IMF World Economic Outlook Update--Lowering Expectations a Bit

Click here to explore this data.

June 25 VIX Point & Figure Reversal

Looks like I went for the fake.  The relatively high VIX readings on June 20 spooked me into standing aside to see which way the market was going.  So far, it looks like a normal bounce, rather than a 'correction.'  On June 25, the Point & Figure chart for the VIX signaled a downward move, indicating reduced fear.

Larry McMillan, one of my favorite pundits, is making more bullish sounds, "In summary, it seems almost certain that the indicators will turn bullish, because the put-call ratio signals are generally so dominant. However, their signals can be early, so we would not declare that the intermediate-term bullish trend has resumed, unless $SPX closed above resistance at 1630."

With half the trading day gone, the early gains are fading, but the S&P500 is holding above 1630 at around 1638.

I remain short the AUD/USD and have not yet re-entered the stock market.

VIX on. Risk off.

The VIX broke out of a triple top on the Point & Figure chart today.  Additionally, the S&P500 Index closed below the 1600 support level.  There seems to be risk of further correction.  I took profits in my long positions in stocks.  I will stand aside and see what happens.  I remain short the AUD/USD.

Druckenmiller Interview

The following interview appeared on ZeroHedge today.

http://www.zerohedge.com/news/2013-06-14/stanley-druckenmiller-chinas-future-and-investing-new-normal

No Longer Short the Yen

Since June 6 I am no longer short Yen.  I remain short AUD/USD.

Risk Off on Friday

Friday I took half my short position in Yen off the table.  

Staying Short the Yen and AUD/USD over the Weekend

Toyota Stock looking good still, with cheaper yen, despite recent gains.

Self-made Billionaire Stanley Druckenmiller Bets Against AUD/USD

“We think the Australian dollar will come down and will come down hard”

Stanley Druckenmiller - Duquesne Family Office

• Stock Idea - Long GOOG
• Commences by calling QE a nuclear weapon and believes that Bernanke has embarked on the wrong policy. But he notes that listening to Bernanke shows that he's not going "wobbly anytime."
• No condition of Bear market until Fed changes - so expect the market to continue to rise.
• On commodities, he says that the super-cycle is ending and believes that their a "poisonous cocktail" in commodities when it comes to China.
• He says he thinks the AUD will sell-off hard.
• He is bullish onGOOG  - says that its a great tech company and notes some of their new technologies pushing from glass to auto.

Complete Ira Sohn Conference Highlights

Gold Price Support Caves

Not sure how Hannity will explain this.  Goldman is suggesting shorting gold.

Bank of Japan's Kuroda Acts to Weaken Yen (fight deflation)

Forbes Comment on New Japanese QE



Note:  The Yen Continues Weakening Since Abe's Election

Elections May Be A Most Important Indicator For Currency Markets

Tesla Sales Beat Projections

Stock Price Jumps 18%!  I guess Model S is a success, while Chevy Volt is not.

Light Bulbs

What happened to my 100-watt lightbulbs?

The Problem

A possible solution.  Cree LED lightbulbs.

CREE earnings and stock price rise

Gold Reaches Bearish Objective on P&F Chart--$1560

Look for Support around Here.

PIMCO's new ETF, FORX

It should be on your radar.  The managers are heavily experienced and geeky.

http://www.pimcoetfs.com/Funds/Pages/FORX.aspx

A Simple Markov Chain Model of the Market

A Markov Chain has the beauty of not depending on
history, but solely on the present state of the system
and probabilities.

A simple concept, but as this book shows, you can very soon be way in the deep end of the pool!

Bull Confirmed since Dec 20--Fiscal Cliff Whipsaw Not On NYSE Bullish Percent Index Radar

Jacob Lew--Obama's Next Treasury Sec?

Not a great communicator.  A good ass-kisser and an ass.

Larry Fink of Blackrock--Our Next Treasury Sec?

I like this guy.

Meredith Whitney Bullish? Hello.

http://video.cnbc.com/gallery/?video=3000136283

Six Bill Gross Forecasts for 2013

http://blogs.wsj.com/marketbeat/2012/12/31/the-bond-kings-fearless-forecasts-for-2013/?mod=WSJBlog&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fmarketbeat%2Ffeed+%28WSJ.com%3A+MarketBeat+Blog%29

Probability 97% Bearish

If we assume that the market moves randomly (why not?), each day it has a 50% chance of being up and a 50% chance of being down.  In such a world, the probability (P) that the market would be down five days in a row, such as it was the past 5 days would be P(.5) to the 5th power.  This works out to about a 3% chance.

