Stock Market Summary

Stocks finished higher today with the major indexes closing near session highs.  In addition, the DJIA posted another new high.  Investor participation was ok and market breadth was good.  As a result, we are raising the support levels on the DJIA, S&P 500, and Nasdaq Composite (see below).  Also, we are increasing the resistance level for the DJIA but leaving it the same for the S&P 500 and Nasdaq Composite (see below).  Overall, we continue to believe the prudent approach is continue selling into strength and avoid becoming aggressive with opening new positions in stocks based on how far the stock market direction has run without a significant pullback.  Don't let a position turn into a big loss if the market trend suddenly changes.  If you need to own stocks, please see our open watch list below.

 

SUMMARY

 

DJIA: Up 0.9% to 11,981

S&P 500: Up 0.6% to 1,291

Nasdaq Composite: Up 1.0% to 2,718

 

BREADTH FOR NYSE

 

Advancing Issues: 2,143

Declining Issues: 904

Advance/Decline Ratio: 2.4 to 1

 

New Highs: 113

New Lows: 10

High/Low Ratio: 11 to 1

 

SUPPORT/RESISTANCE LEVELS

 

DJIA: 11,706/12,029

S&P 500: 1,274/1,295

Nasdaq Composite: 2,701/2,766

 

SECTOR ANALYSIS

 

Technology was the best performing sectors up 1.4% while Financials and Health Care were the worst performing sectors down 0.1%.

 

Other Sectors:

 

Consumer Discretionary Up 0.4%

Consumer Staples Up 0.2%

Energy Up 0.5%

Industrials Up 1.0%

Materials Up 1.1%

Utilities Up 0.6%

 

OPEN WATCH LIST SYMBOLS (Through Monday, January 22, 2011)

 

(SH: 42.6919 0.00 0.00%) added @ $46.03 on 11/12/10; current price @ $42.69; 7.3% loss

(PSQ: 33.40 0.00 0.00%) added @ $35.05 on 12/8/10; current price @ $33.40; 4.7% loss

(RWM: 32.30 0.00 0.00%) added @ $32.79 on 12/16/10; current price @ $32.30; 1.5% loss

(UUP: 22.44 0.00 0.00%) added @ $22.80 on 1/14/11; current price @ $22.44; 1.6% loss

(EUO: 19.40 0.00 0.00%) added @ $20.30 on 1/14/11; current price @ $19.40; 4.4% loss

(FDO: 43.44 0.00 0.00%) added @ $44.64 on 1/21/11; current price @ $43.44; 2.7% loss

 

CLOSED WATCH LIST SYMBOLS

 

(UUP: 22.44 0.00 0.00%) added @ $22.56 on 10/20/10; removed @ $23.51 on 11/30/10; 4.2% gain

(EUO: 19.40 0.00 0.00%) added @ $19.19 on 10/20/10; removed @ $21.65 on 11/30/10; 12.8% gain

(APOL: 41.87 0.00 0.00%) added @ $37.77 on 10/28/10; removed @ $39.97 on 12/31/10; 5.8% gain

(NUVA: 27.91 0.00 0.00%) added @ $25.11 on 11/12/10; removed @ $26.03 on 12/31/10; 3.7% gain

(DLR: 52.37 0.00 0.00%) added @ $52.22 on 11/26/10; removed @ $53.01 on 12/10/10; 1.5% gain 

(CSCO: 21.17 0.00 0.00%) added @ $19.36 on 12/2/10; removed @ $20.91 on 1/6/11; 8.0% gain 

(UUP: 22.44 0.00 0.00%) added @ $23.14 on 12/8/10; removed @ $23.37 on 1/10/11; 1.0% gain 

(EUO: 19.40 0.00 0.00%) added @ $20.79 on 12/8/10; removed @ $21.73 on 1/10/11; 4.5% gain 

Cellectis Bioresearch First To Launch Revolutionary Custom TAL Nuclease Service

PARIS, Jan. 25, 2011 /PRNewswire/ — Cellectis bioresearch, a specialist in genome customization and a subsidiary of Cellectis (Alternext: ALCLS), has today announced that it will launch gene specific TAL(1) nucleases on February 28, 2011.

Taking advantage of an exclusive license agreement with the University of Minnesota, Cellectis has rapidly integrated TAL effector nucleases into its DNA nuclease production platform. TAL effector nucleases are sequence specific DNA scissors that can be custom engineered to target and modify any gene of interest, in any species. Cellectis is able to produce TAL nucleases in around one week, providing scientists with rapid access to custom-made products.

"This technology has a huge potential and could revolutionize the genome customization world. Being the first to launch TAL nuclease services puts us in an attractive position to gain significant share of the multimillion dollar market for custom DNA nucleases," explained Marc Le Bozec, CEO of Cellectis bioresearch.

"We add yet another asset to our portfolio of important genome customization tools, and invite you to visit our website on February 28, for the official launch of our custom TAL nuclease offer," added Luc Selig, VP Sales and Marketing of Cellectis bioresearch.

About Cellectis bioresearch

Cellectis bioresearch was incorporated as a subsidiary of Cellectis (Alternext: ALCLS) in June 2008. It provides life science researchers with ready- and easy-to-use tools for genome customization.  These tools, based on sequence specific endonucleases, enable the engineering of cells with optimized features for drug discovery, protein production and gene function studies. The genome customization products and services can be purchased online from www.cellectis-bioresearch.com.

About Cellectis

Cellectis improves life by applying its genome engineering expertise to a broad range of applications, including agriculture, bioresearch and human therapeutics. Cellectis is listed on the NYSE-Euronext Alternext market (code: ALCLS) in Paris.

 

Disclaimer

This press release and the information contained herein do not constitute an offer to sell or subscribe, or a solicitation of an offer to buy or subscribe, for shares in Cellectis in any country. This press release contains forward-looking statements that relate to the Company's objectives based on the current expectations and assumptions of the Company's management only and involve unforeseeable risk and uncertainties that could cause the Company to fail to achieve the objectives expressed by the forward-looking statements above.

Speculators Exit Gold & Silver, But Remains Heavily Long Other Markets

There are many ways to measure market sentiment. We use surveys, put-call ratios, fund flows data and for commodities especially, the commitment of traders reports (COT). Lately, we've noted the improving sentiment picture for Gold. As a market weakens sentiment will naturally become less bullish. In this case, sentiment has weakened considerably yet Gold is only 6% off its high.

Most interesting in particular is the divergence between the COT data for Gold and Silver and the rest of the commodities. The speculators (non-commercials) according to the COT data are positioned more bullishly in Copper, Oil, Corn and Wheat while they've cut back long positions in Gold and Silver.

First we see the chart of Gold and the commercial traders' net short position at the bottom. The commercials' short position is down 32% in the last several months. In other words, the speculative long position in Gold is down 32% and is at its lowest point since the middle of 2009.

The COT picture is equally as encouraging for Silver bulls. Net non-commercial long positions are down about 30% in the last several months. The last time commercial traders held a similar position, Silver rallied from $17 to $20, $18 to $24 and from $26 to $31.

