ICM Weekly Plan Jan 30

8/2/2019 ICM Weekly Plan Jan 30

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ICM Weekly Plan Jan 30, 2011

The equity market maintained the rather well-mannered uptrend of the past few weeks Monday and

Tuesday. Wednesday was much wider range driven partly by the FOMC statement indicating interest

rates would remain very low into 2014 and by rumors of nearing agreement on a Greek debt

restructuring ( the Loch Ness Monster of finance). Thursday was another wide ranging day but closed inthe other direction giving back the new high ground and Friday showed early weakness but closed with

a modest range and net change. The entire week formed a doji pattern on the weekly bar chart

reflecting the overbought nature of recent action and uncertainty of weekend news flows. Asia had little

impact as a result of the many holidays in those markets related to Golden Week and similar festivities.


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The Liquidity Cycle Indicator sits right at recent highs and is close to a breakout up. The Thursday and

Friday action held it back from a breakout buy signal. Action of the indicator on any mild correction will

tell us more about the strength of investor conviction since it measures defensive versus more

aggressive early upturn market groups. On a more favorable move early this week the indicator should

break up out of the recent range bolstering the case for less defensive portfolio allocation.

The Global Liquidity is giving a bit mor robust signal of improvement of bullishness than the US indicator.

Many of the markets that were really hit hard last year have started with a good bounce which is part of

the Year of the Dragon optimism.

Sector performance Table is below: watch utilities versus the SPX or Materials for a simple indication of

optimism. Utilities should be trailing if the news is good.


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Sector ETFs


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INDICES

Among equity indices we see considerably better price action since the new year than in 2011. Below

are the developed and more liquid global indices with a simple weighting of 3month, 6 month, and 12

month performance in dollar terms. Although it may not have seemed so, the US market was the best

performing in 2011.

On the following page is a dollar based weighted ranking of emerging and smaller country indices not

included above. The best performing markets in this group were the Philippines, Peru, and Thailand.

Relative strength basket trades from this list pairing the strong versus the weak or middling will be

targeted for trade this year. Personally I will avoid shorting the extraordinarily weak indices because

they have pretty much discounted Armageddon and even a small bit of optimistic news can lead to a

sharp short covering rally. I favor shooting the wounded rather than the dead.


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Foreign exchange trade is still noisy and unsettled. The short position in Euro was so large it has

provided support and the FOMC commitment to easy credit proved enough to generate a bounce up

above 132 versus the dollar. Rumors this weekend of a Greek agreement falling apart may abort that

Euro rally.

Two tables below rank the major country currency strength and the second ranks the smaller trading

currency strength.


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Commodities

Scott Grannis provides this chart with the heading: Commodity Prices Are Turning Up.

This index of non-energy industrial commodities (mundane things such as burlap, butter, cocoa beans,

copper scrap, corn, cotton, hides, hogs, lard, lead scrap, print cloth, rosin, rubber, soybean oil, steel

scrap, steers, sugar, tallow, tin, wheat, wool tops, and zinc) began to weaken last summer as the

Eurozone sovereign debt crisis was heating up and fears of another financial crisis caused sparked a

wave of risk-aversion and de-risking.and nowas the above chart showscommodity prices are

turning up (as of Friday, the CRB Spot index had exceeded both its 50- and 100-day moving average).

Moreover, copper prices have jumped 27% since October, and the JOC metals index is up almost 16%

since December. All of this suggests that global growth fundamentals are improving. Scott Grannis

The table below includes the major grain contracts and soft contracts and the year to date column gives

a quick picture of performance over the last three weeks
http://scottgrannis.blogspot.com/http://scottgrannis.blogspot.com/http://scottgrannis.blogspot.com/


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Glancing at the year to date changes by commodity shows that soybeans are up slightly on the year and

though in contango the spreads have flattened slightly. Soymeal has also while bean oil steepened a

small amount. Corn got cut off the chart but the contango has flattened as corn is down slightly on the

year so far.

In the energy complex the first 2 month spreads declined a tiny bit but the balance strengthened barely.Brent spreads were generally stronger and the backwardation firmed. The see-saw of Iranian rumors

keeps the Brent curve wiggling.

One of the best trends so far in the physical commodities are in the meats. The drought in Texas and

Oklahoma led to massive herd liquidation and herd restocking means extra demand.


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Copper and the industrial metals are also off to a good start along with basic materials in equities. Easy

money in the US and Europe along with hope for easing policies in China are boosting these markets.

Volatility Environment

The table with volatiltity environment readings visually gives one a very quick read. A lot more

green showing up in the trend category than in recent weeks. Financials, currencies and indices

are all tagged as bullish. Volatility is still largely neutral to quiet with the exception of Nat Gasand OJ. I expected more early volatility than we have had so far but fortunately I have not

carried a lot of premium. This picture is still signaling that short premium is ok and be patient as

a buyer.


