Morning Audibles 4.22.10 - Follow up on Yesterday's POLL
Little did you all know you were subjects of a lab experiment yesterday. In yesterdays thread, I asked everyone to nominate ONE DJIA stock that was the most important to the index. My purpose wasn't to prove anybody right or wrong. Instead, it was to get people thinking in terms of what type of company that money OUGHT to flow to given the current environment. IOW - Notwithstanding the challenges facing the economy (that politicians and Wall St. bankers seem to be in denial about). If you HAD to invest money, where would you put it?
The following is an overview of that experiment.
CAT #8 (which went from $87 to $22 - and has recovered to HIGHER than "pre-Lehman") - Steady Eddy?
3M #2 ($97 to $40, now almost at October '07 levels) - Steady Eddy?
GE #27 ($60, in 2000, went down to $5 in March '09, still intertwined in finance) - Steady Eddy?
IBM #1 ($135, in 2000, crashed down to $54 post dot.com, now trading at ALL TIME HIGHS) - Steady Eddy?
MSFT #21 ($60, in 2000, traded down to $14 in March '09, now at October '07 levels) - Steady Eddy?
MCD #6 (new ALL TIME HIGHS every day... However, did go from $45 down to $12 post dot.com... But now trading 15% ABOVE October '07 levels) - Steady Eddy? Bubble?
WMT #11 (Still 15% lower than 2000 highs... Decade long WEDGE PATTERN there) - Steady Eddy?
JPM #16 ($65, in 2000, traded down to $14 in March '09, now trading at "pre Lehman" levels) - Steady Eddy?
KO #12 ($88, "pre-LTCM 1988", traded down to $37 in 2002 recession, recently got back to October '07 levels)...
XOM #7 (Went BUBBLETASTIC from '02-'08 [Right before China Olympics]... When it 'crashed' though, it only gave back about 33% - Meaning: As BUBBLE as it got, it never got as "bubbly" as everything else)...
The above is how it went down yesterday (these were solely based on the nominations that the readers put forth. However, since that included some companies that were NOT within the SINGLE DIGIT rank in the "weightings". I decided to fill this list out a little (so now you have 15 companies - HALF of the DOW).
Chevron #3
UTX #4 - Trading at October '07 levels (really? - that many elevators?)
BA #5 - At "right shoulder" H&S level (2000-2007-2010) - That many planes?
JNJ #9 - At October '07 levels
P&G #10 - Just shy of October '07 levels
And my thesis is as follows... I took 10 of the MOST NOMINATED stocks (the ones all of you offered)... Then filled out the list with 5 which weren't nominated (but which have high WEIGHTINGS)...
Now look at the PRICE BEHAVIOR of these "industrials" based on their ALL TIME HIGH levels (which mostly correlated with the two PEAKS we've had in equities in 2000 and in 2007)...
Of these...
IBM is close to all time high, MCD "is" at all time high.
KO, MSFT, MMM, JPM, Chevron, JNJ, PG, UTX are at October '07 levels.
CAT is higher than "pre-Lehman".
BA is fully at a TECHNICAL barrier.
WMT probably isn't going anywhere significant.
GE is struggling mightily with finance...
XOM is hanging on because of $80 oil prices... While it hasn't yet reached it's '08 highs, it's hard to imagine it will (unless we see $150 a barrel oil again)... And we all know what THAT would do to the rest of the economy...
So basically, a great deal of these BEST OF THE DOW stocks that you all have nominated have recovered to the BEST LEVELS they have ever attained...
And this is with:
- ZIRP
- payrolls slashed to skeleton crews
- not yet facing higher taxes
- not yet accounting for bump in HC premiums
and NOT FACING the potential headwinds of
- dollar, perhaps, getting stronger
- geo-political tensions (which are benign at the moment)
- "happy talk" 24/7 on TV (changing its tone)
Can anyone say "Priced to Perfection"? Or, in different terms... Notwithstanding the notion that the DOW & S&P are nearing important FIBONACCI re-tracement levels (for the broader indices), it would seem to me that any FINAL PUSH higher would have to include participation in these IMPORTANT DOW components.
Since many of them are already at "all-time" highs, October 2007 highs, or "pre-Lehman" levels, I suppose one would have to "jump the shark" and just start pushing the VALUATIONS on these companies to boundaries not yet known to mankind.
Who's willing to make those kinds of bets? Remember, that oftentimes "dividends" are the key motive for investing in these... At what point does the ROI not "skew" properly?
The following is an overview of that experiment.
(# = % Weight in the Index)
CAT #8 (which went from $87 to $22 - and has recovered to HIGHER than "pre-Lehman") - Steady Eddy?
3M #2 ($97 to $40, now almost at October '07 levels) - Steady Eddy?
GE #27 ($60, in 2000, went down to $5 in March '09, still intertwined in finance) - Steady Eddy?
IBM #1 ($135, in 2000, crashed down to $54 post dot.com, now trading at ALL TIME HIGHS) - Steady Eddy?
MSFT #21 ($60, in 2000, traded down to $14 in March '09, now at October '07 levels) - Steady Eddy?
MCD #6 (new ALL TIME HIGHS every day... However, did go from $45 down to $12 post dot.com... But now trading 15% ABOVE October '07 levels) - Steady Eddy? Bubble?
WMT #11 (Still 15% lower than 2000 highs... Decade long WEDGE PATTERN there) - Steady Eddy?
JPM #16 ($65, in 2000, traded down to $14 in March '09, now trading at "pre Lehman" levels) - Steady Eddy?
KO #12 ($88, "pre-LTCM 1988", traded down to $37 in 2002 recession, recently got back to October '07 levels)...
