Stock Market favors the prepared mind!

"AAPL, BA, UGL, UCO, SLV, AGQ, GLD, EEM, ILF"

2012-01-25T11:40:00.000-08:00

Technical indicators are turning bullish, but the oscillators are short term over bought. Lets see if this resolves with small correction or will it be sideways buying some time ..

4th quarter results (both earnings and revenues) are trailing behind the estimates, but the market is heading higher ..

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 2.04%
Volatility Index % change, VIX = 4.92%
Short term bond rate (average of 3 year and 5 year) = 0.645%
10 year Treasury yield = 2.05%
Small Cap (IWM): 2.43%
Latin America (ILF): 5.21%
Europe (IEV): 5.42%
Emerging Markets (EEM): 5.32%
Commodities (DBC): 0.44%
Long term Bonds (TLT): -3.23%
US Dollar Index, 8 DMA:80.64
Gold, (GLD) change: 1.76%
Put/Call Ratio, total of equity/Index = 0.8
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 138.46

Next Week's economic calendar:

FOMC Rate decision - 1/25
Durables Orders, New home sales - 1/26
Q4 GDP, Michigan Sentiment - 1/27

"GLD and commodities struggling", "30 year mortgage rates making new lows"

2011-12-22T10:52:00.000-08:00

US dollar popped through the resistance at 80 .. commodities and gold struggling ..

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -2.83%
Volatility Index % change, VIX = -7.92%
Short term bond rate (average of 3 year and 5 year) = 0.58%
10 year Treasury yield = 1.86%
Small Cap (IWM): -3.06%
Latin America (ILF): -5.02%
Europe (IEV): -6.4%
Emerging Markets (EEM): -4.7%
Commodities (DBC): -4.1%
Long term Bonds (TLT): 4.81%
US Dollar Index, 8 DMA: 79.79
Gold, (GLD) change: -6.71%
Put/Call Ratio, total of equity/Index =1.15
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA =32.52

Next Week's economic calendar:

Existing Home sales - 12/21
GDP, Leading Indicators - 12/22
Durable orders, New home sales - 12/23

"Euro Drama", "TLT, GLD, UGL, CEF, UUP", "FOMC Statement"

2011-12-14T11:20:00.000-08:00

Global markets are still acting on the statements coming from Europe. Helicopter Ben did not please the US markets yesterday (12/13) with another round of Helicopter money-drop .. Traders were disappointed as the expectation was built in for another round of QE .. the retail sales did not create "shock & awe" response for November sales .. but the economy seems to be stabilizing in the US generally speaking ..

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 0.88%
Volatility Index % change, VIX = -4.14%
Short term bond rate (average of 3 year and 5 year) = 0.63%
10 year Treasury yield = 2.07%
Small Cap (IWM): 1.41%
Latin America (ILF): 1.09%
Europe (IEV): 0.7%
Emerging Markets (EEM): -1.01%
Commodities (DBC): -1.76%
Long term Bonds (TLT): -1.63%
US Dollar Index, 8 DMA: 78.62
Gold, (GLD) change: -2.01%
Put/Call Ratio, total of equity/Index =1.2
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA =74.17

Next Week's economic calendar:

Retail sales, FOMC decision - 12/13
PPI, Industrial Production - 12/15
Core CPI - 12/16

"Euro to test 1.28?", "UUP, FXE, EWA, FXY, EWC, UGL, UCO, CEF, AGQ"

2011-12-05T12:06:00.000-08:00

Some extreme measures (coordinated effort for easy access to US dollars ) from US/Euro/England/Canada/Japan central banks last week and reducing reserve requirement by China sent the markets soaring by 10% in Small caps, Emerging markets and in European markets. Did the central banks see such a dire danger that they have to take a step as big as this.. May be they did or they are just following the earlier recommendation of Tim Geithner on providing a shock and awe response to the crisis .. Will it be enough to save Euro and for how long?

Fed's discount window is 0.75% for US banks, but the Fed is offering 0.5% for European banks . The cheaper US dollar for European banks should help with liquidity problems ..

Technically, US dollar might be seeing double top in the intermediate term and this drop in dollar is fueling the equities and the gold. Besides, the not so gloomy economic reports are indicating that the economy might be bottoming ... Unemployment report improved marginally to 8.6% ..

With very few US economic reports this week the markets might be inclined to head higher, but watch the developments in Europe closely though ..

