WSW – Monday, November 15, 2010

General Comment

Well, it’s been a while since I did a full up WSW posting (about 6 weeks+). I’ve done a couple of little notes along the way, but we’ve had elections, Fed meetings and now the G20 (Group of 20 larger industrialized nations) meeting. It’s time for another top to bottom run through of markets. The most important point is probably that Bernanke is clearly on record as a staunch “bugger the dollar” trade, at least until inflation in the OFFICIAL statistics is somewhere around 2% (which means food and fuel will be way higher…) and the Republicans can have a tiny bit of control on spending by congress, at least after the Lame Duck session finishes their last bit of squandering…

So I’m still mostly in metals and other ‘real stuff’ but with a large chunk in long term ‘value investments’ that are just riding for a very long time. As there has been some interest expressed, I’ll add a bit on longer cycle investments and grow it over time.

Pointer To Other Topics

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

The Nature of the Charts Here

The charts in this posting are 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. 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 – Monday, November 15, 2010

So we’ve got a bit of a spanking for the Democrats, a tiny bit of “Can I trust you with the cookies now?” to the Republicans, a G20 that is souring on the USA buggering the dollar (but seems to think it’s fine if they all bugger their currencies, so watch metals prices…) and a Fed meeting that said “A Printing We Will Go, A Printing We Will Go, Hi Ho the Merry-O, A Printing We Will Go!”.

What a mess.

So I’ve held modest cash balances with a medium metals position to hedge it all to rough neutrality along with some deep value things I bought way back when (like my Birkshire Hathaway – where Warren Buffet announced his intention to step down and his successor… drat.). No real “positioning” so much as just hedging to minimize the impacts of all those turkeys having so many Ministry Of Stupidity moments in the same 2 weeks.

Some Calendar Issues

We have the “End of Year” coming in about 6 weeks, along with an options expiration or two, and the Christmas Holiday (that has it’s own odd impacts). Often there is an end of year “Christmas Rally” and retail stocks often get a ‘lift’. We’ll see.

It’s likely we’ll see a bit of a lift in stocks about the turn of the month as all those monthly IRA and 401K deposits happen. Then there is the risk of a ‘dip’ the following week.

And, as I said last posting:

Finally, we are 2 years into this “crash”. At about 2 1/2 years things start to recover (in most years). About then, The Fed starts to raise interest rates. This is not always good for markets. It’s a race condition between the good economic performance (that lets rate hikes happen) and the depressive impacts from higher rates on things like comparative rates of return on investments. That means we need to start watching bond rates more closely and remembering that whenever The Fed starts to raise rates, Bonds (and Bond Funds even more so) drop in value. You don’t want to be the last one out the door when that starts.

So we’re going to take a closer look at bonds and the bond short TBT to see if there are early signs in place.

The Dollar Lately

We’ve had dollar weakness for a while, but now it’s gone more or less flat, but with a strong ‘ripple’ as news hits. First up is a 6 month chart for some context, then the 10 day chart for those wanting to trade the ripples. Note that I’ve added TBT, the bond “short” to the top graph. I’ve got some, and expect to have more. It’s likely to be a good “ride” for a year or so, depending on how much The Fed has to raise interest rates to quell the inflation it is sowing now, it could be a spectacular ride for a few years.

6 Month Currencies and TBT the US Treasury "Bond Short" fund

6 Month Currencies and TBT the US Treasury "Bond Short" fund

And here is the 10 day, where you can see a bit of recent dollar strength playing out as everything else seems to drop, measured in dollars. Someone is moving money around, and into dollars. The question is why? What are THEY going to buy? Or avoid?

Currencies - 10 Day Hourly Interval chart vs US Dollar

Currencies - 10 Day Hourly Interval chart vs US Dollar

Metals look to have topped, so time to exit most of them. We have “failure to advance” along with a DMI red on top…

Metals 6 month chart

Metals 6 month chart

Though I do note that the base metals fund has not yet crossed the 50 day moving average, so we keep an eye on these guys as a potential ‘reentry’…

10 Day Hourly Interval chart of Metals

10 Day Hourly Interval chart of Metals

And Ag commodities are more mixed, with a “parabolic rise” ending in a spike down for sugar and cotton. Often a time to buy a bit for a ‘dead cat bounce’ trade… though it also indicates that the underlaying trend is now broken. The upshot of this is that your food bill is going up, farmers will be making some more money (and buying more ‘stuff’) and companies that use these things will be raising prices or cutting profits.

