With all the taxpayer money being spend
and all the total interference in the
capitalist system by the government I
had a long piece written but deleted it
as it seemed to political. It is just
that the government helped to create the
last housing and credit bubble and at
the least let it go unregulated and now
they again want the consumers to just
borrow and spend insteand of save money
for a change and let things work out as
they would naturally over time. This
interference and huge debt creating is
just messing things up even more. Even
when they have a general idea they do
not follow through. They took over about
36% if Citi Group and effectively have a
lot of control. If they instead just
nationalized it short term they really
could sort things out and clean up
balance sheets and create parts of the
business that would be very attractive
to buyers and they could get the
taxpayer money back. This half hearted
plan just throws more money at those who
are the problem.
Again the markets have no clarity. If
the Gov took over C and BAC
the market for a day or so would react
negatively maybe but then they would
realize that at least they do not have
to worry about those two things.
The prices of those stocks are so low
that they do not affect the Dow more
than about $50 bucks and should be taken
off anyway as all under $10.00.
This is the situation and this lack of
any clarity keeps the buyers from coming
in. Once a rally does start that may not
matter as much as people will not
want to be left out regardless of the
reason for the rally.
We had rising
unemployment this week and lower GDP and
homes sales and if one day the market
stops going down on such negative news
we can start a rally that may last a few
weeks or actually months. The sell off on
Friday was on the highest volume this year
so on the bright side - maybe they will get
it out of their system.
The
Commerce Department reported that new orders
for durable goods fell 5.2% month-over-month
in January. New orders were down for six
consecutive months. Economists looked
forward to a 2.5% decline in the durable
goods orders for January. The decline was
mainly due to a 13.5% drop in transportation
equipment orders. Shipments of durable goods
fell 3.7% and unfilled orders were down
1.9%, while inventories fell 0.8%. The key
non-defense capital good orders, excluding
aircraft orders, fell 2.7%.
.
First-time claims for unemployment benefits
increased in the week ended February 21st,
according to another report released by the
Labor Department. Jobless claims were at
667,000, up 36,000 from the previous week's
revised average of 631,000. Economists had
been expecting a decrease in claims to
625,000 from the originally reported figure
of 627,000 for the previous week. he Labor
Department also said that the less volatile
four-week moving average rose to 639,000
from the previous week's revised average of
620,000.
New homes sales in the US fell in January to
a new all-time low of 309,000 (annualized
rate), well below the 330,000 rate expected.
January's rate is 10.2% below the
upwardly-revised 344,000 posted in December.
The pace of new home sales in January is
48.2% lower than the pace set in January
2008, the largest decline seen since April
1980.
The preliminary GDP report
released by the Bureau of Economic Analysis
showed that the U.S. GDP shrank at an
upwardly revised pace of 6.2% in the fourth
quarter. The contraction was worse than the
0.5% GDP decline witnessed in the third
quarter and the 5.4% decline expected by
economists. On a year-over-year basis,
fourth quarter GDP declined by 0.8% compared
to 0.7% growth in the third quarter.
The decline in fourth quarter GDP compared
to the previous quarter reflected negative
contributions from personal consumption
expenditures, exports, equipment and
software and residential fixed investment
that were offset to some extent by positive
contributions from federal government
spending and private inventory investment.
The major indices for
last week: Only oil the big winner.
The top and bottom
sectors last week.
The best and worst
industries last week.
T
On the long-term perspective, this Dow chart
is adjusted for
inflation since 1925. There are several
points of interest. For one, the
inflation-adjusted Dow has gained a mere 55%
since its 1929 peak and gained only 10%
since its 1966 peak – not that impressive
considering it took many decades to achieve
those gains. It is also interesting to note
that based on an inflation-adjusted Dow, the
current bear market actually began in 1999
only to be interrupted briefly by a
multi-trillion dollar credit bubble. That
bubble has burst, of course, and the Dow now
trades at a level not seen since 1995.
The portrait
monthly view of the Dow as it is
now between the top and bottom trend
lines. The lower line is at the 62%
retrace from the 1987 low to 2007 high.
