Paul Ebeling on Wall Street
Paul Ebeling on Wall Street
This is another big week for Economic data in the USA beginning with the ISM Monday and finishing with November Jobs report Friday.
The major market indices have some upside momentum in here and since it is the start of a new month we could very well see new money coming in this week that will extend this move North to the next Key resistance mark.
The DJIA is trading above its 200-Day SMA and below its 50-Day EMA; there is serious resistance at 13,100.
The real action is centered around the Washington DC and the F-Cliff negotiations. The market is expecting a compromise resolution. If it does not get it expect a move lower on the disappointment.
For most of us observing and commenting on the F-Cliff is an unknown that folks think it will result in another US recession.
The fact that the negotiations are not public leads to uncertainty and continuing speculations as to what the compromise solution might be.
As I am seeing this the politicians wish to keep this debate private and then the Key players come to the TV cameras to voice their POV’s on the issues.
The market and the public is then subject to the ebb and flow of information of the negotiations as the politicians see fit, and it is hard to know how this “brinkmanship” game will resolve. Maddening for sure because those on both sides want to keep their promises to their constituents and come out looking like the/a Winner.
And it is possible nothing gets resolved, and the US is downgraded again. The US lawmakers have to come up with a resolution that prevents recession, and spurs growth, not kick the can down the road as they have been and continue to do in Europe.
The DJIA, S&P 500 and NAS have been in a rally mode even though the chart patterns are not really strong, and those buying the rally are likely taking into consideration that the US Fed has the liquidity faucet open wide, and we all know you do not fight the Fed.
That being the case there are upsides on stocks but the where are the buys to extend this rally, that’s the Big Q.
Meaning that you have to be ready if the rally stalls out, because this a relief rally until it is proved otherwise, and the major indices suggest it is still relief rally.
But for now let it work, if it continues North there will be some nice profits to bank.
Some believe that if there is a deal of the F-Cliff then there is a 5% move North in the wings. Again, let profits run…
What I am seeing and reading is that some very savvy participants are very worried in here and they are expressing it loudly. Remember, do your own work, tune out the noise and leave your emotions out of the mix, discipline is the Key, the name of this game is to make money.
Have a great week.
Paul A. Ebeling, Jnr.
Red’s Bull and Bear Trade Alerts
Red’s Trade Alert: PepsiCo NYSE:PEP
Profile: PepsiCo, Inc. engages in the manufacture and sale of snacks, carbonated and non-carbonated beverages, dairy products, and other foods worldwide. It operates in four divisions: PepsiCo Americas Foods (PAF); PepsiCo Americas Beverages (PAB); PepsiCo Europe; and PepsiCo Asia, Middle East, and Africa (AMEA).
PepsiCo options set a new 90-day record for the number of Call contracts that exchanged hands between the buyers and the sellers.
Aggregate volume of Puts was 5,434 and Calls was 15,227 equating to a 0.36 Put/Call Ratio PCR
The PCR implies that investors are hedging their positions in anticipation of a stock move. Friday’s unusual volume activity confirms that traders are re-balancing their portfolios.
Also, PCRs can be regarded as a predictor of investment sentiment, indicating what experienced investors are doing in preparation for a move of an underlying equity.
A high PCR suggests that the investor sentiment is Bearish and that investors are expecting the underlying stock price to decrease.
A low PCR implies that the investor sentiment is Bullish and that investors are expecting the underlying stock price to increase. Thus, unusual volume provides reliable clues that the stock is expected to make a move.
Shares of PEP finished Friday at 70.21, -0.10, -0.14% as it approaches its 52 wk high.
The shares of the stock had an intra-day low of 69.74 and high of 70.35.
The stock’s 52 wk low is 62.15 and 52 wk high is 73.66.
PEP is trading above its 20, 50 and 200-Day Moving Averages
Next Earnings Date: 17 January 2013
Analysts Recommendation: Hold
1 yr Price Target Estimate: 76.50
Week Month Quarter Half Year Year
+1.44% +1.93% -3.13% +3.84% +15.21%
|Neutral (0.10)||Bullish (0.29)||Neutral (-0.05)||Neutral (0.05)|
Recent CandleStick Analysis Neutral
|up||23 Nov 2012||69.4 to 69.5|
|Support and Resistance|
|VBu=Very Bullish, Bu=Bullish
Be=Bearish, VBe=Very Bearish
See them daily at www.livetradingnews.com
Disclaimer: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. Neither Ebeling-Heffernan, www.livetradingnews.com nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither Ebeling-Heffernan, www.livetradingnews.com nor its affiliates are responsible for any errors or for results obtained from the use of this information. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in Good Faith, are subject to change without notice. Before acting on any information contained on the website, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
Re-cap of the US Markets for the Week ended 30 November 2012
US Stocks: Wall Street finishes flat Friday
DJIA +3.76 at 13025.58, NAS -1.79 at 3010.24, S&P 500 +0.23 at 1416.18
US stocks were edgy Friday. The S&P 500 followed the early indecision by sliding to its lows just above the 1410 level.
Rising stocks narrowly outnumbered falling ones on the NYSE. Volume was in line with the recent average at 3.8-B/shrs on the day.
A familiar theme played out intra-day as President Obama and House Speaker Boehner held their press conferences.
The President preached the importance of reaching compromise and expressed hope that enough Republicans can be convinced to break rank and vote in favor of his budget proposal. Meanwhile,
US House Speaker Boehner maintained his stance, and said that Republicans are willing to compromise if Democratic lawmakers agree to spending cuts.
They are at a stalemate.
The S&P 500 spent most of the session in the Red, a late buying surge just before the close lifted the index to the flat line on the close.
Strong: Telecoms, Utilities
Weak: Consumer Discretionary, Financials
The utilities sector was the top performer and the SPDR Utilities Select Sector ETF XLU 35.32, +0.37 settled higher by 1.1%, in the space, electric utilities paced the advance.
