Can you say clusterf**k?
Steve Cook on Disciplined Investing

Syndication

Have You Seen This?

News

  • Make money by accessing all our Portfolios, the supporting research and Price Disciplines using our paid subscription blog, Strategic Stock Invetments. Our work is focused on making money for our Portfolios not as some academic exercise in Internet investing. Check our performance (audited)--our Dividend Growth Portfolio has beaten the S&P by 500 basis points per year for the last seven years but with a beta of only .62. (Mandatory Disclaimer: past performance is not a guarantee of future results.) We give you everything you need to duplicate our results, in particular, a strict price discipline for both Buying and Selling.

Have You Seen This?

The Market
    
    Technical

    The indices (DJIA 12036, S&P 1298) had another good day, moving significantly above the upper boundary of their very short term down trends (intersect at 11769, 1268).  Distance is now the more important element of our time and distance discipline in this case; so I think it highly probable that this trend will be confirmed as broken.  That will put the short term trend as a trading range marked by the recent lows (11554, 1247) and the February highs (12405, 1345). 

Meanwhile, the Averages intermediate term up trends (11655-15079, 1222-1651) have survived a test.  The technical issue now is, will stocks break above the 12405, 1345 top and re-set the short term up trend to up or will they break the lower boundary of the intermediate term up trend and re-set it to a trading range.  Given the longer duration of the intermediate term up trend, I would put my money on the former alternative.

    Volume was quite low; breadth was mixed.  The VIX plunged and closed below the lower boundary of its short term up trend; so just when I thought that this indicator was starting to trend, it reverts to its prior directionless meandering.

    Gold (GLD) rose but remained below the level of the quadruple top--if it fails to penetrate this level, it will become a quintuple top. I stay on the sidelines until GLD breaks either that top or the lower boundary of its intermediate term up trend.

    Bottom line:  the intermediate term up trends have held and, technically, it seems more likely that the short term trading range will be re-set to an up trend.

    The latest from Trader Mike (short):
    http://www.tradermike.net/

    On the other hand, this from Chris Kimble (short):
    http://dshort.com/articles/Kimble/2011/0321-bearish-sentiment-market-and-dollar.html

    In the above link, Chris points to the dollar as a factor in higher stock prices.  Here is another look at the dollar (short):
    http://www.bespokeinvest.com/thinkbig/2011/3/21/dollar-decline.html


   Fundamental
    
     Headlines

(1)    the domestic headlines were, in general, positive.  ATT agreed to buy T Mobile, Schwab agreed to buy optionXpress, Citicorp announced a 10 for 1 reverse stock split and declared a dividend.  These factors fueled yesterday’s fine pin action.  However, all was not roses and wine.  The Chicago Fed national activity index was a neutral; while February existing home sales were just awful,

(2)    on the international front, the Japanese seem to making some progress getting the potential nuclear disaster under control; if that proves the case, then clearly it will cap the risk, a plus for Japan and the globe.  However, keep in mind that these guys having been lying to the world since day one.

Meanwhile, clusterf**k is probably the best description for what is going on in Libya.  Angel Obama, Mr. Constitutional Scholar, forgot to get congressional approval before the bombing started [James Madison is turning over in his grave].  Oh, but He got permission from the UN. Beer General Obama says that the US is going to turn the allied offensive over to others [UK, France, NATO].  Really?  When was the last time that group won any conflict without our lead and money? Coffee The Arab League has decided that our version of a no fly zone wasn’t quite what they signed up for.  Drinks US manned weapons are now killing Muslims in three countries. [Is three a charm?]   Email we are bombing Gaddafi’s compound undoubtedly killing innocent civilians; his troops are purposely shooting civilians and using them as human shields.  How is that for aiding the Libyan people?  [f] And nobody can tell the American electorate the endgame.  If you don’t know where you are going, how do you know when you get there?   
 
Obama in His own words:                http://www.powerlineblog.com/archives/2011/03/028647.php
   
Elsewhere, the Baa’thist party headquarters in Damascus was torched and tensions are rising again in Yemen.  All in all not a scenario for oil price stability.

    Bottom line: I am back in Seinfeld’s bizarro world.  I have no clue how stocks could have been up yesterday, much less by over 1%--except that on low volume days, the program trading has been pushing stocks higher.  Part of my problem is that I am viewing the world through a pessimistic lens right now; so the tendency has to be to assume that negatives are more negative than they are and positives are not as positive as they are.

That said, as you know, I do my best to listen to the Market and respond when it tells me that I am wrong.   So given the indices successful test of their intermediate term up trend plus the rather convincing move above the short term down trend, I am going to grit my teeth and nibble recognizing that this is simply a hedge against my (perhaps?) overly pessimistic view being wrong.

Economics

   This Week’s Data

    February existing homes sales fell 8.9% versus expectations of a 3.9% decrease.

   Other

    The latest from James Grant (medium):
    http://www.lewrockwell.com/orig8/grant7.1.1.html

    Hello, worldwide inflation (medium):
    http://www.minyanville.com/businessmarkets/articles/world-inflation-food-prices-oil-price/3/21/2011/id/33455?camp=featuredslide&medium=home&from=minyanville

    Banks and the next financial crisis (medium):
    http://online.wsj.com/article/SB10001424052748703899704576204594093772576.html

    The CBO on the president’s budget (short):
    http://gregmankiw.blogspot.com/2011/03/cbo-on-presidents-budget.html

    Taxes in the developed world (short):
    http://mjperry.blogspot.com/2011/03/us-has-most-progressive-tax-system-for.html

Politics

  Domestic

The fallacy of the social security lockbox (medium):
http://www.washingtonpost.com/opinions/its_still_an_empty_lockbox/2011/03/17/ABPpoym_story.html?nav=emailpage

  International War Against Radical Islam

     The need for congressional approval to bomb Libya (long):
    http://www.nationalreview.com/articles/262547/unwise-and-illegitimate-andrew-c-mccarthy

   








Posted 03-22-2011 8:21 AM by Steve Cook