Morning Journal -- John Taylor on Fed policy

Economics
This Week’s Data

February personal income grew at 0.2% versus expectations of a rise of 0.3%; personal spending increased 0.8% versus estimates of 0.6%.
http://www.calculatedriskblog.com/2012/03/personal-income-increased-02-in.html

Other

An analysis of 2011 corporate profits (medium):
http://scottgrannis.blogspot.com/2012/03/corporate-profits-continue-to-impress.html

Brevan Howard looks at the risks to the US economy and points out the big Kahuna hanging out there. I haven’t introduced it into our narrative yet; but with the end of the first quarter, we have to start thinking about what the Market is going to have to start discounting in 2013 (short):
http://www.zerohedge.com/news/brevan-howards-three-uncertainties-and-one-certainty-worry-about-us

The Morning Call + Subscriber Alert + The Bulls still rule

Note: our number one grandson arrives tomorrow morning on his spring break and will be here a week. That means a lot of fun and joy for me but also no Morning Calls or Closing Bells until April 9. As always I will be monitoring the Market closely; so if any action is called for, I will be in touch via Subscriber Alerts.

The Market

Technical

The indices (DJIA 13145, S&P 1403) were mixed yesterday (Dow up, S&P down). The DJIA tested the lower boundary of its short term up trend (13125-14557) and bounced; it remains within its intermediate term up trend (11352-16352). The S&P is well within both its short term (1386-1494) and intermediate term (1190-1757) up trends.

Volume was flat; breadth improved modestly: the VIX was down slightly but again closed right on the lower boundary of its intermediate term trading range.

GLD was off fractionally, finishing above the lower boundary of its short term trading range but below its 200 day moving average.

Jim Grant on the Fed and China

Morning Journal-Funding the US government's debt

Economics

This Week’s Data

Weekly jobless claims fell 5,000 versus expectations of a 2,000 increase.
http://www.calculatedriskblog.com/2012/03/weekly-initial-unemployment-claims_29.html

The final fourth quarter GDP revision came in at +3.0%, unchanged from the prior revision but slightly below estimates; the GDP deflator was +0.9%, in line with forecasts.

Other

A first place finish we don’t want (short):
http://gregmankiw.blogspot.com/2012/03/were-number-one.html

Politics

Domestic

An alternative to the Ryan budget (short):
http://www.clubforgrowth.org/perm/?postID=15861

Saul Alinsky’s playbook (long):
http://www.nationalreview.com/articles/294454/still-alinsky-playbook-john-fund

The Supreme Court and the Tenth Amendment (medium):
http://townhall.com/columnists/thomassowell/2012/03/28/back_to_the_future

A letter from three senators calls out the Obama administration on its ‘inaccuracies’ pertaining to its energy policies (medium):
http://www.powerlineblog.com/archives/2012/03/senators-call-obama-on-his-energy-lies.php

Funding the government (4 minute video and today’s must read/see):
http://www.zerohedge.com/news/how-fund-government-year

News on Stocks in Our Portfolios

Earnings reports:

Reported Expected

Paychex $.37 $.37

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

The Morning Call-So maybe things aren't so great

The Market

Technical

The indices (DJIA 13126, S&P 1405) had another down day, but remained within both their short term (13085-14512, 1386-1494) and intermediate term (11349-16349, 1190-1757) uptrends--although clearly the DJIA is again nearing its lower boundary.

Volume rose slightly; breadth fell. The VIX declined (unusual for a Market down day), closing right on the lower boundary of its intermediate term trading range.

GLD fell along with everything else but finished well over the lower boundary of its short term trading range. However, its decline marked a failure to successfully penetrate its 200 day moving average--and that’s not good.

Bottom line: stocks are in an up trend. If the Averages bounce off the lower boundaries of their short term up trend, our Portfolios will nibble some more pushing cash towards the 25% level (now 27%). On the other hand, if that boundary is broken, VIG is history.

More on the seasonal stock price patterns of late March/early April (short):
http://blog.stocktradersalmanac.com/post/Last-Two-Days-Q1-Bearish-SPX-SPY-DJIA-DIA-Last-Day-Bullish-COMPQ-QQQ-RUT-IWM

Another divergent indicator (short):
http://advisorperspectives.com/dshort/guest/Chris-Kimble-120328-Commodity-Update.php

Fundamental

Headlines

Yesterday’s US economic data was mixed at best: weekly mortgage applications were down though purchase applications were up; February durable goods orders were disappointing, however, ex transportation, they were in line. These stats got the Market off to a rocky start.

Adding weight on stock prices were continuing worries about (1) recession in China, (2) strikes in Spain which should ongoing as this being read and (3) Moody’s downgrade of four Portuguese banks.

The latest on Spain (medium):
http://www.nakedcapitalism.com/2012/03/spain-follows-greece.html

Looks like the eurocrats are about to issue more debt to.........well, pay off debt. Think that they will ever learn? (medium):
http://www.zerohedge.com/news/europe-leaks-it-will-fix-crushing-debt-problem-%E2%82%AC940-billion-more-efsfesm-debt

Not so far (medium):
http://advisorperspectives.com/commentaries/pimco_32712.php

Bottom line: have you noticed that the news is getting a bit more ‘mixed’; and all those issues about which I have been worried are starting to re-surface. The economy is not smoking but rather performing exactly per our forecast. Europe is not out of its sovereign debt mess no matter what the fantasies of the eurocrats. Oil is still too high; and our own political class spends more time either ignoring or obfuscating the truth than addressing it.

Our budget charade (short):
http://www.washingtontimes.com/blog/inside-politics/2012/mar/28/obama-budget-defeated-414-0/

And Israel cancels all military Passover leaves (medium):
http://www.zerohedge.com/news/israel-army-cancels-passover-vacation-while-korea-begins-fuelling-missile-test-rocket

Of course as I have noted, that doesn’t mean that these concerns aren’t already in the price of eggs. But it does keep me at defcon 4, meaning that any break in the current investor euphoria is a signal to beat a hasty retreat.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

Proteome Sciences Up Big On Alzheimer's Test

Proteome Sciences (LON:PRM) is up big today on the markets after announcing success in its project to develop better diagnostic tools for Alzheimer’s disease.

