DRIVING JUST GOT MORE EXPENSIVE. WHEN WILL THE FED STOP?

TAKING A DRIVE, WHAT IS THE COST?
As I drove the kids to school today I noticed that once again fuel prices are high.  Unfortunately I have one of those cars that takes only the super premium 93 octane blend of gas, so I am always looking at the most expensive level of gas pricing when I drive around town.  This morning's damage in my neighborhood store was $4.11 for the super premium grade.  While I'm sensitive to the cost of filling up the car, I'm fortunate and blessed in that I make enough money where it doesn't harm me and it gives me something to complain about and blog about.  On the other hand, there are people that are getting brutalized daily by the effects of the speculative froth that is caused by loose monetary policy and it's famed QEII debacle.

Quickly I'll review, the Fed buys bonds from dealers and they in turn are using that money to park it in assets that are more likely to provide some type of return.  In addition, since hedge funds and other investors cannot find investments that will compensate them for the risk they are taking (try living on the interest created on a bond portfolio), they are forced into other securities and investments that at least attempt to reward you for the risks.  Thus, the Fed's aim has been wildly successful.  Market participants have shunned safe assets and been driven like a herd into risky assets like stocks and commodities.  And there you have it, investors are buying commodities because they can't get paid anywhere else.  Speculators have bought gold, silver, wheat, corn, cotton, oil, and gas.  Almost every commodity has been on fire.  Remember the summer of 2008 where investment banks had oil tankers filled to the brim sitting off the coast to speculate on the surging price of black gold?  Recall the $148 oil spike?  I'm not hearing the same stories of excess, but we are seeing a mass flood into these alternative assets to flee poor rates of return and a declining value of the dollar.

WHAT WILL BE THE IMPACT OF RISING GAS PRICES? -
http://www.foxnews.com/us/2011/04/11/drivers-start-cut-gas-prices-rise-1546568875/

I'm not sure how Americans will ultimately deal with rising gas prices, but over the last several weeks as prices have soared, drivers have been constraining their fill ups.  As the article notes, drivers bought 2.4 million gallons of gas less than last year at this time.  The average price for gas in the nation was $3.77, remember that the all-time high in July of 2008 was $4.11.

This article says that some folks have been walking more, riding public transportation, and simply not going places.  Other reasons that we've seen a reduction in the consumption of gas may be that Amerikans have bought more fuel efficient cars that require less gas.

CONFUSING DATA - DECLINING GAS CONSUMPTION BUT INCREASING CONSUMER SPENDING?
The foxnews article also keyed on one interesting point here that for me speaks to a larger macro-economic shift. 

"The decline is somewhat puzzling because Americans typically curb their driving only as a last resort, after sacrificing other forms of discretionary spending, like shopping for new clothes, or going to movies, concerts and restaurants.



But demand for gas is falling while other types of spending are on the rise. Retail sales rose 2 percent in March compared with a year earlier, surprising economists who were expecting no increase or even a decline."

So, consumers are curbing gas consumption, but someone is out there spending away.  What is the answer for the data?  I think it clearly shows that the divide between classes is growing AND we can only thank our friends at the FED for the disaster and attack on the poorest who can ill afford to handle the assault on their wallets.  To clarify, the poor working class folks are getting crushed since fuel is a significant portion of their pay checks.  On the other hand, the Fed strategy has been successful driving 401Ks and brokerage account values higher, so the wealthiest of individuals are back spending and engaged in business as usual (let's go out to dinner and a movie!).

Not buying it?  How about the quote here? -

"About two and a half days' worth of Whitney Shaw's pay each month goes just to fill up her 2001 Hyundai Accent. The administrative assistant is thinking about taking the bus for her daily commute, 50 miles each way between Branford, Conn., and Hartford.


"It's three hours of pay from work just to fill up my tank even once, so I'm definitely feeling it," Shaw said while filling up for $3.61 a gallon at a Valero station on the Berlin Turnpike."

