Financial market report for February 16, 2011
Stockcharts.com reports 5,275 mutual funds rose to a 52 week high; this is truly a large number.
The parabolic rise in the solar energy stocks, KWT, and their expansion in relation to wind energy stocks, FAN, that is KWT:FAN, coupled with the ongoing rise in the energy shares, XLE, and their expansion in relation to oil, XLE:USO, suggests that the overall stock current rally cannot be sustained. This is all the more the case given that quantitative easing is exhausted.
The chart of energy shares relative to oil, XLE:USO, has risen parabolically since the announcement of QE2 in November as savvy investors took flight from US Treasuries. They poured into Exxon Mobil, XOM and other energy production companies across the board. But economic rules apply to all. Exxon Mobil has formed a broadening top pattern at a price of 83 and according to Street Authority, the law is ... when you see the broadening top te market will eventually drop.
1) … Today’s ETF gainers included
Solar Energy Stocks, KWT, 2.5%, ….. LDK, SOLR, SPWRA, TSL
European Financial, EUFN, 2.5% …. these closed at 24.43.
Dow Jones Energy Services, IEZ, 2.2%
Energy Services, OIH, 2.2%
Global Financial Firms, IXG, 1.8%
Homebuilding, ITB, 1.7% …. LOW, and HD.
Small Cap Energy Services, XLES, 1.6%
Retail, XRT, 1.6% …. ULTA
Metal Manufacturing, XME 1.5% …. X, GSM PKOH RS
Agriculture, MOO, 1.5%
Energy, XLE, 1.3% …. XOM
Basic Material, XLB, 1.3% …. TXI
Small Cap Pure Value, RZV, 1.3%
Global Listed Private Equity, this is leveraged buyout debt indebted companies, PSP, 1.3%
World Real Estate, WPS, 1.2%
Insurance, KIE, 1.2% …. AEL
Transportation Stocks, IYT, 1.1% ….. GWR
Health Care, IHF, 1.1% ….. ISRG
Coal, KOL, 1.1% ... Coal’s rise to resistance suggests that it has crested as high as it will go and will enter an Elliott Wave 3 of 3 Down.
Germany, EWG, 1.1% … SI
Design and Build, PKB, 1.1%
Russell 2000, IWM, 1.0%
Nasdaq 100, QTEC, 1.0%
Networking, IGN, 1.0% … ALLT, EMC, NTAP, and PLCM
US Basic Materials, IYM, 1.0%
Russell 2000 Growth, IWO, 0.9% …. SRZ
Copper Miners, COPX, 1.0%
Small Cap Energy Shares, XLES, 1.0%
One Fund, ONEF, 0.9% … This ETF is the investor’s weather vane; as it goes, so goes the world’s stocks.
Consumer Discretionary, VCR, 0.9%
Canada Small Caps, CNDA, 0.9%
Timber Products, WOOD, 0.7% …. DEL
Internet Retail, HHH, 0.0% …. AMZN, GOOG, and ICGE
3) … Quantitative easing is exhausting … stocks, lacking seigniorage, that is the moneyness, from the US Federal Reserve will soon fall lowe in value.
The Morgan Stanley Cyclical Index, $CYC, rose 0.8% .... DE, AA, ETN, TIN, JCI, DD, PPG, and R were significant risers. The parabolic rise in Goodyear Tire, GT, is a canary in the stock market coal mine, warning the investor to take profits and leave.
Yahoo Finance charts shows that In the last six months,XLES, COPX, IEZ, OIH, XSD have been among in the top performing funds. But copper mining, COPX, despite rising 1.0% today, has fallen to the middle of a broadening top pattern, suggesting a strong fall lower is coming soon.
The ratio of copper miners to copper, COPX:JJC, peaked in November through December 2010, in part due to the fall lower of the Optimized Carry ETN, ICI, suggesting an exhaustion of carry trade investing, and in part due to the fall lower in the 30 10 Leverage Curve, $TYX:$TNX, as investors took flight from the 30 Year US Government Bond, EDV, and the 10 Year US Government note, TLT, witnessing exhausting quantitative easing.
Coal miners, KOL, have lost more investment value than copper miners, COPX, with Arch Coal, ACI, and ANR Resources, ANR, being prime examples. Other QE exhausted investments include Pharmaceuticals, XPH, Nasdaq Biotechnology, IBB, S&P Biotechnology, XBI, Las Vegas Sands, LVS, Brazil Financials, BRAF, Airlines, FAA, Shipping,SEA, and Manufactured Housing, CVCO.
Chart shows Turkey,TUR, the Phillippines, EPHE, India, INP, China, YAO, Chile, ECH, Indonesia, IDX,and Brazil, EWZ, to have experienced the most quantitative easing exhaustion … TUR, EPHE, INP, YAO, ECH, IDX, and EWZ
The monthly chart of the Morgan Stanley Cyclical Index, relative to the 30 Year US Government Bond, Monthly $CYC:EDV, communicates that investment in the growth and expansion stocks came via seigniorage of US Government debt. When the seigniorage fails, the investment fails.
Yahoo Finance reports that Volatility, VXX and VXZ, turned up today suggesting that a market turn lower at hand.
4) … Bond vigilantes rule the world, they are the new sovereigns.
They took sovereignty from Ben Bernanke and the United States government when Mr Bernanke announced quantitative easing as his printing of money to buy US Treasuries constitutes monetization of debt as well as destruction of the US Dollar.
The bond vigilantes called the Interest Rate in the 30 Year US Government Bond, $TYX, higher, to 4.7% on February 4, 2011, and the quantitative easing seigniorage, seen in Daily $CYC:EDV, fell lower.
World stocks, ACWI, will be falling lower on exhausted quantitative easing and failure of US Central Bank debt sovereignty, that is US debt seigniorage.
As US Government Treasuries, EDV, and the US Government Ten Year note, TLT, fall lower, US Stocks, VTI, and world stocks, VT, will loose more and more value. Out of the ensuing chaos a global Chancellor, that is a Sovereign, and a global Banker, that is a Seignior, will arise to establish global order, universal Seigniorage and austerity for all.