Seems kind of caught in mid air in this
view and a drop to the trend would be a
better support lien but not sure that we
can drop 500 points before starting a
rally leg up.
The multi-index chart with Bollinger
bands and in all cases they are at the
lower bands though not below them.
Ideally we would like to see some hammer
candles forming.
This monthly Dow view will be
interesting to see over the next several
years. As you see it could some day
produce a head and shoulder's pattern
though that would be 4-5 years away. It
would have to move up to over 10,000 and
stay a few years to have that happen and
that would require another bubble of
sorts at this point as it should take
several years for the economy to really
recover in a real fashion without
relying on the government false and
shorter term intervention. At this point
it seems more likely that it will drop
substantially below that 62% line within
the next year after a B wave up has
taken place..
The daily Dow still has some
positive RSI divergence but is losing
it. The oversold conditions still
suggests a rally this week.
The transportation index down 12
out of the last 13 days so it too is
oversold.
Dow Utilities have not yet tested
the Spike low but we may see that soon.
Nasdaq dipped just under
the December lows but above the November
ones. No divergence yet.
Summation index NASI is
still pointing down.
The VIX although still over 40
which was once considered a a high level
of fear but now rather calm in relation to
its highs of 80 last year. Seems still a
lot of hope out there.
The Nasdaq 100 is approaching the
test of the December lows and indicators
pointing lower.
The Nasdaq 100 to S&P 500 ratio
chart saw the Nasdaq
underperform the S&P only briefly and
now it is back up. It is good that the
Nasdaq does well but for the S&P to
outperform for a while could indicate
that the broader market has started to
become of interest again.
The S&P 500 monthly has a
trend line at about 700 and support at
660 area and then over 500.
The S&P 500 weekly and a
possible end of major wave A which could
be followed with a wave B up then a
final wave C down to complete the bear
market in the years ahead. If the wave B
were to start this month the target from
this level would be between the 38% and
50% retracements at 1057 and 1155.
At that time new longer term shorts
would be entered on a reversal.
To go along with the above are some wave counts using staring dates of 2007
high, 2008 high and since start of 2009. Elliot wave is followed by many as it
can be changed very often to fit the situation so all can participate in the
naming game. Because of that it may not be as useful as indictors are but this
does show some possible counts that all show an end of the short term move down
or the longer term major wave A is near an end. Obviously we could have a crash
which would negate these counts as positioned. So if we do end this A down we
may start the wave B up.
The S&P 500 daily and
the new low from Friday. This only means
a
new low it does not mean it is anything
major. The major signals we long ago.
The NYSE is also at its
November low and had high volume on
Friday..
The percentage of issues on the NYSE now
trading over their 50-day moving average
is back down to 11%. This is in the range of
past rallies though a lot higher than it
was at the extreme last Autumn. This in
itself may be a type of positive
divergence.
The S&P 400 mid caps have
held up better than most and still have
not tested the November lows and maybe
will not during this wave. Yet they
could instead play catch-up and drop
quickly.
The Russell 2000 small caps monthly
as it nears the 2002 lows. The
November low was at 371.
The Russell 2000 daily
holding above the November closing low.
The banking sector BKX 60-min had a nice rally going until it ran into
the 200-period EMA and the RSI went over 70. Now it needs to hold the support as
shown to get back into rally mode.
The XHB homebuilders index has
been holding it lows a long time but
broke below this week.
London FTSE to watch the
stochastics to see if it can move back
over 20 as the FTSE could move before
the US markets.
China 25 iShares broke below this
trend.
Russian Trading System had a
green candle for February after 8 months
of red ones. Compared to the S&P 500 the
Russian market has done very well since
2001. Actually no comparisons are
necessary as it is up 250% since then.
The US markets instead are much lower
this century.
GSG commodity iShares had a
pretty good week and base building it
seems.
CRB commodities shows the 4 days
of green and the trend lien resistance
overhead. A break above and over the
50-day EMA would be bullish for the
markets also.