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 7.39%
Volatility Index % change, VIX = -20.16%
Short term bond rate (average of 3 year and 5 year) = 0.655%
10 year Treasury yield = 2.05%
Small Cap (IWM): 10.33%
Latin America (ILF): 10.05%
Europe (IEV): 10.42%
Emerging Markets (EEM): 10.17%
Commodities (DBC): 4.28%
Long term Bonds (TLT): -1.54%
US Dollar Index, 8 DMA: 78.61
Gold, (GLD) change: 3.93%
Put/Call Ratio, total of equity/Index = 0.98
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -51.13

Next Week's economic calendar:

ISM services - 12/5
Wholesale Inventories - 12/8
Trade Balance - 12/9

"FCX, MSFT, BIDU, ATVI, SNDK, FSLR, SBUX, UGL, CEF, SLW, UGX, NGD, GG, SLW"

2011-11-28T10:35:00.000-08:00

Risk trade is clearly off the table. US dollar testing resistance at 79.5 and can see an interim pull back for reaching the resistance. The equity indexes are short term oversold and might look for any good news to bounce back. However note that this week is heavily loaded with news from Europe (Italy's auction on tuesday) and economic reports in the US (ISM index, Unemployment report).

Given the record thanksgiving retail sales in the US and not so depressed economic reports in the US, we can expect some kind of interim bottoming to occur in December. The worries from Europe is still lingering - its just that the can is kicked down the road further.

However, I decided to get the new set of tickers ready for getting into them when the opportune time shows up.. just to list a few .. FCX, MSFT, BIDU, ATVI, SNDK, FSLR, SBUX, UGL, CEF, SLW, UGX, NGD, GG, SLW .. Am not saying that I will get into all these, but just my initial list for further investigation ..

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -4.69%
Volatility Index % change, VIX = 6.52%
Short term bond rate (average of 3 year and 5 year) = 0.685%
10 year Treasury yield = 2.01%
Small Cap (IWM): -7.45%
Latin America (ILF): -7.81%
Europe (IEV): -6.92%
Emerging Markets (EEM): -6.33%
Commodities (DBC): -2.38%
Long term Bonds (TLT): 1.22%
US Dollar Index, 8 DMA: 78.55
Gold, (GLD) change: -2.52%
Put/Call Ratio, total of equity/Index = 1.32
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -49.12

Next Week's economic calendar:

New Home sales - 11/28
Case Schiller 20 city index - 11/29
ISM Index - 11/30
Unemployment rate - 12/2

"Existing Home Sales, GDP, Durables Orders", "DGZ, DZZ, SDS, QID - Ultra short ETFs"

2011-11-21T09:32:00.000-08:00

US dollar rose 1.45% last week thereby pushing equities, yields and gold further downwards. Retail sales, Industrial production and leading indicators showed strength. Consumer price inflation falls on lower energy costs. So US economic indicators are showing improvements.

However markets are at the mercy of the situation in Europe. Many governments are toppling the recent one being Spain - now replaced with People's party. The heads of governments in Greece and Italy are replaced by non-elected persons who are influential in US fed, ECB and BOE. So the motives of their actions will have to be taken into consideration.

Technically, the SP500 broke below the triangle formation which can be bearish. Also the price action as evidenced by MACD has been looking bearish in the intermediate term.

Generally the thanksgiving week will be low volume trading and usually positive. Lets see what the retailers will have to say after the black friday sales..

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -3.81%
Volatility Index % change, VIX = 6.52%
Short term bond rate (average of 3 year and 5 year) = 0.685%
10 year Treasury yield = 2.01%
Small Cap (IWM): -3.23%
Latin America (ILF): -5.19%
Europe (IEV): -5.12%
Emerging Markets (EEM): -5.52%
Commodities (DBC): -3.06%
Long term Bonds (TLT): 3.19%
US Dollar Index, 8 DMA: 77.75
Gold, (GLD) change: -3.64%
Put/Call Ratio, total of equity/Index = 0.89
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 16.84

Next Week's economic calendar:

Existing Home sales - 11/21
GDP second estimate, FOMC minutes - 11/22
PCE, Durables orders - 11/23

"UCO, USO, UUP, GLD, CRM, PETM, YOKU, DLTR", "Industrial Production"

2011-11-15T19:57:00.000-08:00

Economic data is seeming to improve but not necessarily at a pace needed to bring down unemployment and pull housing out of the slump. The corporate earnings, consumer spending, consumer sentiment from Umich and Retail sales are all improving. But the European sovereign debt problem is looming large over all these reports. US export sector that is dependent on global markets is still not convinced of the global recovery.

Technically speaking, the US equity indexes are leading the global markets higher. And bond markets are receiving favorable treatment as indicated by lower yields.