Ag Commodities 6 month chart

Ag Commodities 6 month chart

and the 10 day ‘trader chart’:

Ag Commodities 10 day hourly interval chart

Ag Commodities 10 day hourly interval chart

So the dollar has taken a hit, commodity inflation is showing up in globally traded commodities (though prices have started to stabilize at their new, higher, levels…), and Your Government is still trying to decide what value to place on Your Currency…

Monthly Running Stocks

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’)

10 Best Performing Industries
  Industry Name	Percent Change (over time selected)  

  DJ US Platinum & Precious Metals In...	21.35%  
  DJ US Automobiles Index	16.45%  
  DJ US Travel & Tourism Index	14.46%  
  DJ US Gambling Index	14.05%  
  DJ US Automobiles & Parts Index	11.76%  
  DJ US Paper Index	11.51%  
  DJ US Forestry & Paper Index	11.51%  
  DJ US Internet Index	10.45%  
  DJ US Airlines Index	10.04%  
  DJ US Coal Index	9.99%  

Platinum and Precious Metals (that I’ve been in, in modest size) both an inflation play and an industrial recovery / catalyst play.

Autos, travel, gambling? A “consumer isn’t dead” thesis? Auto parts? But they are still fixing the old jalopy… then some paper goods and forestry. Land and trees have inherent value, like metals, but often lag the metals as they are also industrial demand driven. Worth a look. Airilnes? Never OWN and airline, only trade them, and trade fast… Then Coal. IF you have economic growth anywhere on the globe (China…) you need coal…

10 Worst Performing Industries
  Industry Name	Percent Change (over time selected)  

  DJ US Tires Index	-11.19%  
  DJ US Mortgage Finance Index	-10.31%  
  DJ US Furnishings Index	-6.60%  
  DJ US Durable Household Products In...	-5.61%  
  DJ US Pharmaceuticals Index	-4.07%  
  DJ US Personal Products Index	-3.91%  
  DJ US Waste & Disposal Services Ind...	-3.71%  
  DJ US Diversified Industrials Index	-3.22%  
  DJ US Aerospace Index	-3.15%  
  DJ US Industrial & Office REITs Ind...	-3.10%  

The early riser of “tires” from oh so many months back looks to have reached an end. The bet is now that folks will buy new cars, not new tires for the old car. Mortgage Finance? With those jokers in DC playing puppet master? And all the “no recovery ‘duck and cover’ stocks”. The “defensive” stocks. Personal products, trash, drugs. Funds are repositioning out of defensive and into ‘something else’ that looks a bit like economic recovery. Yet “consumer durables” are also dropping… Hmmm Perhaps they expect the “good times” to be in other countries… Fits with the diversified industrials and industrial REITS / Offices dropping. A “get out of the USA” trade? But that ought to be a bit long in the tooth already… Maybe just running to cash ahead of the Holidays?

Weekly Running Stocks

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

10 Best Performing Industries
  Industry Name	Percent Change (over time selected)  

  DJ US Platinum & Precious Metals In...	6.05%  
  DJ US Travel & Tourism Index	3.66%  
  DJ US Coal Index	2.78%  
  DJ US Exploration & Production Inde...	2.05%  
  DJ US Mining Index	1.42%  
  DJ US Oil & Gas Producers Index	1.35%  
  DJ US Pipelines Index	1.21%  
  DJ US Oil & Gas Index	1.18%  
  DJ US Integrated Oil & Gas Index	0.97%  
  DJ US Oil Equipment, Services & Dis...	0.69%  

Again the “Industrial Inputs” plays. Platinum. Coal. Oil and Gas. Add some foreign tourists coming to the USA as our dollar cheapens. Yeah, it fits. China needs coal, oil, gas, platinum, and will be having money to loan to Europeans for their holidays here ;-)

10 Worst Performing Industries
  Industry Name	Percent Change (over time selected)  

  DJ US Mortgage Finance Index	-10.08%  
  DJ US Telecommunications Equipment...	-7.97%  
  DJ US Hotel & Lodging REITs Index	-7.52%  
  DJ US Full Line Insurance Index	-7.26%  
  DJ US Aerospace Index	-6.39%  
  DJ US Industrial & Office REITs Ind...	-6.18%  
  DJ US Aerospace & Defense Index	-5.63%  
  DJ US Retail REITs Index	-5.54%  
  DJ US Real Estate Investment Trusts...	-5.13%  
  DJ US Speciality REITs Index	-5.04%  