Oil monthly
also had a green candle with is the
first in a long time. A hammer at that.
Stochastics have not yet gone over 20
but we had oil as a long this week with
USO and DXO. Posted on
blog USO early in week.
US oil fund USO monthly also a
hammer but no great in February. They
had to roll over some contrasts into a
month with higher prices.
OIL ETF on Thursday popped
over the short term trend line for the
year and Friday filed that gap.
Double long crude DXO ran into
the top resistance line at $2.50. A
break above may take it to the 50-day
EMA.
Gold weekly lost all of its gains
from the week before as it had gone over
the top Bollinger band and looked topy.
Gold daily and while the pullback
could stop here, a test at a minimal of
the trend line seems a better place to
watch.
Our standard GDX Renko 60-minute
chart is still on a short sell signal as
the profits add up.
This on is a shorter time fame and the
buy/sell lines are based only on the
Parobolic SAR though the CCI does in most
cases coincide.
This shows GDX in the top part of the chart and it
has broken below the trend line. The bottom portion is only the 21 and 7-day EMAs. Note that they crossed near the low in late November and may cross
again soon. They also almost crossed in January but did not so this is good
to keep an eye on. The use of only the EMAs seems to be a longer term
indicator.
Last week we pointed out how gold stocks were underperforming gold and the
HUI pulled back some this week, breaking below a trend line and at
the 50-day EMA.
The XAU 60-min charts also shows the break
this week.
Silver when asked if the first day move down would go lower we showed the
high volume sell and suggested that it would at least hit the 200-day which it
has done. This could bounce but as stochastics still point down it could also
fail her and to to the 50-day EMA.
The US dollar monthly and the longer term target back to the 105 line.
The US dollar weekly possible double top.
The US dollar daily shows more detail.
|
Butch Cooley Market Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Stock Market Comments
It was another week full of news
items, and many had a definitive effect on the stock
markets. First was Presidents Obama's tax cuts, $400
for individuals and $800 for couples. Supposedly we
will "feel the effects" of these cuts by April 1. That
may be, but the markets and I most definitely have
doubts. The average family in the US will have $13 a
week more in their pay checks in 2009 and less than $8
in 2010. Hard to find that very stimulating. It's
"Burger King" money!! "Chump Change", and hardly
stimulating.
Then President Obama's Auto Industry Task Force
basically said the industry needs an overhaul. That is
just not news!! The real question is how much money is
this Administration willing to continue to give GM and
Chrysler and for how long, and what terms and at what
price now and at what price later. We don't know the
answer to that yet. And the markets do not like
conjecture for very long. Rumors are fine though!!
This is no longer a rumor, this is trouble down the
road.
Then we had a ton of news regarding the banks, and how
much money we might be willing to hand over to them. I
do believe all this talk is meant to put some stability
in the stock markets, particularly the financial
sector. But it's still a nothing plan. It's not even
vague at this point, it is simply a lot of talk. Even
the so called "Stress Test" for banks is vague and
ambiguous. Discussion about how it works.....I have no
clue yet. Terms like "extra cushions", "well
capitalized", and "consistent, forward looking and
conservative." What the heck does any of this mean??
We, as a nation, are buying stock in banks, and I think
we as taxpayers now own some 36% to 40% of Citibank.
The fear in the markets is "nationalization" of these
banks. Treasury says no, the Fed says no way, the White
House isn't considering this as an option. But that
seems to me to be exactly where we are headed. And the
markets do not like that idea. But I honestly believe
it's the only option open to the Treasury and Fed to
keep a lid on just how much money is "debt" or "toxic
waste" in these banks. Anyway I look at it, it's a bad
deal.
And hidden away in the 1071 pages of "stimulus" is a $4
billion plan for the Department of Housing and Urban
Development to give grants to all 50 states to be
divided up by different cities to buy foreclosed homes.