US dollar is gaining momentum after Italy's and is headed to test resistance at 80. As a result Gold is faltering though long term trend favors gold. Short term support for gold is at 1750 and longer term support should be at 1600. Crude oil is testing resistance at $100.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 0.85%
Volatility Index % change, VIX = -0.4%
Short term bond rate (average of 3 year and 5 year) = 0.64%
10 year Treasury yield = 2.04%
Small Cap (IWM): -0.29%
Latin America (ILF): -1.07%
Europe (IEV): 0.14%
Emerging Markets (EEM): -0.97%
Commodities (DBC): 0.57%
Long term Bonds (TLT): -0.71%
US Dollar Index, 8 DMA: 77.08
Gold, (GLD) change: 1.82%
Put/Call Ratio, total of equity/Index = 0.93
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 52.92

Next Week's economic calendar:

Retail Sales - 11/15
Core CPI, Industrial Production - 11/16

"PCLN, CSCO, ZBRA, DF, GM, GMCR, M, MAKO, SPRD, JSDA"

2011-11-08T07:46:00.000-08:00

US economic reports are neither too good nor too bad, but the short term market movements are at the mercy of news coming out of Europe. This time the focal point is Italy whose 10 year yield has surged above 6.6%. Also there aren't any heavy economic reports coming out this week.

US Employment report came in a little lower than expected, but the earlier numbers were revised upwards. ISM numbers indicate improving manufacturing picture in the US. Despite the global concerns the US indexes seem resilient.

Gold is the beneficiary of the safe heaven trade along with the US dollar. That seems to be an odd proposition to have both US dollar and gold to rally together. US bonds/treasuries are seeing some accumulation as ten year yield fell below 2% again.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -2.48%
Volatility Index % change, VIX = 22.95%
Short term bond rate (average of 3 year and 5 year) = 0.625%
10 year Treasury yield = 2.06%
Small Cap (IWM): -1.88%
Latin America (ILF): -3.3%
Europe (IEV): -6.42%
Emerging Markets (EEM): -2.85%
Commodities (DBC): -0.57%
Long term Bonds (TLT): -1.48%
US Dollar Index, 8 DMA: 76.6
Gold, (GLD) change: 6.33%
Put/Call Ratio, total of equity/Index = 1.13
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 54.08

Next Week's economic calendar:

Consumer Credit - 11/7
MBA Mortgage Index - 11/9
Treasury budget - 11/10

"G20 summit", "TLT, CLWR, MA, QCOM, TWX, WLT, GPRO"

2011-11-01T22:32:00.000-07:00

US GDP rose at 2.5%, much better than expected 2.1%. Durable orders was less negative than expected at -0.8%. Durables other than transportation was positive at 1.7%. Consumer confidence readings were weaker than expected and from last month. Economic indicators in US are mixed to slightly positive. But the Euro drags global markets down.

Technicals show that S&P 500 penetrated below 200 dma and is testing the support at 1200 and at 50 dma. If you used 200 simple dma, then the index barely crossed above it. Other indexes are also testing the 200 dma or 50 dma. Treasuries surged higher this Monday after MF Global bankruptcy announcement.

Uncertainties coming out of Europe are plaguing most global markets and commodities; resulting in strength in US dollar. Unless the G20 summit calms the markets, EUR/USD exchange will pretty much determine the strength of equity and bond markets for foreseeable future.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 3.78%
Volatility Index % change, VIX = -21.68%
Short term bond rate (average of 3 year and 5 year) = 0.815%
10 year Treasury yield = 2.34%
Small Cap (IWM): 6.89%
Latin America (ILF): 10.77%
Europe (IEV): 5.93%
Emerging Markets (EEM): 9.11%
Commodities (DBC): 3.57%
Long term Bonds (TLT): -1.48%
US Dollar Index, 8 DMA: 75.94
Gold, (GLD) change: 6.33%
Put/Call Ratio, total of equity/Index = 1
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 74.59

Next Week's economic calendar:

Case Schiller Index - 10/25
Durable Orders - 10/26

"FXE, CAT, NFLX, AMGN, X, AMZN, COH, S, V, GLW, MRK, F, BA, ADP, BRCM, WU"

2011-10-24T09:54:00.000-07:00

Earnings and economic reports are not as dire as it was thought a few weeks back. Though the growth is modest, the reports have not been gloomy. And the euphoria coming from a Euro solution is driving "risk on" trade in Equities and selling in Safe haven securities like Treasuries. US dollar is on the decline and it may be testing support at 200 dma at 76.5.

The correlation between SP 500 & FXE (Euro currency ETF) has been at 0.89 in the past 2 weeks. Does this mean that Euro currency fluctuation explains 89% of the moves in S&P 500? Or it could be other way too since Correlation does not differentiate between cause & effect. But at this juncture we know that it does not make economical sense for Euro currency to depend on S&P 500.

16.67% rally in 22 calendar days for S&P 500 ..