Again the “Sovereign Risk” issues causing mortgages to be a bad place to be, and the USA based equipment and offices / industrial getting hammered. Odd that Retail REITS would be whacked too, as they have Christmas coming. Need to see if this is just a ‘buy the dip’ or a ‘failure to advance’ or… but clearly the trend was ‘dump real estate’. And it looks like somebody thinks Insurance has a target on their back. It IS a Lame Duck session for a while and they WILL be up to mischief…

Last time we’d looked at this mixed bag of metals and miners and found that there was gold in those copper miners. Looks like it’s still a viable trade, though some of the lesser miners and metals are drooping (like PAL). And as I said then, TBT looked like a bottom and would “take off” soon. Looks like “soon” is now.

Gold, Silver, Copper and Related Metals miners

Gold, Silver, Copper and Related Metals miners

Also on the chart is a “bond short” which shows how The Fed and inflation is acting.

GLD  -  Gold
SWC  -  Stillwater Mining
PAL   -  Palladium Mining
JJC  -  Copper ETN
GDX  -  Gold Mining ETF
SCCO -  Souther Copper miner
TBT  -  SHORT of bonds
SLV  -  Silver 
JJN  -  Nickel ETN
FCX  -  Freeport McMoRan Copper and Gold miner

But this trade is starting to look a bit “tired” to me. I’d start easing for the exits… maybe 1/2 off the table for now, and start rolling into other things. More if it has the indicators go to ‘get out’ mode.

Retail has had a nice run up, especially in the “high end” retail like TIF. Time to exit the “low end” retailers was probably a week or two ago. In an economic recovery, folks rotate OUT of “low end” retail like COST and WMT and into the higher end stores (as folks get tired of trunk loads of beans and rice and go buy a new camera… ;-)

Broad Retail Race

Broad Retail Race

Looks like Retail is back on an up trend. What about clothing in particular?

Apparel Retailers

Apparel Retailers

Looks like the run has ended. It might just be the normal “sag” before the Christmas run up and earnings reports in January. Watch for a ‘reentry’ but don’t just sit there in it while it’s dropping. As I said last time:

I’m in the major retailers (like Macy’s, Penny’s, Tiffany, etc.) and some specialty like HOTT Hot Topic (though not in size. Yet…)

These are some of the ‘deep value’ stocks I picked up near the bottom. Months and months ago. They are in my spouses retirement account, so will be held for years (perhaps decades). Oh, and the 100 shares of HOTT are just because my daughter works there. Not a particularly ‘trade pick’, more a ‘want the annual report and want the kid to learn about this stuff’ holding. I’ll be holding if for a few years (as long as she works there, and she loves it so that’s likely to be a while). Don’t know what the deal is in ROST. Perhaps someone with clothes savvy could figure out what they are doing right… (Ross Stores)

Here I’m going to repeat my “retail disclaimer”:

There are so many retailers it would benefit from many more custom races, and from someone who knows fashion commenting on what’s selling and what’s not… but that person is not me, so you will get ‘the usual’ on the charts and trend following rather than trend predicting. But if you have a good eye for fashion and a hot hand at shopping, it can tell you months in advance who will have a good quarter. Yes, women especially can “make money shopping”… if they buy the stocks instead of the stockings…

So any fashion conscious women (or even Guys) would be highly appreciated if they were to make comments on, oh, the rotten ‘colors’ at one place, or the ‘so last year’ fabrics somewhere else… It’s “retail season” and I’m a fashion dud…

What Is Our Asset Class Context?

Let’s look at the S&P 500 largest stocks in America compared with some other kinds of assets; a 20 year+ maturity bond fund, oil, gold, Yen.