Let's assume that it costs $75 to fill up and as Whitney Shaw describes, is 2.5 days of her monthly pay.  Assume also that she works 5 days a week or a total of 20 days a month.  Given all of that, Whitney is making $600 a month, clearly she isn't wealthy and obviously $75 is a large portion of her monthly take home pay, essentially 12.5% of her take home pay.  Perhaps just one year ago, the cost was $55 to fill up?  That is $20 a month less to spend on essentials, pay down debt, or splurge for a movie. 

$5.00 GAS?  IS THAT A POSSIBILITY?
I love the Foxnews article because it simply drops in that most analysts are looking for $4 gas, and some $5.  The way the quote is couched makes it seem like there is no chance that we'll be at $5.00 gas.  I think that $4.00 is absolutely figured in and that $5.00 is easily within reach.  What are the factors that prevent $5.00 gas from arriving?  Where are the forces that will make global demand for oil abate?  Is peace suddenly breaking out in the Middle East?  Probably most importantly, is the US Dollar getting stronger here?

In the article by CBS News - Gas Prices Climbing Toward $5 we get a mind blowing picture of the thought processes of folks that live in Chicago, the home of our President. 

Drivers Monday morning were practically numb to the price spikes.

"“What are you going to do?” said Shannon Thompson. “We’ve become so gas-dependent in this country. There are so many SUVs. I mean, I’ve had a hybrid. It worked great. Right now, I’m just going to deal with it.”


Prices at some gas stations outside the city were still below $4, a bargain compared to the $4.29-$4.40 range at some service stations downtown."

What drives me crazy here is the acceptance of the situation.  I can almost see them shrugging saying, that's the breaks!  "I guess we're stuck with high gas.  I bought a hybrid so that's all I can do!  Yeah OBAMA, just give him a chance!"

Are you kidding me, it's all about the policy?!   We have a Presidential administration that believes that our best course of action is to buy more oil from Brazil rather than exploit our own resources.  We have an environmental policy that holds us hostage to Middle Eastern despots, radicals, and UN pacifists, and we have a FED that is driven to destroy the US Dollar in the name of suspending market principles to save a bankrupt system.

For another perspective I've added an interview here with Stephen Schork, president of the Schork Group.  Stephen talks about the outlook for oil prices and mentions his thoughts on natural gas in the last few moments too.




TRADING UPDATE
So what's the point besides noting that gas is higher and no one has a clue that the Fed is the cause and there is no stopping it?  Well, since January 17th I've been suggesting that we need to buy gas and energy related stocks.

As we look at the trading view, we must examine oil first.  I've used USO here as a proxy for oil, but we all know there are tracking issues with that etf.  Having said that, it gives us a general idea of what we're up against, if you assume that all the fundamental items we discussed (Fed, global demand, summer driving season) are all still in play.

Based on the action here, there may be a drop in USO to the $41.14 area, but this area of previous resistance should be support.  USO has a lot of room to run with a target of $47 and $53.00 

Since USO looks pretty bullish here, that leads us to examine UGA which is the US gasoline etf.  If we are going to see oil move even higher, US gas prices too should inflate.

I've presented the 4 year weekly view of UGA and clearly we are at a point of resistance at $52, although I believe it will be minor.

The 3 Year UGA view is also good as it shows the area of support near $48.00.  I dropped the resistance line at the $52.00 area, but please note, it is there. 

As I review it, I believe that the target for UGA is still right at $64 or so, but I'd be out around $60.00 or by late June or early July (next earnings season in July may be a killer) whichever comes first.  The $60.00 target may not seem like that much from here, but if you'll recall we highlighted this target in January when UGA was trading at $39.50.

That is the update, please be careful and of course limit your driving cause it is going to cost you.

