, so maybe time for a more detailed look inside the RACE for individual better positions. Time to get some dividends ;-)

REITS Race

REITS Race

PEI  Pennsylvania Real Estate - Mall REIT (REMOVED to make better graph)
VTR  Ventas - sr. care, nursing homes, hospitals
PSA  Public Storage - junk storage units
BXP  Boston Properties - office REIT on BosWash corridor  
HCN  Health Care REIT -  extended care, senior care, medical offices
HCP  Health Care Properties - ex. care, senior living, Dr. offices
PCL  Plum Creek Timber - lumber and trees REIT
SPY  S & P 500 broad stock market benchmark
RPT  Ramco Mall REIT
PLD  Prologis - logistics 

The Long Term Context

Nothing in this section has really changed. I’ve moved one of the charts from here to the top for a while, as we’re still in a negative long term context (though potentially near an inflection).

Here is another interesting chart where you can see how volatility spikes at market bottoms and drops lower during times of topping actions. It also has “momentum” on it which can act as a reminder of how much force a trend has, and which way. Slow Stochastic is better for a faster trade behaviour when ADX (of the DMI / ADX indicator above) is below 20 or so.

If this all looks like “too much”, just remember that you don’t need to look at more than the one basic chart. The rest of these indicators give more depth of insight into “why”, but not better answers as to when to be in stocks vs bonds.

SPY vs TLT with Slow Stochastic, Volatility (fast) and Momentum

SPY vs TLT with Slow Stochastic, Volatility (fast) and Momentum

Last time I’d said:

While it generally is giving ‘be in’ indications (momentum positive, volatility dropping but not yet low) that Slow Stochastic is saying ‘expect a dip soon’. That ought to be a buying opportunity (unless things fall apart completely on Europe news or a new war…)

And we not only got that dip, and recovered some since then, but we also had more horrid news from Europe and some minor military action around the world (mysterious things blowing up in Iran, renewed riots in Syria and Egypt, Iran sabre rattling about the gulf, etc.)

As of now, with volatility dropping quite low, and prices at the SMA lines from below, it’s not a particularly safe configuration. Then again the Christmas holiday often looks like a ‘momentum failing, fail to advance, sell’ when it is really ‘what to buy for the spouse?!’ and not really what it seems. I’m willing to take on small positions, but will have at least 1/2 cash and related at these times and make the trade on a faster chart so I’m out quick if things turn negative.

VIX the Volatility Index

Volatility is just dying. Common near the Christmas holiday, but also can happen at market tops. (Christmas tends to mess up the use of volatility as a top indicator). Still, things are dampening down.
Last time I’d said:

Oddly, the most interesting thing to me on this chart is the IYT transportation index. Looking at that chart shows a dramatic spike down, then a major spike back up (probably Hedge Fund driven) and it’s now above the SMA stack with positive indicators. OK, note to self, do a Transportation Posting…

Note to self: Still need to do that ;-)

Volatility Index and Related

Volatility Index and Related

VIX  - Volatility Index (not a ticker, you can't trade it)
VXX  - Short term VIX futures ETN (a ticker you can trade)
VXZ  - Medium term VIX futures ETN (a ticker you can trade)
FXY  - Japanese Yen
SH   - "Short" sell of SPY
SPY  - S&P 500 benchmark
IYT  - Transports, a leading sector
XHB  - Homebuilders, a leading sector and "canary" 
XRT  - Retail
Volatility Index and Related

Volatility Index and Related

You could make some money on volatility trades (VXZ and VXX), but it’s a dicey fast trade. A 6 month ‘close up’ shows recent trends. We’ve got some positive slope in the sectors shown (though hard to see as volatility is a wide swing ticker…) and the yen FXY continues to shine a good ‘parking place’ for currency.

Stock Indicators – what and how

When the long duration charts say “maybe making a top, but perhaps a ‘buy the dip’ moment”, I look at the faster charts and faster indicators and move to a faster time scale with faster trades. But I’m a trader.