Duke Energy NYSE:DUK 63.82, +1.43 gained 2.3% after reaching settlement with the North Carolina Utilities Commission. The settlement aims to resolve issues following the merger of Duke Energy and Progress Energy. In addition, the company President, Chairman, and Chief Executive Officer Jim Rogers announced his intention to retire by the end of next year.
Looking at other utility stocks, Northeast Utilities NYSE:NU 38.74, +0.58 and IDACORP NYSE:IDA 42.71, +0.47 both advanced near 1.3%.
Financials saw relative weakness as the budget debate remains in focus.
Citigroup NYSE:C 34.57, -0.64 lost 1.8% and was the weakest performer among the majors.
Though US financials underperformed, their European counterparts advanced. Barclays NYSE:BCS 15.83, +0.17 and UBS NYSE:UBS 15.70, +0.11 added 1.1% and 0.7%, respectively.
Reuters reported Barclays may cut as many as 3500 investment bank positions and reduce the scope of its Asian operations.
Tech stocks lagged the broader market and large cap names saw weakness. Apple NASDAQ:AAPL 585.28, -4.08), International Business Machines IBM 190.07, -1.46, and Microsoft NASDAQ:MSFT 26.61, -0.33) all lost between 0.7% and 1.2%.
Elsewhere, VeriSign NASDAQ:VRSN 34.15, -5.19 fell 13.2% after its updated agreement with the US Department of Commerce limited the company’s ability to increase domain registration prices.
Also of note, Groupon NASDAQ:GRPN 4.14, -0.40 fell another 8.8% after company spokesman said CEO Andrew Mason will not be replaced in the near term.
Consumer discretionary stocks saw weakness and carmakers weighed on the sector.
Ford Motor NYSE:F 11.45, -0.08 said it plans to increase its electric car market share to 11.0%, from the current 5.2%. Shares of Ford finished lower by 0.7%.
Looking at other automakers, Honda Motor NYSE:HMC 33.29, -0.30, Toyota Motor NYSE:TM 86.08, -0.43, and Thor NYSE:THO 37.74, -0.21 all lost between 0.5% and 1.0%.
Yum! Brands NYSE:YUM 67.08, -7.39 after tapping a 52 wk high Thursday and breaking above the safety zone EPS mark of 20/, weighed on the discretionary space. The restaurant operator slid 9.9% after issuing Y 2013 guidance and reaffirming its Y 2012 earnings growth forecast of at least 13%. The guidance proved to be a point of concern as sales in China are expected to continue tracking lower. Following the update, Raymond James, Susquehanna, and UBS all downgraded the stock.
On the upside, teen retailer Five Below NASDAQ:FIVE 37.15, +5.76 soared 18.4% after beating on earnings and revenue. Plus, the company issued downside Q-4 earnings guidance while revenue is expected to come in above consensus estimates.
US Major Market Indexes Technical Analysis
|30 Nov 2012||QQQ||65.76||Neutral (-0.12)||65.22||66.23|
|30 Nov 2012||DIA||129.95||Neutral (-0.19)||129.26||130.33|
|30 Nov 2012||SPY||142.14||Neutral (0.05)||141.84||143.49|
In economic news, the November Chicago PMI reading of 50.4 surprised to the downside as economists surveyed had expected a reading of 50.7 to follow the prior month’s 49.9.
Personal income was unchanged in October, which was below the 0.2% increase expected by the Briefing.com consensus. Personal spending decreased by 0.2%, which was below the expected 0.1% up-tick. Core personal consumption expenditures were higher by 0.1%, which fell short of the broadly expected reading of 0.2%.
Monday’s economic data will include the November ISM Index as well as October construction spending. The 2 reports will be released at 10:00 a EST. Plus; automakers will report their sales throughout the day.
This Week on the Economic Front in the USA
Monday, 3 December
ISM Index, November (10:00): 51.2 expected, 51.7 past
Construction Spending, October (10:00): 0.4% expected, 0.6% past
Auto Sales, November (14:00): 5.2-M past
Truck Sales, November (14:00): 6.0-M past
Tuesday, 4 December
Wednesday, 5 December
MBA Mortgage Index, 12/01 (7:00): -0.9% past
ADP Employment Change, November (8:15): 125-K expected, 158-K past
Productivity-Rev., Q-3 (8:30): 2.7% expected, 1.9% past
Unit Labor Costs -Revised, Q-3 (8:30): -0.8% expected, -0.1% past
Factory Orders, October (10:00): -0.1% expected, 4.8% past
ISM Services, November (10:00): 53.7 expected, 54.2 past
Crude Oil Inventories, 12/01 (10:30): -0.347-M past
Thursday, 6 December
Challenger Job Cuts, November (7:30): 11.6% past
Initial Claims, 12/1 (8:30): 382-K expected, 393-K past
Continuing Claims, 11/24 (8:30): 3275-K expected, 3287-K past
Friday, 7 December
Nonfarm Payrolls, November (8:30): 90-K expected, 171-K past
Nonfarm Private Payrolls, November (8:30): 120-K expected, 184-K past
Unemployment Rate, November (8:30): 8.0% expected, 7.9% past
Hourly Earnings, November (8:30): 0.1% expected, 0.0% past
Average Workweek, November (8:30): 34.4 expected, 34.4 past
Michigan Sentiment, December (9:55): 82.4 expected, 82.7 past
Consumer Credit, October (15:00): $9.9-B expected, $11.4-B past
This Week on the Earnings Front in the USA
Earnings Season has wound down
There are no notable companies report earnings this week.
For the complete go to: http://biz.yahoo.com/research/earncal/today.html
The Most Asked Question last Week
The Big Q: Red, what is a Lame Duck Congress?
The Big A: October was start of the new F-Y USA, it came on quietly Congress recessed in mid-September so House and Senate members could return to their districts to campaign before the November elections. Members returned to Washington in mid-November for a “Lame Duck” session of Congress, during which there is pressure to address a number of Key issues.
If you are wondering about the phrase, “Lame Ducks” are those members of Congress who lost their election or did not seek another term, but are still in office because their term has not yet officially ended. So a Lame-Duck session of Congress is one that occurs after the election, but before new members of Congress are sworn in January.
