Idus Martias
- Ides of March now on the 15th
(also for May, July, and October while
the ides for other 8 months is on the
13th.) The day in the year 44 before the
common era, when Julius Caesar was
assassinated by Brutis and Cassius.
Brutus issued a coin to commemorate this
and it is now probably the most historic
coin in existence with less than one
hundred coins in silver and two in gold
are known. The coin shows a Liberty Cap
and two daggers above the date of the
assassination. From this came "Beware of
the ides of March as William Shakespeare
popularized this story.
The rally started right
on time as the Dow and S&P 500
hit their 10 year trend lines and Citi
waited until then to announce that the bail
out money helped them see some green
ink the last two months. So often we see that
the charts lead the news and not follow it. A
bit later we talk of the percentage gains
that took place in the last two rallies in
this bear market and what will need to
happen to repeat those moves. So far this
has played out in a usual way and if it
continues we could see a test of the
lows starting this week. It is an options
expiration week by the way and there is a
full economic calendar so maybe more
volatility. The popular expression is
that the second mouse gets the cheese and we
may see this play out. The market would need
to retrace much of its gains and be
successful on the test and this could bring
in more buyers on the second rally and it
would go higher than the first. This
is a bit more than wishful thinking as it
has happened that way many times it the past
but it may be totally different this time of
course.
We suppose that there are
a growing number who suppose the market has
changed direction for the long term and if
we get a volatile pullback they may have
second thoughts. The holding of the lows of
last week and the volume on the dip buying
will be a clue as to the next move up. The
market could surprise and just go on much
lower but now that seems a higher odds
against situation.
The BKX banking
index broke above its tend line from the
beginning of the year and if it can pull
back and break out again it could set up the
multi week rally all are hoping for. The
congress may come up with a bank bail out
plan after all.
A bit earlier in the week
I noted a
WSJ report that said the ink is barely dry on the
$787 billion economic stimulus package
enacted by Congress, and talk is already
beginning on Capitol Hill of the need
for a second measure to spur job growth.
Speaker Nancy Pelosi said
that lawmakers must give the
just-approved package of tax cuts and government spending a chance to work. The bulk
of the funds from the $787 billion
package are flowing out of government
coffers over the next two years, in hopes of
lifting the economy of its downward spiral.
But Mrs. Pelosi suggested she's not ruling
out action on another measure if the economy
remains weak. In another article was
mentioned that while AIG
received a taxpayer bailout of more than
$170
billion dollars it did not forget its
executives and their $165 million in bonuses
for doing such a great job.
I imagine that the US taxpayers feel all
warm and fuzzy about being able to help out
the friends of Treasury Secretary
Geithner etc.
Retail
sales went down 0.1% month-over-month
in February following an upwardly
revised 1.8% increase in January. On a year-over-year basis,
retail sales were down 8.7%.
First-time claims
for unemployment benefits rose in the
week ended March 7th. Jobless claims were at
654,000, up 9,000 from the previous
week's revised average of 645,000.
The Labor Department also said that the
less volatile four-week moving average
rose to 650,000 from the previous week's
revised average of 643,250.
.
February business
inventories declined 1.1%, which is
essentially in-line with the consensus
estimate.
U.S. trade deficit narrowed to $36
billion in January from a revised
deficit of $39.9 billion in December.
Economists had estimated a narrowing in
the deficit to $38 billion in the month.
The narrower deficit reflected a decline
in exports, which in turn is seen as a
corollary of slowing global growth, and
a drop in imports. The January exports
were down $7.6 billion to $124.91
billion, while imports fell $11.5
billion to $160.94 billion.
The major indices up sharply for the
past week.
The top and bottom
sectors for the week.
The best and worst
industries for the week.
On our multi
index chart we see the Dow is back
over the 20-day EMA and all here are
over their center Bollinger bands witch
is bullish. Some are at resistance and
others have it overhead as shown.
Last week the case we made for the rally
was that this Dow charts and the S&P 500
were both at their 20+ year trend line
which was also the 62% Fibonacci
retrace. When you have two such strong
supports at one place the odds for the
expected results increase dramatically.
Even the news follows along when such
events take place. The financials were
falling week after week and needed some
news to spark a rally. It was then, not
in the slightest a coincidence, that we
had such news as the trend lines were
touched. In this case it was a rather
funny item as Citigroup C
announced that they operated at a profit
during the first two months of the year.
I say funny as what would you think
after receiving so many billions of
dollars from the taxpayers as a bail
out. Regardless though it worked to
bring on the rally at the exact right
day. The November rally of the Dow had
it up 16.9% in 6 days and up 19.4% by
the January high. A 19% move from the
low of 6470 would be 7699.