Asset Class Races

Asset Class Recent Race

SPY       The S&P 500 ETF
GLD       Gold ETF
USO       Oil ETF
FXY       Japanese Yen currency fund
TLT       20 Year U.S. Treasury Bond fund
FXE       Euro currency ETF
SLV       Silver fund
BZF       Brazilian currency ETF
EWA       Australia ETF
WOOD      A wood and paper products fund

Silver did nicely, but that looks like a ‘failure to advance’ to me. Time to put that puppy to bed or go to faster trade times on it. Australia doing well, but I’d take a close look at charts before jumping into it right now. The “minerals” trade is likely to roll in to the next stage of production if we do have an economic recovery. We need an international race to see if money is moving from Australia to, oh, China and India, prior to picking where to sit… (Though the G20 meeting has likely caused some of these wobbles as The Ministers Of Stupidity have made various pronouncements…)

Frankly, most of this stuff looks ‘tired’ to me. Like the “stuff trade” is wearing thin and the “bugger the dollar” is running into “bugger the Euro” and “bugger the Pound” and “bugger the Yuan” and…

OK, I’m going to “crow” just a bit more on one point. Last posting I said:

I’d called the top in bonds (even made a special posting about it). A couple of postings back I’d commented:

Bonds (TLT) have had a double top “failure to advance” and a closer look showed it’s time to be out of long term tradable bonds. (No, you don’t need to sell your $50 savings bonds, especially those with an inflation adjustment, just the long term bond funds are at high risk.) More detail here:

https://chiefio.wordpress.com/2010/09/04/bonds-are-not-safe/

Notice how you have weeks, sometimes even months, to react to these kinds of trend changes? Trading does not have to be a frantic day trade obsession.

And TBT has been a nice trade since then. Those are the moments I love… That TLT line headed down crossing all the others. Just loverly…

Notice that the SPY main ticker of the graph continues to show a “Be out” signal with the MACD crossover toward the downside with “red on top” just after an RSI of “near 80”. The DMI/ADX shows “blue on top” so has not confirmed this as a longer term ‘be out’, but it tends to lag. So this could just be a ‘reversion to the mean’ moment as the prices ‘kiss’ the SMA stack, or it could be worse. Move to a faster trade cycle or step out is what my rules say…

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

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

And the 10 day called an exit about 7 trade days ago, with a ‘confirm’ from DMI about 5 days ago… Looks like it’s setting up for a ‘reentry’ (though if MACD stays below zero, it’s just a pause in a down trend…) but remember “Early OUT, late in…”

What about Brazil? Also India and China.

So, we’ve had a load of “crap” from Minsters of Stupidity as they have attempted to put on taxes on foreign investment (Brazil) and other kinds of exchange controls. Plus China made grumpy talk about our “bugger the dollar” behaviours. Any of that show up in the charts? Or is that dollar strength just foreign central banks buying dollars in an attempt to (relatively) bugger their currencies?

Brazil the EWZ ETF vs the BZF currency ETF

Brazil ETF vs Currency Race

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

Brazil has a ‘failure to advance’ with two tops of about equal height. Now DMI is ‘red on top’. Time to be gone from Brazil (probably was a while ago… wonder if anyone said to dump Brazil a month or so ago? ;-)

We have India continuing to win (and I hold some of the EPI fund. It’s a decent one that screens for earnings). China is being volatile, but not having a “failure to advance” as this peak was higher than last peak. So I’d say China / India are the more likely places to be. OK, need to cast a broader net to see where that Brazil money is headed… (Notice that BZF has rolled over… cash is leaving Brazil…) and golly, EWW Mexico is on a nice 45 degree upward climb. Makes you wanna say “hmmm”… Rich with drug money and going shopping? Works for me…

This next chart has a couple of the other ‘trade’ indicators on it. Slow Stochastic (that isn’t very slow), Williams %R (that usually tells you the same thing as MACD, but sometimes more clearly), and “momentum” that is like Rate Of Change, but sometimes seems to move a bit faster.

OK, look back at the above chart. ADX (on the DMI / ADX indicator) is in the basement at about 18. The “trend” is broken, but you can swing trade the ‘ripples’ if you like. For that you swap to faster ‘ripple’ oriented indicators (at least until ADX is back over 25 or so, then trade THAT new trend..) So for investors it may be time to leave Brazil, but for traders, you can just change your ‘style’ and ‘speed’…

Brazil EWZ with Slow Stochastic, Williams %R and Momentum

Brazil EWZ with Slow Stochastic, Williams %R and Momentum

Slow stochastic has hits the top, you sell. Slow stochastic on the bottom, you buy.
Williams %R on a bottom, time to buy. On a top, time to sell.
Momentum (or Rate Of Change sometimes) crosses the midline, you swap sides.