Below are some of the must-do pieces of business facing this current Lame-Duck Congress;
Fiscal Cliff, Part 1: The Bush-era tax cuts – They are set to expire 31 December. Republicans favor extending them for all income levels, Democrats propose extending them for everyone but top earners, individuals making more than $200,000 or families making more than $250,000
Fiscal Cliff, Part 2: Sequestration – The across-the-board spending cuts mandated by last year’s Budget Control Act are scheduled to take effect on 2 January 2013. Overall, Democrats and Republicans alike want to avoid sequestration, but they cannot agree on a plan to keep it from happening.
These could be addressed as part of a “Grand Deal” that tackles reducing the US federal deficit, it also appears unlikely that such a deal will be made during the Lame-Duck session. Instead, expect Congress to “Punt” the final decision on these issues, particularly sequestration to later in the year after the new Congress convenes.
The F-Y 2013 Budget – Although F-Y 2013 officially began on 1 October, there is no F-Y 2013 budget. Instead, prior to recessing, the US Congress enacted a stop-gap spending bill – known as a Continuing Resolution CR that keeps the government operating at current funding levels for 1-H of F-Y 2013. This will not be an issue for the Lame-Duck session, but it is out there.
The Farm Bill – The Senate has passed its version of this legislation, which expired on 30 September. The House has not acted yet. This is important legislation for farmers and live-stock owners who rely on federal commodity price support programs. The situation is more acute this year due to the drought that plagued the Midwest. Plus the farm bill contains funding for the Supplemental Nutrition Assistance Program SNAP, the federal Food Stamp program.
Then there are a whole lot of other pieces of legislation that are high priorities for certain members of Congress: a bailout of the floundering US Postal Service, the annual defense authorization, ratification of the Law of the Sea Treaty, and Medicare funding for physician payments to name a few which are not vying for the returning Congress.
The real Big Q is: will it be a Lame Duck, or a Dead Duck Congress?
PS: We here at LTN are focused on natural resources, agriculture, the Singapore $, and quality stocks that offer steady returns and high dividends, we call them Aristocrat Stocks (and the events that shape the market prices) and profile them weekly on www.livetradingnews.com . They are not priced to make investors a fortune, but they are priced to give approximately 4 to 5% real return on capital, that beat the bank deposit rates soundly and risk is avoided. Pay attention and Cheer up.
Knowledge of Yourself -Your Plan is very helpful, and is used by professional traders to help them Win in a game where most lose. Knowledge is Power!
Red’s Edge and in the Trenches
Reflect and Resolve to Make Money
The area that I believe to be of great importance to those of us who have a keen interest in trading markets is how to better Play the Game of trading and investing.
The 1st thing to do, IMO, is to reflect on what was done last year and how well it was done. I believe it will be the common denominator that some stuff was done well and some not so well. That said it would be a good plan to work to be better at what was not done so well in this New Year.
Looking into the past may be helpful to put together Resolutions that will bring positive changes that bode well for future action in the markets, in order to set up for continuing success.
The common areas that most all traders/players work on to improve in order to continuously post good Percentage and Money records are:
1. Formulate a Trading Plan for their business; this is a business, though many of refer to it as a Game.
2. Follow and fine-tune the Trading Plan along the way.
3. Learn to Cut Losses
4. Stop Cutting Profits
5. Manage your money; remember Your Money and Your Responsibility.
6. Education, Education and more Education, Knowledge is Power.
7. Last but not least are; never enter a position without a Way Out (aka Exit Strategy)
Lumped into 1 Key Trader/Player Resolution and followed will likely lead to improved trading results.
That said, always strive to do your best, use the best tools, be patient with yourself and be happy.
Each new day comes with new opportunities, challenges, and changes.
All the best,
Paul A. Ebeling, Jnr.
PS: if you look at yourself as a player/trader, and you like doing it, then it is Key to understand what makes you “tick”; plus it is very helpful to understand the motivations for your actions and their timing in the entering and exiting positions. It is very important to strive to remove the emotion and focus on the business of trading the markets to win. When you acquire the discipline and the tools to remove the emotion you are on the way to winning and perhaps winning Big. PE
To succeed in trading, a Player needs Knowledge; Gain it and use it wisely
The Key to Stock Market Understanding
We all know that markets and stocks go up and they go down. Players will have winning trades and losing trades.
Individual trades do not determine if a trader is a success or failure. A losing trade can be a successful trade if the trader has followed the disciplined Plan and cut a loss timely.
So, that being said, and knowing that there will be times of drawdown for even the best trader, how is success measured in this business?
Well, one way is to go back and look at steps along the path that brought you to trading. This will likely help you understand how well you are doing.
Example: one of the first steps along the path to trading success was your learning how to use the computer, a basic skill that makes the work easier, faster and hopefully better, and it follows that improvements made in the steps along the path would likely improve overall success.
Next is, have you completed and do you use a well-defined and controlled trading plan? And have you learned strategies to trade up down or sideways markets? Have you developed an exit strategy, whether you have a discipline to cut losses-whether you are dedicating time to education through reading, or seminars and/or have you structured your time to permit regularly attending to the business of trading? Hopefully you are getting more knowledgeable, as knowledge is Key.
So, then take the time to look back from where you are now, so you can analyze the steps that you have taken so far, looking at what you have done you can see what you have not done as well and that may lead you to improve our trading.
You might look back and see that you have closed losing positions only after losses have mounted to the point where you feel hopeless.
That revelation could lead you to establishing a more disciplined exit strategy. Instead of waiting for hopeless, instead decide to use the reversal of some indicator, or the break through a moving average as a more disciplined way to cut losses more quickly and more efficiently. I tell people this all the time when they call to ask.
So, if you are not satisfied with your trading, look and see what actions can be improved going forward?
Success is not static and can become better than you ever thought when you are willing to examine how you got where you are, with a look to how you can make the necessary changes to get where you want to be.
Again, there are many ways to make and lose money in the markets. It is clearly worthwhile to learn how to make money and how to reduce or avoid losses if one is going to venture into this game.
