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Final Burst Of Quantitative Easing Takes Stocks Higher As The Euro And Utilities Turn Lower On Deepening Sovereign Angst

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Seeking Alpha Analyst Since 2010

I am not an investment professional. I do not engage in stock or currency trading. I am a blogger and investor who believes the failure of credit has created an investment demand for gold, and that gold bullion is the sole means of wealth preservation.
Financial market report for February 15, 2011

1) ... Introduction
The S&P, basic materials, semiconductors, and energy rose, on a last and final push of quantitative easing, as the Euro and Utilities turned lower on deepening sovereign angst.

Stockcharts.com relates traders invested in 101,563,747 S&P contracts. Sirius XM Radio, SIRI, had the next greatest number of contracts traded. Semiconductor manufacturer, Micron Technology, MU, had the next most. Yahoo Finance In Play reports an exact doubling of the S&P from the 666 low: “Late day push in S&P, SPY, +3.4 to new session/multi-year year of 1332.96. The 100% gain level off the March 2009 bear market low of 666 is at 1332 (exact low was 666.79, 100% gain level 1333.58).”

The Russell 2000, IWM, rose 0.51% to close at 82.49

2) … Speculators called base metal commodities, DBB, higher, on a higher US Dollar, $USD, stimulating US Shares to risely steeply higher.  
The chart of Copper, JJC, +1.5%, shows an evening star.
Lead, LD, +5.4%, shows a lollipop hanging man candlestick.
Tin, JJT, +1.3%, shows a shooting star.
Nikel, JJN, +1.1%, shows a strong rise.

Basic Materials, XLB, rose on higher base metal prices.
Denison Mines, DNH, a uranium miner, rose 7.5%
Cliff Natural Resource, CLF, an iron ore producer 5.9%
Koppers, KOP, a carbon products manufacturer, found investors favor and rose 3.2%
NewMarket, NEU, a chemical manufacturer, rose 2.9%
Alcoa Aluminum, AA, rose 1.2%
Cameco, CCJ, manifested a shooting star in rising 3.1%  
BHP Billiton, BHP, rose 2.0%, rallying Australian Bank, WBK, Australia, EWA, and Australia Small Caps, KROO.
Chesapeake Energy, CHK, rose 2.2% to resistance.
Brazilian Miner, VALE, rose 2.2%
Clean Energy, ICLN, rose 1.7% to crest in an Elliott Wave 2 up high.
Water Utilities, FIW, manifested a dark cloud covering, lollipop hanging man candlestick as American Waterworks, AWK, manifested an evening star.

Rising basic materials stimulated design and build, PKB, to rise. It manifested a dark cloud covering lollipop hanging man candlestick, as Foster Wheeler, FWLT, to a new high. And Fluor, FLR, manifested three white soldiers.  

Rising basic materials, caused agricultural implements manufacturer, CHN Global, CNH, and Morgan Stanley Cyclical Index Component, International Paper, IP, to rise. And Temple Inland,TIN, another paper manufacturer rose manifested a double top. And Keystone Paper, KS, rose to a new rally high, as did paper manufacturer, Buckeye Technologies, BKI.

Steel, SLX, rose strongly to a new rally high as US Steel, X, rose to a triple top high, steel recycler Metalico, MEA, manifested three white soldiers. And as Schnitzer Steel, SCHN, manifested a hammer after failing to punch through resistance.

Construction Equipment company, Terex, TEX, rose to a new high.

Industrial company, Cummins, CMI, rose to a double high.

3) … Energy service companies and energy production companies rose on a falling price of oil.
Energy service companies, OIH, and, IEZ, rising included: Flotek, FTK, 6.4%, Weatherford International, WFT, 2.2%. Ion Geophysical, IO, Transocean, RIG, 3.0%, National Oilwell Varco, NOV, 2.2%…. And Energy companies, XLE, rising included Clayton Williams Energy, CWEI, 2.5%,  FX Energy, FXEN, 4.8%, Exxon Mobil, XOM, 2.5%. … All on a falling price of oil.

Ben Sharples and Christian Schmollinger of Bloomberg report an absolute glut of oil and gasoline in the marketplace in article Oil Near 10-Week Low as Mubarak Resignation Eases Supply Concern:  Oil traded near the lowest in more than 10 weeks after Egyptian President Hosni Mubarak stepped down, reducing concern that civil unrest will disrupt crude shipments from the Middle East.