The Company announced that in collaboration with the National Institute for Health Research (NIHR) Biomedical Research Centre for Mental Health and Merck Millipore, the completion of the large, 1,000 sample Alzheimer’s Disease (AD) biomarker validation study. Preliminary results indicate that these biomarkers have significant potential diagnostic and prognostic utility that could form the basis of a series of simple blood tests for the diagnosis and management of this debilitating disease.

All American Investor

Morning Journal -- More details on Ryan's budget

Economics

This Week’s Data

The International Council of Shopping Centers reported weekly sales of major retailers fell 0.5% versus the prior week but rose 2.7% versus the comparable period last year: Redbook Research reported month to date retail chain stores sales rose 0.5% versus the similar time frame a month ago and 3.8% on a year over year basis.

The January Case Shiller home price index fell 3.8% on a year over year basis.
http://www.calculatedriskblog.com/2012/03/case-shiller-house-prices-fall-to-new.html

The March Conference Board’s index of consumer sentiment came in at 70.2 versus expectations of 70.9 and February’s reading of 70.8.
http://advisorperspectives.com/dshort/updates/Conference-Board-Consumer-Confidence-Index.php

The Morning Call -- The fundamentals continue to support our forecast; the technicals not so much

The Market
Technical

The indices (DJIA 13197, S&P 1412) took a break yesterday, but continued well within both their short term (13077-14410, 1381-1511) and intermediate term (11345-16345, 1188-1755) up trends.

Volume was flat, breadth declined. The VIX rose and once again finished the day over the lower boundary of the intermediate term trading range, thereby (once again) negating the recent break. Clearly, the VIX is waging a battle around the aforementioned lower boundary. Typically, when such a back and forth trading pattern occurs and direction is finally established, the security in question tends to experience strong follow through; in other words, if the VIX breaks down, it will likely go down a lot more (a positive for stocks); but if it holds, it will likely bounce hard (a negative for stocks).

Volume is actually constructive (short):
http://www.ritholtz.com/blog/2012/03/volume-is-surprisingly-constructive/

Teva Pharmaceutical (TEVA) 2012 Review

Teva Pharmaceutical Industries (TEVA) is an Israeli based global pharmaceutical company that develops, manufactures and markets generic and proprietary branded drugs and active pharmaceutical ingredients.

The company has grown profits and dividends at a 20%+ rate over the last ten years earning a 14-18% return on equity. The company was little impacted by the recent recession and should continue to expand as a result of:

(1) plentiful growth opportunities in generic drugs. The company currently has 83 product applications pending before the FDA,

(2) a significant and growing branded pharmaceutical business,

(3) the company has a very successful at resolving patent challenges which is a key part of generic product selections and development strategy,

Home Prices Hit New Low, Index Drops to 2003

Home Price Indices, the leading measure of U.S. home prices, showed annual declines of 3.9% and 3.8% for the 10- and 20-City Composites, respectively.

Both composites saw price declines of 0.8% in the month of January. Sixteen of 19 MSAs also saw home prices decrease over the month; only Miami, Phoenix and Washington DC home prices went up versus December 2011.

All American Investor

Morning Journal -- A close up of the Japanese economy

Economics
This Week’s Data

Other

The manufacturing sector is out pacing the rest of the economy (short):
http://mjperry.blogspot.com/2012/03/manufacturing-profits-set-new-record-in.html

The February leading economic indices in both China and Europe were better than expected.

The US dive toward insolvency is speeding up (medium):
http://www.ocregister.com/opinion/budget-346003-debt-percent.html

The Chicago Fed National Activity Index indicates the recovery is on track (short):
http://www.capitalspectator.com/archives/2012/03/chicago_fed_us.html#more

The Morning Call + Subscriber Alert + QEIII?

The Market
Technical

The indices (DJIA 13241, S&P 1416) had a great day finishing within both their short term (13047-14328, 1370-1515) and intermediate term (11332-15201, 1189-1615) up trends.

Volume was light; breadth improved/ The VIX declined and closed (1) within its short term down trend and (2) below the lower boundary of its intermediate term trading range for the second day in a row.

GLD spiked, demonstrating great follow through from last Friday’s bounce off its secondary support level.

Bottom line: stocks continue their relentless move up; and our Portfolios continue to nibble at cash, adding to the Vanguard Dividend Appreciation ETF (VIG). GLD appears to have found a base and that to prompts me to rebuild this holding.

End of March window dressing (short):
http://blog.stocktradersalmanac.com/post/Historically-Weak-End-of-March-DJIA-DIA

Is the S&P decoupling or getting dangerously overextended? (medium):
http://advisorperspectives.com/dshort/guest/Dominic-Cimino-120327-Decoupling-or-Dangerous-Divergences.php

Bernanke Speech -- Recent Developments in the Labor Market

To sum up: A wide range of indicators suggests that the job market has been improving, which is a welcome development indeed. Still, conditions remain far from normal, as shown, for example, by the high level of long-term unemployment and the fact that jobs and hours worked remain well below pre-crisis peaks, even without adjusting for growth in the labor force.

Ben Bernanke

My remarks today will focus on recent and prospective developments in the labor market. We have seen some positive signs on the jobs front recently, including a pickup in monthly payroll gains and a notable decline in the unemployment rate. That is good news. At the same time, some key questions are unresolved. For example, the better jobs numbers seem somewhat out of sync with the overall pace of economic expansion. What explains this apparent discrepancy and what implications does it have for the future course of the labor market and the economy?

All American Investor

Monday Morning Chartology 3/26/12

The Market
Technical

Monday Morning Chartology

Nothing to suggest the up trend won’t continue.

Investors Fled Treasurys At Record Pace Last Week--And Went Straight To Foreign Equities (And Apple)

A horde of investors decided to give up the safety behind U.S. Treasurys last week, seeking prospects for better returns elsewhere. 

Actually they seemed to look past the entire United States.

Treasury funds saw the greatest outflow in at least five years, according to mutual fund tracker EPFR Global. 

This corresponded with a exuberant Treasurys sell-off on Tuesday and a 10-year bond yield that nearly touched 2.3%. That came the same day Federal Reserve Chairman Ben Bernanke presented an improved economic outlook to Congress with nary a mention of further quantitative easing.