For if you are not armed with Knowledge, it is better to forget the possibility of financial gain in the markets and simply live life on the sidelines. The risks for the ignorant are huge, and in this action, Ignorance is not bliss.
Safety is an illusion. You have all heard and experienced that, ask yourself, Is it safe to walk down steps, take a walk, cross the street, drive your car, sail your boat, swim in the ocean, fly your plane, ski and scuba dive, etc, etc, etc. So it is fair to say that it is not likely to have complete safety in life.
In the investment world, highly rated bonds were considered safe in the past, but that has been proved not necessarily so.
In the world of stock trading, safety is established with the exit strategy, and like most safety, it is imperfect at best. But it does work pretty well if you have established a good plan. And as a player/trader, you must begin with a clear understanding what is adequate safety for you. This column talks about the “Plan” throughout the year, Plan Your Work and Work Your Plan is a recurring theme here. It is your money, so for sure it is your responsibility.
Knowledge of Yourself -Your Plan is very helpful, and is used by professional traders to help them Win in a game where most lose. Knowledge is Power!
Again, the Reminder on Risk
Risk is everywhere including trading the markets; you must learn to manage risk.
When you seek profits in trading markets there is a certain factor that creeps in; it is the “Greed” factor; then come the Risk factors that give rise to the Fear factor in trading.
Likely, many bad trades are the results of a misunderstanding of/or an initial failure to pay attention to risk.
Once that risk becomes real for many folks, it can turn into fear and panic. Risk means we can lose something we have, and often, traders fail to realize just how much is at risk until it is too late for them
One of the most compelling facts regarding risk of loss in the market is that if a position loses 50%, it must then double, i.e. move up 100% to get back to even.
It is important to note that risk in the buying of stock in the market is one of the riskiest things on the planet.
When buying a stock, the total investment is at risk. And as we have seen recently, formerly great companies can fall to Zero.
You ask: Red, Are there ways to reduce the risk of losing my entire investment when buying stocks?
Sure, we have discussed them in previous articles. One is employ stop loss orders in place or trailing stop loss orders.
In most situations, these orders can work to prevent losing everything. It is unlikely that a stock will drop from USUS$50 to US$ Zero overnight, and most stocks that fail often post warning signs; and while they often fall fast, they usually take a bit of time to hit Zero bottom. In such circumstances, the stop loss may work to preserve capital.
Here is another way to protect an asset (some of us call it Insurance). That is to buy a protective Put. A Put option is a contract whereby the buyer of the Put has the right, but not the obligation, to force someone to buy his stock at a pre-determined price, called the strike price, any time before the option expires.
To obtain that right, the buyer of a Put pays a premium. The situation is at least analogous to an insurance policy where the insured (stock owner) pays a premium in order to assure that a loss is limited to the premium, plus any deductible.
You can learn about managing risk with options, but the major risk in options strategies is that options expire, so your puts and calls only have value until expiration; and assuming no change in the price of the stock, the call becomes less and less valuable as time passes, until there is no time left. Insurance…
Another thought that is often espoused is to diversify. There are differing schools of thought regarding diversification and there are many ways to diversify.
The above discussion lists some of the ways traders reduce and manage risk in a stock purchase transaction.
All of the above is intended to motivate you to seek a greater understanding of Risk and in doing so help you Win.
Again, think Education First.
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My pal Wally Stein’s Words of Wisdom
Buy Low, Sell High or at least in the Middle; that’s Wally’s Lullaby
Sooner or later, those who win are those who believe they can!
Red’s Favorite Quote for this Week: “I could end the deficit in 5 minutes,” he told CNBC. “You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.” — Warren Buffett
See all of the Latest World News on www.livetradingnews.com up-dated hourly 24/7
In View: The traditional Santa Claus Rally to the edge of the F-Cliff
This week’s reports of U.S. economic data might be a reason for a December rally in the US stock market but for the questions posed by the DC stalemate on the US governments F-Cliff issues.
December is often a strong month for the stock markets. The S&P 500 has risen 16 times in the past 20 years during December.
This year the market is not operating under normal circumstances, and has not since 7 November, just one day after the US election when investors shifted the focus to the “Fiscal Cliff.”
Investors are nervous about the ability of lawmakers to undo the $600-B in tax increases and spending cuts that are set to begin in January; those changes, should they go into effect, will likely drive the US economy into another recession.
The economic indicators being reported this week begins with a Key reading of the manufacturing sector Monday, and finishes with the November jobs report Friday.
Even if these indicators are fair to good, their impact may be muted.
Wall Street’s focus will be on signs from Washington that politicians can settle their differences on how to avoid the F-Cliff.
Concerns about the F-Cliff sent the S&P 500 into a 2 wk decline after the US elections, dropping as much as 5.3%, it rallied back about 4% as the initial tone of talks offered hope that a compromise could be reached and investors bought stocks seen as undervalued.
Last Wednesday, the S&P 500 gained more than 20 pts from its intra-day low after House Speaker John Boehner said he was optimistic that a budget deal to avoid big spending cuts and tax hikes could be worked out. The very next day, more pessimistic comments from Rep Boehner briefly had a negative effect on US stocks.
Friday, the deep divide between the Democrats and the Republicans on taxes and spending was evident in comments from President Obama , who is out on the road expounding his POV favoring raising taxes on the wealthy, and Mr. Boehner, the top Republican in Congress, who followed saying Obama’s plan is the wrong approach and declared that the talks are “stalemated”.
Nevertheless, investor attitudes and seasonality may ignite a rally extension into the end of the year.
A recent survey by the American Association of Individual Investors, Bulls Vs Bears, reflected investor caution about the F-Cliff. Although Bullish sentiment rose above 40% for the 1st time since 23 August, Bearish sentiment remained above its historical average of 30.5% for the 14th straight week.
December is a critical month for retailers like Target Corp NYSE:TGT and Macy’s Inc NYSE:M. They saw monthly retail sales results dampened by Superstorm Sandy, but the start of the holiday shopping season fared better for them.
Consumer spending makes up about 70% of the US economy, so a strong showing for retailers during the holiday season could help drive gains.