But again, we have a government equation as to how the
money is given out. California has twice as many
foreclosures as Florida, but will get the same amount of
money, about $500 million. It will help local
communities for sure, but it's just not enough money to
amount to anything substantial. On the other hand,
Vermont will be getting $20 million, but claims only 150
foreclosed homes in the entire State. None of it makes
sense. It all makes good headlines, but when the
numbers get crunched, nothing makes sense. If this is
any indication of how the stimulus is going to work, we
are in serious trouble. We are anyway.
Bernanke boosted things a little with his statements
that banks would not be nationalized. But it was short
lived. But Bernanke has been making statements
regarding this economy and banking issues and money for
2 years, and very little of what he has to project comes
to be reality. So the boost he gave the markets just
didn't last long. Lifting my spirits is ok, but if I
can't make money, my spirits don't remain lifted for
long!!
President Obama promised the nation on Tuesday
night that he would lead it from a dire "day of
reckoning" to a brighter future, summoning politicians
and public alike to shoulder responsibility for hard
choices and shared sacrifice. "The time to take charge
of our future is here." Nice speech, but just
rhetoric. No substance. He claims he is going to
stimulate the economy, put up to 4 million people back
to work, by spending $787 billion over a 3 or 4 year
period. He proposes a budget nearly 4 times that of
President Bush's last budget, $1.75 trillion, but he is
going to cut the deficit, and cut spending. It is not
exactly a contradiction, but there is no plan, no
understanding of just how this going to work. All this
talk lacks detail, and it may make the average Joe in
America a little less worried, but the stock markets are
not buying it. To say the very least, his budget
proposals are daring and bold. But as long as there are
lobbyists, health care is going to stay health care as
we know it. He plans to cut Medicare and Medicaid.
There are an awful lot of Congressmen and women who are
up for re-election. This is not going to be an easy
path. He wants to raise taxes on the richest 5% of
America. I don't know, but my guess would be those are
some of the very people who pay the lobbyists.
I do believe some of this budget will get passed in some
fashion. This is a Democratic Congress and a Democratic
Administration and a country that is just a little bit
anti Republican right now, and holding on to a lot of
hope. But the rich don't pay. Middle class America
pays. And if they aren't working...good luck. Oh yeah,
more bad news on the unemployment line this week too. I
made the statement before the elections that Presidents
don't make laws, Congress does. Maybe Nancy Pelosi and
Senator Reid are going to vote for this type of stuff,
but it's going to be a real fight with the rest of our
Congressmen and women. And the stock markets are not
liking any of it. Hence a close on Friday on the Dow of
7063, and S&P of 735. The Dow was just off it's lows of
the week, but the S&P closed at its lows. Question now
is can we hold these lows? Or are we going lower? I
have to say it, I'm betting we go lower. 6,500 to 6,800
on the Dow. I don't see how we can't go there. But
then question #2 is will we hold that? Jury is still
out. There is still much of bad news out there
people. And there are way too many "zeros" being thrown
around.
BC
|
Here is
a list of stocks reporting earnings on Monday. Check the updated
Earnings Calendar
on all overnight holds.
Weekly economic calendar from briefing.com.
To try futures trading you may
sign up for a free simulated account that uses live streaming data.
Futures have been very volatile so great opportunities right now for
wide swings.
When any of you sign up for a new
stockcharts.com
accounts there is a space to put in a referral name
on that form. If you enter
stocktiger@stocktiger.com they give
us credit. Thanks!
Request:
You
have probably all seen testimonials on
financial websites.
Over the years I have received many in
e-mails PMs and in the chat room and
appreciate them but never saved them
in one particular place so would not be able
to find them. I may want to use some on the
site (will not use your name) and want them
only to be real ones. So if you would like
to say how the site, newsletter, blog, chat
room or picks have helped in some way and
made profits it would be greatly
appreciated. Just send to:
stocktiger@stocktiger.com
Thanks
With this wireless data
communications service, Schlumberger is able to help
people communicate in ways they were not able to do
before, like enabling drilling operations to send data
back to the office for collaboration in real time.
Remember to check the
. If
you would like a free StockTiger.com email address that uses the Google Gmail
spam filter and you can check your mail from anywhere. Send me (ST) a