Continue Reading

All American Investor

The Closing Bell -- Fundamental -- A Dividend Growth Investment Strategy 324

Fundamental-A Dividend Growth Investment Strategy

The DJIA (13080) finished this week about 20.0% above Fair Value (10895) while the S&P closed (1397) 3.8% over valued (1346).

Incorporated in that ‘Fair Value’ judgment is a ‘muddle through’ scenario in Europe and a sluggish recovery at home that isn’t likely to improve until we change the personnel in Washington.

The economic data continues to support both our Economic and Valuation Models. After a couple of weeks of mostly positive headlines, the news flow turned a bit more mixed this week. The US housing numbers were not very good and industrial production in Europe and China was disappointing. Try as I might when I analyze the numbers at hand combined with higher interest rates, higher oil prices and slippage in the global economic growth rate, I can’t get to a forecast sufficiently higher than our current one. Hence no reason to alter the assumptions in our Valuation Model.

The Closing Bell -- The Market-Disciplined Investing --Technical 324

The Market-Disciplined Investing

Technical

The indices (DJIA 13080, S&P 1397) experienced a little indigestion this week. The Dow looked like it was going to test the lower boundary of its short term up trend (13025-14366) but bounced; while the S&P confirmed the break out above the upper boundary of its intermediate term trading range and re-set to a short term up trend (1374-1484).

Both of the Averages are well within their respective intermediate term up trends (11300-16300, 1188-1755).

Aside from the upper boundaries of their short and intermediate term up trends, the next visible resistance is at the old October 2007 highs (14190, 1561).

The Closing Bell -- Price is truth

Economics

The economy is a modest positive for Your Money. Not much data this week and what little we had was mixed--most of the negatives came in the housing area, which is clearly still struggling.; while the bright spots were weekly retail sales, weekly jobless claims and the February leading economic indicators.

None of this gets me any closer to the generally accepted more optimistic viewpoint for the economy. I continue to believe that preponderance of economic stats points to a sluggishly growing economy. By that I mean that it is getting better but less than expectations.

To be sure, I have acknowledged that the results of last week’s bank stress test are not only a major positive but also have a much more significant impact than a single week or month’s datapoint. But as I look at it, the improving US bank balance sheets act less as a upward jolt to the economy and more as a disaster preventative if the economy starts to falter or if a financial crisis in Europe leads to massive defaults in the derivatives market. Nonetheless, it keeps the risk that our forecast may be too pessimistic alive and well; and if you agree with the prevailing investor sentiment, then this risk is the most significant one to our outlook

CME Group (CME) 2012 Review

The CME Group is the largest futures exchange in the US and the largest clearinghouse in the world for trading futures and options on futures. 

The company earns a 6%+ return on equity which is expected to trend back toward its historical 20%+ rate as it amortizes the goodwill it incurred as a result of recent acquisitions; it has grown its earnings and dividends 20-30% over the last five years. That record should continue because:

Richard Bernstein and David Rosenberg debate the economy

If you don't see the video go here.

Morning Journal, the Cleveland Financial Stress Index

Economics
This Week’s Data

The leading economic indicators in February came in up 0.7% versus expectations of up 0.6%.
http://econompicdata.blogspot.com/2012/03/leading-economic-indicators-show.html

Other

The problem with any budget ‘fix’ (medium):
http://advisorperspectives.com/dshort/guest/Lance-Roberts-120322-Fly-in-the-Budget-Ointment.php

The Morning Call, Is a slowing global economy reallly a surprise?

The Market
Technical

The indices (DJIA 13046, S&P 1392) finished down for the day, but continued within their short term up trends (13017-14328, 1372-1479). Obviously, the Dow is starting to toy with the lower boundary of its trend. Were a break to occur, the next support level is not far at 12919.

Volume was light; breadth weak. The VIX rose, closing within its short term down trend but back above the lower boundary of its intermediate term trading range (again). That negates (again) Wednesday’s break below that boundary.

Medtronic (MDT) 2012 Review

Medtronic Inc. (MDT) is the world’s largest manufacturer of implantable biomedical devices in the cardiac, neurological and vascular markets.

The company has grown profits and dividends 14-18% annually over the last ten years earning a return on equity in excess of 20%. Facilitating the continuation of this trend:

(1) MDT has strong R&D program and consequently has a deep product pipeline insuring strong organic growth. It expects to launch 20 new products in the next 12 months,

(2) the company is moving into emerging therapies through acquisitions--its latest acquisitions include Ardian, Invatec. Osteotech and ATS Medical,

Morning Journal - Defense appropriations as source of budget cuts

Economics
This Week’s Data

Existing home sales fell fractionally in February, although January was revised up--more than offsetting the decline. http://www.calculatedriskblog.com/2012/03/existing-home-sales-inventory-and-nsa.html

A broader view of the housing sector:
http://blog.stocktradersalmanac.com/post/What-Housing-Recovery-Only-Foundation-Laid-Housing-Yet-to-Recover-

Weekly jobless claims fell 3,000 versus expectations of a 4,000 increase.
http://www.calculatedriskblog.com/2012/03/weekly-initial-unemployment-claims_22.html

Overnight Chinese and EU PMI’s were released and showed contraction.

The Morning Call - Holding my nose and going along

The Market
Technical

The Averages (DJIA 13124, S&P 1402) spent another meandering lower. Nonetheless, both indices remained within their short term up trend (12981-14328, 1369-1479). Just to be clear, (1) I think that the intermediate term up trends (11183-16618, 1185-1724) are far more important in citing direction, however, (2) our Portfolios will be trading the VIG ETF off the short term trend.

Volume fell again; breadth was mixed. The VIX remains in its short term down trend and sold down again breaking below the lower boundary of its intermediate term trading range. This re-starts the clock of our time and distance discipline for the break of the trading range.

GLD traded up fractionally, but finished right on the upper boundary of its short term down trend. The trend lines of the short term down trend and the secondary support level are converging. Any move today will likely break one of these two trend lines.

