Sunday, December 5, 2010

Itz Week End Review 12-4-10

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Surprise.... only 39,000 jobs gained for November and unemployment rose to 9.8%! Officially the BLS claims there are 15.1 million people currently unemployed. Those jobless for 27 weeks or longer stood at 6.3 million and 41.9% of the unemployed total. Those underemployed and working part time stood at slightly more than nine million. There were also 2.5 million "marginally" attached to the work force and 1.3 million "discouraged" workers. Those are not included in the unemployment rolls. site
The ISM Non-Manufacturing report for November rose to a six month high at 55.0 and slightly better than the 54.5 analysts expected.
Fed Chairman Ben Bernanke is scheduled to appear on CBS 60 Minutes Sunday evening, last time he appeared on the program the markets rallied. Most likely, Mr. Bernanke will attempt to explain why the Fed plans to spend $600 billion on quantitative easing and why it might be necessary for them to spend up to $2 trillion more. The FOMC meets on December 14th.
Itz Stock Chartz maintained 2 downside targets that came close the S&P500 going to 1155 & Crude Oil to $78. The S&P is now on the verge of a significant breakout over 1228 and a new high for the year. We could easily see that year-end 1250 prediction by Goldman Sachs as a real possibility.

 a few weeks ago ITZ called for RIMM to make a run towards the $68 level on a breakout of $60 (RIMM is in the Itz Pix portfolio)  read more on Jefferies $80 Upgrade

Helping to rally the markets this week was Goldman Sachs 2011 forecast that was very bullish. They stated the U.S. was on the verge of a "very strong recovery." They believe the S&P will end 2011 at 1,450 for a +23% gain. Gold is expected to hit a high of $1,750 but close the year at $1,690. The U.S. GDP is expected to clock in at +2.7% for the full year. Last year Goldman forecasted that the S&P would close '10 at 1250 and they are going to be very close!  Goldman sees oil prices to "average" $110 in 2011, up from a prior forecast of $100. The company said, "the stage is set for a return to a structural bull market in oil." Goldman expects a two million barrel per day increase in demand in both 2011 and 2012 and require OPEC to tap the majority of its "reported" 5.64 mbpd of spare capacity.
Itz Stock Chartz has been for $110 in 2011 for several weeks now & was looking for a pullback shorter term towards $78, which came close $80. Oil has been trading at the upper range of OPEC implicit target of $70-$90 over the past few weeks. Investors are probably interested in the cartel's upcoming general meeting on December 11.
Commodities took off this week on the weakening dollar, as the Jobs Report took some of the bullish economic recovery momentum away. There seems to be a split call on the dollar now, there are those who see a recovery for the U.S. economy in 2011 and then there are some who say more QE is needed.  Itz see the EU weakening and the U.S. continuing its snail pace recovery and China trying to slow down it's economy. According to Li Daokui, an academic adviser to the People's Bank of China (PBOC), measures such as rate hikes will be implemented moderately and gradually. Moreover, RMB may appreciate faster if gains are controllable. The market forecasts the Chinese government will announce rate hikes this month the earliest in order to curb inflation and asset bubbles. Apart from uncertainty in Eurozone's debt problems and long-term weakness in U.S. Dollar as Fed's monetary stance will stay loose, China's accumulation may help push the yellow metal higher. Xia Bin, a PBOC adviser, said China should increase its gold reserve as a pathway for internationalization of RMB. Indeed, although China ranks as the world's largest foreign holder of US Treasury, it only has 1054.1 metric tons of gold as of April 2009. According to the latest data compiled by the IMF, China's gold reserves stayed at the same level, compared with US' reserves of 8133.5 metric tons. While consolidation in gold price will continue for some time, its outlook remains robust and the uptrend should remain later.

Itz Stock Chartz raised the 12 month  price target on SLW from $40 to $65 Twitter post previous SLW post on this blog >>Read More

This Week's Video Highlights
Is oil heading back over $100 and does that threaten a fragile economic recovery? Insight with Dan Dicker, independent oil trader; Peter Beutel, Cameron Hanover and CNBC's Sharon Epperson.

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks at where oil and gold are likely headed next week.

A look at how experts are playing the current situation, with Ashraf Ladi, CMC Markets chief market strategist.

Oil hits a new high after a bullish call from Morgan Stanley and issues with the dollar are likely to make it happen, with CNBC's Melissa Lee & the Fast Money traders. Also, Pops & Drops and a look at the chip sector brings to mind the word "bullish."

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