GOATMUG

UPDATE ON AAPL & RIMM. SHORT TERM REVERSAL LONGER TERM FAIL

Several days ago I made a case that AAPL might be in for a decline.  While that post certainly had a day-trading (go short) aspect to it, I really was making the case that longer term, there would be headwinds that would cause AAPL to slow its march higher and ultimately reverse.  APPLE RESTING OR "SHIFT" IN PLAY?

Please examine the chart below.  I've drawn an additional line or two to show where we might see some major support at $305.  Again, I am looking at the play from a longer term strategy view (I think these are the ones I'm best at).

Some Slopers are currently taking a shot on the long side of AAPL, and when you take a look at the daily chart here, you can see why they would go after it.  If I were playing that trade, I think I'd lighten up at $340 if I got there.  I think there could be a short term bounce, but ultimately a failure back at the $330 level and a fall to test my $305 level. 

So there you have it, a bounce here, and then over the next several weeks a drop through the $330.00 to visit $305.  As for my RIMM play.  I'm keeping that one short. 

GOATMUG

UNEASINESS - HOW ARE YOUR PREPARATIONS?

I'll admit that in waking today and following my normal routine I am troubled and uneasy.  Not uneasy in the sense that I'm fearful, uneasy that we are truly at an inflection point in our economy.  Having said that, we have also witnessed a disaster in Japan that is still going, we see war breaking out in the Middle East and a subtle transition of power that is happening unbelievably fast.  All the hurricanes in the Gulf of Mexico we've had in recent years should also put us on notice that those that are prepared have a chance.  Let your mind think through what would happen if your entire state had no power for 2 weeks.  What would you do?  How would you provide?  Are you ready?




I found this list several years ago and bookmarked it.  Unfortunately, I think I still only have about 25 of the items and they are not in a consolidated place to ensure that I could access them in an emergency.  This list is a good starting point and there are many others, but I do feel the deep urge to do this now.   I share this with you so that you might think about if you need to do the same and pray about how to approach this.