Best if two out of three agree. (Or you can just use trailing “stop loss” and “buy if touched” orders to time entry / exit).

Watch for a new ‘trend to the downside’ and if that forms, go short and don’t play th e long side…

OOTUS – Out Of The U.S.

See the racing stocks tab for currencies and for foreign emerging stock markets for the latest moves.

We’ve already highlighted this up top, but I’m leaving this chart here for longer context. The European currencies in particular have really rolled over compared to the US Dollar. The British Pound and the Looney look to be roughly dollar stable. OOTUS as a currency trade looks to be dead (at least for now…). Most likely as a ruslt of the Republicans getting the House (and the purse…) back along with the G20 deciding to push back on a ‘bugger the dollar’ free hand by The Fed.

Currencies race

Currencies race

So when everyone is trashing their currencies, what’s left? Traditionally it’s gold. But this chart is looking a bit ‘tired’ to me too. It’s been a very long run.

Gold 1 year daily chart

Gold 1 year daily chart

RSI has a ‘lower top’, and price has advanced peak-to-peak; but only just barely on a couple of day spike that was probably news driven, then dropped right back. I’d guess this is where some of the dollar demand is coming from. Funds and Hedge Funds moving out of gold and related (and foreign currencies) and into dollars as they, too, try to figure out “what’s next?”.

No, we don’t have “DMI Red On Top”, and MACD is still above zero (though pointed downward with a new barely formed crossover.

So gold, two, joins the ‘trade faster on faster charts’ group as it is likely near to a ‘topping roll’ behaviour.

The ‘seasonal trade’ has about 6 more weeks in it. If you were a billion dollar hedge fund, you would need to start edging out now, not waiting for Jan 4… so watch closely for any signs they are up to that and join them…

Some Selected Emerging Markets

Indonesia Fund 1 Year Chart

Indonesia Fund 1 Year Chart

This chart compares FXI – China 25 big stocks, EWZ – Brazil, EWO – Austria, EPI – Wisdom Tree India fund, and the Indonesia fund. CH and ECH are two Chile funds.

IDX  Indonesia Fund
FXI  China
EWZ  Brazil
EWO  Austria ('emerging Europe proxy)
EPI  India with dividends and growth fund
CH  Chile Aberdeen Fund (volatile and thin)
ECH Chile iShares Fund 

It looks like the ‘lesser emerging markets’ are getting the money that is running out of the major emerging markets as their Ministers make Pronouncements and add taxes…

VIX the Volatility Index

Don’t like this. Don’t like it one bit. Volatility is getting rather low. When it does that, it often precedes a drop. Yeah, it could go lower still before a drop… but it’s just getting a bit too quiet in the volatility camp…

On the other side, that means it’s relatively cheap to buy “puts” to protect your positions against a drop…

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

As VIX drops, stocks rise, but as it gets very low, we are getting late in a given ‘run’ and you can expect reversal or flat days.

The Dollar

This is a ‘US Dollar UP” trade chart of UUP. The down bet is UDN.

Dollar Trade -UP

Dollar Trade -UP

OK, we’ve already noted this above, but this ‘boiler plate’ chart needs to be here all the time to remind you to keep an eye on the measuring stick, no matter what, as this is a ‘rubber ruler’ with politicians pulling on it.

DMI is ‘blue on top’. MACD is “open upwards” and rising. RSI is ‘higher low off of near 20’. It’s all saying to “be in the dollar” for now…

And this week, on a fast chart, for the UDN Dollar DOWN ticker we get:

UDN Dollar Down trade vs selected currencies and UUP a Dollar Up trade

UDN Dollar Down trade vs selected currencies and UUP a Dollar Up trade

A “be in the dollar” indication of about 7 trading days duration.

Ideas of the Week

Shorting bonds. Moving out of more of my metals positions. Looking in more detail at some of the smaller emerging markets for entries. Mexico and Chile are interesting. May add to me EPI position in India. A Closer Look at China and what they have said at the G20 meeting. Planning for a “duck and cover” toward the end of the year…

What does the 10 day hourly chart say is happening now?

