Rise 'n Chew!

Wrigley's introduces Alert™ Energy Caffeine Gum...each piece contains about as much caffeine (40mg) as 1/2 cup of coffee. Pick your flavour -- fruit or mint.

Mornings will never be the same again...

Things are Different Without Gravity

Addendum to "Money Flow for April Week 4"

Further to, and as an addendum to, yesterday's Weekly Market Update, I've provided the following percentage gained/lost graphs (without commentary) for the purposes of simply seeing, at a glance, where money flow has been directed this past week in various world markets...certainly a "risk-on" week. We'll see if that momentum and sentiment continue over the next week(s).

Money Flow for April Week 4

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• Channel/Fibonacci Projections to the End of Q2 of 2013 for 6 Major Indices

The "BUZZ WORDS" for 2013

In this global "LOW-GROWTH" macro-economic environment, I would use the following "BUZZ WORDS" to define World Central Bank and global market activity for 2013, as I see it at present.

*(I may update this list as the year progresses, as various scenarios become clearer, and as new events unfold.)

"MONEY PRINTING" and "EASY MONEY"

• the Fed's "QUANTITATIVE EASING" program ("QE") of buying bonds and mortgage-backed securities
• the Fed (and other Central Bankers around the world) provides low interest-rate loans to Banks
• Banks are supposed to make this money available to companies and individuals at low rates that they deem appropriate (however, as demand for loans picks up, no doubt the Banks will raise interest rates, even though the Fed may not...a risk that will have to be factored into a company's costs)
• the Fed's "DUAL MANDATE" monetary policy -- to reduce the unemployment rate while maintaining an inflation target of 2%
• the Fed's goal is to produce a "WEALTH EFFECT" (precisely who will benefit remains to be seen)

"OUTRIGHT MONETARY TRANSACTIONS" ("OMT")

• the ECB's secondary and sovereign bond-buying program (there is still some debate as to its legality) from the implementation of its "ESM" and "EFSF" bailout programs -- UPDATE January 14, 2015 (courtesy of ZeroHedge article): "European Top Court finds ECB's OMT 'May Be Legal' but must meet conditions"

"INCREASE JAPAN'S MONETARY BASE"

• through the use of its money market operations (for the purposes of reflating its economy)

"INFLATE"

• wholesale and retail prices of goods and services
• price of stocks, commodities, etc.
• home prices
• taxes

"SQUASH"

• interest rates (and, thus, the nest eggs of 'savers')
• market volatility
• the value of currencies (e.g., the Yen)

"COMPANY SHAREHOLDER PERKS"

• introduce company share buy-back programs
• increase dividends
• offer or enhance preferred-share programs
• issue or enhance corporate bond programs

"IMPROVE"

• production and distribution of goods and services
• costs of goods and services
• employee/goods/services performance
• sales
• the benefits (to the consumer) of the goods and services
• the housing sector (the Fed's desire)

"CUT"

• wages
• staff

"INCREASE RISK"

• as I've recently described at this link

"SQUEEZE"

• short-sellers of national and international holdings
• short-sellers of commodities
• short-sellers of beaten-down stocks
• savers (and, in some cases, seize savings)

"OVERBOUGHT INDICATORS"

• this phrase does not seem to exist in this current environment where most (U.S.) markets are at/near either 4-year highs or all-time highs

"BAD ECONOMIC NEWS/DATA"

• is being ignored

"SOCIAL MEDIA CYBER ATTACKS"

• a new phenomenon and risk, in addition to other types of global cyber attacks that we've seen recently

Companies will need to effectively balance their "SHAREHOLDER PERKS" with their cost-cutting measures against demand for their products/services to ensure that, in offering these perks (while protecting against domestic and global risks), they don't go from cash-rich to debt-ridden in short order. As always, it's up to each investor to determine just how "TRANSPARENT" these "RISKS vs. REWARDS" are, as presented by companies, so they can make informed decisions before buying (or continuing to hold) shares.

The risks of a "VALUE" company in this kind of environment may very well be much greater because of its low-growth nature; whereas, a "GROWTH" company's risks may be lower. However, if demand is not there, they will all become "value" plays (or worse) in the end, as their risks increase. In the long run, all of this will only work if consumer demand for goods and services keeps pace with, and outpaces the ultimate costs of the company's "ADDED RISKS" and "INFLATION."

We'll see how 2013 ends and how well global Central Bank policy has worked. Stay tuned...

"Please stay on the line..."

This Week's Sentiment...and Prescription for 2013

This week's sentiment (as of noon on Thursday)...

• BUY corporate debt
• BUY high dividend-payers
• BUY risk
• BUY banks (and their debts & assets)

Repeat daily until the Fed stops QE and the Financials retreat...so says my crystal ball, but it may only be an illusion. ;-) (I'm watching for a breakout and hold above immediate highs on XLF to confirm and substantiate any further equity advance.)