100 Items to Disappear First - http://www.thepowerhour.com/news/items_disappearfirst.htm

1. Generators (Good ones cost dearly. Gas storage, risky. Noisy...target of thieves; maintenance etc.)
2. Water Filters/Purifiers
3. Portable Toilets
4. Seasoned Firewood. Wood takes about 6 - 12 months to become dried, for home uses.
5. Lamp Oil, Wicks, Lamps (First Choice: Buy CLEAR oil. If scarce, stockpile ANY!)
6. Coleman Fuel. Impossible to stockpile too much.
7. Guns, Ammunition, Pepper Spray, Knives, Clubs, Bats & Slingshots.
8. Hand-can openers, & hand egg beaters, whisks.
9. Honey/Syrups/white, brown sugar
10. Rice - Beans - Wheat
11. Vegetable Oil (for cooking) Without it food burns/must be boiled etc.,)
12. Charcoal, Lighter Fluid (Will become scarce suddenly)
13. Water Containers (Urgent Item to obtain.) Any size. Small: HARD CLEAR PLASTIC ONLY - note - food grade if for drinking.
14. Mini Heater head (Propane) (Without this item, propane won't heat a room.)
15. Grain Grinder (Non-electric)
16. Propane Cylinders (Urgent: Definite shortages will occur.
17. Survival Guide Book.
18. Mantles: Aladdin, Coleman, etc. (Without this item, longer-term lighting is difficult.)
19. Baby Supplies: Diapers/formula. ointments/aspirin, etc.
20. Washboards, Mop Bucket w/wringer (for Laundry)
21. Cookstoves (Propane, Coleman & Kerosene)
22. Vitamins
23. Propane Cylinder Handle-Holder (Urgent: Small canister use is dangerous without this item)
24. Feminine Hygiene/Haircare/Skin products.
25. Thermal underwear (Tops & Bottoms)
26. Bow saws, axes and hatchets, Wedges (also, honing oil)
27. Aluminum Foil Reg. & Heavy Duty (Great Cooking and Barter Item)
28. Gasoline Containers (Plastic & Metal)
29. Garbage Bags (Impossible To Have Too Many).
30. Toilet Paper, Kleenex, Paper Towels
31. Milk - Powdered & Condensed (Shake Liquid every 3 to 4 months)
32. Garden Seeds (Non-Hybrid) (A MUST)
33. Clothes pins/line/hangers (A MUST)
34. Coleman's Pump Repair Kit
35. Tuna Fish (in oil)
36. Fire Extinguishers (or..large box of Baking Soda in every room)
37. First aid kits
38. Batteries (all sizes...buy furthest-out for Expiration Dates)
39. Garlic, spices & vinegar, baking supplies
40. Big Dogs (and plenty of dog food)
41. Flour, yeast & salt
42. Matches. {"Strike Anywhere" preferred.) Boxed, wooden matches will go first
43. Writing paper/pads/pencils, solar calculators
44. Insulated ice chests (good for keeping items from freezing in Wintertime.)
45. Workboots, belts, Levis & durable shirts
46. Flashlights/LIGHTSTICKS & torches, "No. 76 Dietz" Lanterns
47. Journals, Diaries & Scrapbooks (jot down ideas, feelings, experience; Historic Times)
48. Garbage cans Plastic (great for storage, water, transporting - if with wheels)
49. Men's Hygiene: Shampoo, Toothbrush/paste, Mouthwash/floss, nail clippers, etc
50. Cast iron cookware (sturdy, efficient)
51. Fishing supplies/tools
52. Mosquito coils/repellent, sprays/creams
53. Duct Tape
54. Tarps/stakes/twine/nails/rope/spikes
55. Candles
56. Laundry Detergent (liquid)
57. Backpacks, Duffel Bags
58. Garden tools & supplies
59. Scissors, fabrics & sewing supplies
60. Canned Fruits, Veggies, Soups, stews, etc.
61. Bleach (plain, NOT scented: 4 to 6% sodium hypochlorite)
62. Canning supplies, (Jars/lids/wax)
63. Knives & Sharpening tools: files, stones, steel
64. Bicycles...Tires/tubes/pumps/chains, etc
65. Sleeping Bags & blankets/pillows/mats
66. Carbon Monoxide Alarm (battery powered)
67. Board Games, Cards, Dice
68. d-con Rat poison, MOUSE PRUFE II, Roach Killer
69. Mousetraps, Ant traps & cockroach magnets
70. Paper plates/cups/utensils (stock up, folks)
71. Baby wipes, oils, waterless & Antibacterial soap (saves a lot of water)
72. Rain gear, rubberized boots, etc.
73. Shaving supplies (razors & creams, talc, after shave)
74. Hand pumps & siphons (for water and for fuels)
75. Soysauce, vinegar, bullions/gravy/soupbase
76. Reading glasses
77. Chocolate/Cocoa/Tang/Punch (water enhancers)
78. "Survival-in-a-Can"
79. Woolen clothing, scarves/ear-muffs/mittens
80. Boy Scout Handbook, / also Leaders Catalog
81. Roll-on Window Insulation Kit (MANCO)
82. Graham crackers, saltines, pretzels, Trail mix/Jerky
83. Popcorn, Peanut Butter, Nuts
84. Socks, Underwear, T-shirts, etc. (extras)
85. Lumber (all types)
86. Wagons & carts (for transport to and from)
87. Cots & Inflatable mattress's
88. Gloves: Work/warming/gardening, etc.
89. Lantern Hangers
90. Screen Patches, glue, nails, screws,, nuts & bolts
91. Teas
92. Coffee
93. Cigarettes
94. Wine/Liquors (for bribes, medicinal, etc,)
95. Paraffin wax
96. Glue, nails, nuts, bolts, screws, etc.
97. Chewing gum/candies
98. Atomizers (for cooling/bathing)
99. Hats & cotton neckerchiefs
100. Goats/chickens


From a Sarajevo War Survivor:
Experiencing horrible things that can happen in a war - death of parents and friends, hunger and malnutrition, endless freezing cold, fear, sniper attacks.