Meanwhile, let's take a look at Copper. Back in mid 2010 when Copper fell below $3.00/lb, the commercials' net position was neutral. Now their net short position is the highest in at least several years.

The same can be said for Crude Oil.

And Corn.

Meanwhile, the commercials are somewhat net-short of Wheat. Yet, about 95% of the time during the last three years, commercials were net-long Wheat.

It is not shown in the charts but open interest in these markets remains near recent highs while open interest in Gold and Silver are 10% and 14% off recent highs. This is another sign that speculation in Gold and Silver has diminished but not in the other commodities.

We'd also note that per sentimentrader.com, public opinion has declined from 73% bulls to 62% in Gold and from 86% to 72% in Silver.

In the larger picture, Gold and Silver are in an enviable position. While they've been in corrective mode, they've only declined marginally while shedding the speculative "hot" money that in fact, continues to reside in other markets. Moreover, as the economic recovery stagnates and more monetization is forced on the US and other governments, Gold and Silver will reassert their leadership. Money will come out of bonds in favor of the premier hard assets, Gold and Silver.

Asia Stocks Broadly Higher On Earnings Optimism; Nikkei Up 1.15%

Forex Pros – Asian stocks were broadly higher on Tuesday as market sentiment was boosted by upbeat corporate earnings reports from Wall Street, while Japanese exporters advanced amid optimism over the global economic recovery.

During late Asian trade, Hong Kong's Hang Seng Index climbed 0.33%, South Korea's Kospi Composite added 0.22%, while Japan's Nikkei 225 Index jumped 1.15%.

Shares in many of the big name Japanese exporters advanced amid optimism over the global economic recovery, boosting the outlook for export earnings.

Shares in electronics giant Sony surged 2.31%, rival Toshiba saw shares climb 1.23%, while shares in Nissan Motor, which gets approximately 60% of its revenue abroad rose 1.93%.

Meanwhile, shares in the world's third largest maker of computer memory chips Elpida Memory rallied 2.29%, while rival Tokyo Electron saw shares gain 0.93% after chip manufacturing giant Texas Instruments reported better-than-expected fourth quarter earnings on Monday.

Earlier in the day, the Bank of Japan kept its benchmark interest rate and the size of its asset-buying fund unchanged, in line with expectations.

In Hong Kong, shares in the energy sector led gains after the nation's largest oil and gas producer PetroChina saw shares jump 1.14% after it said that it was targeting a 1.5 billion metric tons increase in proven oil reserves between 2011 and 2015 at its Changqing field, the nation's second largest oil field.

Shares in rival Sinopec surged 1.53%, China Shenhua Energy saw shares gain 0.57%, while shares in the nation's largest offshore oil producer Cnooc climbed 0.52%.

Elsewhere, Australia's S&P/ASX 200 Index rose 0.46% as market sentiment was boosted after official data showed that inflation in the fourth quarter rose by 0.4%, compared with economists' expectations for a 0.7% increase.

Meanwhile, shares in the financial sector performed strongly, with shares in the nation's largest lender National Australia Bank rising 0.69%. Shares in rival Commonwealth Bank of Australia added 0.54%, while Westpac Banking Group saw shares gain 0/49%.

The outlook for European equity markets, meanwhile, was mixed. The EURO STOXX 50 futures pointed to a gain of 0.15%, France's CAC 40 futures indicated an increase of 0.05%, the FTSE 100 futures pointed to a drop of 0.04%, while Germany's DAX futures were up 0.05%.

Later in the day, the U.S. was to produce data on consumer confidence, as well as a report on house prices.

Aggressive Growth Stock: Caliper Life Sciences

Caliper Life Sciences (CALP: 6.36 0.00 0.00%) recently announced preliminary financial results that breathed some life into the stock. Estimates are moving higher as a result.

CALP currently has a Zacks #1 Rank (Strong Buy) and continues to expand into new markets.

Company Description

Caliper Life Sciences develops advanced instruments and outsourcing services for pharmaceutical, biotech and other research institutions and companies.

Positive Announcement

On Jan 13 Caliper released preliminary fourth-quarter results that made investors quite happy. Revenue came in at $36 million, which brings the full-year mark to $124 million. That is a 10% organic growth rate.

Caliper's gross margin expanded by over 800 bps, allowing them to surpass goals for 2010. The company raised its 2011 guidance and is now expecting the top line to improve 12-20%.

Estimates Move Higher

Both analysts polled by Zacks raised their full-year estimates for this year on the news. Caliper is expected to break even this year; up from a 9-cent loss they were expecting 3 months ago.

Next year's forecasts are averaging 3 cents, up from a 2-cent loss. While the earnings figures are not impressive on the surface, the upward momentum is encouraging. In 2009 Caliper lose 12 cents.

M&A Activity

On Dec 21 Caliper said it completed a previously announce deal to acquire Cambridge Research & Instrumentation, Inc for $20 million in cash, assumed debt and common stock. The move will help Caliper break into the tissue imaging and digital pathology market.

The Chart

The recent news and raised guidance gave shares of CALP a jolt. There is a level of resistance here, but given the upward estimate revisions there is a good chance that we see a new high soon.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service

Growth & Income Stock: B&G Foods, Inc.

Earnings estimates have been rising for B&G Foods, Inc. (BGS: 13.78 0.00 0.00%) after the company reported a solid third quarter in which EPS beat the Zacks Consensus Estimate by 11%. Despite a modest increase in sales, the company was able to grow its margins significantly, leading to a 20% increase in operating income year-over-year.

The stock has risen more than 20% since its latest earnings surprise, but shares remain reasonably priced. The company also pays a dividend that yields an attractive 5.0%. It is a Zacks #2 Rank (Buy) stock.

Company Description

B&G Foods, Inc. manufactures various shelf-stable foods, including hot cereals, fruit spreads, spices, seasonings, salad dressings, Mexican food, pickles and other specialty foods products. Its brands include Cream of Wheat, Cream of Rice, Emeril's, Las Palmas, Ortega and Red Devil.

The company is headquartered in Parsippany, New Jersey and has a market cap of $647 million.

Third Quarter Results

B&G reported third quarter earnings per share of 20 cents, beating the Zacks Consensus Estimate by 11%. It was a 43% increase over the same quarter in 2009.

Net sales increased a modest 1.0% due in part to slightly higher prices and volumes. The gross margin expanded from 29.2% of sales to 31.3%, leading to an 8.2% increase in gross profit. The margin increase was due to a reduction in coupons and a decrease in commodity and ingredient costs.

Meanwhile, operating income grew 19.6% as the company lowered its selling, general and administrative expenses.

Outlook

Earnings estimates have been climbing recently, as seen in the company's Price & Consensus chart:

The Zacks Consensus Estimate for 2010 is 81 cents, representing a 40% increase over 2009 EPS. The 2011 estimate is currently 90 cents, equating to 11% growth. It is a Zacks #2 Rank (Buy) stock.