An analyst that I read believes the recent fall after the presidential election may be a market bottom, with sentiment indicating that stocks are set up for the traditional Santa Claus Rally.
He said that concerns on the F-Cliff, as valid as they might be, may well be overblown. When you look at a lot of the overriding sentiment, that has gotten extremely negative. From that contrarian POV with the historically Bullish December time frame, we once again could be setting ourselves up for a nice rally into the end of the year, on lower expectations.
Some others view the F-Cliff as such an unusual event that any historical comparisons should ignored, with a rally unlikely due to lack of confidence in the ability of US lawmakers to reach an agreement and the economic hit caused by Superstorm Sandy. And, saying, that History does not matter when dealing with an extraordinary set of circumstances that could very well end up in the US economy going into a recession.
And the likelihood of that is purely in the hands of US elected officials in Washington, people that could without a doubt drive the US into a nasty and voluntary recession. Stay tuned…
EU Watch: Italy’s unemployment hits all-time high
Italy’s unemployment rate reached 11.1% in October, the highest level since January 2004, which experts said showed the Italian economy remains fragile despite some encouraging signs.
Italy’s National Statistic Institute reported Friday that the official unemployment was above the 10.9% predicted in the local media earlier in the week and significantly worse than the 10.8% recorded in September.
According to Mauro Dal Cerro, an economist and former analyst with the Italian Treasury, the still-rising unemployment rate is a reflection of a lack of confidence from Italian companies.
“There are some reasons for optimism because bond yields are lower, some much-needed reforms are in place, and the economy should be a little stronger in Y 2013 than it is this year,” Dal Cerro said.
“But the fact that companies aren’t hiring, I think that means they are not convinced any kind of a turnaround is in the works,” he added.
The news is particularly bad for young workers. A stunning 36.5% of the workers 15 to 24 anni are unemployed, also an all-time high. The rate increased by nearly 6% over last year.
Dal Cerro said the figure was a reflection that with a stagnated labor market, too few new entry-level jobs were opening up. “The outlook is particularly bleak for the youngest workers,” Dal Cerro said.
Italy’s unemployment figures actually under-report the percentage of the work force without a job, since it does not include figures for people who have given up looking for work or otherwise off unemployment insurance roles.
Most economists expect unemployment figures to continue to rise into next year, before the figure starts to drop by early summer, according to a research note published by Banca Intesa Sanpaolo.
Italy, now in its 4th recession since Y 2001, has seen growth hampered by spending cuts and increased taxes from the technocrat government led by Prime Minister Mario Monti, a former European Commissioner.
While Monti’s austerity reforms have lessened the likelihood that Italy could be forced to default on its sovereign debt. That has reduced borrowing costs for the government.
The yields for the benchmark 10-yr bond were as low as 4.5% Friday, their lowest levels since June 2010, but it has made the day-to-day life for many Italians more difficult.
The same ISTAT report with the new unemployment figures also showed that consumer confidence also reached its lowest level since Y 1996, and slumping household demand for purchases threatened to result in falling prices in some areas going forward.
The Paris-based Organization for Economic Cooperation and Development said earlier this week that Italy’s economy would shrink by 2.2% this year, more or less in line with ISTAT forecasts of a 2.4% contraction.
A further 0.2 to 0.5% contraction in the economy in Y 2013 is predicted from most models.
According to Hildebrandt & Ferrar technical analyst Anna Maria Zenato, the unemployment figures show that even while the perception is that the worst may be over for the Italian economy, employers are not convinced.
“When you see companies hiring new workers, that’s going to be a very solid signal that better days are ahead,” she said.
ASEAN Watch: Singapore expects economic growth to slow to 2 to 3%
Singapore Prime Minister Lee Hsien Loong has said that the government is no longer aiming for “ridiculously high” economic growth like those seen in the past years, but rather a more sustainable rate of about 2 to 3% per year, local media reported Monday.
Lee said at a conference of the ruling People’s Action Party that Singapore’s growth rate used to be 7 to 8% per year, and 5% on average over the last decade.
“Now, if you can do 3 to 4%, I think that’s good. As our workforce grows more slowly in future, even 2 to 3% will be considered good growth,” Lee said.
Singapore is now one of the world’s richest countries in terms of per capita GDP, compared to its status of a 3rd-world city state only 50 yrs ago.
Lee, who is also the secretary-general of the ruling party, said that growth remains important and that those who feel that the government over-emphasis growth do not appreciate how a lack of growth would inevitably impact the country. A sustained period of low or Zero growth would invariably affect Singapore’s vibrancy, its business sector and its own confidence and the low-wage workers would be likely to be the hardest hit.
“Do we need growth? Yes we do, because we want to generate resources, we want to improve lives and build a livable city,” Lee said.
Lee reiterated that Singapore need to keep the important values that have made the country successful, including meritocracy.
“If we do not recognize merit, how do people from poor backgrounds rise, improve their lives, and contribute fully to Singapore? Nobody will ever discover them,” he said.
He also said Singapore changed its phrasing of the growth target recently to “about 1.5%” because the government is not confident that it can hit 1.5%.
It may well be lower, so I would say it is wise for us to expect the final number to be lower than 1.5%,” he said.
BRICS Watch: Morgan Stanley NYSE: MS raised India’s growth forecast to 5.4%
Morgan Stanley Monday raised India’s economic growth forecast for the current financial year to 5.4% from 5.1% earlier based on better-than-expected GDP growth in the July-September period.
Morgan Stanley says growth, other than in the farm sector, has bottomed out.
“We believe that the pace of recovery will be slow in view of macro stability challenges; high inflation, current account deficit and loan-deposit ratio,” it said in its report.
Morgan Stanley is the latest financial institution to forecast brighter prospects for the Indian economy, which is expanding at its slowest pace in 10 yrs. It posted growth of 5.3% in July-September; lower than 5.5% in the previous 3 months.
Last week Goldman Sachs NYSE:GS raised its outlook to overweight from market weight, just after Moody’s maintained a stable outlook on the country’s sovereign debt rating.
