A Pivotal Indicator Worth Viewing

Posted February 22, 2010 at 2:23 pm

From Barry Goss:

There’s a myriad of reasons that long-rates are headed higher… most likey sometime this year.

And when rates (yields)) on Treasuries INCREASE, their principal (price) DECREASES.

To find out why the chart below is a very significant measuring stick on how rates will play out, click here..

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Strong Rebound? Not In Rail Traffic, Pal

Posted February 22, 2010 at 2:12 pm

by John Shipman:

An Association of American Railroads report today has some interesting nuggets that add more texture to the state of the current economic recovery.

Still empty and idle.

In “Great Expectations: Railroads and U.S. Economic Recovery,” the railroad trade group notes US rail carload traffic was down 16.1% last year vs 2008, and off 18.2% vs 2007. AAR said last year’s carload total was the lowest for U.S. railroads since before 1988, when it started keeping track.

And “freight rail traffic today remains well below 2008 levels,” AAR adds.

Not a good sign. As the trade group says, “demand for rail services occurs when there is demand for the products that railroads haul,” which is pretty much everything.

“In other words, if America is not building or buying, railroads are not hauling,” AAR says.

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Can the Market Bulls Put On Some Muscle?

Posted February 22, 2010 at 11:01 am

by Michael Kahn:
via Barrons.com

TO MEASURE THE QUALITY of any stock-market rally, we look at such factors as market breadth and volume.

Technical analysis textbooks tell us that truly healthy and therefore sustainable gains in the stock market are built on substantial participation by a clear majority of stocks. In other words, we need the public and institutions involved in a big way buying almost anything that looks decent.

By these criteria, the February rebound is neither flimsy nor robust. Breadth, in terms of the numbers of stocks making gains, is decent. But the volume has been as weak as it has been over the past year.

It is the absence of the bears, rather than the aggressiveness of the bulls, that has let the market move up from its February 5 intraday low. But the question now is whether there is enough power to take it through the resistance level it is now challenging.

(Resistance indicates the price at which sellers of stocks take control and prevent them from rising higher. The opposite of that is a stock’s support level, which is the price at which buyers take control and prevent shares from falling lower.)

To be sure, the entire rally from the March 2009 lows was marked with weak volume. So clearly volume alone does not dictate market direction. I won’t get into the argument about how…

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Two Olympic Investments in Canada

Posted February 19, 2010 at 12:27 pm

From The Jutia Group:

One of our favorite posts was when I covered Brazil in “Bright Signs of an Early Carnival for Traders Utilizing Brazilian ETFs“. So, with the Winter Olympics in full-throttle I want to shine the light on some safe and steady Canadian investments.

As of this morning, the U.S., Germany and Canada lead the Olympics with the most medals per country, respectively. Canada may not be placing first in the Olympics, but they are economically benefiting from the attention on Vancouver and the wallets being opened in surrounding areas right now.

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Will California Be Removed from the United States?

Posted February 19, 2010 at 12:19 pm

by Bill Jenkins:

Ever since the War Between the States (circa 1860), there hasn’t been a serious (or at least widespread) move for succession from the United States. However, there is a call by some for the State of California to be removed.

Have you heard about this? As you may know, California is bankrupt. That ball got rolling

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3 Trends To Watch

Posted February 15, 2010 at 9:39 am

by Teeka Tiwari:

While the bulls may be breathing a sigh of relief after last Friday’s stunning end-of-day reversal, they might not be out of the woods yet.

Most of Friday’s trading action was dominated by follow-on selling from the previous day’s 268-point decline. But in the last hour of trading, the market rallied back as traders decided to cash in their short positions.

Late-day reprieve or not, the damage to the charts was already done. The break to 9,800 on the Dow Jones Industrial Average (DJI) was ugly.

The bulls are on their back feet here, but the bull case will require some really, really good news if the markets going to have a chance at propelling higher.

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Four Things to Remember About China’s Next Moves

Posted February 11, 2010 at 7:47 pm

This is an excerpt from Keith Fitz-Gerald’s excellent article titled:

How to Profit From China’s Next Move

Given the new insights we’ve received from the 13F filing (insights that confirmed the hypotheses that I’ve shared with all of you), I think we can make some safe assumptions about what’s going to happen next. Here are the top four things to watch for:

1. China will continue to invest in hard assets and other emerging markets: These two go hand-in-hand, to some extent, and underscore China’s long-term vision. Beijing is looking past the current financial crisis and is investing for the next century, which is a key element of what China is all about. This mandate will include a wide variety of investment opportunities in South America, as well as such surrounding Asian Rim countries as Indonesia, Vietnam, Cambodia, and even Thailand, for example. Resources will be key targets in each of those regions, as will infrastructure — especially when it comes to moving the products it wants into the export chain… straight to China. Africa and the Middle East will be on the radar, but not to the same degree. That’s why companies like Vale (VALE) made the grade as one of CIC’s core holdings.

