Yen Carry Traders Sell Oil And Buy Bank Stocks
Friday, 18. July 2008, 06:39:09
Financial Market Report For Thursday, July 17, 2008
Yen Carry Traders Took Profit On Oil And Bought Bank Stocks
It was options expiration on oil today, so over the last three days, the yen carry traders, that is those who purchased with bank of Japan 0.5% interest loans sold their positions in oil futures and indexed oil funds to take profits.
The chart of the oil ETF, USO, shows three black crows with a closing price of 105, which goes back to strong support of May 19, 2008.
The chart of the bank ETF, KBE, shows banks have risen to strong resistance at 30.
The ongoing Google Finance chart shows oil, uso, sold off 5%; and banks rallied 22% in the last two days.
The debt laden and consumer related stock sectors rallied Wednesday the 16th and Thursday the 17th.
Banks, KBE, 14%, 8% .... 22%
Brokers Dealers, IAI, 14%, 5% .... 20%
Investement Bankers, KCE, 10%, 5% .... 15%
High Yield Dividend Payers, PEY 7%, 7% .... 14%
Financial, IYF, 11%, 4% .... 14%
Homebuilders, ITB, 9%, 4% .... 13%
Preferred, PFF, 8%, 5% .... 13%
Private Equity, PSP, 7%, 5% .... 12%
REITS, RWR, 7%, 3% .... 10%
Real Estate, IYR, 7%, 3%, .... 10%
Retail, XRT, 6%, 4% .... 10%
India, INP, 4%, 6% .... 10%
Transportation, IYT, 6%, 2% (rose on lower oil) .... 8%
Insurance, IAK, 5%, 2% .... 7%
Mortgage REITS, REM, 5%, 2% .... 7%
Consumer Discretionary, XLY 4%, 3% .... 7%
Turkey, TUR, 4%, 2% .... 6%
Semiconductors, XSD, 4%, 2% .... 6%
Small Cap Value, RZV 3%, 3% .... 6%
China, FXI, 5%, 1%, .... 6%
China, FXI, 5%, 1%, .... 6%
Internet, FDN, 5%, 0% (Google fell lower) .... 5%
Industrial, XLI 3%, 2% .... 5%
The capital status of the banks is very precarious, and the sustainability of the rally questionable for a number of reasons
First, the chart of Banks, KBE, shows banks have risen to strong resistance at 30.
Secondly, the rally came through liquidity provided by the yen carry trade, as seen in its barometer, EUR/JPY, FXE:FXY. There was a tremendous gap up on Thursday July 17, 2008 from 1.67 to 1.69. Bank of Japan, 0.5% interest loans, were used to buy the bank stocks. The money that came in two days, could very quickly take flight and send the bank stocks reeling. The rise has come through lending, rather than committed investing by the investment community at large.
Thirdly, the type of rise is historic and unique, that is unusual.
Fourthly, tomorrow is options expiration on stocks.
Fifthly, the rally that is in the major indices is simply that --- a rally in a terrifically bearish market as seen in Jesse's report Charts in the Babson Style Showing the Extent of the Bear Market Rally.
The market indices rose Wednesday the 16th, and Thursday the 17th, with most of the gain coming on Wednesday.
The Indices
Russell 2000, IWM, 3%, 0% .... 3.0%
Dow, DIA, 3.0%, 0% .... 3.0%
S&P, SPY, 1.0%, 1.0% .... 2.0%
Nasdaq, QQQQ, 2.0%, 1.0% .... 3.0%
Overall US Market, VTI, 1.25%, 1.25% .... 2.5%
The weak doji in the overall stock market, VTI, suggests that the gains will not be maintained
The chart of VTI.
Evidence suggests the the utility sector and bond market is acting adversely to the Wednesday economic report that inflation is rising
1) ... The ongoing Google Finance chart of the dividend paying stocks, of VPU, DES, DLN and DOO shows that concerns over inflation have hit the utility stocks hard; they fell 4% on Wednesday the 16th, and Thursday the 17th, while the other dividend stocks as a group have rose 4% while the overall stock market, VTI, rose 2.5%.
2) ... The ongoing Google Finance chart of of interest rate senstive sectors, VPU, TLT and DOO, shows that the utility stocks fell 4% on Wednesday the 16th, and Thursday the 17th, and Treasury Bonds, TLT, fell 2%.
3) .... The chart of the Intermediate US Government Bond ETF, TLT daily, as of July 17th, 2008 shows two fractal breaks lower with RSI falling below 50 and a bearish MACD crossover.