Here’s a 10 day houly chart of the Dow 30 Industrials (DIA), the S&P 500 (SPY), the Nasdaq tech companies (QQQQ), the Russel 2000 (RUT), and both a Brazil fund (EWZ) and an Australia fund (EWA). It also has a ‘short fund’ (SH) on the chart so you can see what being short this market is doing right now. We also have EWO, an emerging Europe Austria fund, EWW for Mexico and IIF for India.

10 Day Hourly Interval Broad Market

10 Day Hourly Interval Broad Market

Not much good news in the stocks arena… maybe I’ll just stay in a hedge / straddle for a while…

Comparison of Broader Mixed Asset Classes

The 6 month asset class race:

Asset Class Race

Asset Class Race

SPY  S & P 500 US stocks
GLD  Gold
EEM  Emerging Markets
FXY  Japanese Yen
JJC  Copper
TLT  Long term bonds 20 year+
USO  U.S. Oil
DBA  Agricultural basket
SLV  Silver
WOOD  Wood / Timber

Just not talking to me. Copper and Silver are the only clear winners, but those trades are too long in the tooth for a big new entry. We’ve got things weakening in the tail ends, like traders starting to ‘pack it in’ and go to cash ahead of a long Thanksgiving / Christmas holiday vacation… Maybe I’ll just go shopping for some high dividend oil trusts and park there for the holidays… Or maybe not… looks like even the energy commodities are rolling over for a big dipper… Might have a day trade with RSI on a bottom, but that’s about it.

USO Oil vs KOL Coal, UNG Natural Gas, and UGA Gasoline

USO Oil vs KOL Coal, UNG Natural Gas, and UGA Gasoline

Just not liking the idea of a day trade into the holidays. Too much work. Maybe that’s what is driving up the dollar. Sloth…

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

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

Outperforming the other domestic markets, but being beaten by Mexico. The other markets that beat it look to be pausing, so no joy there for now. I’d called this as looking extended last time and ready for a drop. That call was about a month early, as it’s basically just run since then, but we’ve got our dip now… Probably an entry point for a trade. For longer term, we’ve got a lot of run-up behind us… So if you enter here, be ready to exit if it does not bounce off the SMA stack to the upside but instead punches through.

(BTW, “early” is trader talk for “I was wrong”… though it did ‘dip’ at the open of the first trade day of October… )

Were Bonds a good idea?

Nope, not at all…

OK, lets take a peak at the Bonds Race but with TBT (the “long term bonds” short sell ETN – that is, the thing that “shorts bonds”) as the main ticker symbol:

Bonds - TBT to Short Them

Bonds - TBT to Short Them

We’ve got a nice trend trade on in TBT. Short the bond market. That’s the major theme in Bonds for a while…

What About Oils?

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

Sasol, Exxon and BP. I’m not keen on BP just as they run their business rather badly, but someone is buying it… Exxon has some Sovereign Risk from the Obama Admin, but with the Repubs getting some traction is likely a good investment holding. Sasol I love as a “Coal to Oil” trade, but I’d not put money in South African politics right now.

Not a lot to warm my heart here, but as a small holding in an investment portfolio, puting some XOM and SSL (small part!) ought to work out OK.. PBR has turned into “dead money” as their Ministry Of Stupidity has killed interest in Brazil and as they have a new Socialist Leader who is less prone to leaving their markets alone that the last leader..

Some Near Oil and Oil Related Comparisions

What about oil service companies and Brazilian sugar / alcohol?

Oil Services and Oil Related

Oil Services and Oil Related

Sugar is continuing a Spike and Drop pattern. At these prices, may well be time to exit my CZZ holdings. Long term readers will remember when I’d loaded up on a bunch at something like $2.68 to $4 a share. It’s now $13, and with changed politics, I’ve lightened up to a much smaller stake. But I’m not going to be all the way out until DMI is ‘red on top’…

Ag Trade 6 Month Daily Interval Mixed Players

Ag Trade 6 Month Daily Interval Mixed Players

About 6 weeks ago I’d said:

HOGS is a Chinese hog farming operation and is running nicely.

Boy was than an understatement! Food for a China gaining wealth will likely be a grower for years to come…

MON Monsanto is getting whacked. Looks like the fertilizer / seeds guys are having issues for the moment.

Which issues didn’t last long and now MON is on a run up again. The takeover of POT has fallen apart and I suspect that a “long POT short MON” hedge is getting unwound.