Bottom line: stocks are in an up trend. This week’s economic news hasn’t been that positive, providing something of a test of investor sentiment. So far, equities have acquitted themselves fairly well. Any additional weakness holding above the lower boundaries of the short term up trends, our Portfolios will go to 25% cash; a break of that trend line will prompt the sale of the VIG ETF.

Altera Corp (ALTR) 2012 Review

Altera Corp.(ALTR) is a global leader in the design and manufacture of high density programmable logic devices (PLD) and associated computer aided engineering logic development tools. 

Its products are utilized in the telecommunications, data communications, computers and industrial applications. The company has grown profits at an 8% pace over the last 10 years and its dividend at a 13% rate since its initiation in 2007; in addition, it has earned a 20-25% return on equity. ALTR experienced an earnings decline in 2009 but rebounded sharply in 2010 and should continue to grow as a result of:

(1) ALTR has technological advantage over its principal PLD rival via a newly developed, high performance application specific integrated circuit,

(2) its new generation of products carry higher margins and should add to earnings growth as they become a larger portion of the sales mix,

(3) the rollout of the third generation mobile networks in Asia will add significantly to profit expansion.

The Morning Call - China reminds investors that all is not well, sort of

The Market
Technical

The indices (DJIA 13170, S&P 1405) experienced a mild decline yesterday. However, both the Dow and S&P remained with in their short term up trends (13099-14819, 1367-1479).

Volume was light; breadth weak. The VIX rallied and closed above the lower boundary of its intermediate term trading range. This negates for a second time the break below that lower boundary.

GLD fell, closing right on the secondary support level. That leaves GLD in a narrow range between the declining upper boundary of its short term down trend and the secondary support level. A break of one of these trend lines will provide good directional evidence.

Bernanke’s argument against the gold standard (medium):
http://www.businessinsider.com/ben-bernanke-murders-the-gold-standard-2012-3

Bottom line: both of the Averages are solidly within both their short term and intermediate term up trends, though yesterday’s VIX performance is a bit of cognitive dissonance. Barring a break of the 13099/12919, 1372/1369 levels, the trend will remain up.

Morning Journal Are US companies facing declining profit margins

Economics
This Week’s Data

The International Council of Shopping Centers reported weekly sales of major retailers up 0.9% versus the prior week and up 3.3% versus the comparable period a year ago; Redbook Research reported month to date retail chain store sales up 4.6% on a year over year basis.

Weekly mortgage applications plummeted 7.4% though purchase applications were only off 1.0%.

Other

Still lots of cash on the sidelines (medium):
http://scottgrannis.blogspot.com/2012/03/mountains-of-cash-are-still-on.html

TC Pipeline (TCP) 2012 Review

TC Pipelines LP and its subsidiaries acquire, own and manage energy transmission pipeline systems in the US and Canada. 

The partnership has experienced flat earnings over the past five years though that is expected to change substantially this year. In that same period, dividends have increased 5% annually and return on equity has averaged 10-15%. The company should continue to expand moderately as a result of:

(1) it is a key player in the Western Canada gas transmission market for which thee is robust demand,

(2) acquisitions,

(3) its low debt to equity ratio provides financial flexibility for future acquisitions.

Morning Journal-New book on Kennedy assassination

Economics

This Week’s Data

February housing starts declined slightly versus expectations of a 1.5% increase; however, building permits rose 5.1% versus estimates of up 2.6%.
http://www.calculatedriskblog.com/2012/03/housing-starts-decline-slightly-in.html

Other

What the US economy faces on 1/1/2013 (medium):
http://online.wsj.com/article/SB10001424052702304459804577281233569546496.html?mod=WSJ_Opinion_LEADTop

The Morning Call + Subscriber Alert

The Market
Technical

The indices (DJIA 13239, S&P 1409) continued their relentless move up. The Dow closed within its short term up trend (13097-14819). I have been mischaracterizing this as an intermediate term up trend; it is not. The intermediate term up trend in 11295-15201.

The Morning Call-Monday Morning Chartology 3/19/12

The Market
Technical

Monday Morning Chartology

Clearly, absent a dramatic plunge today, the S&P will re-set to an up trend at the close tonight.



I used a longer term chart of GLD. You can see that if the intermediate term trading range doesn’t hold, GLD could fall a lot without breaking the long term up trend.

The Closing Bell - A good week, but was it that good?

Statistical Summary
Current Economic Forecast

2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%

Energy Transfer Partners LP (ETP)

Energy Transfer Partners LP  (ETP)gathers, processes, stores and transports natural gas. mainly in Texas and surrounding states.

The partnership has grown profits and cash distributions between 10-15% over the past five years earning between 13-16% return of capital. ETP experienced difficulties in 2009-11 but should recover this year and continue to make progress as a result of:

(1) it is connected to almost every natural gas shale play in the US,

(2) acquisitions. It most recent is LDH Energy Asset Holdings,

(3) the recent sale of its propane will allow management to focus exclusively on its pipeline business.

Negatives:

(1) it is sensitive to fluctuations in commodity prices,

(2) volatility in the securities markets could make it harder to finance acquisitions,

(3) potentially unfavorable regulatory changes.

ETP is rated B++ by Value Line, has a debt to equity ratio of 60% and its stock yields 8.3%.

Erie Indemnity (ERIE) 2012 Reveiw

Erie Indemnity Company (ERIE) offers property casualty insurance including automobile, homeowners and commercial multi peril, automobile and worker’s compensation insurance.

Over the last ten years, the company has grown profits at 2% rate but dividends at a 14% rate generating a 12-20% return on equity. 2008 and 2009 were difficult for ERIE, but earnings bounced back in 2010 and should continue to improve this year as a result of:

(1) rising management fees,

(2) stringent cost controls,

Morning Journal-Part 3 on China + Germany fails to meet its own austerity goals

Economics
This Week’s Data

The March Philadelphia Fed manufacturing index came in at 12.5 versus expectations of 10.0 and February’s reading of 10.2.

The February consumer price index was reported up 0.4% versus estimates of up 0.5%; core CPI rose 0.1% versus forecasts of up 0.2%.
http://www.calculatedriskblog.com/2012/03/bls-cpi-increases-04-in-february.html

The Morning Call - Still perplexed but planning the next move

The Market
Technical

The indices (DJIA 13252, S&P 1402) extended their rally yesterday. The Dow continues in its intermediate term up trend (13049-14769). The S&P finished its third day above the upper boundary of its intermediate term trading range (1101-1372).