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 1.12%
Volatility Index % change, VIX = 10.91%
Short term bond rate (average of 3 year and 5 year) = 0.77%
10 year Treasury yield = 2.23%
Small Cap (IWM): -0.01%
Latin America (ILF): -1.67%
Europe (IEV): -0.06%
Emerging Markets (EEM): -1.84%
Commodities (DBC): -2.48%
Long term Bonds (TLT): -0.72%
US Dollar Index, 8 DMA: 77.04
Gold, (GLD) change: -2.37%
Put/Call Ratio, total of equity/Index = 0.86
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 10.74

Next Week's economic calendar:

Case Schiller Index - 10/25
Durable Orders - 10/26
Q3 GDP - 10/27
Michigan sentiment - 10/28

"C, WFC, FHN, HAL, BAC, KO, AAPL, EMC, MS, PNC, USB, AXP, UTX, CMG, NUE, PPG, HON, SLB, VZ, GOLD, ADBE,UCO, WFC, IBM, VMW, LNCR, AGQ, SSO, UWM, QLD, DDM, UGL, GOOG"

2011-10-17T08:10:00.000-07:00

Equities pulled off a "risk on" week brilliantly with 8% for the week. But was that a jump back from oversold condition or is the rally sustainable. The answer lies in what proportion of the following factors contributed to the rally - Increasing hopes of rescuing Euro nations or better Unemployment report or gangbuster report from tech giant, Google or the overbought condition in safe haven trade. Though all of these contributed to the bullish condition, the hope of bailing out Euro nations and the hope of something materializing in the G20 meeting in Paris is baked into the equity prices.

Will the equities stage another rally behind a 8% week or will there be reversal after a strong week. The volatility in the past 8 weeks has been around 5.5%. So chances of swinging either way is high and the magnitude can be high as well. But after a 8% week, the magnitude on the upside may not be that big.
A lot will ride on the statements coming out of G20 meeting in Paris. And also on the US earnings next week - Wells Fargo, IBM, VMW. Tech sector is leading the way up.

US Dollar, Treasury bonds and VIX are all extended to the downside. Though downward momentum seems to be big, they can reverse any time with news coming out of Europe.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 5.98%
Volatility Index % change, VIX = -21.99%
Short term bond rate (average of 3 year and 5 year) = 0.81%
10 year Treasury yield = 2.26%
Small Cap (IWM): 8.61%
Latin America (ILF): 8.52%
Europe (IEV): 8.04%
Emerging Markets (EEM): 8.64%
Commodities (DBC): 5.77%
Long term Bonds (TLT): -3.63%
US Dollar Index, 8 DMA: 77.49
Gold, (GLD) change: 2.65%
Put/Call Ratio, total of equity/Index = 0.99
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -63.56

Next Week's economic calendar:

FOMC Minutes - 10/11

"Lock in fixed mortgage rates?", "AA, GOOG, JPM, IWM, Nasdaq", RWM, QQQ, QLD"

2011-10-10T08:01:00.000-07:00

Though October 4th seemed like a reversal day with late day rally and continued rally for the next 2 days, the small cap and Nasdaq issues by the week end were indicating sluggishness compared to Dow Jones Industrial Index.

We are still in macro driven environment, but earnings season can be a good catalyst for the setting the direction into this earnings season. The number of new highs compared against number of new lows is still low and may not justify a broad rally yet.

30 year mortgage rates hit historical lows at 3.93%, but has now risen above 4%. I think there will be another occasion for 30 year mortgage to dip below 4%.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 2.12%
Volatility Index % change, VIX = -15.74%
Short term bond rate (average of 3 year and 5 year) = 0.79%
10 year Treasury yield = 2.1%
Small Cap (IWM): 1.87%
Latin America (ILF): 2.31%
Europe (IEV): 3.42%
Emerging Markets (EEM): 3.82%
Commodities (DBC): 2.33%
Long term Bonds (TLT): -1.87%
US Dollar Index, 8 DMA: 78.66
Gold, (GLD) change: 0.71%
Put/Call Ratio, total of equity/Index = 1.16
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -268

Next Week's economic calendar:

FOMC Minutes - 10/11
Retail Sales, Business Inventories, Michigan sentiment - 10/14

"ECB Meeting", "TLT, TBT, GLD, USO", "Unemployment report"

2011-10-03T14:04:00.000-07:00

Equities, commodities and precious metals took a hit last week, though most equity indexes closed a doji for the week. All the gains right now accumulating to US dollar and the long term treasuries.

