2009 ReCap, and a Look Ahead

There were a few surprises, at least there were to "ME", when looking back at the performance of various "ASSET" classes over the past year. One that doesn't surprise me, is the performance out of Brazil, as it's been shown time and time again, that the award of the Olympic games is a great boost to that countries GDP, as they spend hundred's of billions in construction on the various venue's, plus new hotels, etc etc etc. And just as certain, as I chronicled prior to the China games, once the games end, and the disappointment set's in over how much it cost, and how little they recieved for hosting the games, the Four Horsemen ride in, to take the country firmly in their grip. China was very typical, as they peaked in the last quarter of 07', before losing 70% into the post game period. Naturally, a lot of people will say, but that was a result of the world wide finanacial crisis! HAH! Was that crisis a by product of China winding down??? Hmmmmm, could be.

Despite all the yelling and screaming by the Gold bug's, it was actually only in the middle of the returns, which of course, those same bug's will be yelling and screaming again this year, that Gold's mediocre performance is setting it up for the BLAST OFF this year!! Wad ever, good luck to you on that one, seriously, I might pick some up this year, I haven't decided yet.

Bonds of course, are the single most interesting asset class of last year, and, of the coming year. This is only the second time that bond's have actually lost money, in like, the last 30 or 40 years?? I forget, I heard some one give the Stat, it's either since 1981, or 1974, some thing like that. Regardless, they are either going to be the best performing class in the next year, or set a new record, and lose money for two consecutive years, which would probably be an all time record. The piss poor sentiment analysis is overwhelmingly on the bearish side, as Retails have piled into bond funds in record amounts over the last year, while the "funnymental" picture HAS to be just as bearish, for with the BenHOLE holding rate's at ZERO percent, rate's have NO WHERE to go, but UP! Which bring's up the contrarian point, that with EVERY ONE thinking bonds HAVE to go DOWN, WILL THEY???!!! I guess the break point is going to come in March, when the FED start's to wind down their printing and "investment" spree, the Five year yield has been moving up for the last year, currently sitting at 2.68%, and when going back to before the "crisis" started, yield's were "generally" in the 5% "area", so they could double from here, very easily as a matter of fact, which would suit me JUST FINE, thank you very much. The chart of the TLT, above, is sitting at a critical point right here, it's on a double bottom going back to last June, and "COULD", bounce here, BUT, the pattern since then has a slight wisp of a head and shoulders pattern, and if you measure it, from the head to the neck line, the TLT "could", drop down into the 70's, if we break down from here. My preferred play on an H & S, is to draw a line across the top, from the Head down to the top of the right shoulder, with that area being the break point, IE, we bounce up from here, and the break point, right now, would be in the 93-95 "area", which is where we might get the final failure, before breaking back down below the neck line. The reverse would come with a clean break through that line, in which case I may start to partial in over the course of the next year. I have other vehicle's I use, like my Vanguard funds, I'm just using the TLT as an example.

The list above are the eight sector's that CXO talked about in their Sector Rotation strategy, I posted the parameter's on 12/24. If you use their strategy on a YEARLY basis, then you "should", be buying Tech (Please DO, you have my invitation to buy my position, HAH), for another 70% return next year. Of course, if you use the strategy that has been proven to work for centuries, you would just flip flop the list above, and over weight your " sector investment" in XLU for the next year, with lesser weightings all the way down to XLK.

The best ETF's over the past year follow pretty much in line with the asset classes, with the exception of coal, KOL, hmmmmmm, I think I've seen this story some where before! The Liar's, some times called ANALYST, have been yelling and screaming about KOL, the concept being that China is loading up, in preparation for 100% GDP growth next year, but my own little indicator is saying some thing entirely different, that being the Baltic Dry index, which has been dropping pretty rapidly the last month (damn that DRYS!!). Either the liar's are lying, or those commie bastards are (I'm not talking about OUR administration by the way).