The monthly Dow still has RSI and
stochastics very oversold but so far a
hammer for the month is forming. If it
can close positive the rally may last
longer than a few a few weeks.
The weekly Dow has its RSI now
over 30 but stochastics has yet to cross
over 20 which would be bullish.
The 60-minute Dow shows the
200-period EMA just over head. The RSI
and stochastics have a bit of negative
divergence and the MACD could crossover
negatively. We would expect a pullback
soon but if it does happen to power
higher watch the next line up as it
would be even more likely to be the
short term top.
The utilities
did not gain as much as the other
indices as seen on this weekly chart and
RSI has not yet moved over 30.
The Nasdaq tested the Novembers
lows a little bit lower and is closing
in on the 50-day EMA. Stochastics made a
run from under 20 to almost 80 this week
alone. The Nasdaq 100 though, as seen in
the multi chart did not drop to the
November lows as it has been stronger.
The NASI hit support exactly and
turned back up. The crossover has to be
a bit more defined before it signals a
possible longer term change.
With this move the VIX remained
near this trend line so fear is still
high.
The semi conductor index SOX has done very well as it stayed above the
November and even the December lows as investors favored the chip stocks. Even
if first we have a pullback, a break out here would likely take this to the
200-day EMA currently at 264.
Like the Dow the S&P 500 bounced
right at support and Fibonacci levels
shown last week. Maybe the low will have
to be tested again but we expect at some
point the rally to at least achieve
similar results to the previous ones we
have had in this bear market. From the
October low of 2008 the S&P rallied
18.5% in 6 days and from the November
low it went up 19.1% in 6 days and was up
24.2% by its January high. A move of 18%
from the low of 667 would be 787 and 24%
would be 827.
Not sure if this was the end of major
wave A down and the beginning of the
counter trend B up but RSI is back over
20 on the weekly and stochastics has a
slight turn up. A test of the lows does
not exclude this if the lows hold but
there was good volume supporting the
move so now we need to see how the dip
buyers react when they have a chance to
pick up "bargains". Often they
may decide
to buy a pullback but when it comes have
second thoughts.
S&P 500 daily and it is now back
over the November lows. The daily is not
overbought so if the dip buyers do show up
on any pullback we have decent room to
run.
The NYSE very similar to the S&P
chart and it moved up 540 points and has
the 50-day EMA 284 points higher. The
MACD has crossed over bullishly.
The percentage of stocks on the NYSE now
trading above their 50-day moving
average is at 20% but the TRIX
has not yet crossed over.
The S&P 400 mid caps very V
ish pattern so consolidation or pullback
preferred.
The Russell 2000 small caps
monthly shows as hammer so far
though RSI has not yet crossed back over
30.
The daily Russell 2000 had all
four usual buy signals at the bottom as
circled.
Russell 2000 60-min has a pretty
steep move up and resistance as shown.
Be aware of indictors and they may
signals sells also for a short term pull
back.
The banking index
BKX broke above the 2009 trend
line and is over the 200-dy EMA. A
pullback to around the 50-day EMA and
some consolidation would be a place to
watch.
The London FTSE is nearing the
not drawn trend line from the lat two
highs.
Chinese iShares FXI move back
over the 50-day EMA with the tredn line
at 28.
The Russian market is now up
19.8% for the month.
The commodities
index CRB has made it to the
trend line at about 221 with the 50-day
EMA at 217.
Crude oil has a bowl shape and it
may not break out until some real signs
of improvement in the economy.
The US oil fund USO monthly slightly positve.
The ETF OIL with its main resistance near the 50-day EMA.
DXO the double crude oil ETF also has 50-day EMA resistance and then the
line just above.
UGA US gasoline fund is well over the 50-day and could break out.
Gold lost 1% for the week. If the recent high was a typical double top we
should see some stronger pullback. Watch for a trend line break to confirm. This
could be a significant pullback. Depends some on the US dollar.
Last week we warned of he negative crossover that may show up on the gold
cloud chart and it came this week.
Again gold stocks did little as seen on the XAU chart.
On the daily basis though there was money to be made on GDX using the
mechanical Renko chart signals going long and short. It makes more money when the
time span between signals is longer as this lags a bit but that actually it is
benefit as it does filer out a lot of noise.
This GDX shows only two EMAs and they are still on sell.
Silver is hanging above
the 200-day EMA and the trend line but a
touch would be good to confirm the up trend
or if broken, the pullback.
UDN is a bearish US
dollar fund and it broke above its 3-month
trend line. It goes up if the dollar falls.
