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CGTS WEEKEND REPORT FOR 10 AUGUST 2009

CGTS WEEKEND EDITION 
9 AUGUST 2009

Where are we in terms of our Goldman Sachs Rally?  Generally speaking, we are short-term overbought but still have rising momentum.  Clearly the government is desperate to keep this rally going.  Bernanke's boys are so desperate they are using our money to keep stocks (and Treasury Bond yields) from falling.  Can the governments of the world keep this rally going, even when the fundamentals suggest we should have a flat or a negative market.  The cheerleaders in the financial press have tried everything they can to convince us that his is the bottom of the recession -- but not all of us are buying this.  They want to keep their jobs -- I understand that -- but they are not using their own money to try to keep their jobs.  They are using our childrens' and grandchildrens' money. 

The government give-away for 'Cash for Clunkers' is another example of the subterfuge.  They are resurrecting the auto industry?  Really?  Over-indebted Americans are giving up wholly-owned cars for a $4,000 rebate (a rebate we are paying them) in order to go more deeply in debt?  Is that what capitalism is?  A government-sponsored purchase plan?  Is that a sign of an economic recovery?  It looks like the Obama administration is now taking its orders from China -- instead of facing the Day of Reckoning with a bold recogniton that an era is ending and a new era is beginning -- an era of fiscal responsibility.  China tried to buy an economic recovery by handing our billions of dollars to consumers to buy cars, stocks, and property.  I wonder what John Maynard Keynes would be saying about all this?  (I wonder what Mao Tse Tung would be saying?  My, how the world has changed.)

Is the subterfuge working?  This weeks non-farm employment numbers were a bit of a snowjob by the government also.  Unemployment numbers supposed fell by .1%, from 9.5% to 9.4% -- and the celebration was heard all the way to Mars.  Stock markets jumped another 1 1/2% -- I guess the jobs numbers also 'beat the street' expectations.  But a closer look at the numbers inspires wonder.

June 154,926,000 work force - 140,196,000 employed = 14,730,000 unemployed (14.73/154.926 = 9.5%)

July 154,504,000 work force - 140,041,000 employed = 14,463,000 unemployed (14.463/154.504 = 9.4%)

June 154,926,000 employed. July 154,504,000 employed. = Loss of 422,000 jobs.

June 14,730,000 unemployed. July 14,463,000 unemployed = gain of 155,000 jobs.

What happened to those extra 267,000 people who lost jobs (422,000 July jobs lost - 155,000 July jobs gained).

As it has been explained to me, those 422,000 people who were unaccounted for apparently gave up looking for jobs.  So they don't count anymore.  Did they get jobs?  No.  They did NOT show up in the 'employed' column.  So, by the government's own numbers, 267,000 more people were unemployed, rather than 155,000 fewer.  Lying is easier than facing the truth apparently.  Let's all put on a good face and trust our leaders -- afterall, that's what we did before the economy imploded two years ago.  Maybe if we close our eyes and ears, we won't see that the economy is still disintegrating.  Let's try it.


How Do the Indices Look?

The Semiconductor Index (NASDAQ:SOXX) is giving us a slightly different picture.  SOXX is trying to top (see chart below).

In Asia, The Taiwan Index is also showing major signs of fatigue.  And for the first time in a while, Chinese stocks manifested slight signs of gravity.

Reason tells us we're heading toward a mean correction.  But the charts aren't showing that yet.  Some rounding in to tops.  But mainly, a blind euphoria that is a little bit unnerving.  (I try to ignore my own personal feelings -- opinions -- as much as possible, and rely on the numbers telling me what the current reality is.)

SOXX WeekClick to enlargeSOXX DailyClick to enlargeTWIIClick to enlargeHSI DailyClick to enlargeSSEC DailyClick to enlarge




Some readers have asked how to work with our Top 30 and Bottom 30 Momentum leaders.  These jumps in momentum are not buy or sell signals by themselves.  But they indicate a very strong pop up or pop down has occurred.  If the reader owns issues in the Top 40, then he or she should be smiling.  If the reader owns issues in the Botton 40, then these issues need to be watched closely, as momentum has begun to shift.  We will look at a few charts to illustrate this.

JNJ, Johnson and Johnson, is in the Bottom 30 Momentum list and deserves to be there.  RHT (Red Hat) also is bleeding momentum.  AMGN also looks like it's losing momentum at a top.  On the other hand, our 'leaders' DHI, PNC, and JPMorgan all seem to be heading to higher highs.