2. China will also invest heavily in those companies that feed the growing country’s “appetite”: Global brands will be a big focus, as the country works to create a domestic market for its own products — and for top brands made by other “foreign” companies. Two great examples, which both show up on the 13F: Apple (AAPL) and Coca-Cola (KO). At the same time — given Beijing’s vision — I believe China will continue to invest spectacularly in alternative energy. For the country to keep growing it will need power — hence such investments as the $50 million it pumped into SouthGobi Energy Resources Ltd for instance.

3. China could create a private equity resurgence all by itself: Pundits who poke fun at China for making such high-profile and expensive flubs as their investments in The Blackstone Group LP and other private-equity groups are missing the point. China could care less that it spent billions and hasn’t received a return. What Beijing really wants is “how-to” insight, and access to deal flow — hence such investments as its foray into the Apax Partners’ Europe VII LP fund, for example, is access to deal flow. China has bought itself a seat at the most expensive poker table in the world — and now it’s got dealer’s odds by virtue of being able to see some of the world’s most sophisticated private deal flow. In my way of thinking, that’s a pretty shrewd bet.

4. China will begin hiring Western money management firms: This is likely to include some really high-profile names. In similar fashion to the private equity “tuition” they’ve paid, China’s investment managers are keen to learn from the best — which means hiring the best, and then observing at close range how those experts do things and why. Part of nearly every hiring agreement in Asia of this nature includes the strategic placement of a few “executives” who watch the shop and report back to headquarters (Beijing) how things are getting done. I recall many similar arrangements during the Japanese buying binge of the late 1980s, when it was common for the target firm to accept a few new “employees” as part of the buyout deal.

Just as the Japanese acquisition wave of the late 1980s created some superb opportunities, so, too, will China’s buying binge.

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The era of big government has returned with a vengeance

Posted February 10, 2010 at 12:40 am

by Stephen Dinan:

The era of big government has returned with a vengeance, in the form of the largest federal work force in modern history.

The Obama administration says the government will grow to 2.15 million employees this year, topping 2 million for the first time since President Clinton declared that “the era of big government is over” and joined forces with a Republican-led Congress in the 1990s to pare back the federal work force.

Most of the increases are on the civilian side, which will grow by 153,000 workers, to 1.43 million people, in fiscal 2010.

The expansion could provide more ammunition to those arguing that the government is trying to do too much under President Obama.

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Heavy hitters are short-term bullish, but long-term bearish

Posted February 10, 2010 at 12:36 am

from GuruFocus.com

There’s a lot of disagreement about where the stock markets are going over the next couple of years, but then what else is new?

The consensus among the heaviest hitters at the Orlando World Money Show is that 2010 will be a pretty good time to have some money in equities, the January Effect notwithstanding. But beware of 2011 and beyond. That may be the time to really hunker down.

In a nutshell, the forecast is short-term gain, long-term pain!

“Right now we are in a tremendous cyclical recovery in corporate profits,” Fidelity managing director Bruce Johnstone told an audience of several thousand at the conference’s opening ceremonies. Mr. Johnstone has a lot of credibility in the investment community – he’s been with Fidelity for more than 40 years in various senior positions, including a highly successful stint as manager of one of the company’s top-performing funds.

“We are okay for about a year,” he said. “But this is an artificial recovery that has been generated by government stimulus. About a year from now the stimulus is going to wind down and profit growth over the next ten years will be below average. The next five to ten years are going to be very difficult.”

His views were neatly summarized in the caption of a cartoon he showed at the conclusion of his talk. It depicted a speaker standing before an audience saying: “Although the end of the world will be filled with unimaginable horrors, the pre-end period will offer unprecedented opportunities.”

So feast now for tomorrow the famine begins, at least financially speaking.

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Is This Just a ‘Cleansing’ Correction?

Posted February 4, 2010 at 1:44 pm

by Babak of tradersnarrative.com
via SeekingAlpha.com

A recent research report from CitiFX Technicals argues that this is a healthy correction for the equity markets and not the start of a “big meltdown”. Citi foresees a possible move all the way to the 200 day moving average which is at approximately 1100 on the S&P 500 index. But they also note that:

…on every reasonable deep correction since August ranging from a low of 20 points to a high of 71 points the low has been put in when the S&P posts 2 consecutive up closes. This likely comes from an underlying bullish overview and fear of getting left behind that sees new buying once it looks to be stabilising. This will not work forever but has been a good guide in the last 5 to 6 months. The S&P had a good up close yesterday and if followed with an up close today it could suggest a similar dynamic at play.

On a weekly basis, the S&P 500 put in the first reversal since the March 2009 low. A weekly reversal is when the index first climbs to a higher high than the prior week, then follows it with a lower low and finally closes below the prior week’s low:

On a monthly basis, the close below 1085 on the S&P 500 also gave us a monthly reversal. That is something we haven’t seen in a while. The last time it was a warning signal that came in July 2007 in advance of the impending top in October 2007.

There’s much more in the full report, including their continued “Spooky Chart” which compares the current market to the aftermath of the 1929 crash. As well as analysis of emerging markets, fixed income, commodities and forex.

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