Futures fluctuated after sliding 1.3 percent on Feb. 11 following the announcement of Mubarak’s resignation on state television. Crude rose to a two-year high last month on speculation supplies through Egypt’s Suez Canal and Suez- Mediterranean pipeline may be interrupted and disturbances may spread to oil-producing countries in the Middle East. Brent prices gained as North Sea oil-field glitches reduced output.
“The market will now focus its thinking away from Egypt,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “It’s back to inventories and the economic numbers this week.”

Crude for March delivery was at $85.52 a barrel, down 6 cents, in electronic trading on the New York Mercantile Exchange at 12:52 p.m. Singapore time. The contract closed at $85.58 on Feb. 11, the lowest since Nov. 30. Prices slid 3.9 percent last week and are 15 percent higher than a year ago.

Brent crude for April settlement climbed 68 cents, or 0.7 percent, to $101.62 a barrel on the ICE Futures Europe exchange in London. The contract rose 0.7 percent last week. March futures expired on Feb. 11, up 0.6 percent at $101.43.

Brent, BNO, has outpaced New York futures, widening the difference between the prices to a record, as unplanned outages cut European supplies. Production from the North Sea has been reduced by 2 percent, according to data compiled by Bloomberg.

“There have been output issues in the North Sea that have continued to linger,” said Victor Shum, a senior principal at consultants Purvin Gertz Inc. in Singapore. “Certainly the concerns about supply disruptions in Egypt have eased. The fear of contagion to other countries will keep crude supported.”

Egypt’s ruling army council yesterday dissolved parliament and suspended the constitution following the ouster of President Mubarak, saying it will rule for six months or until general elections take place.

About 3.5 percent of global oil output moves through Egypt via the Suez Canal and the Suez-Mediterranean Pipeline, according to Bloomberg calculations using data from the U.S. Energy Department.

U.S. crude stockpiles rose for a fourth week in the seven days ending Feb. 4, an Energy Department report last week showed. Gasoline supplies advanced to the highest level since March 1990, according to the data.

The price of prompt delivered oil in New York has dropped compared with later-dated supplies amid a build-up in inventories at Cushing, Oklahoma, the delivery point for futures contracts. March crude is trading at a discount of $3.69 a barrel to the April contract, a market structure known as a contango. That is the most since May 14.

Supplies at Cushing swelled to a record 38.3 million barrels at the end of January, according to the Energy Department. They shrank in the week ended Feb. 4. More crude will begin flowing to the hub following the start up this month of TransCanada Corp.’s Keystone pipeline extension that will carry 150,000 barrels a day to the delivery point.

The 36-inch extension is the second phase of the $12 billion Keystone pipeline project. The first phase started service in mid-2010 with a capacity of 435,000 barrels a day.

An expansion to the U.S. Gulf Coast, the third part of the project, known as Keystone XL, may be operational by early 2013 if regulatory approvals are completed. The extension will run from Cushing to Texas, linking refineries on the U.S. Gulf Coast to Canada’s oil sands.

4) … The Morgan Stanley Cyclical Index, $CYC, manifested a doji, at 1122.70 suggesting that the rally in the growth and expansion stocks has ended.

Chart of $CYC

5) … Investments which sold off with the announcement of QE2 or at the beginning of the year, rose in a type of dead cat bounce; this is a bearish indicator for stocks.
The countries and stocks which initially manifested quantitative easing exhaustion rose today; these are the ones which investors disinvested from as the 30 Year US Government Bond, EDV, and the 10 Year US Government Note, TLT, sold off on announcement of QE 2 in early November.   
India, INP, +2.0%, is much like gold stocks; it has been a great swing trade; it sold off in early November as being at the forefront of quantitative easing stimulus..
Thailand, THD, +0.8%.
Philippines, EPHE, +0.6%
Chile, ECH, +0.9%, is the very definition of the former neoliberal Milton Friedman free to choose floating currency regime; it sold off with the emerging markets at the beginning of 2011.
Coal, KOL, rose very strongly; first on being a basic material and secondly on temporary recovery from quantitative exhaustion. Arch Coal, ACI, crested up into an Elliott Wave 2 High, getting ready to soon fall lower in an Elliott Wave 3 Decline. ANR Resources, ANR, rose strongly as well.  It is the coal stocks along with Pharmaceuticals, XPH, Biotechnology, IBB and XBI, as well as Indonesia, IDX, Chile, ECH, Philippines, EPHE, Thailand, THD, and Turkey, TUR, that are the leaders in the great deleveraging that will be coming from quantitative easing exhaustion.  
The China shares, in particular, Shanghai, CAF, blasted 3% higher.
Las Vegas Sands, LVS, rose 1.6%         
Brazil Financials, BRAF, rose 1.6%
Shipping, SEA, rose 1.6%