In the worst ETF's, the TLT was saved only by the Short ETF's, amazing, it was the first ETF to show up, that was NOT a short one.

The one that bother's me on a personal basis, is the Livestock, it doesn't bother me because of the pricing, Live Cattle are going for about 85 cents right now, I've seen it get down in the 60's, it's more the rumbling's I've heard in town, about cutting back production and stuff like that, PLUS, in case you haven't noticed, Gasoline has almost DOUBLED in the last year, I'm talking about the RBOB, which has to start working it's way into food prices, not to mention the cost of Joe Twelve pack in getting to the job he wish's he had.

Semi-Conductors kind of blew every other Industry away this year, didn't they!!!!! Yeeeeeee Haaaaawwwwww, I'm throwing ALLLLLLLLLL my money, into that group, they are BOUND, to double next year!!!!!!!!!!

The one thing that stands out to me on the Industry loser's list, is that ONLY 10 of the Industry's were negative the past year, and not surprisingly, most of those were Regional banks, or related to banking or Insurance.
I'm sure that with our massive 2.5% GDP growth that most of the "experts" are calling for next year, we can eliminate those pesky loser's, and go 100% POSITIVE next year!

2010 Market Prediction

Ok, I DON'T "DO", market predictions, but I went to all the trouble to draw out the EXACT direction the market will take next year, above, so, hell, I might as well say it's a prediction! Ok, so sue me, actually of course, I didn't draw it out, that chart is from 2004, which, is EXACTLY what "I" think, we have to look forward to next year. The similarities are, aaaahhhhhh, ERIE, we had the big run up out of 03', we had the "SANTA" pump into the first of the year, the little yellow circle on the left, we then continued the pump into earnings in January, when we kind of, aaaahhhh, STOPPED, to think about it a little. We then had a little pull back into February, tried to make a new high, and failed, pulled back, then ran it back up into March, had a break out failure, when the "people" in the KNOW, found out first quarter earnings in April were going to SUCK, so they dumped the shit out of it, into late March. Da Boyz then did one of their little classic's they love to do, they rallied us into April earnings, trying to suck in as many RETAILS as they could, which they promptly crushed. They then dumped us into May, when they did the exact same thing, and rallied us into earnings in July (geeze, we just NEVER learn), and finally bottomed in my favorite month, August.

The HOPE I see, in order to get us positive for the year, is Joe Six Pack finally realize's there's no STIMULUS plan, only a Democrap SPENDING plan, with ton's of TAX's included with the PLAN, and get so fed up by the election, that they vote in enough INDEPENDENTS, to counter act the spend thrift Republican Guard and the Democraps, so that no body has control of one of the house's, probably Congress. This will put a lid on any more stupid spending bills, and the "market", will love it, with a blast off into November, just like in 04', the rally actually started in mid to late October.

This is the current chart of where we are now, if you look at the TSV, it's VERY similar to where we were going into 04', FLAT. The thing that bother's me, is that MS, Money Stream, was going UP into 04', whereas NOW, it's almost trying to go negative.

I know it's hard to remember this, but in 04', the A/D's, Advance/Decline line, was just BLASTING higher into the first of the year, even as TSV continued to diverge into those new highs on the A/D's.

When we look at the A/D's right now, yea, we're going higher, but we are creepey crawling higher with the market, not BLASTING up, IE, it doesn't look as good as 03' into the first of 04'.

Bottom line, I could easily see us following pretty close to the same senario, surprising every one (EVERY ONE, being the Bear's of course (like, ME, hahaha)), by continuing UP into January earnings season, then a little, aaaaaaahhhhhhhhh, HESITATION, after earnings are over, when it appear's that earnings are not as GREAT as the sell side is trying to convince the RETAILS that they will be, then we pull back a little (that's called, aaahh, February), as Da Street get's their Salesmen out in full force, to try and convince the RETAILS, HEY, DON'T WORRY, BE HAPPY, we'll blow earning's away in APRIL!!!! Hahahahahaha, the typical bull shit type stuff, of course, as we get pumped into earnings, then we disappoint in April, and do the pull back into August.