For long term investors, you just ride the ride until the chart says “top is definitely in” and “buy the dip” until proven otherwise by a confirmed roll over (price below SMA stack). In general, I’d put very long term bias as “be in”. Trend is up, dip happened. Be in. But you just can’t ignore that the price plot looks very “rolled flat” at least… and we’re all waiting for DC and Germany to “make their moves”… So you must WATCH the chart each week, even if not acting to be out of the market yet.

If all this talk of indicators is leaving you wondering what the heck I’m talking about, hit the link in the heading of this paragraph and there is a bit of an explanation.

Click for Disclaimers, Disclosures, and Where To Get Charts

Remember that on any stock or ticker I say I’m looking at, you don’t just go buy it. You wait for a stock entry indication to get the best possible entry into the position.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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13 Responses to WSW, Wedneday, 21 December, 2011

  1. I know little or nothing about economics, but like almost everyone else, I am keenly aware that the world economy is extremely unstable and the public has justifiably lost faith in world leaders.

    Perhaps government deception, identified at the root of the 40-year global climate scandal:

    http://dl.dropbox.com/u/10640850/Climategate_Roots.pdf

    Was also involved in the collapse of Western economies?

    Four recent news stories suggest to me that deception continues today.

    a.) Quiet cooperation between Russian and US leaders:

    http://www.physorg.com/news/2011-12-russia-multinational-crew-iss.html

    http://www.physorg.com/news/2011-12-darpa-spy-satellite-real-time-video.html

    b.) NASA’s belated interest in data on the Solar System’s birth:

    http://dl.dropbox.com/u/10640850/NASA_finally_asks.pdf

    c.) Reports of Russia’s new aggressive rocket development

    http://news.yahoo.com/blogs/envoy/moscow-eyeing-u-missile-defense-plans-announces-100-194904097.html

    Information in a-b seem more reliable than the news story in c. But why do world leaders shadowbox in public while quietly cooperating out of sight?

  2. Jason Calley says:

    @ Oliver K. Manuel “But why do world leaders shadowbox in public while quietly cooperating out of sight?”

    Why do puppeteers stage Punch and Judy fights, even though they work together to set up the show, and then drive off for dinner together after the children have been entertained?

  3. AJStrata says:

    Chiefio, Went back to Climategate 1 code and guess what I found – what looks like nearly a decade of code ‘hiding the decline’ across a bunch of supposedly independent studies.

    http://strata-sphere.com/blog/index.php/archives/17772

  4. @Jason Calley “Why do puppeteers stage Punch and Judy fights, even though they work together to set up the show, and then drive off for dinner together after the children have been entertained?”

    That was the same conclusion I reached in tracing back the 40-year history of the global climate scandal (1971-2011):

    http://dl.dropbox.com/u/10640850/Climategate_Roots.pdf

    These parts of the history were a mystery:

    a.) The Geophysics Section of NAS ambushed Dr. Sabu and I at the 1976 AGU meeting when we presented evidence the Sun is violent and gave birth to the Solar System five billion years (5 Gyr) ago:

    http://www.omatumr.com/archive/StrangeXenon.pdf

    b.) The USSR NAS and the US NAS were squabbling and invited me to present the same evidence in a plenary lecture in Moscow in Nov 1981:

    “Heterogeneity of isotopic and elemental compositions in meteorites: Evidence of local synthesis of the elements “, Geokhimiya (12) 1776-1801 (1981) [In Russian].

    c.) In Mar 1983 US President Ronald Reagan, a former movie star, told the National Association of Evangelicals in his first EVIL EMPIRE Speech:

    “So, in your discussions of the nuclear freeze proposals I urge you to beware the temptation of pride – the temptation of blithely … eh … declaring yourselves above it all and label both sides equally at fault, to ignore the facts of history and the aggressive impulses of an EVIL EMPIRE, to simply call the arms race a giant misunderstanding and thereby remove yourself from the struggle between right and wrong and good and evil.

