Tuesday Sept 20, 2011
Despite al the worry, QQQ is now up six days in a row. Today makes seven with a FED announcement on the way.
At bottom On Balance Volume is broke over its resistance line on the daily chart. Note, Apple made a new high yesterday. As 12% of the QQQ Apple is powering it higher.
If you're not making money you may simply be in the wrong index. With Apple and AMZN powering the QQQs, it is clearly in the lead.
This Performance Chart ranks the recent relative performance of one index to another. The QQQs in red orange are simply outperforming the others. Then in order are the DOW, New York Stock Exchange (the market) and finally the Russell 2000 small caps. This is bear market behavior. Recall that in the early 1970s investors focused on the Nifty Fifty thinking those stocks would withstand selling pressure. But this is a symptom of the bear market where funds crowd into fewer and fewer stocks pushing them higher to the exclusion of the other, note the hapless RUT 2000 going nowhere.
In the last couple of months NFLX and OPEN have lost half their value. Once the funds dump a stocks the move down is vicious.
At any rate the party continues, speculations runs high over some kind of stimulus from the FED. The world bankers see these charts as well. No doubt there will be another attempt at goosing the economy but the last chart today tells the story. We mentioned short term overbought this weekend, the QQQ shrugged that off yesterday to finish higher.
VIX remains stubbornly above 30. And the SPX/NYSE turned down yesterday. The rally is in QQQ.
Pass the iPad and enjoy the rally in high tech.
While we never intended to be stock pickers here, and I have small positions in these stocks, here are a couple that look like low risk plays.
SEA a fund of screened international shipping companies is bouncing along at 17.
TIE has experience massive insider buying this year and is moving up, moving averages flashing a buy signal now.
As always set percentage maximums for your positions before entering orders.
The Beaten Down Buck
Yes my worst call of 2010 was to go long UUP. But reward comes to those with patience. Yes crude oil has a buy signal this weekend but the longer term fate of commodities ( and therefore Australia and Canada), gold, silver, oil, and stocks is shown above. Note that oil reversed May 1 the exact day the US Dollar shown via UUP reversed to the upside. Note the surge in volume in the lower panel in May and now in September. Now UUP has, gee imagine, climbed above its 200 day MA. As the EU lurches from one hastily cobbled deal to another to 'save' the Euro, Greece, and the French and German bank bond holdings, the world scrambles into the Dollar. Everything is priced in dollars.
All the talking heads and consumer advocates will soon get what they want, lower gasoline prices, and a much slower economy.
Socionomics
IN today's WSJ
-Note the increase in Greek Suicides, the ultimate negative mood. the story of a vegetable dealer who tragically took his own life reveals that "a local custom of free flowing often informal lending kept his business afloat for years" which is to say Mr. Petrakis was a microcosm of Greece itself, or pre bust GM or IL or CA today, simply rolling debt, always generating cash from financing to use the Cash Flow Statement term, but never from operations.
Bret Stephens, page A 13, extrapolates to the larger picture, "Europe is a geographical expression", to which I would add, so is South America, again on page one note the creation of new currencies in Brazil, now one of the most expensive countries in the world but with a large poor population. Brazil like Canada and Australia is a commodity economy, the Stronger Dollar dooms its growth and its Bovespa has been in decline since Nov. 2010....
Comments