HEY, that's my story, and I'M STICKING TO IT! At least, until I find out I'm wrong, and then I'll just delete this post, HAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!

Of course, the Big Money is going to made by figuring out what bubble Uncle Ben Bernacke is creating now, just like the Green AHOLE did in 03', when he held interest rates at a LOFTY 1-1.25% (I say, "LOFTY", of course, as that's much higher than the ZERO that Ben is holding them at now). I don't really see where it's at yet, of course, it probably wasn't easily seen in 03', as that was just the start of the housing, and Banking, bubble. Ben "COULD", create a commodity bubble again, but of course, that's defeatist, as it was the oil bubble that ACTUALLY caused the recession, as consumer's were more than happy to keep buying shit they couldn't afford, as long as Congress kept telling the banks to loan to the dead beats, but it was $4 plus gas prices that finally convinced the dumb ass's that they were in a lot of trouble! No, I don't think it will be another commodity bubble, that would get cut short right away, as the economy would collaspe faster than you can spell "BEN". I'd say BONDS, but, they are acutally already pulling back, as interest rates rise, so it's going to be SOONER, rather than later, when the retails start getting cushed even more, with that massive amount of money they've thrown into bond funds. The retails and consumer's are so fricking stupid, geeze, I can't believe it, they pile into bond's, when the rate is ZERO, with no where to go, accept UP, the same thing with the idiots that brought house's with adjustable rate, and option arm loans, with the Green HOLE holding rate's at 1%, with again, no where to go, accept UP, just in time for the ReFi's. NAW, it's going to be some thing else, like, right now, looking at the toy making Q's, HAH, I could say it would be them, as the consensus seems to be, that the Asian consumers, who make a dollar an hour, are buying those $600 CSCO router's has fast as they can spell Ying Yang. Wad ever, I believe it. The Industry leading Semi's will probably be the tell, keep an eye on inventories, if they start to rise, then, Hmmmmm, maybe they aren't spending their whole year's wages on that cell phone.

Some QQQQ Component Stats

AAAAAAAIIIIIIIYYYYEEEEEEEEE!! That is one UUUUGGGGILLLLYYYY MF'ing bearish engulfing candle on Da Q's!!! WELCOME TO 2010! HAHAHAHAHAHAHAHAHA! I mean, the LOGICAL thing, would be for us to take the DUMB ASS SANTA RALLY out, which would take us back down to the break out point, which is where the horizontal while line is, about 44.80 or there abouts, that is also where the 20dma is sitting, and a convergence of that break out line, and a lower trend line comes in around that "area", as well. Just seem's like a logical area to me, wad ever.

My 15min pivot chart show's how we dumped out of the open, after ANOTHER gap up, we basically went down for the first 1 3/4 hours, to the S1 support area, where we wallowed all day, until the last half hour, hahahahahahahaha, GEEZE, LIGHTEN UP PEOPLE!!! I'm sure most of the yakking yelling screaming TV head's will be claiming it was year end tax selling, or rebalancing before the NEW year, wad ever. We are actually up about 1/4 of a percent in the after hours, I guess they are buying the tax loser's back.

My 60min McCellan actually got over sold, which is the first time since Santa showed up, it show's very clearly why I stopped using it as a timing or trading tool on the "Strategy", as it "bought" it (like, THE FARM), way back on 12/10, and then never exited the trade, as it never got over +100, you see, it should have SOLD on about 12/14, then shorted it, then covered it on 12/17, AND, brought it back again on 12/17 when we crossed back up over the -100 level. It should have then sold on 12/22, or at least, 12/24, but we couldn't get back up over the +100 level, WHICH MEANT, the Q's were advancing on very FEW stocks, as the A/D's were not supporting the bull shit. It's been sending a warning since 12/28, as it's been going down this whole week, meaning this side ways action was NOT being supported by the A/D's. The Strategy may not work, but the basic premise is still the same, it see's through the BULL SHIT being spouted off on Da Street, as THEY MAY BE SAYING ONE THING, BUT THEY ARE DEFINITELY DOING SOME THING ELSE!