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Seasonality : These comment and charts fromBespoke Investment
http://www.bespokepremium.com/http://www.bespokepremium.com/http://www.bespokepremium.com/http://www.bespokepremium.com/


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Equity Sentiment Indicators

Business Insider
http://www.businessinsider.com/a-stunning-fact-about-the-current-streak-of-strong-economic-data-2012-1http://www.businessinsider.com/a-stunning-fact-about-the-current-streak-of-strong-economic-data-2012-1http://www.businessinsider.com/a-stunning-fact-about-the-current-streak-of-strong-economic-data-2012-1


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Supporting Information and Comments

A Eurozone Bailout May Be Getting Too Big

For Germany To Handle

Read more:http://www.testosteronepit.com/home/2012/1/27/germany-frets-as-bailouts-and-risks-balloon.html#ixzz1kuRYfgeWIn her speech at theDavosWorld Economic Forum, ChancellorAngela Merkelwarned that

Germany might be overwhelmed by its efforts to bail out the Eurozone. Germany must not make

promises that in the end cant be kept, she said. It doesn't make sense to demand a doubling or

tripling of Germany's contribution. "How long will that remain credible?" she asked.

The governments reluctance has made Germany the favorite punching bag of the economicworld, and most certainly ofGeorge Soros, whomusedin Davos: "It's Germany that dictatesEuropean policy ... the trouble is that the austerity that Germany wants to impose will pushEurope into a deflationary debt spiral."

But every few months, the amounts to bail out Greece are rising. And its not just Greece. Other

countries are on life support as well. So the bailout mechanisms have become a bewildering andexpanding array of direct and indirect contributions, commitments, and guarantees that,theoretically, all 17 member states of the Eurozone would share proportionately. But five ofthemPortugal, Ireland, Italy, Greece, and Spainare in trouble. So the remaining 12 have toshoulder their burden, and some of them are teetering.

Now all eyes are on Germany.CESIfo, the Munich-based economic research group thatpublishes the closely-followed Ifo Business Climate index, has put a pencil to Germanysmaximum exposure over time. Thereporttakes into account Germany 27.1% share of the ECBand 6% voting rights of the IMF. Total exposure: 635 billion ($831 billion), a whopping 27% ofGermanys GDP. And it doesnt even include any bailouts within Germany contd at link below.

Read more:http://www.testosteronepit.com/home/2012/1/27/germany-frets-as-bailouts-and-risks-balloon.html#ixzz1kuRkAH6u

_____________________________________________________________________________

Greek fury at plan for EU budget control

High quality global journalism requires investment. Please share this article with others using thelink below, do not cut & paste the article. See ourTs&CsandCopyright Policyfor more detail.
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[email protected] buy additional rights.http://www.ft.com/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#ixzz1kuXjzeQv

Greeces finance minister angrily rejected a German plan for the eurozone to impose a budgetoverseer onto Athens in return for a new 130bn bail-out, saying it would improperly force his

country to choose between financial assistance and national dignity.

Evangelos Venizelos said theproposalto create a European Union budget commissioner withthe power to veto Greek tax and spending decisions, revealed by the FT, ignores some keyhistorical lessons. He added EU lenders already had sufficient monitoring safeguards in place in

its bail-out programme.

The balance of the article is well worth readingHERE at FT

____________________________________________________________________________

The FOMC commentary this past week ignited the gold markets and sent the metal from the

1500s and low 1600 dollar per ounce price levels to the mid 1700 per ounce figure in the short

space of my vacation. I completely agree with the markets reaction to the official reassertion of

its intention debase the currency. I have been and remain a believer in the uptrend real assets

as the governing elites in the world do what they have always done, rape the middle class.

Having said that I must also give a bit of warning. I read CURRENCY WARS by James Rickards

this past week and he recounts the revaluation of gold by FDR during the depression. Gold was

officially priced at $20.67 per ounce when Roosevelt announced the confiscation of essentially

all gold in the country because it was being hoarded. A few trivial exceptions were made but

basically with authority only given him after this was done FDR confiscated an estimated 500

tons of gold from the public under threat of a penalty of $10,000 for failure to comply. ( roughly

160,000 dollars today ) Then the IS drove the price of gold to $35 per ounce where it stood till

Nixon cut the ties to gold.

Roosevelt devalued the dollar almost 70% and stripped those who prepared for devaluation of

their ability to protect themselves. All of the powers legislated to give FDR authority to make

this theft stick are still on the books.

So those of you holding some gold for long term disaster insurance be sure some of it is out of

the country. Forewarned is forearmed.

Jan 29 2012

Bruce Lawrence
mailto:[email protected]:[email protected]:[email protected]://www.ft.com/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#ixzz1kuXjzeQvhttp://www.ft.com/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#ixzz1kuXjzeQvhttp://www.ft.com/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#ixzz1kuXjzeQvhttp://www.ft.com/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#ixzz1kuXjzeQvhttp://www.ft.com/intl/cms/s/0/33ab91f0-4913-11e1-88f0-00144feabdc0.htmlhttp://www.ft.com/intl/cms/s/0/33ab91f0-4913-11e1-88f0-00144feabdc0.htmlhttp://www.ft.com/intl/cms/s/0/33ab91f0-4913-11e1-88f0-00144feabdc0.htmlhttp://www.ft.com/intl/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#axzz1kuXWHq00http://www.ft.com/intl/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#axzz1kuXWHq00http://www.ft.com/intl/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#axzz1kuXWHq00http://www.ft.com/intl/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#axzz1kuXWHq00http://www.ft.com/intl/cms/s/0/33ab91f0-4913-11e1-88f0-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#ixzz1kuXjzeQvhttp://www.ft.com/cms/s/0/c54ff27c-4a99-11e1-a11e-00144feabdc0.html#ixzz1kuXjzeQvmailto:[email protected]


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ICM Weekly Plan Jan 30

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