Although we still assume that on any given day there is a 50% chance the market will be up or down, the market's behavior the past week has been bearish.  Only 3% chance it was random.

VIX turns bearish.

According to Larry McMillan, a VIX close above 22 is bearish.
Blame the TV for whipping up fiscal cliff hysteria.

http://www.optionstrategist.com/weekly-charts?utm_source=Email+Updater&utm_campaign=233a2e6ebd-Updater12_28_2012&utm_medium=email&mc_cid=233a2e6ebd&mc_eid=640d05de85

Morgan Stanley--Top 10 Trades for 2013

http://www.businessinsider.com/morgan-stanleys-top-10-trades-for-2013-2012-12#overweight-stocks-in-asian-markets-ex-japan-1

Some Reading for the Holidays

IMF External Sector Report

Updated Estimates of Fundamental Equilibrium Exchange Rates

 

http://www.petersoninstitute.org/publications/pb/pb12-23.pdf

 

Bull Confirmed--NYSE Bullish % Index

The Latest from Hans Redeker re: EUR/USD

http://www.bloomberg.com/news/2012-12-17/euro-may-rise-to-1-34-on-resistance-break-technical-analysis.html

An Important Interview with Jan Hatzius

http://www.businessinsider.com/goldmans-jan-hatzius-on-sectoral-balances-2012-12

With Tax Increases on the Horizon, Munis Look Good

Blackrock's Peter Hayes makes a good case, and I like that guy's haircut.

Good Advice from Blackrock and Good Haircut

Goldman Sachs | Economic Outlook 2013 - Jan Hatzius on the 2013 Global Economic Forecast

Goldman Sachs | Economic Outlook 2013 - Jan Hatzius on the 2013 Global Economic Forecast

Regulation Blues

GFT Forex shuts down its retail operations in the US and Japan.  Although it was one of the 5 largest, regulation changes have made in impossible to make money with less than $50 billion a month.  They apologize for the inconvenience.  Now that my account is closed, I'm really feeling protected.  Thanks, Big Government.

http://www.fx-mm.com/20988/news/gft-abandons-us-and-japan-retail-fx-markets/

VIX Index Remains in Bullish Territory, $BPNYA Still Defensive

The market has remained relatively calm despite the correction
in the S&P500 since the election.  The VIX (Volatility Index)
is still in bullish territory.

Meanwhile, the NYSE Bullish Percent Index Continues to
flash Bull Market Correction since November 12.

New Team in China

Besides the new General Secretary, Xi Jinping, the other six members of the Standing Committee are: Comrade Li Keqiang, Comrade Zhang Dejiang, Comrade Yu Zhengsheng, Comrade Liu Yunshan, Comrade Wang Qishan, and Comrade Zhang Gaoli.

Comrade Li Keqiang served as a Standing Committee member of the Political Bureau of the 17th CPC Central Committee while other comrades served as members of the Political Bureau of the 17th CPC Central Committee.

http://www.businessweek.com/ap/2012-11-14/xi-jinping-takes-helm-of-china-amid-reform-calls

http://www.ft.com/intl/cms/s/0/8de22556-2eca-11e2-8bb3-00144feabdc0.html#axzz2CIrBGdlg

Transcript of Xi Jinping's speech

http://www.bbc.co.uk/news/world-asia-china-20338586

Market Correction Lowers Most Boats

The important indicator of market direction, NYSE Bullish Percent Index, showed "Bull Correction" on Monday, November 12.  Defence!

Homebuilders Not Holding Up

Pulte gave a sell signal yesterday.  MDC flashed sell on Friday.

Fiscal Cliff Equals Recession--AEI Pie Chart and PIMCO's Latest Analysis

http://www.pimco.com/EN/Insights/Pages/After-the-Election-Fiscal-Cliff-Outcome-May-Surprise.aspx

Home Builders Holding Up

Hovnanian Enterprises (HOV) did especially well today, despite the strong market selloff.  We still have Obama.  We still have QE3.  Homebuilders may continue their rally.  PHM, KBH, TOL, HOV, etc.  Just a thought.

Take Your Lumps--Exit Coal as Gracefully as You Can

We re-elected the coal killer.  Enough said.

Beyond Bernanke

An essay from PIMCO, looking beyond the event horizon.

http://www.pimco.com/EN/Insights/Pages/What-Would-Happen-at-the-Fed-Under-a-Romney-Presidency.aspx

Apple Resumes Its Correction--Target 565

After its previous breakdown, Apple bounced strongly, giving a false low pole reversal signal.  Following the market close on Thursday, Apple released their earnings and guidance, resulting in Friday's double-bottom breakdown.  The P&F Chart bearish target is 565.