Anyway, I have some Stat's on the 100 individual components of the Q's below, but before I leave, I want to say, that I have not heard 1, one, ONE, ONE, yelling screaming lying MF'ing ANALYST, SAY TO SELL THE Q'S!! Every one I've listened to or read (red, wred???), is saying that TECH is the ONE YOU HAVE TO BUY FOR 2010!!!!! THEY LED US IN 09', AND SHOULD DO JUST FINE!! I'll be the FIRST to admit that I'm a dumb ass, beyond any and all doubt, but I have read MANY studies, that show that buying the LEADING sector of the prior year, IS A LOSER'S GAME!! The worst sector of the prior year, "ALMOST", "ALWAYS" (those are DISCLAIMERS, hahahahaha), outperform the leading sector in the following year. Wad Ever!

There are 7 stocks in the Q's that are NOT higher than they were a year ago, BIIB, GILD, FSLR, PPDI, APOL, GENZ, and CEPH.

61 of the 100 stocks in the Q's, had NEGATIVE earnings growth over the last year.

22 stocks have NO P/E, as they lost money last year, of the stocks that have earnings, MRVL has the highest P/E at 188, followed by YHOO at 185.80, and then drops "WAY DOWN", to 86.70 and 81.50 for VRSN and AMZN respectively. Three stocks have P/E's in the 10's, with IACI leading at 10.10, followed by FWLT and GRMN.

STX, LINTA and EXPE lead in the percentage gain over the last year, 446%, 415% and 319.54% respectively.

The current TTM P/E for the Q's is approximately 34.69, "approximately" because, of course, 22 of them don't have any earnings.

The current P/E of 60 of the stocks that HAVE earnings, is higher than their five year average, with BIIB being the LEAST amount higher at 7% higher, and PCAR is "leading", the group, with their current P/E 588% higher than their five year average. THE MOST SURPRISING, is INTC, in third place, with their current P/E 242% higher than their five year average, YHOO is sandwiched inbetween them, but who cares (ok, it's 393% higher). For those interested in some of the udder Big Dogs, MSFT is 110% higher, AAPL 105%, AMZN 137%, CSCO 117%, QCOM 159%, ORCL 100%, DELL 99%, GOOG 59%, EBAY only 32%.

Watch List for 12/31/09

After seeing my Boy's, and spending 20 hours on the road, I'm feeling a little lazy, and I've decided that this will be my last watch list, of 2009.
On the bullish side, CY, the top chart, is setting up a flat top ascending triangle, and could break out higher, stop would be under todays low, naturally.
HOC is the bottom chart, it had a long two month pull back, found support at the 200dma, it had a nice TSV surge and moved up over it's 20dma, where's it's consolidated for a week, and could move higher, stop under that 20dma around 25 (or where ever the hell you want it).

I like the bearish charts a lot better (naturally), PPDI at the top, is double topping, it had a nice NR7 doji day yesterday, then put on a bearish engulfing today, I love these because of your tight R/R, the stop is over yesterday's high. TSV has turned down slightly, but MS is still positive, so this might be a quickie.

At the bottom ITG is really cool, it had a big dump for a month and a half, and has had a nice little rally, some people (like ME), would call this a "bear flag". The really COOl part, is that it flagged right up to it's 50dma, and stopped dead in it's tracks yesterday, putting on a bearish engulfing bar today. Both TSV and MS are fairly positive, so this thing "could" be dangerous, BUT, your stop is VERY clear, over that 50dma, and you will be quietly leaving Dodge, in a hurry.