Volume fell; breadth improved. The VIX rose above the lower boundary of its intermediate term trading range. Under our time and distance discipline that negates Tuesday’s break down; it is also not a positive sign for stocks.

GLD (161.06) bounced but remains below the upper boundary of its short term down trend (163.64).

Bottom line: I am waiting as the confirmation process works itself out for the S&P. It should be done by the close Monday; and if the break is confirmed the S&P will re-set to an up trend.

U.S. weekly jobless claims drop 14,000 to 351,000

In the week ending March 10, the advance figure for seasonally adjusted initial claims was 351,000, a decrease of 14,000 from the previous week's revised figure of 365,000. 

The 4-week moving average was 355,750, unchanged from the previous week's revised average of 355,750.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending March 3, a decrease of 0.1 percentage point from the prior week's unrevised rate of 2.7 percent.

Morning Journal-More on China

Economics
This Week’s Data

Weekly jobless claims fell 11,000 versus expectations of a 2,000 decline.
http://www.calculatedriskblog.com/2012/03/weekly-initial-unemployment-claims_15.html

The February producer price index rose 0.4% versus estimates of up 0.5%; core PPI was up 0.2%, in line with forecasts.

The March Empire State manufacturing index came in at 20.21 versus an anticipated 17.9 and 19.53 recorded in February.

PRODUCER PRICE INDEXES - FEBRUARY 2012

The Producer Price Index for finished goods advanced 0.4 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today.

Finished goods prices rose 0.1 percent in January and decreased 0.1 percent in December. At the earlier stages of processing, the index for intermediate goods moved up 0.7 percent and crude goods prices increased 0.4 percent.

On an unadjusted basis, the finished goods index rose 3.3 percent for the 12 months ended February 2012, the smallest year-over-year rise since a similar 3.3-percent advance in August 2010. (See table A.)

All American Investor

Read the full report and details -- Producer Price Index

The Morning Call + Subscriber Alert + Do we need to add interest rates to our list of worries?

The Market
Technical

The indices (DJIA 13194, S&P 1394) had a quiet, mixed day--the Dow up, the S&P down. The DJIA finished the day within its intermediate term up trend (13010-14730) and above the new 12919 support level.

The S&P closed above the upper boundary of its intermediate term trading range (1101-1372) for the second day. Two to three days to confirmation, depending on the strength of the follow through from Tuesday’s break out. If we get it, then the S&P re-sets to an up trend and is then back in sync with the Dow.

Volume was heavy for the second day in a row; breadth was down, though the flow of funds indicator continues to climb. The VIX rallied but finished below the lower boundary of its intermediate term trading range for the second day.

Fear has declined but confidence is still low (medium):
http://scottgrannis.blogspot.com/2012/03/fear-has-been-overcome-but-confidence.html

GLD (159.57) sold off again, remaining in a short term down trend and taking out secondary support at 159.75. Our Portfolios will sell sufficient shares at the open to bring their GLD position to 2.5%.

EMPLOYER COSTS FOR EMPLOYEE COMPENSATION - DECEMBER 2011

Private industry employers spent an average of $28.57 per hour worked for total employee compensation in December 2011, the U.S. Bureau of Labor Statistics reported today.

Wages and salaries averaged $20.14 per hour worked and accounted for 70.5 percent of these costs, while benefits averaged $8.43 and accounted for the remaining 29.5 percent.

Total compensation costs for state and local government workers averaged $40.90 per hour worked in December 2011. Total employer compensation costs for civilian workers, which include private industry and state and local government workers, averaged $30.45 per hour worked in December 2011.

All American Investor

Morning Journal-Behind the pricing of oil

Economics
This Week’s Data

The International Council of Shopping Centers reported weekly sales of major retailers up 0.7% versus the prior week and up 2.3% versus the comparable period a year ago; Redbook Research reported month to date retail chain store sales unchanged versus the similar timeframe last month an up 3.3% on a year over year basis.

January business inventories rose 0.7% versus expectations of an increase of 0.5%; business sales only grew 0.5%.

Weekly mortgage applications fell 2.4%; but purchase applications advanced 4.4%.

The February US trade deficit came in at $124.1 billion versus January’s $110.3 billion.

Understanding the pricing of oil (medium):
http://www.zerohedge.com/news/guest-post-understanding-new-price-oil

The Morning Call-Blow off top or new trend?

The Market
Technical

The indices (DJIA 13177, S&P 1395) exploded upward yesterday. The Dow closed well above the lower boundary of its intermediate term up trend (12985-14705). As you know last Tuesday, this Average broke below the lower boundary of this trend and remained below it for the requisite time requirement of our time and distance discipline. However, save last Tuesday’s performance, the Dow was up in all subsequent sessions, tracking very closely to the rising lower boundary, just not quite managing to get above it. When the time came for confirmation of the break, I thought it a bit iffy to do so because of the DJIA’s pin action; and I got a bit lucky with my noncall.

The S&P soared above the upper boundary of its intermediate term trading range (1101-1372). Our time and distance discipline now kicks in, although yesterday’s move was big enough that the distance element of our discipline may soon overwhelm the time element if this rocket shot continues. If that occurs then (1) the S&P will re-set to an intermediate term up trend and (2) the Averages will be back in sync. For the moment, though, we wait for confirmation.

The latest from Mohamed El Erian

Morning Journal-The other side of employment

Economics
This Week’s Data

February retail sales rose 1.1% versus expectations of up 1.3%; ex autos sales were up 0.9% in line with estimates.

Other

Two more positive employment indices (short):
http://mjperry.blogspot.com/2012/03/employment-trends-index-reaches-35-year.html
http://mjperry.blogspot.com/2012/03/monster-employment-index-gains-11-in.html

The other side of the employment picture (medium and today’s must read):
http://advisorperspectives.com/dshort/guest/Lance-Roberts-120312-Employment-Report-and-the-Market.php

Oil priced in gold (short):
http://mjperry.blogspot.com/2012/03/measured-in-gold-price-of-oil-is-below.html

The Morning Call-It is still too close to call

The Market

Technical

The indices (DJIA 12959, S&P 1371) were quietly up yesterday. The Dow finished right on the lower boundary of its intermediate term up trend (12959-14669). This is the fifth day at or below that boundary. However, as I noted last weekend, (1) the Dow continues to rise just not as rapidly as the up trend’s lower boundary, (2) with the DJIA tracking the lower boundary of its uptrend but staying even or just slightly below it, I am hesitant to declare a break. As precise as analysis may appear [quoting trend lines to a point] at times, it isn’t. So I am putting off a call for at least another day.