4) ... The chart of the interest rate on the 30 Year US Treasury Bond, $TYX daily, shows that the bond market place called interest rates higher on Wednesday July 16, 2008 and Thursday July, 17, 2008, in response to the Wednesday economic report that inflation is rising as well as the Federal Reserve's proposed guaranteeing and/or recapitalizing of Freddie Mac and Fannie Mae; note the breakout of RSI of 50 and the MACD bullish crossover.
The Philadelphia Manufacturing Philly shows contracting orders and employment
Jesse reports Philly Fed Report Reveals an Unmistakable and Serious Stagflation
It's the end of the investment age in investing in the HUI Indexed precious metal mining shares
The yen carry traders in addition to selling their positions in oil, USO, sold their positions in the metal manufacturing stocks, XME, and the gold mining stocks, GDX; the former off 6% and the latter off 2%.
Today was an epic day in natural resource investing: gold stayed up today; the gold mining stocks did not. Gold stocks have once again strongly disconnected from the price of gold as seen in the chart of gold stocks, GDX, relative to gold, GLD, GDX:GLD weekly.
It seems that when debt, $USB, makes a major turn down, the HUI, $HUI, does as well -- three days of down in the the former, pushed three days of down in the latter.
The HUI indexed metal mining stocks will now more and more be turning down with the stock market.
The Investment Application Is To Go Short Stocks Or Long Gold
My investment maxim is: "In a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength".
The investment application today is to go short or to go long gold, I recommend the latter.
Short selling via stocks and ETFs
The best sectors to go short are the ones that have risen the most lately in the Wednesday July 16th and Thursday July 17th, rally.
Unusually spectacular short selling opportunities exist in the following; I strongly suggest that one look at the charts of the following; these represent short selling opportunities of a lifetime.
APH A definite selling pop.
AZZ Rising price on falling volume and a lollipop hanging man candlestick.
XBI Investment mania at the end of fiat wealth and these biotechnology stocks Google Finance comparative chart of SVNT, ONXX, ALXN, OSIP, MYGN: SVNT, ONXX, ALXN, OSIP, MYGN,
Education Providers Google Finance comparative chart of EDU, GPX, COCO, ESI : EDU, GPX, COCO, ESI
Washington Mutual, WM,
Wachovia Corporation, WB,
Regions Financial, RF,
AIG Insurance, AIG,
Blackrock, BLK,
Capitol One Finance, COF,
CIT Group, CIT,
Coamerica, COA,
Zions Bancorporation, ZION,
Hovnanian, HOV,
Expedia, EXPE,
Strong short selling opportunities exist in what I call the 'Bank of America' rally these also are short selling opportunities of a lifetime.
Banks, KBE,
Brokers Dealers, IAI,
Investement Bankers, KCE,
Homebuilders, ITB,
Moderate short selling opportunities exist in
Preferred, PFF,
Private Equity, PSP,
REITS, RWR,
Real Estate, IYR,
Retail, XRT,
India, INP,
Mortgage REITS, REM,
Consumer Discretionary, XLY
Turkey, TUR,
Semiconductors, XSD,
Small Cap Value, RZV
China, FXI,
Industrial, XLI
Russell 2000, IWM
Moderate short selling opportunities exist in the inflation related utilities as well on their next rise in value.
Utilities, VPU
A strong short selling opportunity exists in US Government Debt; and can be acted upon their next rise as well.
Treasuries, TLT
Short selling via Proshares ETFs
Domestic stocks
SKK Russell 2000 Growth
SRS Real Estate
SSG Semiconductors
TLL Telecommunications
SKF Finance
More Domestic stocks
DXD Industrials
SCC Consumer Services
Foreign and basic material stocks
EEV Emerging markets
FXP China
Debt
TBT One should invest in the future when it falls in value some; as it has risen too strongly now to 70.70.
I really recommend that one go long gold
It's truly an opportune time to go long gold as the chart of gold, $GOLD, shows a price decline to $970, in its immediate chart objective of $1,000.
The above reports of inflation, interest rates rising, and stagflation all favor an investmet in gold.
The investment demand is easily seen in the following; these ratios show that wealth is garnered and maintained by investing in gold;
gold relative to stocks: GLD:VEU
gold relative to bonds: GLD:TLT
gold relative to oil: GLD:USO
gold relative to commodities: GLD:RJI
The ongoing MSN Finance chart and the ongoing Google Finance chart shows that gold outperforms stocks, bonds, oil and commodities; these show that in the last month gold is up 7%, bonds up 2%, oil down 3%, commodities down 4%, and world stocks down 7%.
I recommend that one invest in gold; and put that gold securely away in BullionVault.com and GoldMoney.com, and in a gold ETF, in a trust account, not a brokerage account.