The US dollar
has been pulling back and has held the
line as of Friday. A week dollar helps
companies so helps the market. This is
much to so with inflation/deflation and
timing.
|
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
Market Comments
Well this certainly was not a bad week at all. The Dow
was up around 700 pts, despite a lot of bad news.
That's somewhere near an 11% gain, and not bad volume
either. Now the question is will it continue next
week? Unemployment was over 650,000 and the previous
week revised upwards of 645,000. That's over 1.2
million people out of work! This is not good news.
Foreclosure rate was up 30% in February. Still no good
news there.
Both Citibank and Bank of America made some form of
claim to showing profit in the first two months of
2009. Ok, there are no details, but toxic assets are
still the issue here. But the markets liked it. And
when the markets can make significant gains even when
there is little good news, that's good. At least it was
a decent bear rally and it certainly makes money and
that makes us feel good. Well, it makes me feel good
anyway.
And the Commerce Department reported a less than
expected decline in consumer spending and revised
January upwards from 1% to 1.8%. This has a lot of
analyst talking and even President Obama's highest
ranking economic advisor is talking this up. We are
"stabilizing", although I have no idea what that means.
And the Obama Administration is going to start talking
more positive about the economy. No more "doom and
gloom". All we have to fear is fear itself. Well, that
will fix things won't it.
I'm still out here trying to figure out just what
Treasury Secretary Geithner is going to do about toxic
assets. We had a G8 conference, and he explained it
there and I don't know what he plans. This weekend we
have a G20. Maybe we will get more on how this is going
to work. But I don't think Treasury knows how to make
it work yet. So it becomes nothing more than political
rhetoric. And that doesn't fix anything. We have been
hearing about buying up toxic assets from banks to
increase credit flow since last October. And so far,
nothing has happened. A rose by any other name is still
a rose. Well, if that is true, then a broken economic
system, talked nicely about, is still a broken economic
system. I fail to see how revamping health care
(although it needs to be done) is going to change toxic
assets at banks, or housing prices, or unemployment.
Updating and upgrading our education system, which I am
all for, isn't going to put many people back to work.
Nor is it going to deal with pending deflation, or
consumer spending. But it is going to cost a lot of
money. And money is what investors are all about. And
this is money our country does not have. President
Obama has gone on record that he wants to spend
somewhere in the neighborhood of 3.24 TRILLION dollars
in his Administration....so far. From where I sit, this
is nuts. We don't have this kind of money right now,
and we as a nation just can not afford this. It all has
to be covered by Treasury debt. Who is going to buy US
debt?? China is the number 1 holder of our debt,
totaling about $800 billion to maybe $1 trillion in
Treasury debt. This is up almost 50% in 2008. And now
China has concerns..... ...about our ability to pay for
all this. So do I. Right now the USD is riding pretty
high. But if that value diminishes, we won't be able to
sell our debts off to anyone. China will be hurt from
what it already owns and no one will show at these
auctions. Then what? I guess we just print some money?
This is not a US problem. It is a worldwide problem.
And all the nations of the world are being very careful
about where they put their money today. GM is trying to
get cash out of EU this week. But no one their trusts
them. The fear being they will drag it off to the US to
support what they are doing here. Can you blame them?
Now GE looses AAA ratings. They are strapped for cash.
Who would have guessed?
All of my charts still say we are in a longer term down
trend, and this week hasn't reversed that yet. We made
two new bottoms in October 2008, both followed by decent
bear rallies. We made another new bottom in November
2008, and that too was followed by another nice rally,
through a good part of December. Now we have another
new bottom in March and a nice rally going on right
now. Hopefully this will continue a while longer. But
I still see "gloom and doom" on the horizon. We simply
are not out of the woods yet.
One news item this week I found both disturbing and
funny. The list of billionaires came out and Mr Gates
of MSFT is still number one on that list. But the list
also got shorter. I guess a number of ex-billionaires
are now merely multimillionaires. I guess Bernie Madoff
didn't make that list. But, the #4 man on the
billionaire list is the #1 drug lord in Mexico. Now,
what is wrong with this picture?
BC
|
Weekly economic calendar from briefing.com. Monday
we have the Empire index, Industrial Production and the Home Builders
Index. On Tuesday the PPI and Housing Starts, then on Wednesday the CPI and
Current Account Deficit. Thursday we have the weekly Jobless Claims,
Leading Indicators and the Philly FED. Then on Friday Options expiration. The
FED starts their periodic FOMC meeting on Tuesday, and reports their findings on
Wednesday. Also on Wednesday the Banking Director Cole gives testimony to the
Senate. On Thursday FED governor Tarullo gives testimony to the Senate, and on
Friday there is a speech by FED chairman Bernanke.
Remember to check the
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