Touting Coal (3)

Taking a position in coal while the fog is thick regarding the election results is likely to reward better than waiting until there is certainty. Use risk management accordingly.

James River Coal Company (JRCC) is based in Richmond, VA. Recently, they have been losing money, but their cash position is pretty strong (Current Ratio 2.33, Quick Ratio 1.92).  The shares are priced at 0.6 times the Book Value.

Touting Coal (2)

Peabody Energy (BTU) is the world's largest private-sector coal company.  Like Arch Coal, their corporate headquarters are in St. Louis, MO.

http://www.peabodyenergy.com/content/113/Peabody-at-a-Glance

Touting Coal

A Romney victory could see a new energy policy in Washington, one intended to produce 'energy independence.'  This may put an end to the strangulation of American electricity production using coal.  Although the coal picture is complicated, here are some coal producers that have been showing life.

Arch Coal represents roughly 15% of America's coal supply. It is one of the top 5 coal producers in the world.  The Hunt family of Dallas figures prominently in the history of Arch Coal, and Douglas H. Hunt serves on the Board of Directors.  According to SEC filings, he has been accumulating options for the past several years, currently owning 76,469 shares.

http://www.archcoal.com/aboutus/history.aspx

http://www.secform4.com/insider-trading/1046083.htm

Apple's Low Pole Reversal--Correction Ending?

The low pole reversal is seen when a chart falls below a previous low by at least 3 boxes but then reverses to rise by at least 50 percent of the fall. The reversal implies that the supply that was making the prices fall has been absorbed and demand is taking over. The pattern is an alert that higher prices could be seen in the future. The ideal buy point would be on another reversal back down to be closer to the stop loss point. This would also set up a double top breakout if the prices reverse up and break over the current column's high.

Apple Correction Continues

Bearish Price Objective 565, according to P&F Chart

From Ed Yardeni’s Blog—Insight into China/Japan auto trade

Dr. Ed's Latest

Fed Beige Book Notes Improved Housing Numbers

Here is the latest data from around the country.

Beige Book (for your reading pleasure)

Only Game in Town!

S&P Case-Shiller Index--Today's Press Release

Atlanta housing prices have declined nearly 10% in the last year.  Worst in the nation.

Today's news release from Standard & Poor's

Tom's Tealeaves--Educational Material

A tool for predicting recessions is the inverted yield curve. Jonathan Wright's Model comes to us from the following 2006 paper.  Warning:  there is calculus in it.

http://www.federalreserve.gov/pubs/feds/2006/200607/200607pap.pdf

Ed Yardeni Was Pru-Bache's Economist back in 1982

After market risk, the most influential factor in the performance of a stock is the sector performance (or sector risk).
Stan Weinstein (Secrets for Profiting in Bull and Bear Markets, page 338) recommends that you:

1. first determine the direction of the market;
2. then select the top-performing sectors; and,
3. finally, select the best stocks from within those sectors.

Ed Yardeni has provided a timely and informative analysis of S&P500 sector performance for your reading pleasure.

http://www.yardeni.com/pub/PEACOCKPERF.pdf

For those who need an update on Ed Yardeni, see below:

http://www.yardeni.com/pub/ey_bio_2.pdf

Hans Redeker of Morgan Stanley

Click on this link for Redeker on CNBC today.

NAHB Sentiment and Home Builder Stocks

Strong correlation since 2005

Relationship between USD/JPY and 10-yr Treasury Yield

The USD/JPY has been following 10-year Treasury yields

rather closely for the past couple of years.

Courtesy Kathy Lien, BK Asset Mgmt.

Woodford's Paper Delivered at Jackson Hole

Michael Woodford is an expert on monetary policy from Columbia University.  After Bernanke's statement, this is probably the most widely read and commented upon.

http://kansascityfed.org/publicat/sympos/2012/mw.pdf

Hatzius Nails It on TV--Too Bad I Missed the Broadcast

High Pole Warning for Long Bonds as Fed Walks QE Tightrope

The high pole warning is given when a chart rises above a previous high by at least 3 boxes but then reverses to give back at least 50 percent of the rise. The reversal implies that the demand that was making the prices rise has given way to supply pressure. The pattern is a warningthat lower prices could be seen in the future.

Today's Fed Statement Buying MBS $40 billion a month

You might wanna read dis.

http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm

What is the European Central Bank's new OMT?

Something we need to be aware of.