Markets are nervous about Euro zone problems more than the economic concerns in the US, I think. The much anticipated rate cuts by ECB on thursday can bring some relief and a relief rally depending on the Jobs report on Friday.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -0.44%
Volatility Index % change, VIX = 4.15%
Short term bond rate (average of 3 year and 5 year) = 0.69%
10 year Treasury yield = 1.92%
Small Cap (IWM): -1.29%
Latin America (ILF): -1.57%
Europe (IEV): 2.41%
Emerging Markets (EEM): 2.17%
Commodities (DBC): -3.01%
Long term Bonds (TLT): -.02%
US Dollar Index, 8 DMA: 77.47
Gold, (GLD) change: -1.09%
Put/Call Ratio, total of equity/Index = 1.25
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -157.76

Next Week's economic calendar:

ISM Index - 10/3
ADP Employment Change, ISM services - 10/5
ECB Meeting (possible rate decrease) - 10/6
Unemployment Report - 10/7

"TLT, UUP, CMG, GLD, UGL, AGQ, SLV, UCO ", "Lowest Home mortgage rates", "

2011-09-26T12:02:00.000-07:00

Feds said "there is a significant downside risk to the economy" last week and the markets took that to their chin. We saw similar statements highlighting the risks to the economy from ECB, IMF, World Bank and Credit agencies. The beneficiaries were the US Dollar, US treasuries at the long end and the VIX.

Most world economies have declined more than 20% YTD. Emerging markets declined more severely in August than developed economies. The US indexes have not reached 20% decline, but can they stand alone in this state of affairs?

Home mortgage rates are seeing historically low values - hopefully the underwater home owners can make use of the opportunities available. Until some new programs come out, FHA loans should still be available as a last resort - that is for some one not on Freddie/fannie loan currently.

Though the economic reports shows nothing very dire, the markets continues to get spooked by the sovereign debts and by the statements of the world economic leaders. The main laggards of the US economy are the Unemployment & Housing. Housing led the markets to recovery, but this time around that is hard to expect.

Existing Home sales surged in August, but the Case Schiller index to be reported this week can corroborate that data point. With mortgage rates lower, this can be expected.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -6.54%
Volatility Index % change, VIX = 21.07%
Short term bond rate (average of 3 year and 5 year) = 0.57%
10 year Treasury yield = 1.97%
Small Cap (IWM): -9.49%
Latin America (ILF): -12.4%
Europe (IEV): -9.16%
Emerging Markets (EEM): -13.77%
Commodities (DBC): -1.06%
Long term Bonds (TLT): 9.69%
US Dollar Index, 8 DMA: 77.47
Gold, (GLD) change: -3.79%
Put/Call Ratio, total of equity/Index = 0.79
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -243.72

Next Week's economic calendar:

Case Schiller 20 city Index - 9/27
MBA Mortgage Index - 9/28
GDP 3rd estimate - 9/29
Chicago PMI - 9/30

"FOMC Rate decision", "CMG, ISRG, MAKO, UUP", "Gillette Mach3"

2011-09-20T22:15:00.000-07:00

I have watching the price of Gillette Mach 3 in Costco for the past 3 years and the price for the 20 razor packet has been steadily rising 10% per year. The price was at $40 in 2009 and $44 in 2010 and now ~$48 in 2011. A steady increase of 10% a year - can it make a good Buy and Hold strategy? :)

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 5.35%
Volatility Index % change, VIX = -9.53%
Short term bond rate (average of 3 year and 5 year) = 0.625%
10 year Treasury yield = 2.08%
Small Cap (IWM): 5.96%
Latin America (ILF): 0.87%
Europe (IEV): 4.54%
Emerging Markets (EEM): 1.3%
Commodities (DBC): -1.06%
Long term Bonds (TLT): -1.29%
US Dollar Index, 8 DMA: 76.39
Gold, (GLD) change: -2.58%
Put/Call Ratio, total of equity/Index = 1.02
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -18.14

Next Week's economic calendar:

FOMC Rate decision - 9/21
Leading Indicators - 9/22

"SPY, DIA, IWM, GLD, UUP, EEM, ILF, IEV, TLT, TBT, TBF"

2011-09-13T10:38:00.000-07:00

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -1.68%
Volatility Index % change, VIX = 11.03%
Short term bond rate (average of 3 year and 5 year) = 0.56%
10 year Treasury yield = 1.93%
Small Cap (IWM): -1.4%
Latin America (ILF): -4.72%
Europe (IEV): -7.01%
Emerging Markets (EEM): -3.73%
Commodities (DBC): -1.68%
Long term Bonds (TLT): 1.07%
US Dollar Index, 8 DMA: 76.03
Gold, (GLD) change: -1.39%
Put/Call Ratio, total of equity/Index = 1.26
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = -52.11

Next Week's economic calendar:

MBA MOrtgage Index, PPI, Retail Sales - 9/14
CPI, Industrial Production - 9/15

"Gold Bubble?", "Bonds bubble?", "TLT, GLD, UGL, CEF"

2011-09-06T10:48:00.000-07:00

With Gold surging so much as a safe haven, one has to wonder if Gold is in a bubble. To put that question in a context, you should be aware of amount of easy money policies that the central banks all over the world are following. With money supply increasing, the demand for gold ought to increase and hence the price.