Yen Carry Traders Took Profit On Oil And Bought Bank Stocks
It was options expiration on oil today, so over the last three days, the yen carry traders, that is those who purchased with bank of Japan 0.5% interest loans sold their positions in oil futures and indexed oil funds to take profits.
The chart of the oil ETF, USO, shows three black crows with a closing price of 105, which goes back to strong support of May 19, 2008.
The chart of the bank ETF, KBE, shows banks have risen to strong resistance at 30.
The ongoing Google Finance chart shows oil, uso, sold off 5%; and banks rallied 22% in the last two days.
The debt laden and consumer related stock sectors rallied Wednesday the 16th and Thursday the 17th.
Banks, KBE, 14%, 8% .... 22%
Brokers Dealers, IAI, 14%, 5% .... 20%
Investement Bankers, KCE, 10%, 5% .... 15%
High Yield Dividend Payers, PEY 7%, 7% .... 14%
Financial, IYF, 11%, 4% .... 14%
Homebuilders, ITB, 9%, 4% .... 13%
Preferred, PFF, 8%, 5% .... 13%
Private Equity, PSP, 7%, 5% .... 12%
REITS, RWR, 7%, 3% .... 10%
Real Estate, IYR, 7%, 3%, .... 10%
Retail, XRT, 6%, 4% .... 10%
India, INP, 4%, 6% .... 10%
Transportation, IYT, 6%, 2% (rose on lower oil) .... 8%
Insurance, IAK, 5%, 2% .... 7%
Mortgage REITS, REM, 5%, 2% .... 7%
Consumer Discretionary, XLY 4%, 3% .... 7%
Turkey, TUR, 4%, 2% .... 6%
Semiconductors, XSD, 4%, 2% .... 6%
Small Cap Value, RZV 3%, 3% .... 6%
China, FXI, 5%, 1%, .... 6%
China, FXI, 5%, 1%, .... 6%
Internet, FDN, 5%, 0% (Google fell lower) .... 5%
Industrial, XLI 3%, 2% .... 5%
The capital status of the banks is very precarious, and the sustainability of the rally questionable for a number of reasons
First, the chart of Banks, KBE, shows banks have risen to strong resistance at 30.
Secondly, the rally came through liquidity provided by the yen carry trade, as seen in its barometer, EUR/JPY, FXE:FXY. There was a tremendous gap up on Thursday July 17, 2008 from 1.67 to 1.69. Bank of Japan, 0.5% interest loans, were used to buy the bank stocks. The money that came in two days, could very quickly take flight and send the bank stocks reeling. The rise has come through lending, rather than committed investing by the investment community at large.
Thirdly, the type of rise is historic and unique, that is unusual.
Fourthly, tomorrow is options expiration on stocks.
Fifthly, the rally that is in the major indices is simply that --- a rally in a terrifically bearish market as seen in Jesse's report Charts in the Babson Style Showing the Extent of the Bear Market Rally.
The market indices rose Wednesday the 16th, and Thursday the 17th, with most of the gain coming on Wednesday.
The Indices
Russell 2000, IWM, 3%, 0% .... 3.0%
Dow, DIA, 3.0%, 0% .... 3.0%
S&P, SPY, 1.0%, 1.0% .... 2.0%
Nasdaq, QQQQ, 2.0%, 1.0% .... 3.0%
Overall US Market, VTI, 1.25%, 1.25% .... 2.5%
The weak doji in the overall stock market, VTI, suggests that the gains will not be maintained
The chart of VTI.
Evidence suggests the the utility sector and bond market is acting adversely to the Wednesday economic report that inflation is rising
1) ... The ongoing Google Finance chart of the dividend paying stocks, of VPU, DES, DLN and DOO shows that concerns over inflation have hit the utility stocks hard; they fell 4% on Wednesday the 16th, and Thursday the 17th, while the other dividend stocks as a group have rose 4% while the overall stock market, VTI, rose 2.5%.
2) ... The ongoing Google Finance chart of of interest rate senstive sectors, VPU, TLT and DOO, shows that the utility stocks fell 4% on Wednesday the 16th, and Thursday the 17th, and Treasury Bonds, TLT, fell 2%.
3) .... The chart of the Intermediate US Government Bond ETF, TLT daily, as of July 17th, 2008 shows two fractal breaks lower with RSI falling below 50 and a bearish MACD crossover.
