Saturday, March 26, 2011

Itz Week End Review 3-26-11

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Nice comeback on most indexes this past week and it amazes me how resilient this market has been considering all the geopolitical & economic events occurring. The winners were silver +5.88%; oil index +4.80%; SOX & Nasdaq up around 4% the banks & gold losers. Final Q4 GDP, which ended stronger than expended at +3.1% growth compared to the prior revision at +2.8%. The Fed is continues to forecast real GDP of +3.1% to +3.9% for the rest of 2011. The upcoming week should be interesting as end of the month as well as quarter comes into play, but Friday is the beginning of a new month as well as quarter. The NonFarm Payrolls on Friday are expected to show a gain of +188,000 jobs but there were 192,000 jobs added in February.  With QE2 nearing its end and several Fed presidents made comments this past week on QE2 with a month to go before their next FOMC meeting. Bernanke's decision to host a press conference after the April meeting could go a long way towards smoothing the public's perception of a fragmented Fed. Philly Fed president Charles Plosser believes the Fed has overstayed its welcome in the treasury market and should begin to exit sooner rather than later.
If the Fed speak wasn't enough, there was plenty of news headlines on geopolitical events. Portugal's political parties opted to hold an early election rather than form a new government even though that could force the country to take an unwanted bailout. The socialist government quit last week in a dispute over needed austerity measures. Portugal is likely to need a 75B euro bailout from the new EU bailout fund. The president of Yemen is beginning to give into demands and the situation there could be stabilizing at a high level of unrest and for now its not worsening. It appears he has agreed to leave office but the conditions are still in dispute. While in Syria  public unrest and protests turned violent , reports that at least 37 people were killed in Daraa by security police and dozens more wounded. More than 100,000 people gathered in the protests. Protesters want the ruling Assad family to step down after 41 years of reign. In Bahrain another series of protests planned for Friday were immediately crushed by security forces smothering the crowds in tear gas. In Libya, NATO appointed a Canadian general to take charge of the no-fly zone but coalition forces are still responsible for the attacks on tanks and artillery on the ground.
JP Morgan raised their estimates for Brent crude for Q2 to between $120-$130. while, competitor Bank America called for Brent prices to average $122, up from $88, and reach as high as $140. That assumes Libyan crude remains offline for up to six months. 
In Canada, the conservative minority government collapsed on Friday with the passage of no confidence vote in the House of Commons.
Itz continues to see the major averages trend higher, targeting 1,400 on the S&P500. WTI crude oil is starting to look as if it is losing momentum near term. The weekly COT Commitment of Traders Report came out Friday @ 3:30pm. It showed that the Non-Commercials (Specs) decreases their Net Longs by 840 contracts, while the Commercials (Smart Money) reduced their short positions by 6,223 contracts. Looking at this weekly chart of oil you can see the contraction on the COT, from multi-year extremely high levels. >>LINK ... COT link
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A weak dollar could provide investors with an opportunity to cash in. Louise Yamada, Managing Director, Louise Yamada Technical Research Advisors, LLC lays out a strategy.

Oil prices spiked again today but could prices come crashing down? Brian Kelly of Kanundrum Capital predicts a correction in this high flying commodity.

The markets are still digesting the fallout from the disaster in Japan, with Laszlo Birinyi Jr., Birinyi Associates president.

Doug Kass, Sebreeze Partners Management, discusses the tipping point for oil and whether $105/barrel oil could damage the recovery. Those high prices hurt consumer confidence and, in turn, the economy.

Sectors fall in and out of fashion all the time. Cramer looks at the charts and sees the energy and materials stocks beginning to outperform, which could go on for years.

Insight on which metal is a better bet, with Joshua Brown, Fusion Analytics Investment Partners and Thomas Winmill, The Midas Funds.

Gold prices are soaring but is it too late to buy in? John Kilduff, CNBC analyst and founding partner at Again Capital, lays out a strategy.

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