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. 14 November 2012

My last post stressed the weakness of Canadian banks and suggested that Canada (and Europe) was going to join the American selling party. Today, I 'm suggesting Australian banks are vulnerable here -- and I'm also suggesting (just suggesting) that the housing bubbles in both countries are going to pop. Both country's have historical Debt Bubbles generated by low interest rates (too low for too long) and by housing bubbles.

I don't intend this blog to be about the Canadian/Australian housing bubbles -- and the effects on banks in a declining economy. But both countries have historic housing bubbles, both much more overbought and excessive than the US housing bubble. I will visit this issue some other time.

Today I want to show a relatively new indicator I am using to screen stocks -- its my CGTS Differential Weekly Moving indicator; and this indicator gave us this screen today. We look at the top and the bottom 25 using this screen. And what we see is that the top 25 have an amazing similarity: they are almost all inverse ETFs, that profit when stocks fall.

We have charts of some of the top 25; and we have charts of the bottom 25, emphasizing our theme for the night: Australian banks seem to be topping; and US housing stock are starting to break apart, one by one.

We see gold stocks valiantly trying to resists selling; US TBonds are hot again; the US Dollar is gaining strength by the day -- all signs that the selling in the markets is getting stronger.

TOP 25   CGTS Diff WEEK    
1 IMMR 5 Immersion Robotics  
2 TZA 5 Direxion Daily Small Cap Bear  
3 TSU 5 TIM Part (Tele Cellular)  
4 PSQ 5 Short QQQ Index ETF  
5 TWM 5 Short Russell 2000 Index ETF Daily  
6 SBB 5 Short Small Cap 600 S&P ETF Daily  
7 QID 5 Short NASDAQ Index ETF  
8 RWM 5 Short Russell 200 Index ETF Daily  
9 EWV 5 Short MSCI Japan ETF Daily  
10 EPV 5 Short MSCI Europe ETF  
11 REW 5 Short Technology ETW Daily  
12 BZQ 5 Short Brazil Shares ETF  
13 IEF 5 7-10 Year TBond Fund  
14 TIP 5 Barclay's TIPS Bond  
15 SMN 4 Short Basic Materials  
16 MUB 4 I-Shares Muni Bond Index  
17 SDP 4 Short utilities ETF Daily  
18 EFZ 4 Short MSCI EAPE Index ETF Daily  
19 YHOO 3 Yahoo Inc.  
20 IRWD 3 Ironwood Phama  
21 HURN 3 Huron Consulting  
23 VXX 3 VIX ETF  
24 SDD 3 Short Small Cap Index ETF Daily  
25 SIJ 3 Short Industrials ETF Daily  
BOTTOM 25        
25 VPHM -5 ViroPharma Inc  
24 TXT -5 Textron Corp  
23 ARUN -5 Aruba Networks  
22 NFX -5 Newfield Explorations  
21 TYO -5 Short 10-Year TBond ETF  
20 CA -5 Computer Associates  
19 ANZ.AX -5 Australia/New Zealand Banking  
18 BZF -5 Brazilian Real long currency  
17 CUT -5 Lumber ETF  
16 NAB.AX -5 National Bank of Australia  
15 EUFN -5 Euorpean Financial Index  
14 BBD -5 Banco Brandesco SA  
13 HPQ -5 Hewlett Packard Daily  
12 EWM -5 Malaysia Index ETF  
11 SFL -5 Ship Finance Intl.  
10 RVBD -5 Riverbed Technologies  
9 CSCO -5 Cisco Systems Daily  
8 MAKO -5 Mako Surgical Corp  
6 EWJ -5 Japan Index ETF  
5 SAN -5 Banco Santander  
4 BBVA -5 Banco Bilbao Argent SA  
3 IO -5 Ion corp  
2 BYD -5 Boyd Gaming  
1 ^TNX -5 10-Year CBOE Interest Rate  

Top 25

Let me reiterate: the indicator in use for tonight's report is the very light yellow indicator appearing in the pane second from the top. Usually, when it spikes up, it indicates a buying opportunity.

IMMR, Immersion Robotics, looks very strong at the moment. But remember, the direction of the markets is DOWN; so any counter-movement stock needs to be watched carefully.

TSU is giving a buy signal through the CGTS 5-Day Differential -- but it has not really moved much yet. Everything seems in place for a good move up.

QID, the inverse Nasdaq ETF, is the strongest of the three issues here overall. The picture of QID should be enough to encourage bulls who are holding on that this is no ordinary selling in the making.

Bottom 25

Here come the Aussie banks and one US housing stock that we really feel are all three ready for new short positions.

NAB, National Australian Bank: Short.

ANZ, Australia/NewZealand Bank: Short.

BZH, Beazer Homes: Short.

All three issues are showing accelerated selling and all are breaking down through support and trend levels. A careful examination of all three panes will show our technical logic for assuming these issues are breaking down.

Need to run. Best of luck with trading.

Michael J. Clark

CGTS, Hanoi, Vietnam