US Economy Watch: Obama Economic Plan turns the US into Greece
US Senator Lindsey Graham said President Obama’s plan to prevent American from going over the F-Cliff is “a Joke.”
“I think we are going over the cliff,” the South Carolina Republican said Sunday on CBS’ “Face the Nation.” “It’s pretty clear to me they have made a political calculation. This offer does not remotely deal with entitlement reform in a way to save Medicare and Medicaid and Social Security from imminent bankruptcy.”
Senator Graham said he supports limiting federal income-tax deductions as a way to increase government revenues and said if the deductions are targeted correctly, they will raise between $700/800-B in 10 yrs. He said Mr. Obama’s plan to hike tax rates on the wealthy will produce $400-B during that period and will hurt job creation.
“My side knows we lost the election, and we are willing to put revenue on the table that will get some political heat for people like me,” Senator Graham said. “That is movement in a positive way. The president’s plan does nothing but damn us to becoming Greece.”
Regarding the appointment of Susan Rice as the new Secretary of State following her controversial remarks about the deadly Benghazi attack, Senator Graham said he finds Ms. Rice “lacking” competence to handle such a Key position.
“I think her story on 16 September was a political story designed to help Obama 3 wks before the election, and she should be held accountable for that,” he said on CBS’ Face the Nation.
At the Movies with Monica Petrucci
Domestic Box Office Milestone: Ben Affleck’s ‘Argo’ crosses $100-M in North America
The Iranian hostage drama stays the Top 10 box office chart for 7 wks.
Ben Affleck’s Argo is a million dollar baby in North America
The critical darling and audience favorite jumped the $100-M mark over this weekend at the domestic box office, a commendable accomplishment for a historical drama.
The film tells the real-life story of the rescue of 6 American embassy workers who were rescued during the 1979 Iranian hostage drama.
Ben Affleck directed and stars in the film, which took in $2-M over the weekend, pushing its total to $101-M.
“Argo is one of those rare cinematic achievements that has been equally and enthusiastically embraced by both critics and audiences. Its success at the box office, combined with categorical raves from critics everywhere, is a testament to the talents behind the film, beginning with its remarkable director and star, Ben Affleck. We congratulate him and everyone involved in Argo on this milestone,” Warner Bros. president of domestic distribution Dan Fellman said.
The movie has remained on the Top 10 chart for 7 weeks. It also is Mr. Affleck’s 1st directorial effort to jump $100-M mark domestically. The Town grossed $92.2-M. Internationally; Argo has grossed a strong $56-M.
Affleck directed the movie from an adapted screenplay by Chris Terrio. Argo also stars Bryan Cranston, Alan Arkin and John Goodman. Producers are George Clooney and Grant Heslov.
Have some fun, see a movie this week.
All the best,
Monica Petrucci from Tinsel Town
S&P 500 Support and Resistance
DJIA close: 13,021.82
13,056 the Feb 2012 high
13,058 from the May 2008 high
The 50-Day EMA: 13,067
13,297 the Apr 2012 high
13,331 the Aug 2012 high
13,653 the Sept 2012 high
13662 the Oct 2012 intra-day high
13,668 from the Dec 2007 high
13,692 from Jun 2007 high
14,022 from the Jul 2007 high
The 200-Day SMA: 12,994
12,716 the Apr 2012 closing low
12,524 from the Summer 2012 support zone
12,391 the Feb 2011 peak
12,369 from May 2012
12,284 the Oct 2011 high
12,258 the Dec 2011 high
12,110 the Mar 2007 closing low
12,094 the Apr 2011 low
12,035 the Jun 2012 low
S&P 500 close: 1415.95
1422 the Mar 2012 high
1425 the Oct 2012 low
1427 the Aug 2012 high
1434 from Nov 2012
1433 the Aug 2007 closing low
1440 the Nov 2007 closing lows
1466 the Sept 2012 closing high
1471 the Oct 2012 intra-day high
1475 the Sept 2012 high
1499 from Jan 2008
1539 from Jun 2007
The 50-Day EMA: 1408
1408 from a Oct 2012 closing low
1406 an early May 2012 high
1402 from the Aug 2012 consolidation
The 200-Day SMA: 1384
1378 the Feb 2012 high
1375 the early Jul 2012 high
1371 the May 2011 high
1363 the Jun 2012 high
1359 the Apr 2012 low
1357 the Jul 2011 high
1344 the Feb 2011 high
NAS close: 3012.03
3024 is the Gap point from May 2012
3026 from the Oct 2000 low
3042 from the May 2000 low
3076 an Apr 2012 high
3090 from a Mar 2012 interim high
3037 the Oct 2012 low
3101 the Aug 2012 high
3134 the Mar 2012 high
3171 the Oct 2012 intra-day high
3197 the Sept 2012 high
3227 the Apr 2000 intra-day low
3401 the May 2000 closing low
3000 the Feb 2012 high
2997 the up-trend line from 2011
The 50-Day EMA: 2992
2988 the Jul 2012 high
The 200-Day SMA: 2986
2977 from the late Oct 2012 consolidation
2962 the Apr 2012 low
2950 the mid-Apr 2012 closing low
2942 the mid-Jun 2012 high
2900 the Mar 2012 intra-day low
2858 the late Jul 2011 high
2847 the mid-May 2012 low
2838 from the Jul 2012 lows
US Market Sentiment
US Major Market Sentiment: the Bulls Vs the Bears
VIX: 15.87; +0.81
VXN: 16.96; +0.56
VXO: 16.15; +0.74
Put/Call Ratio (CBOE): 1.16; +0.15
Bulls Vs Bears
The Bulls are at 39.3% Vs 38.3% last. They got close to 35% but not there yet. Back in early June they hit 34% and set off this rally.
For your reference: 35% is the mark that suggests Bullishness, to be really Bearish it has to get up the 60/ 65% mark.
The Bears are at: 27.7% Vs 27.7% last. Bears are going nowhere fast. On the last run they did not make it to the 35% mark that signals Bullishness, but the Bulls were weak enough back in June and this rally began.