Big Drop in Durable Goods Orders and MBA Purchase Applications

More weak data released today (Wednesday) shows a big drop in Durable Goods Orders and Mortgage Purchase Applications, as shown below.

All of this weakening data this year points to a slowing economy, not an expanding one. Perhaps at some point, the markets will reflect this. Until then, they remain (in "The Twilight Zone") pushed up against 4-year highs (and all-time highs in some cases)...the result of the Fed's influence (and other Central Banks around the world, particularly Japan), and not the normal laws of market supply and demand. This reminds me of the story, "The Emperor Wears No Clothes"...at some point, the public will wake up (and admit) to reality, and Ben (and his cohorts) will be looking for a new tailor (and possibly updating their Linkedin profiles). ;-)

Data Sources: Nasdaq and ForexFactory

The New Threat to Markets...Cyber Attacks on Social Media Accounts

Equity markets plunged in a matter of a couple of minutes today (Tuesday) after a "bogus" tweet was made from a hacked Associated Press Twitter account.

THE THREAT & THE PROBLEMS

How will fund managers, as well as the "average investor," hedge against this new risk in the current environment where we've seen increasing incidents of cyber attacks around the world?

Those already in the market who have a stop loss set on their trades (within the ensuing price spike) will be taken out by "High-Frequency Algorithmic Trading" (and not necessarily anywhere near the price of their stop loss, but it could be much lower), and those who don't are at the mercy of market reaction to the HFT trades.

Reality bites...

The following article regarding the AP Tweet is from ZeroHedge:

Weak Manufacturing Data in US & China

Data released last night showed a slowing in China's Manufacturing PMI, as shown below, while today's (Tuesday's) data also shows a slowing in the US PMI Manufacturing Index and Richmond Fed Manufacturing Index, as shown below.

Add these to the recent mix of weakening data, as I've written about here, here, and here, and you will see that the markets are ignoring (and bear no relationship to) economic fundamentals.

Data Sources: Nasdaq and ForexFactory

Note the radical difference in market reaction between the Asian indices and US indices, as of 10:15 am EST today (Tuesday). Precious metals (as well as Copper) are currently down.

World Market Index Source: http://www.indexq.org/

More Weak Economic Data

Data released today (Monday) shows that the Chicago Fed's national activity index fell to -0.23 vs. February's upwardly revised +0.76.

The major indices are in negative territory at the time of writing this post.

Data Source: Nasdaq

Friday's Advance GDP Projections and Gold

The Advance GDP q/q estimate for Q1 of 2013 is forecast at 3.0%, as shown on the graph below...up from the 0.4% revised data reported for Q4 of 2012...and it is being released on Friday, April 26 at 8:30 am EST.

As you can see, the GDP numbers have been in a downtrend from January of 2010. If such a rise were to occur as forecast, it would penetrate above this trend, but would still lie within the 3-year range. It would take a higher number for the next quarterly report (for Q2) to confirm that the current downtrend has, in fact, been broken.

Since inflation is anticipated to have risen at such a rate as forecast, I find that 'interesting' in view of what I wrote about here (the BOC's downward 2013 economic growth forecast), here, here, and here, and we may see an attempt at a bounce in Gold this week. However, any rally from its lows of last week may occur on a low-volume 'dead-cat bounce' (particularly on any overnight rallies) and may not be sustainable in the near or intermediate term...one to watch this week, particularly on Friday.

As you can see on the Weekly chart of Gold below, the next levels of major volume/price support lie at 1150 and 1000.

CBC - Doc Zone - Episode - The Secret World of Gold

This documentary, which aired on Canada's CBC-TV on April 18, 2013, is interesting, to say, the least...(this video is only available within Canada...however, you can find copies of it reproduced on YouTube.com)...

CBC - Doc Zone - Episode - The Secret World of Gold

Money Flow for April Week 3

Volatility, profit-taking, mayhem, and tragedy...this is how I'd summarize the events that took place in world markets, as well as on American soil, this past week. My deepest sympathies go out to those law enforcement, fire fighting, and civilian victims who died or were injured in connection with the Boston marathon bombings and the Texas fertilizer plant explosions, and to all their friends and families. My thoughts and prayers are with you...may we all find answers to these terrible tragedies, and, may all those who are responsible, be brought to justice.

Further to my last Weekly Market Update, this week's update will look at:

1. Nine 1-Year Daily thumbnail chartgrids of a variety of markets around the world
2. Nine 1-Week percentage gained/lost graphs of these markets (you can see which markets gained/lost this week, and by how much)
3. Three Monthly charts of Lumber, Copper, and the Homebuilders ETF (XHB)

As you can see, this is a different format than I usually produce for these weekly summaries. With respect to items 1 and 2 above, I'll simply post each chartgrid, followed by its corresponding graph, without commentary. With regard to item 3, I'll provide some comments just before the three charts on those instruments.