Dividend

B&G Foods pays a dividend yielding an attractive 5.0%. Back in 2008, however, the company cut its quarterly dividend from 21.2 cents to 17 cents per share. It hasn't moved it since.

Its payout ratio of 91% is relatively high too, so don't expect a dividend increase anytime soon.

Valuation

Shares are up more than 20% since its latest earnings surprise, but valuation still remains in check. The stock trades at 15.1x forward earnings, a discount to the industry average of 16.5x. Its price to book multiple of 2.9 is higher than the peer group at 2.1, however.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

Stock Market Awaiting The Outcome Of ECOFIN Meetings

U.S. stocks rose for a seventh straight week Friday, the longest rally since May 2007, buoyed by optimism about corporate earnings and European efforts to control the region's debt crisis. JPMorgan (JPM: 44.91 +0.46 +1.03%) jumped 2.9% as the lender posted record quarterly profit. Financial shares in the Standard & Poor's 500 Index climbed 3.2% after Wells Fargo (WFC: 32.75 +0.86 +2.70%) raised its rating for large banks on prospects for higher dividends. Higher oil prices boosted energy shares, which climbed the most among S&P 500 groups. Micron (MU: 9.71 +0.08 +0.83%), Nvidia (NVDA: 23.59 +0.20 +0.86%) and Novellus Systems (NVLS: 36.85 +4.04 +12.31%) all surged at least 12% amid optimism about semiconductor demand.

Today's Market Moving Stories

China Impacts

Overnight China's stocks fell 3%, driving the benchmark index to the lowest level in three months, as the central bank ordered banks to set aside more reserves and rising property prices signaled tightening measures may be expanded. Industrial and Commercial Bank of China Ltd. and China Construction Bank Corp. led declines for banks after the government boosted reserve requirements for the fourth time in two months. China Vanke Co. and Poly Real Estate Group Co., the nation's largest property developers, slid more than 3 percent. Qingdao Haier Co., a home appliances maker, dropped the most in two months on concern higher interest rates will damp spending.

The focus on China this week will be intense with the Hu/Obama meetings due to take place.  Some articles out over the weekend in the WSJ on this..

U.S. Presses China for Deals

The US pressing China to buy tens of billions of dollars in US aircraft, auto parts, agricultural goods and beef to build goodwill when the two countries' leaders meet Wednesday.  Chinese President Hu Jintao, in written answers to questions from The Wall Street Journal and another U.S. newspaper, emphasized the need for cooperation with the U.S. ahead of his U.S. visit this week, but called the present U.S. dollar-dominated currency system a "product of the past."

More Euro Uncertainty

The euro is weaker almost across the board ahead of Monday/Tuesday meetings of Ecofin and the Eurogroup. Nothing ground breaking has occurred, but several small developments have conspired against the currency. Over the weekend the UK's Telegraph reported that Irish banks are facing liquidity problems, while the ECB's Orphanides commented this morning that the market may have over-reacted to last week's ECB press conference (widely viewed as hawkish).

The US is closed today – so expect a slow start to the week – with most focus on any comments / sound bites coming out from ECOFIN meeting – Merkel comments over the weekend (see below) seems to confirm that Germany will not back an enlarged EFSF right now – but come up with a long lasting solution in March (Fiscal Union ?)

Merkel said on Saturday any measure to stabilize the euro should come within a complete strategic package, dampening hopes for a quick decision on moves to tackle the euro zone debt crisis. Germany faces mounting pressure from the European Commission and its euro zone partners to strengthen a rescue fund for troubled member states, the European Financial Stability Facility (EFSF)."If the discussion is about a further package of measures, it is above all important that we develop a complete strategy that must absolutely include closer economic coordination… (Sounds like a fiscal union, if Germany should.

More concern about emergency lending to Irish banks

Not ECB lending mind you – this is lending by the Irish central bank to Irish banks. Questions now being asked in the media whether Irish Central bank is indulging in a bit of QE "on the sly". All over the press – Saturday's FT, Sunday's Irish Independent, today's Telegraph, zerohedge, Irish chat rooms etc. Concern over the lack of transparency – the lending is listed under the "other assets" column on the central bank's balance sheet. No further details given. Basically, although ECB lending to Irish banks fell slightly in December, the lending via the Irish central bank increased by more than enough to compensate. In other words, things are still getting worse for the banks. Evans-P in the Telegraph headlines with: "Irish lenders besiege central bank for emergency loans"…

Telegraph says Irish lenders besiege central bank for emergency loans. And why is all this official cash needed? Because foreign depositors are pulling their cash out, even if the Irish public have not started to withdraw and bury theirs. Investors from outside the Euozone have pulled out 108 bn since late 2008. A lot of this would likely be destined for UK.

UK House Prices Up

The average price asked for by home-sellers in the U.K. edged up for the first time in three months, amid a shortage of supply that could offer some support to house prices in the coming months, data from an estate agency showed Monday. Property website Rightmove's January survey showed asking prices up 0.3% on the previous month, following sharp declines in November and December, and hovering 0.4% above prices in the comparative month a year before. Signs of cautious optimism from home-sellers contrast with the economic fundamentals facing the housing market. Prices are set to struggle under the weight of public-sector job cuts, pay rises that fail to match inflation, banks' continued reluctance to lend freely and the prospect of higher interest rates sooner or later.

Ernst & Young LLP's Item Club said say the Bank of England must "hold its nerve" and not raise its key interest rate until the recovery shows signs of overcoming the impact of the government's budget squeeze. "With inflation likely to reach 4 percent this spring, the Monetary Policy Committee will come under intense pressure," the research group said in a report in London today. It should "keep base rates where they are until it is clear that the economy is taking the fiscal adjustment in its stride." The central bank maintained emergency stimulus last week as it weighed the threats of spending cuts against the risk that higher oil prices and sales tax rate will keep inflation above the government's 3 percent limit. Citigroup Inc., Societe Generale and BNP Paribas SA said this month the bank may increase the benchmark rate faster than previously anticipated.