6) … Dragon Fly candlesticks abounded suggesting a market reversal is at hand. Stockcharts.com relates: “The dragon fly doji form when the open, high and close are equal and the low creates a long lower shadow. The resulting candlestick looks like a "T" with a long lower shadow and no upper shadow. Dragon fly doji indicate that sellers dominated trading and drove prices lower during the session. By the end of the session, buyers resurfaced and pushed prices back to the opening level and the session high. The reversal implications of a dragon fly doji depend on previous price action and future confirmation. The long lower shadow provides evidence of buying pressure, but the low indicates that plenty of sellers still loom. After a long downtrend, long black candlestick, or at support, a dragon fly doji could signal a potential bullish reversal or bottom. After a long uptrend, long white candlestick or at resistance, the long lower shadow could foreshadow a potential bearish reversal or top.” Dragon Fly candlesticks appeared in a number of ETFs, including Small Cap Information Technology, XLKS, an Small Cap Discretionary, XLYS,

7) … A number of stocks and ETFs manifested as short selling opportunities.
Active Power, ACPW, is rising to an Elliott 2 Wave Up Crest in the middle of a broadening top pattern.
Internet retailer Amazon, AMZN, rallied to its previous high.
Nanotechnology leader, FEIC, manifested a shooting star.
The bearish lollipop at the top of the ascending wedge in medical appliance manufacturer Intuitive Surgical, ISRG, says that’s all there is and there is no more. The stock blasted from 290 to 320 all in one day recently; that is quite common in the middle of strong Elliott Wave 3 Ups. The stock has had good performance, with investors driving it up to a PE of 36, so no one can complain about results here.   
Homebuilders, ITB, is selling off and falling lower in an Elliott Wave 3 sell off
Small cap pure growth, RZG, rose 0.7%, manifesting the three white soldiers, communicating a grand finale to the Ben Bernanke QE 2 inflation in stocks.

The Morningstar Mid Growth, JHK, blasted 0.7% parabolically higher; that which goes up parabolically will fall sharply.

The Russell 2000 Growth, IWO, rose 0.6%, manifesting the three white soldiers as well communicating an end to the rally in the small cap US shares.   

Both Retail shares, XRT, and Discretionary shares, VCR, manifested the lollipop hanging man candlestick at the top of an ascending wedge.

8) … Semiconductors rose bearishly, providing opportunity to go short at the end of the day.    
Semiconductors, XSD, 1.2%, manifesting three white soldiers, a reversal signal and a shooting star, another reversal sign.
Entegris, ENTG, rose 8.3%; might this be a top?
Ceva Inc, CEVA, rose 1.6% to resistance.
Applied Materials, AMAT, rose 1.2%, cresting up into an Elliott Wave 2 high.
Atmel, ATML, rose 1.2% manifesting a shooting star.
Skyworks Solution, SWKS, rose 1.1%, manifested a shooting star as well.
Micron, MU, rose, manifesting a shooting star as well.
Triquent, TQNT, rose 8.7% on short sell covering.

Solar stocks, TAN,  rose strongly manifesting a short selling opportunity.
LDK Solar, LDK, 3.0%
SunPower, SPWRA, 2.8%
GT Solar, SOLR, 2.7%

9) …. The rise of SanDisk in light of topping out semiconductors and bearish discretionary shares presents a short selling opportunity.
SanDisk, SNDK, rose strongly on an ascending wedge. This in light of topping out semiconductors and bearish discretionary shares, presents a short selling opportunity.

10) …  Networking shares manifested a bearish harami at the top of an ascending wedge.
Networking: Networking Stocks,
IGN, manifested a bearish harami at the top of an ascending wedge.
EMC Corp, EMC, rose 0.9%, continuing its parabolic rise.
Network Appliance, NTAP, manifested a bearish lollipop handing man candlestick at resistance.