What I will say, is that on the Item #1 charts, I would use the 50 ma (red) as a rough guide to act as the general daily trend and support indicator. When price is below that moving average, it is subject to 'bearish' influences, particularly in those instances where the 20 ma (blue) has crossed below the 50 ma. In that case, I'd look for areas of support below the 50 ma that would be formed by trendlines, prior consolidations, and a series of previous swing highs/lows, etc. From that, you can see how much further downside is available compared to potential retracement to the 1-year highs. Of course, on those charts where price is at a 1-year low, you'd have to bring up additional longer-term charts to see where you'd find potential support levels...this is not something I've done in this exercise. 

My purpose today is simply to show you, at a quick glance, where world markets are, whether they are in 'bull'  (above the 50 ma) or 'bear' (below the 50 ma) territory, if any are still making new 1-year highs, and how far others have pulled back from their highs. This shows which areas are stronger and may continue to show leadership going forward, and, if they do, we may see those areas which have weakened considerably begin to rally. Otherwise, a continued drop in the weaker issues may, finally, weigh negatively on all markets to produce a larger, more general, pullback, or even a correction.

In general, it appears that the U.S. $ and 30-Year Bonds are still considered to be the 'safe-haven' plays.

The next three Monthly charts show resistance and support levels on Lumber, Copper, and the Homebuilders ETF (XHB). Lumber and XHB have pulled back somewhat after hitting major resistance levels. Copper has been much weaker and is approaching one major support level at 3.00. If Copper falls and holds below 3.00, it may have a negative impact on Lumber and XHB. And, vice versa, if Lumber and XHB continue to drop, we may see Copper decline below that level down to its next major support level at 2.50.

As an aside, I'd have to say that a good part of the increase that we've seen in new home prices since the 2009 lows is likely due to the increase in the price of Lumber (which has been approaching historical 25-year highs) (and Copper, to some extent, which hit an all-time high in 2011). We'll see if new home prices (and sales) continue to rise if we see a meaningful decline in these three issues, as well as in the Financials Sector.

These three instruments (including Financials) are worth watching going forward, along with Commodities, as I've written about recently here, here, here, and here, since further weakness in these may markedly negatively influence equities. As well, further weakness in European instruments, particularly their banks, along with the BRIC countries/ETF and Emerging Markets ETF, may negatively impact U.S. equity markets.

Enjoy your weekend and good luck next week!

My Blog is 2 Years Old Today!

Happy 2nd Birthday, dear Blog! I posted my first article on April 18, 2011. This one will be my 927th article.

What to write about??? That's always the question when I sit down to write a new post. Hmmmm.....

(Taps fingers on mouse pad...looks around for inspiration...)

Since I'm (uncharacteristically) at a loss for words, I'm logging off, will briefly enjoy the view ;-) and will be searching for the biggest piece of chocolate cake I can find...here's to another year!

P.S. Thanks to all for visiting and helping to give my Blog a purpose. And to those kind readers who've taken the time to e-mail me, I've enjoyed the friendly conversations that we've shared...I've learned many important things about life (and myself), as a result...and that's a great gift from each of you that I will forever treasure.

As well, I'd like to take this time to thank the gracious hosts who also publish my articles at these websites (each site offers many valuable resources and a ton of information...well worth repeated visits):

• www.SlopeofHope.com
• www.SharePlanner.com
• www.Investing.com 

I wish everyone the best of times for the next year! :-)

BOC Maintains Interest Rate & Lowers 2013 Forecast

The Bank of Canada maintained its overnight interest rate at 1% today (Wednesday), cut its 2013 economic growth forecast to 1.5% from 2%, and raised its 2014 economic growth forecast to 2.8% from 2.7%.

You can watch BOC Governor Carney's subsequent press conference at this video link. I found his response to this question from a member of the press rather "curious." When asked, "What can you say about the plunge in the price of gold this week?" he responded with "It's not a market that we follow closely." (I have to give him credit for holding a straight face while gave his answer...however, Senior Deputy Governor Macklem, to his right was not quite so skilled.) He went on to say that they (BOC) were more interested in a variety of other commodities (he mentioned oil and lumber) as being more indicative and leading indicators of global growth prospects, and that one could point to the base metals in that regard.

As I write this at 10:30 am EST, most of the commodities in my list are down and Canada's TSX Index is down 103.21 from yesterday's close. Most world market indices are also down.

Continued weakness in commodities may, finally, weigh negatively on equities, as I've written in several posts recently here, here, and here.

UPDATE at 4:30 pm EST - As an example of a base metal that they are likely monitoring, copper is down nearly 4% today and is currently trading at 3.1765. Contrast that with its high of 4.6495 reached in February 2011, and it's down by 32% from that level. The chart below shows that a bearish "Death Cross" has formed recently on the Weekly timeframe as price has fallen below 5-Year major price, moving average, Fibonacci, and volume support levels....one to watch going forward, along with other commodities that I've mentioned in the above referenced (and even older) posts.

(Excerpt from BOC press release)

World Market Index Source: http://www.indexq.org/