1. Stockpiling helps. but you never no how long trouble will last, so locate near renewable food sources.

2. Living near a well with a manual pump is like being in Eden.

3. After awhile, even gold can lose its luster. But there is no luxury in war quite like toilet paper. Its surplus value is greater than gold's.

4. If you had to go without one utility, lose electricity - it's the easiest to do without (unless you're in a very nice climate with no need for heat.)

5. Canned foods are awesome, especially if their contents are tasty without heating. One of the best things to stockpile is canned gravy - it makes a lot of the dry unappetizing things you find to eat in war somewhat edible. Only needs
enough heat to "warm", not to cook. It's cheap too, especially if you buy it in bulk.

6. Bring some books - escapist ones like romance or mysteries become more valuable as the war continues. Sure, it's great to have a lot of survival guides, but you'll figure most of that out on your own anyway - trust me, you'll have a lot of time on your hands.

7. The feeling that you're human can fade pretty fast. I can't tell you how many people I knew who would have traded a much needed meal for just a little bit of toothpaste, rouge, soap or cologne. Not much point in fighting if you have to lose your humanity. These things are morale-builders like nothing else.

8. Slow burning candles and matches, matches, matches

Be careful!

GOATMUG

SOMETIMES YOU NEED TO LET OTHERS SAY IT....

I ran across this blog entry from Peter Schiff.  I think he nails it in 11 minutes.  While this blog really is a collection of my thoughts and a tool to organize information into actionable strategies, I sometimes run into stuff that states exactly how I feel and what I'm thinking.  This is one of them.  I believe you can hear the frustration in Peter's voice and it resonates with me because the entire "government shutdown" charade is a complete joke.

Budget cuts amounting to $40 Billion are 1% of the travesty contained in our budget.  If we had ANYONE that was a real leader (and not a play one in some game called politics)  we'd start at 20% across the board cuts and end up with 15% in a "compromise".  What kind of message would it send the world if we cut $600 Billion from the budget this year?  That would get someone's attention.  To walk around and believe that government is so essential and helpful is just deception.  Does anyone remember how effective all that government was in preventing 9/11?  What about saving everyone in New Orleans in Hurricane Katrina?  How's all that government doing in Japan with all of their compliant citizens?  (God forbid anything like that happening in the USA, people would be killing each other in the first 2 hours.). 

There are several key roots to the problem that create this cancer called government. 

First, we have professional politicians.  Full time politicians have nothing to do but legislate FULL TIME.  We must change the system to require them to have real jobs and only work 1/2 a year.  This should apply to cities as well.  Is it any wonder that government encroaches on every facet of our lives?  With full time city council members working full time to enact laws, it is no wonder you need a permit to open a coin shop, to be an internet blogger (Philadelphia), or have a lemonade stand.

Second, we must have term limits of 2 terms maximum for Congress and the Senate.  Without this you end up having crooked, connected, and out of touch oligarchs that don't represent anyone other than lobbyists, much less the people and wishes of their districts.



Finally, Bill Gross came out on Friday stating that he wasn't just completely out of US Treasuries, he is actually short US Treasuries.  In response, futures are going nuts in all the inflation related assets.  Gold and Silver will go bonkers next week.  The Fed is trapped and it won't be long before the bond market finally snaps the trap shut.  Speculators have probably been laying these positions for some time, and all it has taken was a big boy to get in and finally talk their own book.  Since the Federal Reserve actually owns around 1.2 Trillion of bonds, the Fed is subject to interest rate risk and significant losses.  In the industry we measure the sensitivity of $ losses to an increase in interest rates by measuring something called the DV01 or Dollar Value of 1 basis point.  As of February the calculation of the DV01 was that if treasuries lose value and rates move up by 1bps, the the Fed would lose $1.7 billion!  Isn't that nice, if interest rates move up a mere 23 bps the Fed loses that $40 Billion in savings that was so hard to find.  If interest rates rise 3%, the Fed loses $500 Billion!  These are figures based on February's holdings, so we know that the figures are much worse.