We’ve got continued strength in Ag, and I’d look on these ‘dips’ as an opportunity to enter for longer term holders / investors. During inflationary times, food prices rise and commodities rise, also that farm mortgage shrinks in real terms. Nice place to be for the farmer, who buys more of this ‘stuff’.

For the DBA ‘basket’, we have MACD crossover and DMI+/- headed for a crossover. I’d step back from some of the ag trade at this point (if I were in it) with the possible exception of OOTUS ag (CZZ, HOGS, etc.)

SEE the SEA!

Another “oopsy”:

I’ve stepped out of RCL and CCL. Had a nice ride, but as winter comes, cruises are less interesting.

Forgot all those folks from Euro land heading to cruses in the topics on cheap dollars… So I’ve missed a nice spike in RCL and CCL. That’s the problem with trading ”themes’ and not ‘charts’… Only now is RSI near 80 and with DMI+ (the blue line) firmly diving under ADX (the black line) that has started an inflection down. Those are the conditions for a proper ‘start to exit’…

Shipping Comparison

Shipping Comparison

Here is the RCL / CCL cruise lines chart. You can see how these have much more range (or “beta”) that the S&P 500 SPY fund:

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

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

The cruise lines can have a lot of ‘juice’ but can juice you in either direction… While the indicators still say ‘be in’ RCL, it’s late in this ‘swing’, so I’m out.

And so missed half the run… Then again, driving cross country and going to Disney land are not conducive to properly watching positions and trading rapidly… so maybe I ought not to be beating myself up so much… But it was still wrong…

The REITS race – Real Estate Investment Trusts

Looks like the bottom is in. Good opportunities to get inflation hedge and dividends. Retail is recovering, so the retail REITS and health REITS are probably best.

And that was true for October… now it looks like they are rolling down into the end of year reporting cycle. I’d start watching for a chance to buy some nice dividends on this ‘dip’ as the indicators say a bottom is formed.

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 

And PLD as a logistics REIT is showing life. Folks are expecting a recovery in business shipments. As building returns, wood products rise, so PCL will start being interesting. As a long term investment it’s a nice timber property.

Well at least I got those two right…

Conclusions and Likely Actions

Increase my TBT. Look to pick up some more REITS on a dip to round out positions and maybe even clip some dividends at the year end. Move out of metals a bit more and into “other emerging markets” some. Figure out how to make a Thanksgiving Dinner for a family that has decided to (mostly) be vegetarians… (I make a very nice turkey.. with stuffing… that would now be for me and one other person… Sigh. I need to think up a vegetarian alternative…)

Oh, and spend some more time working on discipline in doing what the charts say not what I think is a bright idea… especially about boats…

The Long Term Context

This is a very long duration chart (5 years) of NYSE and one of the S&P 500 (SPY). They will not change much from week to week (just one tick mark) so guides longer term attitude. I’ve moved it to the bottom as you really don’t need to look at it often.

Slow Stoch says to be out, but MACD and DMI are still ‘be in’. Looks a bit ‘toppy’ to me, and I’d be careful about entering here.

5 Years, NYSE

5 years, NYSE

Spiders (S&P 500) looks very similar.

SPY 5 year weekly tick, RSI, Williams %R, ROC

SPY 5 year weekly tick, RSI, Williams %R, ROC

I’m going to take a few hours break, and try to work up a more ‘long term investor’ oriented bit to put here. But for now, I’m going to release the posting ‘as is’ for all the rest of the folks…

Automated Stock Screens

OK, nobody ever said anything one way or the other about the software based stock ticker selection, so I deleting it. Now I’m figuring I can use it as part of an “investors corner” so I’m off to tune it up and bring it back up to speed…

Stock Indicators – what and how


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.

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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3 Responses to WSW – Monday, November 15, 2010

  1. tckev says:

    Either my browser’s gone nuts or your page formating is screwed-up from just after the first set of charts.
    Just after the charts it’s all formatted as a main header?

  2. E.M.Smith says:

    Took a break to watch “Fast Money” and didn’t do the final proof read. One TINY little missing “/”…

  3. E.M.Smith says:

    between some stop loss on metals and the “worry” over the VIX having been quite low, then the news on Irish banks being the topic of the EU finance ministers… I’m back in cash.

    Still holding TBT the bond short and core holdings like BRKA, though.

Comments are closed.