The S&P continues to trade within its intermediate term trading range, though clearly it is in the process of a second challenge of the 1372 level. For the moment, this leaves the indices out of sync and us on the sidelines.

Volume remains quite low; breadth declined, though the flow of funds indicator continues to be positive. The VIX plunged 8% putting it within shouting distance of the lower boundary of its intermediate term trading range. A break of that boundary would be a positive for stocks.

GLD fell. Recall, it closed right on the initial support boundary last Friday which was the fifth day of our time and distance confirmation process. I held off calling a break because of that close. However, with yesterday’s clear close below that boundary, GLD has now re-set to a short term down trend.

Monday Morning Chartology 3/12/12

The Market
Technical

Monday Morning Chartology

The S&P is making its second attempt to challenge the upper boundary of its intermediate term trading range--so far unsuccessfully.

Mashable Sells Out

Rumors are flying that CNN is paying upwards of $200 million to Acquire Mashable.

The deal is expected to be announced on Tuesday.

Pete Cashmore

Mashable describes itself as the largest independent online news site dedicated to covering digital culture, social media and technology. With more than 20 million unique monthly visitors, Mashable has one of the most engaged online news communities. Founded in 2005, Mashable is headquartered in New York City with an office in San Francisco.

If true this certainly give new meaning to the name Pete Cashmore.

All American Investor

All Employees: Government 311 (Graph)

All American Investor

Reserve Bank Credit 311

Reserve Bank credit is the sum of securities held outright, repurchase agreements, term auction credit, other loans, net portfolio holdings of Commercial Paper Funding Facility LLC, net portfolio holdings of LLCs funded through the Money Market Investor Funding Facility, net portfolio holdings of Maiden Lane LLC, net portfolio holdings of Maiden Lane II LLC, net portfolio holdings of Maiden Lane III LLC, float, central bank liquidity swaps, and other Federal Reserve assets.

All American Investor

The Closing Bell-Greece defaults but EU crisis is still in the first quarter

Statistical Summary
Current Economic Forecast

2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%

McGraw Hill (MHP) 2012 Reveiw

McGraw Hill Co. (MHP) is a global information provider serving the financial, education and business markets via Standard & Poor’s, McGraw Hill Education, Business Week, Aviation Week and Platts.

MHP earns an amazing 35%+ return on equity and has grown profits and dividends 8-12% annually over the last 10 years. While the company experienced profit difficulties in 2009, it recovered in 2010 and continues to grow as a result of:

(1) rapid growth in digital sales,

(2) improvement in the domestic corporate new issue market as well as the credit market services division,

(3) management’s significant efforts to streamline operations and lower costs,

(4) an expanded stock buyback program.

Thoughts on Investing from Forbes

#6 Watch the Politicians

The new era of hypervolatility means that political news and events ranging from the battle over raising the US debt ceiling to the European debt crisis tend to move stocks much more than fundamental factors like paying down debt or boosting profit margins.

For example, in early August 2011 a host of blue chip stocks plummeted as the world wondered whether the congressional stalemate in the US would cause it to default on its debt. Fundamentals are important, but pay attention to the politicians. They can move markets.

THE EMPLOYMENT SITUATION -- FEBRUARY 2012

Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate, was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today.

Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining.

Household Survey Data

The number of unemployed persons, at 12.8 million, was essentially unchanged in February. The unemployment rate held at 8.3 percent, 0.8 percentage point below the August 2011 rate. (See table A-1.)

All American Investor

Morning Journal - Where the Fed has it wrong

Economics
 This Week’s Data

US budget deficit hits all time high in February (short):
http://www.zerohedge.com/news/us-budget-deficit-hits-all-time-high-february

February nonfarm payrolls rose by 227,000 versus expectations of a 210,000 increase; unemployment remained at 8.3% as anticipated.
http://www.calculatedriskblog.com/2012/03/february-employment-report-227000-jobs.html

Other

Where the Fed has it wrong (medium):
http://bit.ly/xMIBdy

Triple trouble (medium):
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9129861/Triple-trouble-in-Europe-US-and-China-brings-out-the-bears.html

Bernanke, inflation and unemployment (short):
http://www.ritholtz.com/blog/2012/03/bernanke-inflation-and-unemployment/

Is deleveraging in the US over (short):
http://www.zerohedge.com/news/us-deleveraging-now-over

The Morning Call - It ain't over till its over

The Market
Technical

The indices (DJIA 12903, S&P 1365) had another good day. The Dow managed to get back to the lower boundary of its intermediate term up trend (12903-14621); however, under our time and distance discipline, it has to close above that boundary to negate the break. So it finished its third day of the break process. It was also unsuccessful at surmounting the former resistance, turned support, now resistance 12919 level.

The S&P remains within its intermediate term trading range (1101-1372).

Volume fell; breadth was flat. The VIX declined again and finished within its short term down trend but above the lower boundary of its intermediate term trading range.

GLD also had a good day; but it closed below that initial support level for the fourth day. A finish below this boundary will re-set the trend to a short term down trend.

Uptrend in Stocks Continues, Chart

The S & P 500 pulled back to its 40 day average (red line), and is now moving back up.

The market appears to be stuck here with resistance around 1380.

The market found good support around 1340 so far. This market really needs tests to the downside to establish support.

Most investor remain skeptical. Preferring to look for reasons while the market should be going down instead of recognizing that the uptrend in intact.

Ross Stores (ROST) 2012 Review

Ross Stores (ROST) operates a chain of off price retail stores offering high quality, in season name brand and designer apparel, shoes, cosmetics, accessories and home merchandise at discounts of 20-60% below mainstream retailers.