It's hard not to be cynical.  These politicians are disgusting.

APRIL UPDATE - IS IT REALLY THAT GOOD?

TOTAL RAILS
Rails continue to be greater than last year.  This statistic confirms that things are better, but I'm remaining intent on seeing a move up in the rate of change of the tonnage rather than just a parallel shift higher.  If it remains where it is, we get to suggest that we're recovered, but not getting better.

RAILS / AUTOS -
Auto shipments continue to outpace last year, and interestingly the rate of increase in the data suggests that we may see an increase in sales too (an increasing push higher).  I reviewed Ford and GM's charts and there is nothing there that would make me want to gamble on a bet that this increase will translate to higher prices.

RAILS / SCRAP TONNAGE -
The freight shipping for scrap continues to be flat and equal to last year's performance.

CANADIAN PACIFIC -
I highlighted CP last month as a target for a short simply because in comparison to the rest of the rails, the tonnage versus last year is weak.  Canadian Pacific continues to under perform and if we would have made a trade on it, we would have been rewarded handsomely.  The trend remains intact this month and based on the stock charts, I am seeing continued weakness.  I will not post a chart of CP yet, but it is pretty close to signaling a long-term short signal on the weekly chart.  When I see this, I will post it.

SCRAP COMPOSITE INDEX -
The last month has ushered in a drop in scrap prices.  Perhaps this is a function of additional supply coming in driving prices lower? 

MOODY'S / MIT - REAL TRANSACTION DATA - http://web.mit.edu/cre/research/credl/rca.html
As of March 30th, 2011 the Moody's / MIT Transaction Index shows that prices slipped by another 1.25% in January for their total property index. 

For another perspective we can look at a recent article in the WSJ that describes a drop in occupancy rates in commercial space, namely in malls.  http://online.wsj.com/article/SB10001424052748704101604576246972728969548.html .   One might initially think that the big reits would be suffering, but the point of the article is that the suburban malls are getting hit fully by the never-ending recession that supposedly ended.  The truth is that while Mom and Pop haven't been able to return to the crazy life-style that happened before the crash and those malls that sold them stuff they never could afford are feeling the pinch.

HOME PRICE DATA - http://www.realtor.org/research/research/ehsdata

So you thought that foreclosure you bought was going to be your ticket to a lavish Robert Kiosaki life-style huh? 
Perhaps it may be, perhaps not.  But with the falling average home price you better hope that things turn around or that you can rent that thing out quick!  Once again we find that home prices continue to drop.  There are so many issues that are hurting the housing sector.  Here are just a few;

A)  Rising interest rates
B)  Tougher lending standards (can you say down payment anyone?)
C)  Lots of inventory including foreclosures on the market
D)  Lots of shadow inventory consisting of;
      1)  Foreclosures that banks have actually foreclosed on because there is no where for it to go
      2)  Homeowners that want to sell that haven't listed because it won't sell or they are waiting for higher prices.
      3)  Homes that people are paying mortgages on, but are underwater.... when prices continue to drop, they'll quit.
E)  That government shut down thing.  Because almost 1/3 of all mortgages receive a Federal Loan Guarantee, all those home transactions that might have been completed are now dead in the water if the shutdown is not averted in the next day.

CNN contributes the following uplifting story stating that a full 11.4% of all homes in the US are vacant!  Isn't it great that we have all those home builders adding more to the pot?
http://money.cnn.com/2011/03/28/real_estate/us_housing_vacancy_rates/index.htm

MONSTER EMPLOYMENT INDEX - http://about-monster.com/employment-index
The Monster Employment Index has been a pretty good indicator of jobs data and we see a big move up in the recent release of figures from Monster.com.  This index powered higher to 136 which is the highest reading since July of 2010.
Recall that this is an index of the number of job postings that employers put on their sites, essentially measuring online availability of jobs.