Company / Equity News

• Travis Perkins Plc: Down 2.4% as the U.K.'s biggest building merchant was downgraded to "sell" from a "buy" at Societe Generale
• UK & Irish banks are under pressure in Europe today with brief the press late evening Barclays shedding 1.3% as Prime Minister David Cameron said his government has had detailed talks with banks over pay and is pressing for lower bonuses, higher taxes for banks and more lending to small businesses.  "We've been having very detailed discussions with Barclays and the other major clearing banks to try to get settlement of this issue," Cameron said in an interview with BBC Radio 4's "Today" show.
• Lloyds: Slipped 2.4%on speculation it is to be broken up. On the ISEQ Allied Irish Banks has tumbled 5.3% bringing its decline in the past 12 months to 81 percent after Copenhagen-based Danske Bank said it was not considering buying Allied's Northern Ireland business, following a Sunday Times report.
• Schroders: Down 2.9% after UBS downgraded the stock to "neutral" versus "buy."
• BP (BP: 49.25 +1.71 +3.60%) deal with Russia has not gone down well in Washington, so expect some further deterioration of BP's hopes there (no longer #1 supplier to US Military and any further Govt related contracts look wishful thinking).
• Airbus SAS will today announce 2010 orders that will beat those of Boeing Co. in terms of value, daily Les Echos reported, without citing anyone. Gross orders at Airbus last year were close to 600 planes, with net orders between 540 and 550, the newspaper said. The company will announce a new order for the A320 NEO today, Les Echos added.
• Today is the deadline for final bids for EBS, with Irish Life & Permanent and Cardinal Asset Management reported to be the final two bidders. It is reported over the weekend that Cardinal has drawn up plans to bid for Irish Permanent if successful in acquiring EBS. The consortium is believed to have met with the NTMA, the Dept of Finance and the Central Bank. Separately, Irish Permanent is expected to raise its variable rates by 0.5% next month to 4.7%, in a move that is expected to be followed by the sector.

Crude Oil Falls As Alaska Pipeline Restarts, Gold Tests Support Near $1360

Commodities – Energy

Crude Oil Falls as Alaska Pipeline Restarts

Crude Oil (WTI) – $90.83 // $0.71 // 0.78%

Commentary: WTI is falling under $91 and Brent is unchanged near $97.43 as volume remains light following the MLK holiday in the U.S. Pit trading resumes on Tuesday, when we can expect the first settlement since last Friday.

Alyeska, operator of the Trans-Alaska Pipeline said that it has completed repairs to the line and that it is once again operational. It expects output to reach 0.5mmbbl/d within 24 hours. Prior to the leak, flows were near 0.6mmbbl/d.

Meanwhile, U.S. equity futures are falling modestly in overnight trade on word that Steve Jobs, CEO of tech giant Apple Inc, will be taking a medical leave of absence for an unspecified amount of time. This is the second time this has happened since 2008. While a single stock will not have a lasting impact on market direction, it could lead to pressure for a single day, especially since equities have rallied so strongly over the past few months.

Technical Outlook: Prices are drifting sideways having put in a bearish Dark Cloud Cover candlestick after retesting support-turned-resistance at rising trend line set from the swing bottom in November. On balance, positioning hints that a move lower is ahead. Initial support lines up at $87.33.

Commodities – Metals

Gold Tests Support Near $1360

Gold – $1363.35 // $0.70 // 0.05%

Commentary: Gold is holding near $1360 as the metal continues to test this notable level of technical support. As we said yesterday, "in order to see a sustainable decline in gold prices, we would need to see a meaningful reduction in investment demand for the metal. Preliminary signs of such a reduction are emerging. Gold ETF holdings have plunged 1.2 million troy ounces since peaking near 68 million troy ounces back in December. They are now at the lowest level since September, when gold was trading at prices more than $100 lower than they are now. Keep in mind, however, that this is by no means the largest drawdown in holdings during gold's 10-year bull run. For instance, we saw a drawdown in excess of over 3 million troy ounces during 2008 (incidentally, there was a big gold price correction during part of that year)."

Technical Outlook: Prices followed a Bearish Engulfing candlestick pattern below resistance at $1388.38, the 50% Fibonacci retracement of the 1/3-1/7 downswing, with a break through support at a rising trend line set from late October. Final confirmation of a larger bearish reversal requires a daily close below $1361.39, an outcome that would clear the way for a decline to the $1325-30 region. The trend line (now at $1368.32) has been recast as near-term resistance.

Silver – $28.30 // $0.02 // 0.05%

Commentary: The $28.30 level in silver is comparable to $1360 for gold. In the event of a meaningful correction in the precious metals complex, silver will likely sell off much more dramatically.

The gold/silver ratio rebounded to 48.1, remaining above the four-year low near 46 set last month. (The gold/silver ratio measures the relative value/performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance)

Technical Outlook: Prices reversed sharply lower at the $30.00 figure, dropping back to horizontal support at $28.32. A daily close below this level exposes $26.71. The $30.00 level remains as near-term resistance.

Three ETFs To Cash In On Intel

Chip bellwether, Intel Inc. (INTC: 21.08 -0.21 -0.99%), recently reported a quarterly profit of $3.39 billion, up nearly 48.7 percent from a year earlier, giving further confidence that the economy is improving and shinning a ray of light on exchange traded funds [[ETFs]] that track the semiconductor industry.

This profit of $0.59 per share came despite weaknesses seen in the consumer personal computer world and was primarily driven by increased business server demand, which aided in pushing revenues up to $11.46 billion.  This indicates that businesses are starting to loosen the grip on their wallets and make the purchases that were once put on the back burner in order to reduce operational costs. 

Furthermore, Intel continues to witness healthy gross margins, as its margins increased to 67.5 percent from 64.7 percent and above analyst expectations of 66.7 percent. 

As for the near term future of Intel, the company forecasts revenues for the current first quarter to be between $11.1 billion and $11.9 billion indicating that demand for its chips will remain elevated.  According to Miriam Gottfried of Barron's, this revenue is expected to be driven by sales of Intel's new Sandy Bridge processor. 

Other reasons Intel remains attractive include an expected $9 billion budget for capital expenditures during 2011, a ramp up in production of the company's first microprocessor based on 22 nanometers and its relative cheapness. Intel's shares are trading at roughly 10 times forward earnings as compared to nearly 21 times for competitor Advanced Micro Devices (AMD: 8.20 -0.06 -0.73%).

Although some analysts are saying that it is equally important to consider changes in consumer behavior as individuals are shunning away from PCs and turning to smartphones and tablets which don't use Intel chips, like the Apple (AAPL: 348.48 +2.80 +0.81%) iPad, these changes have already started to emerge, evident in a decline in PC sales, and Intel appears to be adapting just fine.

Some ETFs that will likely be impacted by Intel's performance include:

• Semiconductors HOLDRs (SMH: 34.41 +0.88 +2.62%), which boast Intel as its second largest holding at nearly 19.1 % of all assets.
• ProShares Ultra Semiconductors (USD: 45.375 +1.425 +3.24%), which is a leveraged play on the semiconductor industry and seeks to return 200 % of the performance of the Dow Jones US Semiconductors Index for a single day.  Intel makes up the largest equity piece of USD and allocates nearly 13.9% of its assets to Intel.
• iShares PHLX SOX Semiconductor Sector (SOXX), which allocates nearly 6.9% of its assets to Intel.

Sense On Cents Media Appearances

I believe one of the highest hurdles we have to elevating the level of 'sense on cents' within our nation is the very fact that we live 'in the moment and for the moment.' How can we achieve a greater sense of perspective on the shortcomings and failings we have had in the past so we can recognize them in the future?

Perhaps even more importantly, how can we be simply be more aware of past failings so we can more effectively navigate the economic landscape? Should we rely strictly on our financial media, our financial regulators, and our political operatives to protect our interests? Do not be so naive. We have to do better than that. We need to take personal control and pay personal attention to our own well being. How can we do that? Welcome to Sense on Cents.

