4um: Market WrapUp (11-22-05)

Title: Market WrapUp (11-22-05)
Source: Financial Sense Online
URL Source: http://www.financialsense.com/Market/wrapup.htm
Published: Nov 22, 2005
Author: Ike Iossif
Post Date: 2005-11-22 20:47:56 by Arete
Ping List: *unUsual Suspects* Subscribe to *unUsual Suspects*
Keywords: (11-22-05), Market, WrapUp
Views: 125
Comments: 21

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Today's WrapUp by Ike Iossif 11.22.2005 Mon Tue Wed Thu Fri Archive

RATIO ANALYSIS

One of our favorite types of analysis is ratio analysis because it tends to reveal when the historical numerical ratio between correlated markets/sectors is at extreme points, and thus, ripe for reversal.

We like to buy gold stocks when the gold/XAU ratio is above 5.00, and sell when the ratio dips below 3.75. We are a long way from an entry point now. Moreover, as the ratio gets closer to 4, we ought to see a minor reaction, but we don't expect to see a top until the ratio gets closer to 3.5-3.25.

Another ratio that we follow closely is the one between the XAU and TLT. Notice in the previous instance we did not get a sharp counter-trend move in the XAU until the ratio exceeded 1.40.

Investors need to pay attention to the direction of interest rates versus the price of gold/gold stocks. Notice that the XAU began to rally from the 105 level as the TLT bottomed around the 88 level. The lesson here is that interest rates have risen to a level that do impact the price of gold/gold stocks, and sooner or later something will have to give. We believe that bonds will end up having to give. We will see higher interest rates and higher gold prices because the "inflation horse" is out of the barn!

Notice that an SPX/BKX ratio below 12.5 is still near its all time low. The implication is that the banking sector remains grossly overvalued. In the face of higher interest rates, investors appear to have misplaced their hopes.

The 30-Yr Bond/BKX ratio appears to be telling us that the banking sector is still in the process of making a long term top, while interest rates are making a long term low.

The QQQQ/QQV ratio is telling us that the QQQQ is near a top.

The SPX/VIX ratio is telling us that the SPX is near a top.

The OEX/VXO ratio is telling that the OEX is near a top.

The NDX/VXN ratio is telling that the NDX is near a top.

Summary

The ratio analysis is telling us that more likely, we ought to expect an intermediate term top in equity prices sometime within the next 2-5 weeks, a counter-trend move in the XAU in the 122-124 zone, to be followed by another rally above 130-135 within the next 4-6 weeks.

Last but not least, we would like to make one more comment about oil. Notice that it has "dug in" the $57-$56 zone. If it continues to hold for the next 2-3 trading days, we would expect a break above resistance at $60, and a subsequent rise above $80. Our top three stocks in the oil complex would be: MRO, OXY, and UPL. For more on oil please visit: http://www.streetiq.com/profile.shtml#MARKETVIEWS

Ike Iossif

Ike Iossif
President & CIO Aegean Capital Group, Inc. &
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Disclaimer

Take the time to look at these charts. From a distance all systems are 'GO' for continue advance. Get up close and you still see the same scanario. If you pick a break in the last lime line to sell, that comes at $488.50.

From a more methodical and management sense, 3% comes at -$14.87 or $480.68. 3% is the widely used ratio to pull out at and used by the majority of the big players. 1% would be $490.60 if you're the jittery type. Use the lime line, the FIBO's, the first fucshia line and the 50dma as major turning points but then look at the RSI and the MACD to see what type of sentiment and momentum is in play at that moment.

I post these charts for one purpose, so that one can have a road map and play the investment game with knowlege and have a game plan day to day. Print them and put your own marks on them. Refer to them often as needed throughout the day. Or just buy and hold like Markum. This is a Bull Market after all. If you really want to see asymtotic, just wait. A blow off top is no where in sight at the moment.

What I see happening tomorrow is most likely more ascention and at the least sideways over to the lime line.

ps: more chicken soup on the menu this evening, he he he. (I just couldn't resist. Gotta have some fun with all this serious stuff.)

After two weeks of holding one year CD rates at 4.45%, Vanguard is now offering a one year at 4.50%.

Da Boyz aren't going to be denied. Looks like Dow 11,000 is a done deal. A big wet kiss thank you from Wall Street to Sir Alan for his retirement.

Geez - oil prices fell through the floor just in time for Christmas shopping. What luck. Ha! --

CHICAGO (Reuters) - U.S. retailers look set to catch a break just in time for the big Thanksgiving shopping weekend as consumer confidence perks up, gasoline prices fall and stores pile up early-bird specials.

A baffling array of contradictory holiday sales forecasts -- some see more spending, others see less -- has made it tough for Wall Street to decide whether to love or hate retail stocks, and the sector has been on a bit of a roller coaster in the past month.

But retail experts say conditions look much better now than they did in October as the U.S. economy recovers from the string of hurricanes that drove up oil prices.

The University of Michigan's index of consumer sentiment, released on Wednesday, climbed slightly more than expected this month, suggesting that shoppers will be in a better mood.

"Consumers really got a monkey off their back when gas prices came down," said Britt Beemer, head of America's Research Group, which surveys consumers on shopping behavior. "I do expect this year that Black Friday will be the biggest (shopping) day of the year."

Oil inventories have increased 6 out of the last 7 weeks (I think). That's on higher demand and lower supply. Wonder where the central planners have all that oil stashed. I also wonder what is going to happen when they need to deliver all that mystery oil.

LONDON (Reuters) - Oil prices eased on Wednesday as U.S. inventory data showed a bigger than expected rise in fuel stocks, though concerns about cold weather cushioned the fall.

We're borrowing it from the next recession. All the commentators will be saying how odd it is that we are in a recession but oil prices aren't dropping.

They have an awful lot of balls in the air -- housing bubble, war, oil, hedge funds, gold, inflation, stocks, GSE's, comsumers, jobs, all those books that need cooked, etc.

Even on a slow day before a holiday and a long weekend, the latest lime line could not be breached. Of course the miners took a dump as soon as spot took a dip. You'd think those guys would get tired of doing in their pants so many times.