How about bonds - Are they in a bubble? Bonds might have bloated a bit more at equity's peril. If you noticed in the past, bonds underperformed when QE1 & QE2 was announced (bonds purchase by the government caused the decline in bonds price - what an irony) and bonds performed well when the QE was completed.

Economically speaking, jobs have become Oasis in the desert and other indicators are just average. So the new jobs creation plan and deficit reduction plan that is to be announced soon, might provide the view into the future.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -0.24%
Volatility Index % change, VIX = 12.12%
Short term bond rate (average of 3 year and 5 year) = 0.605%
10 year Treasury yield = 2.02%
Small Cap (IWM): -0.94%

Latin America (ILF): 3.19%
Europe (IEV): 0%
Emerging Markets (EEM): 2.57%
Commodities (DBC): 0.61%
Long term Bonds (TLT): 4.02%
US Dollar Index, 8 DMA: 74.25
Gold, (GLD) change: 3.25%

Put/Call Ratio, total of equity/Index = 1.44
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA =0.02

Next Week's economic calendar:

ISM services - 9/6
Feds Beige Book - 9/7

"ISRG, VMW, FFIV, MSFT, CMG, QCOM, IBM, EMC, JNJ, YHOO", "Housing starts, Existing home sales"

2011-07-18T15:17:00.000-07:00

Would you trust the strength in Earnings surprise of bell weather companies like Google & IBM OR would you be cautious with all the macro issues with Euro woes and US debt ceiling. That is the general question grappling the traders this week ever since GOOG, JPM & IBM provided positive surprise. Barring the uncertainty with Euro & US debt ceiling, chances are that indexes could have had bullish forces acting on it.

Technically, SP500 is heading to re test the support at 1260 even though 1300 is a support point in the interim. Most of the global markets except South Korea, Taiwan, South Africa, Singapore are in selling pressure. Unless there is a resolution for the Euro/US debt problems, we can expect some range bound actions in most of the global markets.

Gold is the main beneficiary of the uncertainty prevailing in the markets. Silver has been inching upwards as well. Again, would you bet on the earnings surprise next week or will you bet on Gold which might already be crowded as of now.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -2.06%
Volatility Index % change, VIX = 22.45%
Short term bond rate (average of 3 year and 5 year) = 1.04%
10 year Treasury yield = 2.94%
Small Cap (IWM): -2.0%

Latin America (ILF): -2.77%
Europe (IEV): -3.58%
Emerging Markets (EEM): -2.65%
Commodities (DBC): 1.8%
Long term Bonds (TLT): 0.84%
US Dollar Index, 8 DMA: 75.23
Gold, (GLD) change: 3.29%

Put/Call Ratio, total of equity/Index = 1.07
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 75.11

Next Week's economic calendar:

Housing starts -7/19
Existing Home sales - 7/20
Philadelphia fed, Leading indicators - 7/21

"UGL, AGQ, SLV, AAPL, AMZN, XRT, ANF, ULTA, COH, DECK ", "Is silver bottoming?", "Retail sales strong?"

2011-07-11T09:02:00.000-07:00

The big question is: was the 7% rise in SP500 in 2 weeks just a response to a oversold condition by mid June or does it have any fundamental force behind it? By looking at the technical force behind the rally, it seems to have steam behind it. The indexes punched through 50 dma and 100dma with no hesitation. High beta stocks like AAPL and AMZN are in vogue again. The risk trade is on for the short term and may be for the interim term as well - technically speaking.

But, is there are equally violent downside swing in the future?

US dollar is forming a bottom and is probably headed upwards. With the declining debt rating of Portugal and Italy, Euro zone is entering the next turmoil. How will this affect Gold - will it take opposite direction of US dollar or will it be a safe haven? 100dma for gold was held up and there might be a retest of the 100 dma since dollar is on the rise.

Retailers did well last week as indicated by the ETF XRT. Keep an eye on the retail sales reports next week since the summer months may have given a boost to retail sales.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 0.31%
Volatility Index change, VIX = 0.5%
Short term bond rate (average of 3 year and 5 year) = 1.135%
10 year Treasury yield = 3.03%
Small Cap (IWM): 1.54%

Latin America (ILF): -2.12%
Europe (IEV): -2.5%
Emerging Markets (EEM): -0.48%
Commodities (DBC): 3.34%
Long term Bonds (TLT): 1.86%
US Dollar Index, 8 DMA: 74.93
Gold, (GLD) change: 3.67%

Put/Call Ratio, total of equity/Index = 1.02
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 179.39

Next Week's economic calendar:

FOMC minutes, crude inventory -7/13
Retail sales, core PPI - 7/14
CPI, Industrial production - 7/15

"GLD, UGL, GDX, AGQ, SLV, TLT, SHY, IEF, UCO, USO", "US Debt ceiling lifted?"