6 MONTH EURIBOR - http://www.homefinance.nl/english/international-interest-rates/libor/usdollar/libor-rates-1-week-usd.asp
Pimco's Andrew Balls wrote an interesting article calling the ECB strategy into question (just as I have for months). 
http://www.pimco.com/Pages/EuropesNotBackToNormalSoWhyIsTheECBHikingRates.aspx .   No matter what, the ECB raised rates by 25 basis points to 1.25%.  6 Month Euribor has been expecting this as we see it climbing significantly over the last couple of months.

6 MONTH US LIBOR   -
Funny though, look at the magic done here in the US!  Oddly enough our USD Libor hasn't moved a bit!  I wonder why?  Perhaps it is just a tsunami of electronic money.  Nothing can withstand something as powerful as a printing press.

COPPOCK TURN INDICATOR - (For entertainment purposes only)
As I've noted quite often over the last months, I'm about to drop the Coppock Indicator, but have kept it around for entertainment purposes only.  As I mentioned last month, the DJIA had to really drop and stay dropped to continue in it's bearish stance (which has been absolutely wrong).  We did get a pretty sizable dump, but the resilient markets didn't stay dumped.  Therefore, the Coppock has now turned bullish, signaling that all the kids can safely get back in the pool!  If we would have listened to the indicator we'd have missed out on about 2500 Dow points.

FCI - http://www.bloomberg.com/apps/quote?ticker=BFCIUS:IND
The Bloomberg Financial Conditions Index continues to recover.  We are now at levels which are equal to the highest points we've seen throughout this entire recovery.  While we saw a substantial drop, all has been made back.  Levels above 0 indicate that there is a recovery in the works and expansion is underway.  Below zero shows that we are in a contraction.

BDI - http://www.bloomberg.com/apps/quote?ticker=BDIY:IND
The Baltic Dry Goods Index is still in the basement.  Not much going on here.  Shippers like DRYS, FRO, GNK, and DSX all have very ugly looking charts.  Continued weakness here in these names could easily push these guys down to their 4th quarter 2008 lows (which were much lower than the March 2009 lows.)  GNK is already below those March levels.

USD - http://www.bloomberg.com/apps/quote?ticker=DXY:IND
Bucky is still pegged at the lower end of it's range and is still at a critical juncture.  With all of this dollar weakness are we really amazed to see oil, gas, grains, food, and metals lift off?

WRAP UP -

I've actually done a few things differently in this post than normal, so why stop there?  Tonight I will not actually leave you with specific trades or much more commentary about specific areas other than to say that this data just isn't that good.  We do have some improvement in jobs listings with Monster and also a move higher in the FCI.  Beyond those items we see flat rail shipping, a collapsing housing market, falling commercial real estate still, and a really nasty spot shipping market for bulk goods.  Is all of the recovery on the back of the falling dollar?  Perhaps.

If this is the case, it is not a wonder that commodities continue to perform well and the entire market too is being supported by the Fed's wealth effect.  For the first time in a long time I'm seeing opportunities for to genuinely short where the charts look pretty weak and their current position in the recovery since the early March drop is well below the highs.  Stocks need to regain that high point or are at risk for a reversal.

I'm discussed at great length that portfolio managers and other big money will not wait for the end of QE II to be repositioning money and anticipating that the liquidity infusion will end.  If that is the case, we could actually see a rotation from the high-flying stocks into more defensive names over the course of the next couple of weeks.  Those would be companies in health care, utilities, and would certainly be out of technology leaders.

I do have a number of stories ready to go in the next few days, so many that I actually inserted a few in the text here.  So much is going on in the world that I really do feel that we are at an inflection point.  Be Careful!

GOATMUG