For your reference: 35% and over is the mark at is a good Northside indicator. Bearishness hit a 5 yr high at 54.4% the last week of October 2008. The move over 50 took Bearish sentiment to its highest level since Y 1995, extreme negative sentiment for sure.
NB: Watching the VIX. It always tells us when we are moving back to a more rational market. *The VIX measures the volatility of the market. A recent news story described it as “the options market’s gauge of investor fear.” Traders use VIX as a general inverse indicator of market volatility and sentiment. High numbers mean that there’s excess bearishness, and low numbers indicate excess bullishness. The VIX is updated intra-day by the Chicago Board Options Exchange (CBOE), using Standard & Poor’s 500 Index (SPX) bid/ask quotes. It was created in 19**The CBOE NAS Volatility Index (VXN) employs the same formula used to calculate US$VIX, which is based on the implied volatility of S&P 500 index options. This formula is derived from a basket of put and call options. Some are out of the money, some in the money, and some at the money. The resulting US$VXN represents the implied volatility of a hypothetical 30-day option that is at the money.
***The VXO is the ticker created to track the “original VIX” that was calculated using the prices of S&P 100 options. The new VIX uses the ticker US$VIX and is calculated using the prices of S&P 500 options. The fundamental nature of the VXO is the same as the VIX, but it is less robust and not as simple as the VIX.
Focus on FX: EUR/USD Pair
The EUR/USD edged higher to 1.3027 last week but upside momentum was not strong. But, a further rise is expected this week as long as 1.2879 support holds.
The consolidation pattern from 1.3171 finished with 3 waves down to 1.2661. Rebound from 1.2661 should extend to the resistance zone at 1.3138/7. A crack there confirms resumption of rally from 1.2042.
A break of 1.2879 puts a damper on this Bullish POV raising the odds that another low below 1.2661 could be seen before consolidation from 1.3171 is finished.
The Big Picture: the fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039, the Y 2008 high. This decline should have completed at 1.2042. A break of 1.3486 confirms and should show the way to the psych mark at 1.50 medium term. For now staying Bullish as long as 1.25 the psych mark holds.
The Long Term Picture: EUR/USD turned into a long term consolidation pattern when it tapped 1.6039 in Y 2008. Such consolidation is still in progress, range trading to continue for some time. For long term traders, a move anywhere below 76.4% Fibo retracement of 1.1639 to 1.6039 at 1.2677 could be treated as a buy zone while above 23.6% Fibo retracement at 1.5001 is a sell zone, until there is clear indication of breakout. those readers who accumulated some EUR/USD long since May, now patiently wait for the current rise from 1.2042 to extend back towards 1.5001. Stay tuned…
Focus on Precious Metals and Energy
The Overall Technicals
Comex Gold (GC)
Gold’s sharp fall Friday suggests that corrective rebound from 1672.5 possibly finished at 1755, on Bearish divergence condition in 4 hrs MACD.
Initial focus in at 1704.5, the minor support this week. A break there will turn near term outlook Bearish. If that happens, the decline from 1798.1 should be resuming for 61.8% Fibo retracement of 1526.7 to 1798.1 at 1630.4.
The Big Picture: the price actions from 1923.7 high are seen as a medium term consolidation pattern. There is no indication that the consolidation is finished, and more range trading could be seen. In any case, downside of any falling leg should be contained by the support zone at 1478.3/1577.4, and rebound. A clear break of the resistance zone at 1792.7/1804.4 augurs that the long term up trend is possibly resuming for a new high above 1923.7 and beyond.
The Long Term Picture: with support at 1478.3 intact, there is no change in the long term Bullish outlook in Gold. While some more medium term consolidation cannot be ruled out, I see an eventual break of 2000, the psych mark in the long run. Stay tuned…
Comex Gold Continuous Contract Daily Chart
Comex Silver (SI)
The current action suggests that Silver has formed a short term Top at 34.42 on Bearish divergence condition in 4 hrs MACD. The initial bias is back to the minor support at 32.90 this week. A break there augurs that rebound from 30.65 is complete and will turn outlook Bearish for a retest of this support level. A move above 34.42 will bring on another rise, and I expect further loss of momentum ahead of 35.445 resistance and then a reverse.
The Big Picture: as long as 37.58, the Key resistance holds, price actions from 26.105 are seen as a consolidation pattern, that means, the down trend from 49.82 high is not over yet and an new low below 26.105 is favored. But, a break of 37.58 will dampen this Bearish case and could bring stronger rise back to 49.82 high.
The Long Term Picture: the Big Q remains; Is 49.82 is a medium term or long term top? With 61.8% Fibo retracement of 8.4 to 49.82 at 24.22 intact, price actions from 49.82 could eventually turn out to be consolidation. And a break of resistance at 37.58 will increase the odds of a new high above 49.82. Stay tuned…
Comex Silver Continuous Contract Daily Chart
Nymex Crude Oil (CL)
Crude Oil stayed in its range of 84.05/89.90 last week. The corrective nature of the price action from 84.05 augurs that it is a consolidation pattern, and the fall from 100.42 is not finished. But, while stronger recovery could be seen as the consolidation continues, I expect the Northside to be limited by 50% Fibo retracement of 100.42 to 84.05 at 92.24.
On the downside: a break of 84.05 will target support at 77.28.
The Big Picture: the current development suggests that price actions from 114.83 are a triangle consolidation pattern. Fall from 100.42 is likely the 5th and final leg of the consolidation. That said, the Southside should be contained above 77.28 and bring on a upside breakout eventually. A break of the resistance at 110.55 augurs that rebound from 33.29 has resumed for a move above 114.83.
The Long Term Picture: Crude Oil is in a long term consolidation pattern from 147.27, with 1st wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it is the 2nd wave of the consolidation pattern. While it could make another high above 114.83, I look for strong resistance ahead of 147.24 to bring reversal for the 3rd leg of the consolidation pattern. Stay tuned…
Nymex Crude Oil Continuous Contract Daily Chart
Nymex Nat Gas (NG)
The case for near term reversal is starting to build up in Nat Gas. A break of the support at 3.47 is needed to confirm topping 1st. Barring that, another rally is in favor to the Psych mark at 4.00. A clear break of 3.47 will turn the focus to 3.355. A break there should confirm a near term reversal and bring on a pull back to the support zone at 2.575/3.277.