2011-07-05T10:55:00.000-07:00

The stock markets roared crazily this week - up by 6% in a week. Something that had not happened in 2 years. Most global equities rallied as well. Was it the passing of the resolution in Greece OR is it better than expected Chicago PMI and ISM index reports OR is it that there is big movement of money from Bonds to Stocks. The last one seems to be the key because the yields jumped sharply last week.

But not much has changed from the past one week except that there is new legislation in place in Greece. QE2 has ended and debt ceiling is still not lifted. Economic reports are still mixed at best.

The short term indicators are in overbought zone already and we should wait for any signal to see if the summer rally starts or the decline will resume. But what will fuel the summer rally - will it be QE3 or Q2 earnings?

Precious metals and crude oil is springing back to life this week despite non declining US dollar. Is it just the oversold condition that is giving life to these?

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 5.61%
Volatility Index change, VIX = -24.79%
Short term bond rate (average of 3 year and 5 year) = 1.325%
10 year Treasury yield = 3.22%
Small Cap (IWM): 5.19%

Latin America (ILF): 6.71%
Europe (IEV): 7.2%
Emerging Markets (EEM): 5.85%
Commodities (DBC): 2.62%
Long term Bonds (TLT): -3.12%
US Dollar Index, 8 DMA: 74.77
Gold, (GLD) change: -0.91%

Put/Call Ratio, total of equity/Index = 0.87
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 105.45

Next Week's economic calendar:

ADP employment change -7/6
ISM services - 7/6
Unemployment rate - 7/8

"LULU, GLD, USO, UCO, MSTR, CMG, ULTA, NFLX, PLCM, DMND", "Case Schiller report, ISM index"

2011-06-27T09:39:00.000-07:00

S&P 500 and Dow jones industrial indexes ended negative last week, but NASDAQ and small cap were largely in the positive range. Europe got hit, but emerging markets managed upwards. US Q1 GDP remained at 1.9%. The release of oil from emergency storage seems like a big news, and the big splash created some dent in oil prices.

US dollar is looking to stabilize and may be heading upwards - a breakout above 76.5 would confirm. Precious metals and Oil is getting hammered by the rising dollar.

If the voting in Greece on Austerity measures goes fine on Tuesday (6/28), then European banks have much to cheer about in the short term. Given that equities have withered 7 weeks of negative moves, an expectation of short term rally does not seem unjustified. In particular because July 4th short week is around the corner and holiday weeks tend to bullish. Besides, indexes are at their 200 dma and can gain some steam.

As a short term long trade, I am looking at: LULU, MSTR, CMG, ULTA, NFLX,

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -0.24%
Volatility Index change, VIX = -3.43%
Short term bond rate (average of 3 year and 5 year) = 0.985%
10 year Treasury yield = 2.88%
Small Cap (IWM): 2.19%

Latin America (ILF): 0.64%
Europe (IEV): -2.13%
Emerging Markets (EEM): 0.35%
Commodities (DBC): -3.32%
Long term Bonds (TLT): 0.08%
US Dollar Index, 8 DMA: 75.86
Gold, (GLD) change: -2.45%

Put/Call Ratio, total of equity/Index = 1.07
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 34.88

Next Week's economic calendar:

Case Schiller 20 city index - 6/28
Pending Home sales - 6/29
Chicago PMI - 6/30
ISM index - 7/1

"LNKD, QIHU, DANG, YOKU, REDF, ACOM", "Existing Home sales", "FOMC Rate decision"

2011-06-20T12:41:00.000-07:00

No big change in the economic status last week, and US equities largely managed a positive week but rest of the world did not. Euro worries, weaker economic reports from the US and declining consumer sentiments are still plaguing the markets. Recent IPOs like Linkedin and Internet websites like QIHU, DANG, YOKU and REDF have come down substantially.