The company has grown profits and dividends at a 15-20% annual rate over the past 10 years, earning a 25%+ return on equity. While current retail environment experienced difficulties in the recent recession, ROST’s off price business model continued to produce above average results because:

Morning Journal - The problem with student loans

Economics

This Week’s Data

Fourth quarter productivity rose 0.9% in line with expectations; however, unit labor costs spiked 2.8% versus estimates of up 1.2%.
http://scottgrannis.blogspot.com/2012/03/mixed-news-today.html

The February ADP private payroll report was up 216,000 versus estimates of an increase of 203,000.
http://www.capitalspectator.com/archives/2012/03/adp_reports_fas.html#more
\
Consumer credit rose $17.8 billion in January versus expectations of an increase of $10.0 billion--most of the rise due to student loans.
http://www.zerohedge.com/news/january-consumer-credit-surges-government-blows-sudent-debt-bubble-epic-proportions

Speaking of student loans, here is some analysis on this mounting problem (medium and today’s must read):
http://www.zerohedge.com/news/guest-post-our-lets-pretend-economy-lets-pretend-student-loans-are-about-education

The Morning Call - I was wrong; it is an ostrich market

The Market
Technical

The indices (DJIA 12837, S&P 1352) rebounded yesterday. However, the DJIA failed to regain either the lower boundary of its intermediate term up trend (12863-14581) or the former resistance turned support now resistance level of 12919. This keeps our time and distance discipline operative and moves the Dow a day closer to converging again with the S&P. The S&P remains within its intermediate term trading range.

Volume increased; breadth spiked. The VIX declined 8%, pushing it back below the upper boundary of its short term down trend. That negates Tuesday’s break and keeps the VIX in a down trend (good news). It remains above the lower boundary of its intermediate term trading range (potentially troubling).

GLD (163.63) traded up but failed to finish above its initial support level (166.27). Hence. our time and distance discipline is still operative for a potential break from a short term trading range to a short term down trend.
http://www.zerohedge.com/news/gold-suffering-under-ecb-margin-calls

Jim Grant discusses Fed policy

Morning Journal - Oil prices and retail sales

Economics
This Week’s Data

The International Council of Shopping Centers reported weekly sales of major retailers up 1.3% versus the prior week and up 1.7% versus the comparable period last year; Redbook Research reported month to date retail chain store sales up 0.4% versus the similar timeframe the prior month and up 3.0% on a year over year basis.

Weekly mortgage applications fell 1.2%; however, purchase applications rose 2.1%.

The Morning Call + Subscriber Alert + It's a Rip Van Winkle market

The Market
Technical

The indices (DJIA 12759, S&P 1343) suffered some severe whackage yesterday. The Dow closed below the lower boundary of its intermediate term up trend (12842-14560) as well as the 12919 former resistance (now support) level. Our time and distance discipline now kicks in. If this break is confirmed, the DJIA would re-set to a trading range and would be back in sync with the S&P. However, I don’t want to get ahead of myself; as you know, it will take another three to four days of closes below the lower boundary of its intermediate term up trend before change in direction is confirmed.

The S&P remained well within its intermediate term trading range (1101-1372), but did finish the day below its 50 day moving average (1345)--not a hopeful sign.

Chevron (CVX) 2012 Review

Chevron (CVX) is the world’s fourth largest oil company based on proven reserves. 

The company has grown its profits at a 15%+ annual rate over the last 10 years while earning a 15-20% return on equity. The dividend growth rate has not kept pace with profits; but the gap in the rate of increase has been closing. Earnings faltered in 2009 as a result of the global economic slowdown; however, CVX has returned to an attractive growth rate because:

(1) improving oil prices,

(2) it has sold most of its non core, high cost assets redeploying the proceeds in oil and gas exploration,

Great interview with Ken Langone

Subscriber Alert - We are selling one half of GLD position

SUBSCRIBER ALERT
3/6/12

Our Portfolios are Selling one half of their GLD position.

Morning Journal - Carried interest explained

Economics

This week

February factory orders fell 1.0% versus expectations of a 1.6% rise.

The February Institute for Supply Management’s nonmanufacturing index was reported at 57.3 versus estimates of 56.0.
http://scottgrannis.blogspot.com/2012/03/service-sector-continues-to-grow.html

Combining the manufacturing and service indices (short):
http://www.bespokeinvest.com/thinkbig/2012/3/5/combined-ism-manufacturing-and-non-manufacturing-reports.html

Other

A look at carried interest, how it is taxed and why (medium):
http://www.nytimes.com/2012/03/04/business/capital-gains-vs-ordinary-income-economic-view.html?_r=1

The Morning Call - Thursday could be a big day

The Market
Technical

Yesterday started off rough and moderated through the trading session, though the indices (DJIA 12962, S&P 1364) still closed down for the day. The Dow remains in its intermediate term up trend (12835-14500), but is still struggling to surmount the 13000 level.

The S&P finished the day within its intermediate term trading range (1101-1372). That leaves the Averages out of sync and, hence, in a sort of no man’s land in which I think no action is the best action.

Volume remains quite low; breadth was mixed. The VIX rose 4% but continues within its short term down trend and above the lower boundary of its intermediate term trading range.

GLD closed below the 166.25 support level. If it experiences follow through to the downside today, our Portfolios will start to chip away at this holding.

Stocks and Economic News 120 -- IBM’s Watson Gets Wall Street Job After ‘Jeopardy’ Win

IBM’s Watson Gets Wall Street Job After ‘Jeopardy’ Win

International Business Machines Corp. (IBM)’s Watson computer, which beat champions of the quiz show “Jeopardy!” a year ago, will soon be advising Wall Street on risks, portfolios and clients.
Citigroup Inc. (C), the third-largest U.S. lender, is Watson’s first financial services client, IBM said yesterday. It will help analyze customer needs and process financial, economic and client data to advance and personalize digital banking.