In an attempt to more effectively spread the 'sense on cents', I have cleaned out some links here at the site which were not actively monitored. Additionally, I have added a Video link which highlights a few media appearances I have had over the last eighteen months. I do try to pride myself on perpetually pursuing truth, transparency, and integrity throughout our economy and our markets. On that note, I would like to highlight the material provided at this Video link. I write,

My pursuit of truth, transparency, and integrity while navigating our economic landscape is evidenced primarily via my regular writing here at Sense on Cents. In addition to my library of written work, however, I also have an extensive body of work and fabulous material archived in 65 hour long internet radio interviews with a wide array of fabulous professionals. Those interviews are retained here at my site at the No Quarter RadioSense on Cents with Larry Doyle link. Lastly, I have pursued the aforementioned virtues in the midst of media appearances on Fox Business and CNBC. Enjoy!!

>> Fox Business on September 3, 2009: discussing the Financial Industry Regulatory Authority (FINRA) in an 18-minute interview with fellow guests, former SEC chair Harvey Pitt, attorney Richard Greenfield,and Madoff investors Ronnie Sue and Dominic Ambrosino.

(If you watch only one of these videos, please take the time to watch the 18 minute clip highlighted above. The allegations made by Attorney Greenfield may leave you speechless but simultaneously incensed.)

>>CNBC on March 2, 2010: discussing Goldman Sachs. (GS: 175.00 +3.43 +2.00%)

>>CNBC on November 24, 2010 discussing insider trading scandal.

Excuse me for a little shameless self-promotion BUT the fact is I strongly believe the questions I ask and the points I raise in the midst of these appearances are consistent with my mission here. Additionally, where are the media, financial regulators, and politicians in terms of AGGRESSIVELY pursuing these virtues?

Bang the drum and spread the "Sense on Cents!!"

 

U.S. Schools Are Still Ahead—Way Ahead

From Duke/Harvard/Berkeley professor Vivek Wahwa, writing in Bloomberg;

"The independence and social skills American children develop give them a huge advantage when they join the workforce. They learn to experiment, challenge norms, and take risks. They can think for themselves, and they can innovate. This is why America remains the world leader in innovation; why Chinese and Indians invest their life savings to send their children to expensive U.S. schools when they can. India and China are changing, and as the next generations of students become like American ones, they too are beginning to innovate. So far, their education systems have held them back.

My research team at Duke looked in depth at the engineering education of China and India. We documented that these countries now graduate four to seven times as many engineers as does the U.S. The quality of these engineers, however, is so poor that most are not fit to work as engineers; their system of rote learning handicaps those who do get jobs, so it takes two to three years for them to achieve the same productivity as fresh American graduates.As a result, significant proportions of China's engineering graduates end up working on factory floors and Indian industry has to spend large sums of money retraining its employees. After four or five years in the workforce, Indians do become innovative and produce, overall, at the same quality as Americans, but they lose a valuable two to three years in their retraining.

Let's keep improving our education system and focus, in particular, on disadvantaged groups. Education is the future of our nation. But let's get over our inferiority complex. America is second to none. Rather than in mastery of facts learned by rote and great numbers of accomplished martinets, its strength lies in the diversity and innovation that arise in an open, creative society."

U.S. Stock Market & Gold Under Pressure: Is A Top In?

With the holiday season in the rear view mirror and volume slowly creeping back into the marketplace, I can't help but wonder what lies ahead. The optimist in me is hopeful that the economy will continue to repair itself and the financial issues that plague the federal government, state government, and local governments will just go away as the economy rebounds. The only problem with my hope is that massive debts and deficits do not simply disappear and I fear the problem will be a long and lasting one.

Federal Reserve chairman Ben Bernanke indicated that unemployment numbers are likely to remain stubbornly high for an extended period of time. He also made it clear that Quantitative Easing II was necessary and needed to be continued in a vain attempt to keep interest rates low. Since its inception, treasury rates have done nothing but increase which begs the question whether the program is really doing anything it was intended to do.

In addition to our domestic debt issues, unemployment claims, and poor housing market we find that the crisis in Europe while somewhat muted, continues to manifest in a negative fashion. Nearly every where we look we are surrounded by fundamental issues which directly impact risk assets. These issues have been constant for quite some time and the S&P 500 has shrugged them off and powered higher. The S&P 500 has put on quite a run since the March 2009 lows, and while we have had several corrections and a "flash crash" along the way, we have yet to see a major correction turn into bearish market conditions.

Is price action today an early warning sign that lower prices await us in the equities market. Is the U.S. Dollar going to breakout above the 50 period moving average and challenge the 83 price level on the weekly chart?

If the resistance zone listed on the weekly chart failed the dollar would seemingly be poised to test the triple tops around the 88-89 price level. Quadruple tops is not a technical pattern that is recognized by many traders as the 4th mouse typically gets the cheese. The flip side would offer that if resistance around the 83 price level holds and the Dollar plummets risk assets would move higher. It is too early to tell what is going to happen, but active traders need to be monitoring the U.S. Dollar Index closely as it will provide clues as to the direction of the S&P 500 and gold.

S&P 500

Friday's market action is indicative that lower prices may be awaiting us in coming days and weeks. A reversal has been potentially carved out, but it remains to be seen if a top is in. Picking tops in a long term bullish trend is a fool's game as bullish advances can be overbought for long periods of time as they advance higher. What is evident is that prices are being pushed lower and strong selling volume is confirming the potential for a longer term reversal. It is too early to tell if the price action is just working off overbought conditions or if this is a change in price action and market direction. The daily chart of the SPX illustrates the possibility that a reversal or the potential for an intermediate term top to be in.

The S&P 500 has tested the first support area around 1,260 today and it bounced which is typical price action. The question will be whether price will drift higher the rest of the day and close modestly lower, or if selling pressure will hold prices down near the lows of the day. In the recent past, Friday morning selloffs led to a drift higher that by the sound of the closing bell prices were flat or only slightly lower. Will today be different?

There are a few confirming signals that prices may continue lower. Recently Fridays have had relatively low volatility and light volume with the propensity to grind higher through the afternoon session and into the close. While the grind higher remains to be seen, volatility is rising. The Volatility Index (VIX) is trading nearly 3% higher on the day and is trading around the 18 price level as can be seen in the chart below. Price action remains at the upper bound of the lower channel. A breakout in the upper channel could result in additional selling pressure should that occur.

Another telling sign that additional sales pressure may be lurking next week or in the near future is the price action in the financials. The Financial Select Sector SPDR ETF (XLF: 16.215 -0.147 -0.90%) is currently trading down about 1.60% on the day and has completed a gap fill from last week. Price bounced as is typical, but selling pressure remains strong. If the financials continue to probe lower in coming days and weeks the S&P 500 will follow in suit.The daily chart of XLF is shown below.

