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: 158
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

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I'm leaving town tomorrow afternoon and won't be back until Sat evening. Orangedog will be posting the WrapUp tomorrow.

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.)

President Vladimir Putin on Tuesday said he backed the Central Bank's plans to double its gold reserves, as the government set out measures to boost the country's faltering gold industry.

"I support the proposal that the Central Bank pay greater attention to precious metals in forming our gold and foreign exchange reserves," Putin said, Interfax reported. Putin was speaking during a stopover in Magadan, the capital of Russia's gold mining industry, after a visit to Japan and South Korea.

Last week, the Central Bank said it was planning to raise the share of gold in its reserves from 5 percent to 10 percent. In reaction to the announcement, world gold prices reached an 18-year high on Monday.

Iranian President Mahmoud Ahmadinejad has suffered further embarrassment after his third nominee for the key post oil minister was rejected by MPs.

Mohsen Tasalloti, the director of a petrochemical development zone in southern Iran, was dogged by rumours over his personal life and fortune.

The Majlis rejected the president's first two nominees for lacking experience in the oil sector.

Nearly two-thirds of the MPs present voted against the president's candidate in a session.

The BBC's Tehran correspondent, Frances Harrison, says parliament's rejection of three candidates over the past few months is an unprecedented challenge and a huge embarrassment to the new president.

He has denied claims that he has a US green card residency permit and that his daughter is a British citizen.

Shanghai. November 23 INTERFAX-CHINA - Local residents and company officials in Harbin are currently coming to terms with an abrupt termination of the city's water supplies, which are thought to have been contaminated by an upstream petrochemical facility. Rumors about terrorist attacks and impending earthquakes are creating panic throughout the city, and most bottled mineral water and soft drinks have already sold out.

The water in Harbin, the capital city of northeastern China's Heilongjiang Province, was cut off on Wednesday following a second announcement by the government the previous evening. Locals told Interfax that the water cut has caused serious difficulties, and despite attempts by the authorities to clarify the situation, it has led to considerable panic.

"We are totally relying on the mineral water we bought in recent days, which has caused us a great deal of trouble," an official surnamed Sun with Heilongjiang United Petrochemical Corporation, a local trading company, told Interfax on Wednesday.

"We are not going to take a bath these days. Fortunately it's not summer," said Sun.

Fears of pollution caused made it necessary to suspend the water supplies, said the official local government statement released on Tuesday evening. The possible health threat was said by the municipal environmental protection bureau to have arisen from an explosion at PetroChina Jilin Petrochemical, which lies close to the banks of the Songhua River.

You see, that's the big difference between them and us. Here, you can be named to any important government job no matter how inexperienced and incompetent you are. Those crazy Iranians actually expect officials to know what they're doing.

The second half of 2006 is going to be a turbulent for worldwide markets and for the US Equities markets in particular as the seven largest multi-weeks S&P 500 Index cycles peak and start accelerating down – Fed better get busy and keep those money presses rolling if they know what is good for them and mitigate this mess! The total downside move in the S&P 500 Index from mid-2006 into July 2010 is going to be a major five-wave downside move. The last major tops in the S&P 500 Index (until Nov 2007) will be formed in Jan thru March 2006. There is a possible sharp (bear) rally in mid to late 2007. The peak of the seventh cycle of the largest seven weekly cycles in the S&P 500 Index could will be a significant high-water mark in Wall’s Street’s history and cause a “generational change” in world equity markets (along with looming natural disasters and political turmoil and possible food shortages). The Grand Finale is tentatively scheduled for late 2013. It will be WILD! In May 2006, the motto will be “Let The Games Begin” (in more ways than one).

We will continue to track and report on the developing wave fronts in the world’s indices. You just stand right here on this path marked Wall Street while I go off and buy some more gold and silver and natural gas income – not to worry but if you hear something growling later take evasive action immediately if not sooner. Stay tuned, I said we will show you a Mayan Bear one day – but only once in a lifetime will you get to see this Baby Bear and once will be quite enough.

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

When some loud braggert tries to put me down
And says his fool is great
I tell him right away
Now what's the matter buddy, ain't you heard of my fool?
He's just the head of the State!

Be true to your fool now
Just like you would to your girl or guy
Be true to your fool now
Let multiculture fly
Be true to your fool!

I got a DHS sweater with the letters in front
Got it for the Patriot Act
I'm proud to wear it now
When I cruise around the Home Depots in town
I load illegals in back

So be true to your fool now
Just like you would to your girl or guy
Be true to your fool now
Let multiculture fly
Be true to your fool!

Pretty quiet today and spot has sagged. It's come right up against the lime line and then taken off. Amazing how many days this last lime line has stayed in place.

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.

Money problems do not come from a lack of money, but from living an excessive, unrealistic lifestyle

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.