IBM expects to generate billions in new revenue by 2015 by putting Watson to work. The technology giant has already sold Watson to health-care clients, helping WellPoint Inc. (WLP) and Seton Health Family analyze data to improve care. IBM executives say Watson’s skills -- understanding and processing natural language, consulting vast volumes of unstructured information, and accurately answering questions with humanlike cognition -- are also well suited for the finance industry.
Read More


iPad dispute signals new era in trademark troubles
iPotato, isock, icouch, istove, i-you-name-it. An Internet search for "i'' words from A to Z will turn up just about any combination you might think up, from all over the world, only a handful of them related to Apple Inc.
Given its penchant for "iproducts," Apple's current troubles in China over the iPad trademark are not its first, and are unlikely to be its last. China's importance as a major consumer market is bringing fresh headaches for companies, and even celebrities, seeking to protect and claim brand names. That's apart from the usual problems with piracy and other infringements.
Read More


All American Investor

Best Buy (BBY) 2012 Review

Best Buy Company BBY)sells consumer electronics, personal computers, software and appliances through 1564 stores in the US and Canada and 2430 in Europe.

The company has grown profits 16% over the last 10 years and its annual dividend from $.27 in 2003 to an expected $.62 in 2011. It has earned a return on equity 20%+ since 2002. BBY stumbled a bit in 2008 as the economy softened. However, it has bounced back since then and should continue to grow as a result of:

(1) the company’s broad product line, locally tailored store format and brand marketing strategy provides an edge over competitors,

(2) direct sourcing to the manufacturers allows it to lower product costs and achieve supply chain efficiencies,

(3) an ongoing stock buy back program.

The Morning Call + Subscriber Alert

The Market
Technical

Monday Morning Chartology

Last Thursday performance notwithstanding, the S&P closed below the 1372 resistance level on Friday. So at this point under our time and distance discipline, the S&P remains in a trading range.

Stocks and Economy News 119

China Slices 2012 Growth Target to Eight-Year Low

Chinese Premier Wen Jiabao cut his nation's 2012 growth target to an eight-year low of 7.5 percent and made boosting consumer demand the year's first priority as Beijing looks to wean the economy off its reliance on external demand and foreign capital.
He lowered the target from a longstanding annual goal of 8 percent, a move investors anticipated so that Beijing has some economic leeway to rebalance the economy and defuse price pressures in the run up to a leadership change later this year.
Read more

All American Investor

Thoughts on Investing from Forbes

Thoughts on Investing--New Rules of Money courtesy of Forbes

#5 Learn to Profit from Volatility

Volatility is not going away. The average daily closing value of the CBOE’s Volatility Index has nearly doubled since the mid-2000’s, and in 2011 the S&P 500 swung more than 1% in 75 trading days.

Turn volatility into profits.

One way is to hedge your portfolio by taking a 5% stake in a VIX futures fund like the iPath S&P 500VIX Mid-term Futures ETN.

Another way is to use the wild, seemingly irrational moves as a buying opportunities. For example, the earthquake and ensuing nuclear catastrophe in Japan caused a sharp sell off in solid US stocks, including Apple and Intel. Smart investors bought in.

The Closing Bell-Close but no cigar

Statistical Summary
Current Economic Forecast

2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%


Current Market Forecast

Morning Journal - Greece and the CDS market

Economics

This Week’s Data

The February Institute for Supply Management’s manufacturing index was reported at 52.4 versus expectations of 54.6 and January’s reading of 54.1.
http://www.capitalspectator.com/archives/2012/03/ism_index_manuf.html#more

January construction spending fell 0.1% versus estimates of a rise of 0.7%.

February auto sales rose to 15.1 million units (+ 6.5%) versus forecasts of 14.4 million units.

February retail chain store sales rose a robust 5%.

The Morning Call - Our GLD position is still iffy

The Market

Technical

The indices (DJIA 12980, S&P 1374) recovered nicely yesterday. While the Dow couldn’t regain the 13,000, it remains well within its intermediate term up trend (12732-14500).

On the other hand, the S&P penetrated the 1372 upper boundary of its intermediate term trading range. That starts the clock on our time and distance discipline. If the S&P stays above 1372 for the next three to four days, the break will be confirmed. In the meantime, the Averages remain out of sync; though clearly the odds of stock prices re-setting to an up trend (and me being wrong) are growing.

Volume dropped while breadth rebounded. The VIX fell, finishing within its short term down trend but remaining above the lower boundary of its intermediate term trading range.

Morning Journal - Has Israel already attacked Iran?

Economics
This Week’s Data

The February Chicago purchasing managers index came in at 64.0 versus expectations of 61.0 and January’s reading of 60.2.

Weekly jobless claims were unchanged versus estimates of a 2,000 increase.
http://www.calculatedriskblog.com/2012/03/weekly-initial-unemployment-claims.html

January personal income rose 0.3% versus forecasts of up 0.4%; personal spending was up 0.2% versus expectations of up 0.5%; the core PCI deflator was in line with estimates.
http://www.calculatedriskblog.com/2012/03/personal-income-increased-03-in-january.html

Other

The Strategic Petroleum Reserve and oil prices (medium):
http://www.ritholtz.com/blog/2012/02/the-strategic-petroleum-reserve-and-oil-prices/

Household deleveraging (short):
http://www.ritholtz.com/blog/2012/02/household-deleveraging-slows-recovery/

Subscriber Alert

SUBSCRIBER ALERT
3/1/2012

In initial trading, GLD has bounced to above the initial support level (166.25). So for the moment, our Portfolios are holding tight. My finger remains on the trigger.

The Morning Call + Subscriber Alert + The move in GLD was devastating

The Market

Technical

The indices (DJIA 12952, S&P 1365) fell yesterday. The Dow retreated below the psychologically important 13000 level; but remains above the lower boundary of its intermediate term up trend (12816-14590). The S&P finished the day below the upper boundary of its intermediate trading range (1101-1372).

This leaves Averages diverging with the S&P in a trading range and the DJIA in an up trend. Hence, under our discipline, they are directionless; and that argues for cautious investment strategy with a tilt towards the Sell side.

Volume rose; breadth declined. The VIX was up but not nearly as much as I expected. It closed within its short term down trend and above the lower boundary of its intermediate term trading range.

GLD got demolished, breaking below the lower boundary of its short term up trend as well as its initial support. This is technically devastating. Barring a rebound at the open, our Portfolios will Sell Half of their holding.
http://www.bespokeinvest.com/thinkbig/2012/2/29/gold-down-5.html