11) … The Euro fell on growing sovereign angst.
The Euro, FXE, fell lower as Justice Litle, Editorial Director, Taipan Publishing Group relates:
The man to next head the European Central Bank will be in charge of a can-kicking dog and pony show, and will quite possibly need the glib demeanor of a used car salesman, in attempting to convince the world the euro is not being trashed and debased, even as further back-door bailouts accomplish exactly that. As we have written in the past in these pages, Europe has no clear exit from its ongoing sovereign debt crisis other than an ugly program of monetization and devaluation. The credibility of the ECB, and the soundness of the euro itself, will have to be sacrificed for the sake of saving the peripheral economies. The only alternative, when it comes down to it, is for the debt-burdened collapse of one periphery country (Portugal? Spain? Italy? Ireland?) to create a domino chain of collapses and/or defaults, in which the whole project goes belly up anyway. Mr. Weber, being no body's fool, may see the writing on the wall, in which case it would count as good Teutonic sense to say he'll have no part of that, thanks very much.”

12) ,...  The charts or the Russell 2000 growth shares relative to the Russell 2000 value shares suggests a market top has been achieved.
Chart of IWO:IWN

13) … The chart of Gasoline, UGA, communicates that a high has been achieved for now.
Gasoline, UGA, is the epitome of Ben Bernanke QE 2 commodity inflation; its chart shows the fourth top today with a 1.2% shooting star likely finale for now, that is until there is a major event or higher summer driving prices.   

US Federal Reserve Quantitative easing has been quite stimulative to the refinery stocks as well as to Exxon Mobil, XOM. Western Refining, WNR, rose 5.9% and Holly Corp, HOC, 3.9%.  

14) …. Real Estate manifested a bearish lollipop.
Real Estate, IYR, manifested a bearish lollipop at the top of an ascending wedge.

15)  …. Utility shares plummeted
Utility, XLU, plummeted in an Elliott Wave 3 down. Their unabashed 0.7% fall lower communicates a failure of quantitative easing. Debt burdened NextEra Energies, NEE, fell 0.7%. Best of breed industry, Southern Companies, SO, manifested a bearish harami, suggesting a fall lower. I pity the poor dividend investor, as extreme financial pain is coming his way.   

16) …. The computer technology shares manifested bearishly
Kemet, KEM, rose 1.0%, manifesting a dark filled candlestick, in the middle of a broadening top pattern.   
Universal Display, PANL, manifested a bearish harami at the top of an ascending wedge.

17) … Textiles manifested bearish
Unifi, UNI, manifested a bearish harami at the top of an ascending wedge.
Interface, IFSIA, manifested bearish engulfing.

18) … The financial institutions which were helped the most by quantitative easing rose strongly today.
The small cap financials, RWJ, rose more than the banks, KBE and the financials, XLF, and the too big too fail banks, RWW, as is seen in the chart of RWJ, RWW, KBE, and XLF.

The loss of US debt sovereignty, that is of debt seigniorage, came with the announcement of QE2; such loss came to the emerging market countries, as is seen in the chart of  the US Government 10 Year Note, TLT, the emerging market bonds, EMB, Turkey, TUR, Indonesia, IDX, Thailand, THD, Chile, ECH, and the Philippines, EPHE ...  TUR,IDX,THD,EPHE, ECH, EMB

The hot money countries, beloved by the proponents of the neoliberal free to choose Milton Friedman economic philosophy, were the first to experience exhaustion of quantitative easing. These countries suffered debt deflation, that is currency deflation, and probable loss of their sovereign debt value as they experienced loss of stock market value. Their debt deflation came from the quantitative easing exhaustion.

The litmus test for quantitative easing exhaustion will be a fall in the value of the distressed investments mutual  FAGIX as this approximates the value of the US Federal Reserves Balance Sheet. Doug Noland reports weekly on Federal Reserve Credit. This week he reported that is  jumped $30.9bn to a record $2.469 TN (14-wk gain of $189bn).  Fed Credit was up $236bn from a year ago, or 10.6%. I expect these figures to drop in this weeks report.   

Exhaustion of quantitative easing will even bring technology leaders such as EMC Corp, EMC, down, despite all of their ambitions to To Lead The Journey To The Cloud.

And exhaustion of quantitative easing will bring an end to the Apple Ecosystem seigniorage; we will not be seeing headlines like the Business Insider’s Netflix, NFLX, Explodes Higher After Announcement That Includes The Words "Android" and "Qualcomm" and "Tablet".

Psychiatric care company, PHC Inc, PHC, manifested a huge bearish engulfing candlestick and at the top of an ascending wedge, and fell 5.9% lower portending an even greater fall. Many will be in need of psychiatric care when the stocks fall lower; will the peoples be able to afford that attention?

