Kudos to Obama and Trichet + Subscriber Alert
Steve Cook on Disciplined Investing

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Have You Seen This?


The Market
    
    Technical

    The Averages (12409, S&P 1333) drifted off yesterday, but remained within their intermediate term up trend (11823-15245, 1240-1669).  In addition, the DJIA finished above the upper boundary of its short term trading range (12405) for a second day, though just barely.  On the other hand, the S&P has yet to challenge its comparable level (1345).  As I noted yesterday, this divergence in trend has to correct itself and how that is accomplished will point the direction of future price movement.

    Volume fell as did breadth; the VIX rose slightly but remains squarely within its trading range.  On the other hand, the put/call ratio now stands near an all time high and that historically has been negative for stocks.

    Gold (GLD) was off fractionally but closed within its intermediate term up trend.

    Bottom line: equity prices are benefiting from strong underlying momentum fed by a very generous Ben Bernanke.  So at the moment, it seems likely that the S&P will re-set to an up trend.  However, our Portfolios will use any additional advance to Sell a portion of any stock that has moved into its Sell Half Range.

    Conversely, a retreat to the lower boundary of the prevailing intermediate term up trend will likely prompt our Portfolios to Add to positions whose stocks are in the Buy Value Range.

   Fundamental
     
      Headlines

          Yesterday started on a rough note with a new earthquake in Japan.  However, that was quickly offset by some decent economic data: weekly jobless claims were below expectations and March retail sales were surprisingly stronger than forecasts--perhaps a sign that rising food and oil prices aren’t yet hurting the consumer as much as I feared.  In any case, the numbers continue to show an improving economy.

          Another positive was an announcement by the administration that it was close to submitting a revised free trade agreement with Columbia to the senate; and that it expected it to provide the format for the pending treaties with Panama and Korea.  You know my attitude on this subject, so you know I view this very positively.  Credit where it is due; kudos to Obama and his trade representative, Ron Kirk.

          As long as I am handing out praise, let’s hear an ‘at ‘a boy’ for Mr. Trichet who raised interest rates to combat increasing inflationary pressures in Europe.  Are you listening, Ben?  The bad news is that for the first time in my memory, the European political class is acting more responsibly than our own.  Aside from lousy economics, it is embarrassing to be the most powerful nation on the planet and be AWOL from our leadership role.  Sad.
 
          Here is how far behind the curve the Fed is (medium):
          http://scottgrannis.blogspot.com/2011/04/central-bank-update-fed-is-behind-curve.html

          And speaking of an irresponsible political class, the main investor focus remained on the ticking clock on the government shutdown.  As you know, if there is no action by today, the government shuts down.  As you also know I am at best agnostic on the occurrence; and it is not difficult to understand why. I listened to several debates yesterday on the news channels featuring one contestant from each party and I was reminded of just how disgusted I am by our entire political class.  That said, my reading of the experts is that there is not likely to be a shutdown and if there is, it won’t last long and even if does, it probably won’t have much impact on the Market.

          Bottom line: gridlock is better than nothing; but this time around, I believe that our monetary/fiscal policies have put the economy in such a precarious position that mere passivity will not be enough to allow the economy to heal.  The ratification of new free trade agreements is a positive; and the ECB’s increase in its lending rates gives hope that there are really adults in the Western world.  I am just not certain how much these baby steps impact our Economic Model.  To be sure, they are better than a sharp stick in the eye; and if I could only believe that they were harbingers of things to come, then I could really get jiggy.  At the moment, the best that I can come up with is that they help keep the economy on track not to fall off a cliff.

    Subscriber Alert

       The stock price of Automatic Data Processing (ADP-$53) has traded into its Sell Half Range.  Accordingly, at the Market open, this holding will be reduced to a one half position.

     Thoughts on Investing—from Paul Farrell

If you want to know how to survive, Noah’s got the answer. The Ark-builder is one of history’s best long-term investors. For me, the Ark’s a perfect metaphor, a symbol of success and survival. Noah’s message fits today. We paraphrase it, but you’ll get his gift. Listen to his survival tips on how to build your special Ark:

1.Plan ahead. It wasn’t raining when Noah built the Ark.
Wall Street has hypnotized American brains to think short-term, about the next quarter, year-end bonuses, the next election cycle. Start thinking about the next generation.

2.Forget the critics. Trust yourself; you know what’s right.
Less than a third of Americans are building a retirement Ark. Most will ignore the warnings of a flood coming and laugh at ark-builders. Don’t listen; do what’s right.

3. Remember, the Ark was built by amateurs, the Titanic by pros.
The Pros: Wall Street, Corporate America, Washington, cable television anchors, White House, Congress, SEC, the Fed. Don’t sink with them.

4.Two heads are better than one.
Remember: “They boarded in twos.” You’re not alone. Your spouse. Best buddy. Think long-term, to a new career or being self-employed. Plan. Build your own “Great Ark.”

5. Build your future on high ground.
Goals — your goals. Research at a major university proved that a group of graduates with specific goals had made more money than their fellow graduates 20 years later.

6. Don’t “miss the boat” — the ark will keep you from sinking.
Remember, stocks aren’t your only option. Hard assets? Real estate? Getting more education? Cycles happen. We’ve had 25 bull/bear cycles over the past century. Recoveries happen too.

7. Don’t forget: We’re all in the same boat.
America is the great land of opportunity, even today. And while you’re getting yours, remember to help someone who missed the boat; throw them a lifeline.

8. Speed isn’t always an advantage; turtles boarded the Ark with cheetahs.
Let’s hear it one more time: In the race to build your financial ark, the tortoise beats the hare. Trust. You’ve got a lifetime. Just do it. Believe you’re a winner.

9. Woodpeckers inside are a larger threat than the storm outside.
Remember, attitude’s the key to success, it’s an inside job, all in your head. Successful living really does begin with that good old positive mental attitude.

10. When you’re stressed out, float awhile.
Listen to the still small voice. Ask and receive. Pray. Exercise. Take a break. Call an old friend. Help someone worse off. Answers come. This too will pass.

11. Stay fit. When you’re 600 years old, “someone” might ask you to do something really big, like build an “ark” and “save your world.”
That someone will be you. Maybe it’s a new calling. Follow your dreams and fulfill the reason you chose to come to earth at this moment in history.

12. Overwhelmed? Your Higher Power’s with you; a rainbow’s ahead.
I’m very visual. I love symbols, icons — reminders that a Higher Power is working in my life. It’s easy to forget our blessings. Everywhere in our house and outside we have them: Noahs, Santas, Buddhas, Angels. They are protecting us, encouraging us to follow these ‘survival tips.’

Economics

   This Week’s Data

    March retail same store sales rose 1.7% versus estimates of up 0.7%.

   Other

    Some anecdotal evidence that the economy continues to improve (short):
    http://mjperry.blogspot.com/2011/04/recovery-watch-railtemp-help-air.html

Politics

  Domestic

  International

    The continuing problem in the EU (medium):
    http://www.project-syndicate.org/commentary/gros21/English

    This can’t be happening (troops in Libya):
    http://www.zerohedge.com/article/us-prepares-operation-boots-ground-aka-presidente-was-only-keeeding







Posted 04-08-2011 8:19 AM by Steve Cook