In the end, it is simply premature to determine what the price action taking place today in the S&P 500 will lead too. We could see a drift higher this afternoon back to near break even which has been common in the recent past. We could see prices consolidate at current levels or we could see continuation selling with an intermediate term top being put in. At this point, all we can do is wait and see what happens. As I have said before, adjusting stops and taking profits is likely a sound strategy until we know more regarding the price action in the S&P 500 next week.

Gold Futures

Most gold bugs are expecting an outright U.S. Dollar meltdown. What if they are wrong? If you ask them the dollar is surely going to get destroyed and our way of life and standard of living is set for major changes. I do not know for sure what is going to happen, but if the crowd says the Dollar is sure to get killed, the contrarian trader in me wants to get long the dollar in a trade with a good risk / reward setup and defined risk.

If we look at the gold futures it is obvious that they are moving lower and a serious correction could be taking place. If gold futures break down below the 1,330 – 1,315 support area a full fledged correction of 10% or more could take place. The next major support level in gold futures would be around the 1,250 area. The daily chart of gold futures illustrates the key price levels that are currently in play.

Gold has already pulled back quite a bit from the recent highs, but time will tell how deep the pullback in the shiny metal will be. At first glance I would expect more carnage here simply because of how bullish the retail crowd is regarding gold. Longer term gold will likely remain in a bull market, but for those that took profits and have waited patiently gold could give us a solid risk / reward entry. The traders and investors that purchased above the $1,400 an ounce price point have either stopped out or their money is currently trapped. If prices go low enough, those trapped traders will eventually capitulate near the lows. If history serves us well, just about the time the last remaining weak gold bull gives up will be right around the intermediate term bottom.

Its hard to say what is going to happen on Monday or later next week, but based on the price action today it is going to be anything but ordinary. At this point I do not have a clear edge as to what is going to happen in the S&P 500 or gold. What I do know is that they are both under fire and the confirming signals in the VIX and financials is worthy of note. While I will not be jumping into either asset class with fresh capital, I will be watching closely to see if a low risk setup presents itself. Instead of trading based on a feel, a prediction, or a bias I intend to patiently wait to see what transpires next week before putting any capital at risk.

Crude Oil To Bust Through On Supply Concern

Since the start of the New Year, West Texas Intermediate (WTI: 18.04 +0.13 +0.73%) crude oil have been moving with significant bearish sentiment (See Chart) mostly on a lot of profit taking going around in the commodity space, and also on concerns over the high inventory and that supplies would exceed demand. The latest jobs report only further fanned the pessimism.

However, there are two new events that could turn the market around quickly before you can say "what happened?"

Shutdown – Canadian Upgrader

First, there was a fire on Jan. 6 at an oil sands upgrader (that's where bitumen is converted to synthetic crude oil), which forced Canadian Natural Resources Ltd. to shut production at its 110,000 barrels per day [[bpd]] Horizon oil sands project.

Canada is the top importer of crude oil and petroleum product to the United States. This 110,000 bpd capacity is almost 6% of the U.S. daily import volume from Canada.

Shutdown – Alaska Pipeline

Then, the Trans Alaska Pipeline, which is owned by BP, ConocoPhilips, Exxon Mobil Corp., Chevron Corp. and Koch Industries Inc., had to shut down on Saturday Jan. 8, after a leak was discovered at Prudhoe Bay. (Talk about how BP just can't get a break.)

The 800-mile pipeline carries about 15% of U.S. oil production. Oil producers reportedly are in the process of cutting 95% of output, which is normally around 630,000 bpd. So far, there's no estimate as to how long the shutdown will last.

Worse Than Hurrican Ivan

These two outages could potentially cut the U.S. crude supply by up to 709,000 barrels per day. That's about 8% of the U.S. crude import, and around 3.6% of U.S. consumption.

To put it in perspective, this 709,000 bpd volume is more than the disruption caused by Hurricane Ivan. When Ivan hit the U.S. Gulf in 2004, it took down about one third of the oil output in the region, which is around 1.6 million bpd.

OPEC Eyeing $110 a Barrel

Last but not least, several OPEC members are increasinly talking about how the Cartel would not act unless crude crosses $110 a barrel.

This new tightened supply picture, couple with OPEC talks will most likely turn crude oil to move on its own momentum. As such, there will be new money coming into the market, more upward pressure, and lots short covering.

Breaking Above $93 on Supply Concerns 

From a technical standpoint, there's a high probability that crude could easily top $91 a barrel as early as Monday, Jan 10, from the current $88.41 price point, before busting through $93 a barrel levels by end of the week on supply concerns. And also look for WTI to outperform Brent during the week.

4 Reasons Gold ETFs Are Expected To Keep Luster

As gold continues to oscillate ahead and below the $1,400 per ounce mark, some suggest that the precious metal could be in a bubble, but there are four reasons the metal is likely to sustain its price levels in the near future.

First, gold continues to be the ultimate safe haven in times of uncertainty.  The US economy is showing signs of recovery, but at a slow and steady pace.  The most recent data that illustrates this is a report by the Labor Department which indicated that US employers added fewer than expected jobs last month and payroll counts increased by 103,000 last week as opposed to the 150,000 expected by analysts.  To put it into perspective, these numbers resulted in Federal Reserve Chairman, Ben Bernanke to state that it would take "four to five more years" for the labor markets to completely heal.

A second force that is likely to support gold prices is the massive U.S. trade deficit, which continues to widen at an alarming rate.  According to the Bureau of Economic Analysis, the combined balances on trade in goods and services, income and net unilateral current transfers increased to $127.2 billion in the third quarter of 2010, up from $123.2 billion in the second quarter.   This imbalance generally carries trading costs which could further dampen the stability to the US dollar. 

Thirdly, gold offers a good method of asset diversification. The precious metal, as with most other commodities, is uncorrelated to equities and bonds, meaning that gold generally reaps the benefits when traditional equities and bonds are falling. The primary reason behind this lack of correlation is because gold prices are not driven by the same factors that drive the performance of other assets.

Gold is a nonearning asset whose demand is far more diverse than that of many other assets. Additionally, the demand for gold is driven by discretionary spending from the jewelry sector, investment demand and industrial demand; whereas demand for most commodities is primarily driven by industrial, non-discretionary demand.

Lastly, the price of gold isn't at the mercy of government policy. Gold is an asset that cannot easily be issued or produced and is unlikely to witness large decreases in value overnight, which could result if the printing presses are in full effect and governments pump up the circulation of currency in the market.

Some ways to play gold include:

• Market Vectors Gold Miners ETF (GDX: 56.74 0.00 0.00%), which includes companies that are involved in the mining and production of gold in its holdings.
• PowerShares DB Gold Fund (DGL: 48.34 -0.06 -0.12%), which holds futures contracts in gold.
• SPDR Gold Trust (GLD: 133.58 -0.25 -0.19%), which is backed by physical gold bullion.
• E-TRACS CMCI Gold TR ETN (UBG: 36.98 -0.05 -0.14%), which is a way to gain access to gold through an unsecured, unsubordinated debt security.