The Big Picture: recent developments sense that medium term decline from 6.108 finished at 1.902. It is a bit early to confirm this, but Bullish convergence condition in weekly MACD suggests that the down trend from 13.694 the Y 2008 high may be over too. Sustained break of the channel resistance, now at around 3.88 sets up for a test of the Key resistance at 4.983 next. A clear break of the resistance turned support at 3.277 augurs that the rebound from 1.902 is over and the medium larger down trend is still in progress for a new low.
The Long Term Picture: a clear break of the resistance at 3.255 was an important signal of long term bottoming reversal and should at least give Nat Gas push to 4.983/6.108, the resistance zone. Stay tuned…
Nymex Natural Gas Continuous Contract Daily Chart
LTN Hot List
The LTN “Hot List” contains potential investment opportunities suitable small, mini and micro cap portfolios.
American Estates Management Company (PK: AEMC) provides mining and mineral processing engineering services; geological and environmental services; marketing, project development, project management, and mineral resource management services. American Estates Management Company markets mineral and metal products and equity in mineral and metal projects, and partners in the development of mineral assets and metal production facilities. American Estates Management Company has developed business activity in North America, South America and Asia.
Marketing Mineral Real Estate & Mineral Resources
Mineral Lease & Mineral Resource Sale Negotiation
Mineral Lease Management
Monitor Exploration & Mining Activity
Verify Royalty Payments
Develop Real Estate & Mineral Resource Databases, Estimates & Maps
Valuation of Mineral Real Estate & Mineral Resources
Target Price: 0.50
Trai Thien USA Inc (PINK: TRTH)
Trai Thien USA is a fast-growing Vietnam-based dry bulk shipping company operating a 21,990 DWT fleet comprised of six geared bulk vessels specializing in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.
After China, the primary sources of future bulk demand are India, Brazil and Vietnam. The region contains three of the four global BRICs (Brazil, Russia, India, China), seen by economists as the future growth leaders in the world economy.
The Asia Pacific region accounts for 60% of the world’s population and almost 70% of world sea-borne trade in bulk commodities.
In order to meet anticipated continued growth in demand from an expanding base of overseas and domestic Vietnamese customers, as well as to expand the geographic regions that it can service to include potentially more profitable routes in East and South Asia.
The Company’s Vietnam-based operations are located in Ho Chi Minh City, which together with the surrounding areas, accounts for more than seventy percent of Vietnam’s total annual cargo traffic.
Pink Sheets: TRTH
Current Price: 0.10
Current PE: 4.0
Revenue Growth: 148%
1 yr Target Price: 1.00
Analysts Rating: Strong Buy
Red’s Bull Trade Alerts and Option’s Alerts are suitable for Big Cap portfolios
See them daily at www.liveradingnews.com
Red’s Rules to always play by…
Do what they do on Wall St. and not what they say; that means tune out the “Noise”.
Some folks like to buy stocks because they are upgraded, or sell stocks because they are downgraded; that’s the wrong approach. Learn how to evaluate stocks for yourself. It is not a difficult process; the steps are 1) check the volume for a buying or selling patterns, 2) recognize support and resistance levels and utilizing key charting patterns. I use www.stockta.com for my data. Knowledge is Power (and Money)
Over my 30+ yrs playing the stock market in earnest, I have learned that there are winning stocks that most traders and investors completely ignore and abhor. And when played right, these overly unappreciated issues often lead to huge gains, but it is all about timing.
There is no mystery here; you all know and/or have heard about “penny stocks” i.e. those that trade under USUS$5.00/shr on US markets (10’s of thousands of stocks trade on other world markets under USUS$5.00/shr and are not referred to in the same pejorative manner). This is just a label (designed to diminish their value and keep you away, IMO).
The fact is that there are many, many studies made over the years that prove that these stocks outperform the overall market, and when there is a steady new Bull Market, the little stocks (small caps, micro and mini caps) lead the Charge.
As a class, they are the most undiscovered and underappreciated sector of stocks and the sector where the biggest chance ends up big winners on a consistent basis. I call them Little Gems; they are indeed Wall Street’s buried treasure for those who wish to go treasure hunting.
Here, in the RedRoadmaster, I work to uncover solid, moneymaking companies whose shares are grossly undervalued and virtually undiscovered, and they sell for USUS$5 or less a share.
And do not forget to always include some small, mini and micro cap (pennies and juniors) sues in your sights; they can give you explosive percentage returns like no others.
Savvy traders do not wait for the stock market to hit bottom, recover or get toppy; they do not double down or resort to tricky, desperation moves. They make simple moves on good data and bank some gains.
Do not think get rich – think get rich slowly; it works.
Even if you know absolutely nothing about how to start making a living in the stock market, and want to learn how to do it, the first step is to learn from someone who knows how to do it successfully. The stock market is about success, and the lifestyle that comes with it, but it must be done carefully, both by picking the issues and in the trading of them, because one wants to make money doing it independently and without stress.
You can’t reverse your “bad plays”. Breathe through your nose, count to 10 and move ahead. Go forward, and only focus on what the opportunities are in front of you to win in the stock market game. You do not live in the scrapbook, and always take what the market gives.
A journey of a thousand miles begins with the first step (Confucius); Download and read and study “Knowledge is Power,” my e-Book, its Free.
Always remember that we look at the risk first and decide how to manage it before ever entering a position. Yes, losses will be incurred; it is part of this and any business, and not a bad thing if they are controlled.
Again, think “get rich steady” and not “get rich quick” and think Education!
The Bull is charging, and this perhaps this the best investing scenario since the early 80′s. It is happening now and savvy players and investors are positioned and in the action. Remember to always be nimble and take what the market gives.
Have a great week, and stay tuned.
Heffernan Capital Management
Business Development Director – Private Client Group,
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408
Fax: +65 6329 9699
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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