    After massaging the audience with religious and patriotic verbiage, like

    “Yes, I am. I’ve felt it. I believe in intercessionary prayer,”
    “If we will not be governed by God, we must be governed by tyrants.”
    “The God who gave us life, gave us liberty at the same time.”
    “political prosperity, religion and morality are indispensable supports.”
    “if America ever ceases to be good, America will cease to be great.”
    “this administration is motivated by a political philosophy that sees the greatness of America in you, her people, and in your families, churches, neighborhoods, communities — the institutions that foster and nourish values like concern for others and respect for the rule of law under God.”

    http:// _frank_warner/2004/06/ronald_reagan_t.html

    Why did the USSR and the US NAS disagree about letting the public know Earth’s heat source – the Sun – is violently unstable? Was that part of the negotiations to change official propaganda from an impending “Ice Age”

    http://www.time.com/time/magazine/article/0,9171,944914,00.html

    http://www.denisdutton.com/cooling_world.htm

    Despite current fears and turmoil, there is a message of hope recorded in every atom, leaf and rock: “The universe is in good hands!”

    http://dl.dropbox.com/u/10640850/No_Fear.pdf

    So be of good cheer. If the Sun sneezes or belches, world leaders will be instant charcoal, like you and me too!

  5. E.M.Smith says:

    @AJStrata:

    VERY well done!

    But you have put this comment in a posting about finance… if folks are following topics or tags, many will not see it.

    Can I ask you to put a similar comments in one of the climate related postings? Perhaps the “Strata-Sphere on Jones – a must read” or even the “Foia – Agenda 21″ posting (or both if you like ;-) Yes, it’s that good…

  6. @AJStrata: I agree, “VERY well done!”

    @E.M.Smith: Are AGW and finances separate issues? Was the collapse of Western science and the transAtlantic economic system a coincidence?

  7. I just received a link to “Stansberry’s Investment Advisory” (15 Dec 2011)

    “The Corruption of America”

    http://www.stansberryresearch.com/pub/reports/201112PSI_issue.html

    The first figure shows the decline in the USA per capita GDP since ~1971.

    By a remarkable coincidence, the corruption of space sciences and the birth of the AGW scandal trace back to about the same time period!

    http://dl.dropbox.com/u/10640850/Climategate_Roots.pdf

  8. E.M.Smith says:

    @Oliver:

    I don’t see them as disjoint issues so much as disjoint threads.

    AGW has a dramatic impact on investments (why I got interested in the first place) but some folks here are all about the AGW stuff while some others may be more about the money and charts stuff…

    It gets more exposure to have something in an article where the keyword / tag searches will kick it up as well.

    “Coincidence”? Surely you jest ;-)

  9. Yes, coincidence is the Great Reality\’s way of remaining anonymous.

  10. E.M.Smith says:

    Heard on Fox Business just now “Follow The Money” show:

    “Just stay the hell away from ALL Solar Stocks”

    Followed by a very sick falling chart for some of the solar darlings…

    They then disparaged the financials, too…

    Can you say “Sovereign Risk”? I knew you could ;-)

  11. p.g.sharrow says:

    They also said that Soros took a large hit on his positions and Buffet hasn’t done so well ether. Maybe sometimes when you stack the deck to win someone sneaks in and shuffles the deck. pg

  12. E.M.Smith says:

    @P.G. Sharrow:

    One of my minor pleasures is realizing that the same “manage the market” or “stack the deck” behaviours that often benefit the manipulators will also often go astray… Often more money, more consistently, can be made by rampant competitive markets. Who make more: Jobs and Apple, or the manipulative behaviour of AlGore and friends?

    The silly belief that they can legislate markets (that hurts the rest of us) has an inevitable surprise for them…

Comments are closed.