Debt Limit Chicken

Haven't we seen this movie before?

If a threat to shut the government down and perhaps default on debt could be used to exact serious progress on deficit and debt reduction, I would be all for it. But progress is all that could be hoped for. There is no chance of deficit reduction to zero in time to beat the deadline.

The problem with this game of chicken is that there can be no winner if neither side blinks. It's like the preverbial threat to shoot a hole in the bottom of the boat to punish your adversary. We're all in the boat together.

The side doing the threatening is more likely to be blamed if it goes bad than the side that being threatened. That's what happened in 1995, when the gambit backfired. A better approach would be for the side with the enhanced power and public support to use it as adults and achieve their goal based on its merits rather than try to win a game of chicken.

Crude Oil Rises As Alaska Production Reduced By 95%, Gold Little Changed After Falling $50 Last Week

Commodities – Energy

Crude Oil Rises as Alaska Production Reduced by 95%

Crude Oil (WTI) – $89.38 // $1.35 // 1.53%

Commentary: Crude oil is rising almost 1.5% in overnight trade on news that 95% of Alaska's North Slope oil production has been shut down due to an oil leak at a pump station. The region has production capacity of 630,000 barrels per day, or approximately 10% of the United States' total output. While a disruption of over half a million barrels per day is significant, market reaction is rather muted considering that early indications are that the situation will be resolved fairly shortly. Officials from BP, the largest operator on the North Slope, say that it hopes to have production resume within four to six days, though that will be dependent on approval from regulators.

Oil's reaction to this event over the next week will be quite telling. We've already seen a substantial run up to two-year highs in the mid-$90's as the commodity prices in a bullish demand outlook for 2011. If prices manage to make new highs, that will set up a test of $100. On the other hand, a failure would signal that prices are due for a period of consolidation at the very least, perhaps even a meaningful correction.

Technical Outlook: Prices are wedged between $89.63 and $87.80, the 23.6% and 38.2%Fibonacci retracements of the 11/17/10-1/3/11 rally. We see the near-term bias as bearish after prices took out support at a minor rising trend line set from the swing bottom in November. A break below current support exposes the 50% Fib at $86.32.

Commodities – Metals

Gold Little Changed after Falling $50 Last Week

Gold – $1373.90 // $4.33 // 0.32%

Commentary: Gold is little changed to kick off the new week after falling almost $50 last week. Early signs signal that investor demand for the metal may be waning in the face of a gradually-improving economic outlook and the potential for interest rate hikes sometime this year. Already we've seen a nearly 750,000 troy ounce decline in gold ETF holdings. Technical considerations have also turned bearish with some now suggesting that the metal has put in a triple top.

Technical Outlook: Bearish momentum has stalled above horizontal support at $1361.39 having taken out the rising trend line set from late October. Renewed selling targetsthe 38.2% Fibonacci retracement of the 7/28/10-12/7/10 advance at $1326.50. The aforementioned trend line – now at $1375.43 – has been recast as near-term resistance.

Silver – $28.92 // $0.25 // 0.89%

Commentary: Silver fell a sharp 7.3% last week amid a general liquidation of precious metals. Silver rises and falls on the same factors that influence gold. But as silver has risen much more than gold since the second half of 2010, it likely has more to fall should this liquidation continue.

The gold/silver rose to 47.5, as it continues to rebound from December's four-year low at 45.95. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance).

Technical Outlook: Prices continue to edge lower having taken out support at the bottom of a bearish Rising Wedge formation set from early November,with sellers targeting the 23.6% Fibonacci retracement of the 8/24/10-1/3/11 rally at $28.05. The wedge's lower boundary – now squarely at the $30.00 figure – is acting as near-term resistance.

Ford Supercharges Electric Vehicle Plan, Unveiling New C-MAX Energi And C-MAX Hybrid Products

DETROIT, Jan. 10, 2011 /PRNewswire/ —  

• Ford will launch C-MAX Energi, its first-ever production plug-in hybrid electric vehicle, and C-MAX Hybrid, a full hybrid variant, in North America in 2012 and Europe in 2013

• Both versions of the five-passenger multi-activity vehicle will leverage the company's global C-car platform, critically acclaimed powersplit hybrid architecture, next-generation driver information features and advanced, lighter and smaller lithium-ion (Li-ion) battery systems

• C-MAX Hybrid is targeted to deliver better miles per gallon than Ford Fusion Hybrid, the most fuel-efficient sedan in America

• C-MAX Energi targets more than 500 miles (800 kilometers) of driving range using the battery and engine, more than any other plug-in or extended-range vehicle. It also targets AT-PZEV status and delivers better charge-sustaining fuel economy than Chevrolet Volt

Ford today revealed two next-generation hybrid vehicles – including its first production plug-in hybrid electric vehicle – at the 2011 North American International Auto Show, bringing consumers more choice, versatility and style for high-mileage family-friendly vehicles.

Ford C-MAX Energi plug-in hybrid and C-MAX Hybrid are based on the new Ford C-MAX five-passenger multi-activity vehicle, and each will offer high mileage and low emissions as well as distinctive body design and a flexible interior. The plug-in hybrid and third-generation full hybrid leverage Ford's global C-car platform, acclaimed powersplit architecture, next-generation driver information features and advanced lithium-ion battery systems.

"C-MAX Energi and C-MAX Hybrid will be perfect for families looking to maximize their hybrid car experience," said Nancy Gioia, Ford director of Global Electrification. "Thanks to the versatile interior, these cars are going to appeal to environmentally conscious consumers who need room to grow."

C-MAX Hybrid is targeted to deliver better fuel economy than the 41 mpg Ford Fusion Hybrid, the most fuel-efficient sedan in America today. It builds on the success of the critically acclaimed powersplit architecture Ford uses in its current hybrids, allowing it to operate in fuel-saving electric mode beyond 47 mph.

Both the C-MAX Energi and C-MAX Hybrid models will be built alongside the all-new 2012 Ford Focus and Focus Electric at Ford's Michigan Assembly Plant in Wayne, Mich. The plant's production is powered in part by one of the largest solar energy generator systems in the state. The C-MAX Energi and C-MAX Hybrid vehicles sold in Europe in 2013 will be built at Ford's plant in Valencia, Spain, starting in 2013.

The plug-in advantage

Targeted to achieve AT-PZEV (Advanced Technology Partial Zero Emissions Vehicle) status, C-MAX Energi provides maximum fuel efficiency by pairing a high-voltage lithium-ion battery and electric traction motor with a high-efficiency Atkinson-cycle gasoline engine. This allows it to run in electric mode before using the gasoline engine.

C-MAX Energi will offer more than 500 miles (800 kilometers) of overall driving range using the battery and engine – more than any other plug-in or extended-range electric vehicle. C-MAX Energi delivers better charge-sustaining fuel economy than Chevrolet Volt.