Despite the rising US dollar, gold and silver are holding up surprisingly well. The real test would come in when/if dollar rises above 76.5.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: 0.04%
Volatility Index change, VIX = 15.85%
Short term bond rate (average of 3 year and 5 year) = 1.105%
10 year Treasury yield = 2.94%
Small Cap (IWM): 0.29%

Latin America (ILF): -0.76%
Europe (IEV): -0.82%
Emerging Markets (EEM): -1.46%
Commodities (DBC): -3.47%
Long term Bonds (TLT): -0.25%
US Dollar Index, 8 DMA: 75.56
Gold, (GLD) change: 0.47%

Put/Call Ratio, total of equity/Index = 1.19
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 3.74

Next Week's economic calendar:

Existing Home sales - 6/21
FOMC rate decision - 6/22
GDP estimate, Durables orders - 6/24

"EWJ, TLT, RSX, UCO, AGQ, UGL, DZZ, DGZ, LULU", "Retail Sales, Core CPi, PPI, Industrial Production"

2011-06-13T07:33:00.000-07:00

Equity markets were lower for six consecutive weeks and that has not happened in few years. Stock markets are bucking under selling pressure globally - except Japan's Nikkei index which managed a positive for the week and Russian ETF RSX. Since Emerging markets led the way downwards, it may give us a hint for the way up too. That is of course if the fed does not come out with the news of QE3 earlier.

6 weeks of selling can produce a bounce next week since technical indicators are at oversold levels. With financials in doldrums and uncertainty prevailing about monetary policies, it is hard expect a market to perform positively any time soon. But one historical fact that is in favor of Bulls is that this the 3rd year of US presidency and that has always been positive. Lets see what magic Obama can perform when debt ceiling debate is still going on.

Silver is about to test its support at $33 and may further test the support at $30. With US dollar gaining momentum and heading to test resistance at 76.5, we can expect some sluggishness in Gold and Silver. Also, the non conformance by the Gold and silver miners is abetting the decline in the bullion.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -2.24%
Volatility Index change, VIX = 5.07%
Short term bond rate (average of 3 year and 5 year) = 1.145%
10 year Treasury yield = 2.99%
Small Cap (IWM): -3.56%

Latin America (ILF): -1.94%
Europe (IEV): -3.67%
Emerging Markets (EEM): -0.77%
Commodities (DBC): 1.16%
Long term Bonds (TLT): 0.84%
US Dollar Index, 8 DMA: 74.74
Gold, (GLD) change: 0.23%

Put/Call Ratio, total of equity/Index = 1.18
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 14.79

Next Week's economic calendar:

Retail Sales, Core PPI - 6/14
Core CPI, Industrial Production - 6/15
Leading Indicators, Michigan sentiment - 6/17

"SPY, GLD, IWM, QQQ, EEM, STPP, FLAT" - "Feds Beige Book"

2011-06-07T20:59:00.000-07:00

Ten year treasury yield fell below 3%, the first time since December 2010. Weak economic reports are taking control of the equity markets. 5 continuous weeks of downward movement in S&P 500 as of last week - something that is not normal.

Weaker economic reports so far included - Unemployment report, Durable orders, Chicago PMI, FHFA home prices, Factory Orders, etc,

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -1.08%
Volatility Index change, VIX = 12.32%
Short term bond rate (average of 3 year and 5 year) = 1.17%
10 year Treasury yield = 2.99%
Small Cap (IWM): -1.64%

Latin America (ILF): -2.54%
Europe (IEV): -1.57%
Emerging Markets (EEM): -1.61%
Commodities (DBC): -1.16%
Long term Bonds (TLT): -0.76%
US Dollar Index, 8 DMA: 74.75
Gold, (GLD) change: 0.17%

Put/Call Ratio, total of equity/Index = 1.11
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 58.57

Next Week's economic calendar:

Feds Beige Book - 6/8
Consumer Credit - 6/7

"UGL, AGQ, SLV, SLW, GDX, GDXJ, DJP, DBC", "PMI, ISM and Unemployment rate"

2011-05-31T08:12:00.000-07:00

Holiday week lived up to its bullish expectation, rather a bounce from the oversold conditions. Next week is filled with some heavy reports (Unemployment & ISM index) that can move the markets out of this undecided band of index range.

Last week's (week over week) market Sectors Returns and Internals:

SP 500: -0.16%
Volatility Index change, VIX = -8.32%
Short term bond rate (average of 3 year and 5 year) = 1.26%
10 year Treasury yield = 3.07%
Small Cap (IWM): 0.95%

Latin America (ILF): 2.5%
Europe (IEV): 0.56%
Emerging Markets (EEM): 1.44%
Commodities (DBC): 2.49%
Long term Bonds (TLT): 1.21%
US Dollar Index, 8 DMA: 75.46
Gold, (GLD) change: 1.50%

Put/Call Ratio, total of equity/Index = 0.92
Bull/Bear Ratio, Investors Intelligence survey =
NYSE (New Highs - New lows), 8 DMA = 67.02

Next Week's economic calendar:

Chicago PMI -5/31
ISM index, Auto sales -6/1
Unemployment rate - 6/3