Weekend March 29 2014
MIchael Gayed concludes we are in for a choppy market. He concludes as we have warned that stronger bond prices are warning of weaker stock prices.
C H Smith explains that the 50-60s were not normal. And there is no going back. This also explains why gold will not back the US Dollar as a reserve currency for the world.
He then explains why throwing money at he problems will not work.The college situation is a case in point.
The Real Economy - Keep Working
Worst Week for NASD in 17 Months
Bonds
Richard Russell often observed that the bond market is a lot more sophisticated than the stock market. By that he meant it is more sensitive to seeing change coming. This was the case by 19854 as interest rates started falling signalling the coming of the great stock rally as bond rates fell for sixteen years, and in fact are still falling.
We suggested as much this past Thursday, if you hve not read that post do so before going further.
Note, I got my start in tech analysis with the bond rally of 1984. Thursday we suggested that after moving from 100 to 108, it looked like TLT was heading higher. I then explained a buy write trade on "TLT.
TLT Ka Boom Short Term
Short Term Guesses are just that. We may have a fifth wave higher ahead of us. But the Bigger PIcture is that we are headed up in bond prices. See our Thursday update for an explanation on just how profitable this can be.
Longer Term TLT
AS George Strait sings, Put this on the Frigerator Door
Where Everyone will See it For Sure
I am serious about clipping this and putting it where you are reminded of what is happening.
- Bond have completed a two year correction from the late 2011 high.
- The MACD downtrend has been broken.
- Bond prices complete between a 50 and 61.8% FIB correction on the weekly chart.
- The 200 week MA has been tested and prices are now moving up. '
This is classic textbook chart-graphics. We are a bit late to the party but have the long term picture in hand. IF bond prices have moved this much while Dow Industrials are over 16,000, let stocks drop and watch what happens to bonds.
Other Income Ideas
EEP Weekly
EEP has been testing a confluence of moving averages MAs.
The long term uptrend is intact. The MACD looks to be bottoming after a lengthy multi-year correction.
EEP pays a whopping 8% dividend. EEP has had some fundamental problems which casued the drop from 31, it appears the market is looking more favorably on EEP.
Shorter Term EEP
- The SAR PAR indicator turned a buy signal on Friday, see dot at far right
- On Balance Volume turend up after a month long sell off
- Price edges higher
- RSI at top moves above 50
Again this is a textbook chart graphic set up for a longer term buy signal.
KInder Morgan - 80,000 Miles of Pipelines
Support looks to be in the 28-360 area, This is one of the larger pipeline plays in the US and pays a 5.1% dividend.
REITs
WRE
My two favorites are Washington REIT which owns property mainly in the DC area, the best economy in the country for all the wrong reasons. WRI WRE pays 5%, WRI Weingarten pays 4.34% both charts are similar.
Closed End Municipal Bonds
BLE is a good proxy for this group. It appears BLE is beginning a fifth wave to the upside. That fits with out theme this weekend of Bonds, Master Limited Partnerships, REITs, and now Municipals all moving together to the upside. If correct this is a great time to lock in yields.
BLE is paying 7.2% at a near 4% discount to Net Asset Value. You tell me, is that a good idea given this chart?
More confirmation or income plays, Staples outperform Discretionary
This is a ratio chart of Consumer Staples XLP to Consumer Discretionary XLY. When the chart is headed down, consumers are risk on being discretionary items, think hot tubs. When the chart turns up, consumers turn cautious, think basic necessities. The chart clearly turned at teh first of March which confirms the move into more conservative plays we are outlinging today.
HIgh Tech Woes
From top to bottom, even GOOG went down this past week, the big correction has set in with 3 D printers like XONE, Facebook may have finished its big move from the post IPO low, and Infosys took a hit.
NASD Summation Index
NASI looks like it is headed back to the February low.
New York Summation Index
The two summation indexes present quite a contrast as to how much stonger the big market in the lower panel is than the NASD.
QQQ, Way Above the Moving Averages
It has been over a year since QQQ tested even its 50 week MA. The seasonal high approaches in April -mid May. MACD looks weak in the lower panel.
The Next Big Thing Returnof the Emerging Markets?
EEM
Is this one year triangle gonig to break to the upside, the MACD suggests it may.
Gold
Friday action looks like this area is trying to turn up.
GDX 2 Hour
After a two week sell off, GDX may be trying to bottom short term here. Volatility is such that this is not for the indecisive.
I am seriously thinking of re orienting this blog to
bonds
REITs
MLPs
Municipal Bonds
as I read more and more articles on how few people are prepared to retire. One thing you need in retirement is reliable income, not speculation.
Bottom Line
We are suggesting plays in TLT, closed end munis, Pipeline MLPs, REITs for income investors. It looks like these sectors are completing longer term corrections.
Stocks and gold are likely sideways.
Socionomics
Earth to Tech Investors, Facebook FB is now worth half as much at Berkshire Hathaway BRK. It that a good bet?
FB bought Instagram for $7156M, users are up from 30 m to 200 M.
FB bought What's App for $19 B. Whats app allows one to avoid paying for SMS (short messaging service, I had to look that up). If your life is texging, I guess this is a real break through.
FB bought Oculus, a 3D virtual reality company, even though it has yet to bring a product to market.
MY guess is that FB topped and is now headed back to fourth wave support at 45. At least Zuckerberg is using stock rather than all cash for some of these deals.
Elon Musk has been exhibiting a similar Midas Touch at Tesla.
The price is up 6X in one year. Now he is shopping cities for a battery plant, to be built which he says will be a battery breakthrough. Now the cars are limited to say Dallas to Waco on one charge, not so great if you are trying to get to Austin.
Netscape, Word Perfect, Lotus 1 2 3, all gone, My Space, a bad bet compared to Facebook, social mood is full tilt positive on these two developing tech companies.
Let us know if you would prefer more coverage of the income plays we mentioned in this update.
Rambus has chosen to focus solely on gold and mining stocks. That was a great idea on the way down from the 2011 high to the summer low last year. Now volatility reigns necessitating shifts from the long to short side and back again in as little as five days trading time. That's gambling not investing. I suspect most of our readers would prefer ideas that py them to invest. a
Thanks for reading The Market Perspective
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The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance ands no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks. Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned. Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital. No guarantee can be made to the accuracy of text or charts.
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