TOP 30 Momentum Leaders Week of 8/7/09 (1-30)

TBT    Ultrashort T-Bond 20+ Year ETF
DHI    DR Horton Inc.
PNC    PNC Financial Svc Weekly
JPM    JP Morgan Chase
BAC    Bank of America Weekly
AMSC    AMERICAN SUPERCONDUCTOR
NKE    Nike Inc.
HD    Home Depot
BEN    Franklin Resources
BNI    Burlington Northern Santa Fe Corp
IYR    Real Estate ETF
KBH    KBH Home Builders
HOV    Hovnanian Enterprises
BBY    Best Buy Inc.
CA    Computer Associates Inc
AXP    American Express
F    Ford Weekly
EQR    Equity Residential
COL    Rockwell Collins Weekly
^TYX    30 YEAR TREASURY BOND
SBUX    Starbucks
^DJT    Dow Jones Transport Index
TMX    Mexico Telecom
CAT    Caterpillar
PCU    SOUTHERN COPPER CORP
^HUI    Gold Stock Index
^XCI    Amex Computer Stock Index
HMY    Harmony Gold Mining
MKL    Merkel Weekly
IAU    IShares Comex Gold Trust

Bottom 30 Momentum Losers Week of 8/7/09 (30-1)

SGP    Schering Plough Weekly
QCOM    QUALCOM CORP
EMC    EMC Corp
^DRG    Amex Pharmaceutical Index
VZ    Verizon Communications
XOM    Exxon Mobile
UUP    POWERSHARES DB US DOLLAR BULLISH
RHT    RED HAT INC.
^TWII    TSEC WEIGHTED TAIWAN INDEX
STJ    St. Jude Medical
YHOO    Yahoo Weekly
SH    Short SP 500 ETF
INTC    Intel
SGINX    DWS GNMA S. FUND
KUSMX    DWS GOVERNMENT SECURITIES
DXD    Short Dow Index ETF
MCD    McDonald's
MRK    Merck Pharmaceuticals Weekly
DOG    Short DOW 30
JNJ    Johnson & Johnson
AMGN    Amgen Corp
FSLR    FIRST SOLAR
IBB    Biotech ETF
MYY    Short Midcap Index ETF
ORCL    Oracle Inc.
UNH    United Healthcare
PG    Procter & Gamble
TEVA    Teva Labs
RGR    STURM RUGER INC.
HURN    HURON CONSULTING

JNJ WEEKClick to enlarge

RHTClick to enlargeAMGNClick to enlargeDHI WeeklyClick to enlargePNCClick to enlargeJPMClick to enlarge



CGTS WEEKLY PORFTOLIO
% GAIN
TRADING SYSTEM GAIN ACTIVE TRADES ACTIVE COSTS  
34.56% M5 7 $155,506 45 $450,000  
139.72% M5 10 $97,801 7 $70,000  
  M2F ALT Trade new      
  M2F ALT Long-Term new      
10.86% Momentum $44,515 41 $410,000  
11.62% M4 Sum Plus Trade $55,759 48 $480,000  
79.30% M4 Sun Plus L-Term $340,991 43 $430,000  
35.55% MA5/MA40 L-Term $113,764 32 $320,000  
36.91% TOTALS $808,338 219 $2,190,000  
Click to enlarge

You'll see we' ve added a couple new systems to our Weekly Portfolio list.


CGTS WEEKLY - CURRENT TRADES
M5 7 Trading System  
Buy SLM 9.47
Buy EOC 47.99
Buy RGR 11.45
Buy RHT 21.84
M5 10 Trading System  
Buy RHT 21.84
M4 Sum Plus Trade System  
Buy ENMD .56
Buy XES 24.2
M4 Sum Plus L-Term  
Buy ELY 6.95
Buy PEIX .38
Buy FST 17.16
MA5/MA40 L-Term  
ELY 6.95
Click to enlarge


Click to enlarge

Everyone, have a good weekend.

More information on this system can be found at

www.home.mindspring.com/~mclark7/CGTS09.htm


Portfolio of CGTS Trades for 09 (updated weekly) can be found at:

www.home.mindspring.com/~mclark7/cgtsportfolio09.htm


Those interested in reading a draft of 'Turn Out the Lights', my description of the metaphysical causes of the financial collapse, can find it at:


www.hoalantrangallery.com/Turnoutlights.htm

 

Michael J. Clark
Clark's Gate Timing System
Hanoi, Vietnam
84 4 221 92210

Disclosure: the author personally owns none of the issues mentioned in this article.