XOM #7 (Went BUBBLETASTIC from '02-'08 [Right before China Olympics]... When it 'crashed' though, it only gave back about 33% - Meaning: As BUBBLE as it got, it never got as "bubbly" as everything else)...
---
The above is how it went down yesterday (these were solely based on the nominations that the readers put forth. However, since that included some companies that were NOT within the SINGLE DIGIT rank in the "weightings". I decided to fill this list out a little (so now you have 15 companies - HALF of the DOW).
Chevron #3
UTX #4 - Trading at October '07 levels (really? - that many elevators?)
BA #5 - At "right shoulder" H&S level (2000-2007-2010) - That many planes?
JNJ #9 - At October '07 levels
P&G #10 - Just shy of October '07 levels
And my thesis is as follows... I took 10 of the MOST NOMINATED stocks (the ones all of you offered)... Then filled out the list with 5 which weren't nominated (but which have high WEIGHTINGS)...
Now look at the PRICE BEHAVIOR of these "industrials" based on their ALL TIME HIGH levels (which mostly correlated with the two PEAKS we've had in equities in 2000 and in 2007)...
Of these...
IBM is close to all time high, MCD "is" at all time high.
KO, MSFT, MMM, JPM, Chevron, JNJ, PG, UTX are at October '07 levels.
CAT is higher than "pre-Lehman".
BA is fully at a TECHNICAL barrier.
WMT probably isn't going anywhere significant.
GE is struggling mightily with finance...
XOM is hanging on because of $80 oil prices... While it hasn't yet reached it's '08 highs, it's hard to imagine it will (unless we see $150 a barrel oil again)... And we all know what THAT would do to the rest of the economy...
So basically, a great deal of these BEST OF THE DOW stocks that you all have nominated have recovered to the BEST LEVELS they have ever attained...
And this is with:
- ZIRP
- payrolls slashed to skeleton crews
- not yet facing higher taxes
- not yet accounting for bump in HC premiums
and NOT FACING the potential headwinds of
- dollar, perhaps, getting stronger
- geo-political tensions (which are benign at the moment)
- "happy talk" 24/7 on TV (changing its tone)
Can anyone say "Priced to Perfection"? Or, in different terms... Notwithstanding the notion that the DOW & S&P are nearing important FIBONACCI re-tracement levels (for the broader indices), it would seem to me that any FINAL PUSH higher would have to include participation in these IMPORTANT DOW components.
Since many of them are already at "all-time" highs, October 2007 highs, or "pre-Lehman" levels, I suppose one would have to "jump the shark" and just start pushing the VALUATIONS on these companies to boundaries not yet known to mankind.
Who's willing to make those kinds of bets? Remember, that oftentimes "dividends" are the key motive for investing in these... At what point does the ROI not "skew" properly?
AmenRa's Corner
A place where a skillful caddy always offers cool advice when it comes to your "stick" selection
SPXBearish spinning top day (body too large for doji). Possible bearish harami. Stayed above the 1.786 fibo (using low) of 1190.89 (next is the 1.8276 at 1218.63). Midpoint still above 10 SMA. No daily 3LB changes. QE2infinity.
DXYSpinning top day (again). Closed above 21 SMA (barely). Stayed above the 55 SMA. Midpoint above 10 SMA. No daily 3LB changes.
VIXBullish high wave day. Possible bullish thrusting. Still below the 61.8% fibo ext (support). Midpoint back below 10 SMA. No daily 3LB changes.
GOLDBullish short day (again). Midpoint below 10 SMA. Didn't need to test the 14.6% fibo ext. No daily 3LB changes.
EURUSDBearish short day (again). Midpoint below the 10 SMA. Closed below the 21 SMA. Next fibo level of 1.2935 is still a target in case of weakness (Greece is lighting the fuse as we speak). New low on daily 3LB reversal with reversal now 1.3498.
GSBearish short day. Stayed above the 1.618 fibo of 154.80. Closed back below the 0.0% fibo ext. New low on daily 3LB with reversal now 179.50. It's also trending down on the daily 3LB.
The Bond Report 4.21.10 - (courtesy of LB) - Elegance comes both "shaken" & "stirred"
Corpies: LQD 0.35%; AGG 0.17%; JNK 0.08%; HYG 0.01%;
Govies: TLT 0.82%; IEI 0.14%; TIP 0.31%
We hedged again - after this large move down in yields, a rebound seems likely.
Morning Audibles 4.21.10 - What Could POSSIBLY Go Wrong?
Today's thread is going to be a pictorial... Perhaps it'll end up "saying" a lot more than anything I could bang out on a keyboard... Who needs a keyboard anyway? AAPL has that covered for you... From what I understand, they've created an APP that pays your mortgage and all your other bills so all you need to do is just buy their latest "widg-i-mi-jig" (with your stock profits) and you're in PHAT city baby! Hey! You're even "doubling down" and adding while you're at it!
Ah yes... Sometimes life is good! Your team is winning, babes (or studs, as the case may be) are "sexting" you 24/7 on your super cool "widg-i-mi-jig", & the media are programmed (and paid) to shower you with "happy talk" forevermore (or at least until January 2013, or '17 as the case may be)...
It's times like that you ask yourself (in NOT a joking way)... "What Could POSSIBLY Go Wrong"?
Ah yes... Sometimes life is good! Your team is winning, babes (or studs, as the case may be) are "sexting" you 24/7 on your super cool "widg-i-mi-jig", & the media are programmed (and paid) to shower you with "happy talk" forevermore (or at least until January 2013, or '17 as the case may be)...
It's times like that you ask yourself (in NOT a joking way)... "What Could POSSIBLY Go Wrong"?