4) ... The chart of the interest rate on the 30 Year US Treasury Bond, $TYX daily, shows that the bond market place called interest rates higher on Wednesday July 16, 2008 and Thursday July, 17, 2008, in response to the Wednesday economic report that inflation is rising as well as the Federal Reserve's proposed guaranteeing and/or recapitalizing of Freddie Mac and Fannie Mae; note the breakout of RSI of 50 and the MACD bullish crossover.
The Philadelphia Manufacturing Philly shows contracting orders and employment
Jesse reports Philly Fed Report Reveals an Unmistakable and Serious Stagflation
It's the end of the investment age in investing in the HUI Indexed precious metal mining shares
The yen carry traders in addition to selling their positions in oil, USO, sold their positions in the metal manufacturing stocks, XME, and the gold mining stocks, GDX; the former off 6% and the latter off 2%.
Today was an epic day in natural resource investing: gold stayed up today; the gold mining stocks did not. Gold stocks have once again strongly disconnected from the price of gold as seen in the chart of gold stocks, GDX, relative to gold, GLD, GDX:GLD weekly.
It seems that when debt, $USB, makes a major turn down, the HUI, $HUI, does as well -- three days of down in the the former, pushed three days of down in the latter.
The HUI indexed metal mining stocks will now more and more be turning down with the stock market.
The Investment Application Is To Go Short Stocks Or Long Gold
My investment maxim is: "In a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength".
The investment application today is to go short or to go long gold, I recommend the latter.
Short selling via stocks and ETFs
The best sectors to go short are the ones that have risen the most lately in the Wednesday July 16th and Thursday July 17th, rally.
Unusually spectacular short selling opportunities exist in the following; I strongly suggest that one look at the charts of the following; these represent short selling opportunities of a lifetime.
APH A definite selling pop.
AZZ Rising price on falling volume and a lollipop hanging man candlestick.
XBI Investment mania at the end of fiat wealth and these biotechnology stocks Google Finance comparative chart of SVNT, ONXX, ALXN, OSIP, MYGN: SVNT, ONXX, ALXN, OSIP, MYGN,
Education Providers Google Finance comparative chart of EDU, GPX, COCO, ESI : EDU, GPX, COCO, ESI
Washington Mutual, WM,
Wachovia Corporation, WB,
Regions Financial, RF,
AIG Insurance, AIG,
Blackrock, BLK,
Capitol One Finance, COF,
CIT Group, CIT,
Coamerica, COA,
Zions Bancorporation, ZION,
Hovnanian, HOV,
Expedia, EXPE,
Strong short selling opportunities exist in what I call the 'Bank of America' rally these also are short selling opportunities of a lifetime.
Banks, KBE,
Brokers Dealers, IAI,
Investement Bankers, KCE,
Homebuilders, ITB,
Moderate short selling opportunities exist in
Preferred, PFF,
Private Equity, PSP,
REITS, RWR,
Real Estate, IYR,
Retail, XRT,
India, INP,
Mortgage REITS, REM,
Consumer Discretionary, XLY
Turkey, TUR,
Semiconductors, XSD,
Small Cap Value, RZV
China, FXI,
Industrial, XLI
Russell 2000, IWM
Moderate short selling opportunities exist in the inflation related utilities as well on their next rise in value.
Utilities, VPU
A strong short selling opportunity exists in US Government Debt; and can be acted upon their next rise as well.
Treasuries, TLT
Short selling via Proshares ETFs
Domestic stocks
SKK Russell 2000 Growth
SRS Real Estate
SSG Semiconductors
TLL Telecommunications
SKF Finance
More Domestic stocks
DXD Industrials
SCC Consumer Services
Foreign and basic material stocks
EEV Emerging markets
FXP China
Debt
TBT One should invest in the future when it falls in value some; as it has risen too strongly now to 70.70.
I really recommend that one go long gold
It's truly an opportune time to go long gold as the chart of gold, $GOLD, shows a price decline to $970, in its immediate chart objective of $1,000.
The above reports of inflation, interest rates rising, and stagflation all favor an investmet in gold.
The investment demand is easily seen in the following; these ratios show that wealth is garnered and maintained by investing in gold;
gold relative to stocks: GLD:VEU
gold relative to bonds: GLD:TLT
gold relative to oil: GLD:USO
gold relative to commodities: GLD:RJI
The ongoing MSN Finance chart and the ongoing Google Finance chart shows that gold outperforms stocks, bonds, oil and commodities; these show that in the last month gold is up 7%, bonds up 2%, oil down 3%, commodities down 4%, and world stocks down 7%.
I recommend that one invest in gold; and put that gold securely away in BullionVault.com and GoldMoney.com, and in a gold ETF, in a trust account, not a brokerage account.
WIDGETIZE