Saturday, November 27, 2010

Itz Week End Review 11-27-10

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Well, Thanksgiving is behind us and we've entered into the holiday season with just 25 days of trading remaining in 2010. This coming week brings a fresh influx of key economic data ~ including Black Friday sales reports and the November employment report ~ however, data could get eclipsed by the eurozone if contagion fears continued Korean tensions that could escalate as U.S. ships near.
The market rallied early in the week, as  Ireland formally requesting an 85 billion euro ($113 billion) aid package from the European Union and the International Monetary Fund. Although Ireland released a detailed austerity plan and details of its aid package were all but finalized during the course of the week, market participants quickly zeroed in on other weak eurozone nations, wondering which would be the next to seek financial support.  The falling dominos in the Eurozone. Greece, Ireland and now Portugal have fallen prey to speculators. Next up would be Spain and the largest economy to be targeted. Eurozone finance ministers are pressuring Portugal to apply for a bailout quickly in order to prevent the damage to the financial markets that would come from a protracted delay. Anxiety remained elevated on Friday amid reports of artillery fire on North Korean territory as part of an apparent military exercise. According to a New York Times report, North Korea was riled by the U.S. and South Korea's plans to conduct a joint training exercise on Sunday, putting Seoul on alert for a possible follow-up attack. The threat was so high that China warned against performing military acts near its coastline.
All eyes will be on the Labor Department at 8:30 a.m. EST on Friday when it releases November jobs data. The U.S. unemployment rate is expected to remain unchanged at 9.6%. According to, economists expect the economy to add 130,000 nonfarm payrolls in November after gaining 151,000 in October. Nonfarm private payrolls are slated to show an increase of 140,000, compared with the previous month's growth of 159,000.  The market also gets information on October factory orders and November nonmanufacturing activity on Friday. Economists expect the Commerce Department to say that factory orders slipped 1.2% in October after gaining 2.1% in September. The ISM services index is expected to inch up to 54.5 in November, from 54.3, previously. 

Geopolitical tensions & events have historically induced fears and triggered investors to sell risky assets. However, safe-haven assets such as precious metals should remain supported. Famed investor Jim Rogers, however, encourages investors to buy commodities no matter if there's war or not. He believes Fed's QE measures would weaken the US dollar so that investors should hold money in real assets. He particularly favors palladium, platinum, rice, natural gas, and silver over gold. >>Read Report

China's measure to increase margins on trading gold, copper and aluminum futures after the market closes on November 29 will dampen speculations and lower risk appetite. >>Read More  Silver has outperformed gold since the second half of the year and gold-to-silver ratio has dropped below 50 last week. Itz agrees with Jim Roger's view that silver will continue to outperform gold in 2011, Itz Pix favorite and best performing holding remains Silver Wheaton (SLW).

Crude oil neared $80 early Tuesday morning, but managed to again bounce from that level rallying to above $84 by mid-week.  For years the IEA has claimed for years that peak oil did not exist. Jeffrey Rubin, the former chief economist at CIBC World Markets, had an interesting article in the Huffington Post. >>LINK
Those that follow Itz Stock Chartz blog as well as on Twitter know ITZ has been targeting $78 for crude, but that it would rally in 2011 targeting $110.  With Helicopter Ben pushing the U.S. Dollar lower, even though the dollar has recently spiked higher, longer term the Fed has its sights set on a lower dollar & higher inflation. Most economists as well as Rubin expect higher energy prices to possibly put us back into a recession. Near term, Itz sees a possible Head and Shoulders pattern developing for Crude Oil . On Tuesday Itz highlighted the same pattern developing for gold >>LINK

The range on the S&P has been 1175-1200 for nearly two weeks. Every time the shorts get squeezed to take us back to 1200 there is a news story overnight to knock us back down. Considering the frequency and severity of the stories I am surprised we have not plunged through support towards Itz 1,155 target on the S&P500.

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