Charts show that today, February 14, 2010, Valentines Day, the truly great companies of our time either rushed to a rally high, or manifested bearishly as quantitative easing is exhausting.

The Valentines Rally was likely a sweet heart ending to the passionate love affair with Ben Bernanke’s quantitative easing. The printing of money out of thin air has monetized the US Debt, depreciated the US Dollar, $USD, destroyed US sovereign debt seigniorage, as evidenced by a terrific loss of value in the 30 Year US Government Bonds, EDV, and the 10 Year US Government Note, inflated world stock values, VT, US Stock values, VTI, but with the beginning of 2011 has deleveraged investment out of the “hot money” emerging markets such as Indonesia, IDX, Chile, ECH, Thailand, THD, and Turkey, TUR, as well as stimulated a sell off in Biotechnology, IBB, and XBI, as well as Pharmaceuticals, XPH, and the Dow Jones Automobile Sector as is seen in the Google Finance Chart of EEM, XPH, XBI and IBB.

Exhaustion of quantitative easing caused a loss of seigniorage, that is moneyness, in the gold mining stocks, GDX, as they disconnected from the price of gold on December 13, 2010, as is seen in the chart of gold mining stocks relative to gold, GDX:GLD. The gold mining stocks failed to leverage US Sovereign Debt on December 13, 2010, as is seen in the chart of $HUI:$USB, that is the gold mining stocks relative to the 30 Year US Government Bond. In similar vein, the emerging markets, such as Indonesia, Chile, Thailand and Turkey, lost their currency sovereignty with quantitative easing exhaustion.

World stocks, ACWI, rose 0.08%, and manifested a questioning doji today. And for good reason as the seigniorage, that is the moneyness, afforded by quantitative easing has maxed out as is seen in the chart of world stocks relative to the 10 year US government note, VT:TLT.

Exhaustion of quantitative easing caused the world to enter into into the Age of Deleveraging on February 9, 2010, with world stocks, and Junk Bonds falling lower in value. World stocks, VT, fell from a rally high of 49.80 and Junk Bonds, JNK, fell from a rally high of 40.63 to 40.34. The investment bubble that began in the late 1940s has been pricked. The neoliberal Milton Friedman Free To Choose floating currency regime is history. With the fall lower of Junk Bonds, JNK, the end of credit as we have known it has commenced. The world entered into Kondratieff Winter on February 9, 2011.

Today February 11, 2011, the S&P, SPY, has likely crested out in an Elliott Wave 2 high at 133.43, and will be entering an Elliott Wave 3 Down, as is seen in the S&P Weekly, SPY Weekly,

Today February 11, 2011, the world stocks, ACWI, has likely crested out in an Elliott Wave 2 high at 48.48, and will likely be entering an Elliott Wave 3 Down, as is seen in the world stocks weekly, ACWI Weekly.   

Value investing is really value less; that it is of limited value since all stocks, globally, will be going lower. The only thing value investing might afford is to identify the stocks which will suffer the least rate of decline.

Many of the companies and ETFs listed in this article can be sold short. Precious metals, JPP, rose 1.1%, on the awareness that exhausting quantitative easing will create an enduring demand for hard metals. Personally, I am invested in and have taken possession of gold bullion. I do not have a brokerage account as I am concerned that during a severe downturn one may not have access to one’s funds.  I am more concerned about the return of my investment, than I am about the return on my investment.

The chart of gold relative to the Australian Dollar, GLD:FXA, has risen since February 1, 2011, establishing gold to be the sovereign global currency and storehouse of investment value. The seigniorage of the worlds major currencies, DBV, failed on February, 9, 2011. And the seigniorage of the emerging market currencies, CEW, failed in early January, 2011. Yes all currencies failed to be money good on exhausting quantitative easing.  Gold and gold alone will soon be seen as being the sole money good investment, as all other forms of investment, loose more and more of their moneyness.

Out of a soon coming Gotterdammerung, that is an investment flameout, a Chancellor, that is a Sovereign, and a Banker, that is a Seignior, will arise to provide a new order and a new moneyness, but at the cost of the loss of national sovereignty, as Framework Agreements will be announced appointing stakeholders to oversee regions of global economic governance and austerity for all.  Global Corporatism and the rule of global leaders will govern mankind. The Sovereign and the Seignior will endeavor for the security and prosperity of the that leadership.

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