In general, plug-in hybrid vehicles offer several benefits, including:

• Electric driving range, perfect for emissions-free and silent city driving
• Potential consumer savings on energy and fuel costs thanks to improved fuel efficiency over a standard hybrid
• Reduced dependency on petroleum and increased energy independence
• Reduced environmental impact through reductions in greenhouse gas emissions
• Increased use of electricity from renewable energy sources (e.g. wind and solar), where available, for vehicle recharging

"A plug-in hybrid owner may make fewer trips to the pump to refuel because of its all-electric mode capability," said Derrick Kuzak, Ford vice president of Global Product Development. "Conveniently, they'll be able to recharge their plug-in hybrid at home overnight. And they'll never have to think about the vehicle's electric range, because the plug-in hybrid seamlessly shifts to fuel power when needed."

The development of Ford's first-ever production plug-in hybrid leverages more than 200,000 miles of road testing conducted in collaboration with a coalition of 10 utility companies, the U.S. Department of Energy, the New York State Energy Research and Development Administration and the Electric Power Research Institute.

Getting charged up

C-MAX Energi and C-MAX Hybrid will use advanced lithium-ion battery systems developed and assembled in-house by Ford in Michigan. Each system is smartly designed to maximize use of common, high-quality components, such as control board hardware that has proven field performance in Ford's current, critically acclaimed hybrid vehicles.  

Li-ion battery packs offer a number of advantages over the nickel-metal-hydride (NiMH) batteries that power today's hybrid vehicles. In general, they are 25 to 30 percent smaller and 50 percent lighter, which makes them easier to package in a vehicle, and can be tuned to increase power to boost acceleration or to increase energy to extend driving distance.

While C-MAX Hybrid will operate much like today's hybrid vehicles, C-MAX Energi will benefit from daily charging to maximize its all-electric range. Thanks to the efficiencies of its right-sized battery system, the plug-in hybrid easily recharges 100 percent overnight on a 120-volt outlet.

A full charge in CMAX Energi allows owners to increase their driving significantly in all-electric mode and drastically reduce their use of the on-board fuel engine.

On start-up, C-MAX Energi will operate in charge-depletion mode, providing electric driving range. When the battery has been depleted or certain conditions are met, it switches to charge-sustaining hybrid mode for continued optimal fuel efficiency.

Ford worked with a supplier to provide an industry-standard five-point plug for C-MAX Energi (and new Focus Electric) that is ergonomically comfortable to hold as well as durably and distinctively designed. The plug handle uses a matte-finished black rubber for a comfortable, non-slip grip and the plug head is shielded with a glossy white hard plastic to protect the electronics. The Ford Blue Oval trademark helps make the device immediately recognizable.

When the cord set connector is plugged into the vehicle's charge port, which is located conveniently between the driver's door and front wheel well, it activates a light ring that loops around the port twice in acknowledgement of connectivity. The light ring then illuminates in quadrants as the vehicle charges. Flashing quadrants represent charge in progress and solid-lit quadrants show stages of charge completion. When the entire ring is solidly lit, the vehicle is fully charged.

Smarter interface

C-MAX Energi owners will have access to a suite of driver information systems – on-board and off-board – designed to help them manage the recharge process, manage the most eco-friendly route on-board, remotely control their vehicle's charge and preconditioning settings, monitor battery state of charge and maximize energy efficiency to extend use of electric mode. C-MAX Hybrid owners also will benefit from the on-board features.

Among these tools is a unique execution of MyFord Touch™ driver connect technology, especially for electrified driving. It offers exceptional configurability of vehicle information, including fuel level, battery power level, and average and instant miles per gallon.

The cluster's new MyView feature allows drivers to access even more vehicle data such as the electrical demands of vehicle accessories, including air conditioning, which influences fuel economy and the electric driving range of the C-MAX Energi.

The Brake Coach feature helps to educate drivers to optimize their use of the regenerative brakes to recapture kinetic energy and send it back to the battery, also reducing wear on the brakes.

Long-term fuel efficiency can be displayed in two ways – either as a traditional chart or using an innovative display that shows a growing leafy vine on the right side of the cluster. The more efficient a customer is, the more lush and beautiful the leaves and vines become, creating a unique visual reward for the driver's efforts.

To reinforce the message, at the end of each trip a display screen provides distance driven, miles gained through regenerative braking, fuel consumed (average and total) and a regenerative braking score.

New MyFord Mobile

Off-board, C-MAX Energi owners in North America can maintain constant contact with the car anywhere they have mobile phone or web access using the Ford-developed MyFord Mobile.

MyFord Mobile enables access to a secure Ford website and smartphone/feature phone app to get instant vehicle status information, perform key functions remotely, monitor the car's state of charge and current range, get various alerts including when the vehicle requires charging, remotely program charge settings and download vehicle data for analysis.

The feature also allows the owner to program the vehicle to use electricity from the grid to heat or cool the battery and cabin while plugged in. For example, during hot summer months, owners can preprogram the car the evening before to be fully charged – and fully cooled to a particular temperature – by a certain time the following morning. Users can also locate the vehicle with GPS, remotely start the vehicle, and remotely lock and unlock the car doors.

Working with MapQuest®, MyFord Mobile can communicate charge station and other points of interest to C-MAX Energi using SYNC's Traffic, Directions and Information (TDI) service. Turn-by-turn guidance is provided by the in-car map-based Navigation System. Drivers can also get up-to-date charging station information in their vehicle directly through SYNC TDI simply by connecting to SYNC Services.

Value charging, powered by Microsoft

Using the value charging feature, powered by Microsoft, C-MAX Energi owners in North America will be able to optimize their home's energy use and vehicle recharging practices. Value charging allows Ford customers to reduce their electricity costs by taking advantage of off-peak or reduced rates from their utility without a complicated set-up process.

"Although C-MAX Energi owners won't have to plug in, by doing so they'll get the benefits of driving in electric mode for longer distances; that can mean fewer trips to the gas station and less emissions when driving," said Sherif Marakby, director of Ford's hybrid and electric programs. "That's why we'll be providing C-MAX Energi and C-MAX Hybrid owners with a user-friendly interface and tools like value charging that will help them get the most out of the vehicle's electric mode capability."

Proven powersplit technology

C-MAX Energi and C-MAX Hybrid build on the success of the critically acclaimed powersplit architecture Ford uses in its current hybrids, including the Ford Fusion Hybrid, winner of the 2010 MOTOR TREND Car of the Year® award.

In a powersplit hybrid, the electric motor and gasoline-powered engine can work together or separately to maximize efficiency. The engine also can operate independently of vehicle speed, charging the batteries or providing power to the wheels as needed. The motor alone can provide sufficient power to the wheels in low-speed, low-load conditions, and work with the engine at higher speeds.

While this system enables the current Fusion Hybrid to operate in fuel-saving electric mode up to 47 mph, Ford is targeting higher electric operating speeds for C-MAX Hybrid and even more capability for C-MAX Energi, which will have the advantage of additional battery power.

Ford's global C-car strategy

C-MAX Energi and C-MAX Hybrid are two of at least 10 new models or derivatives that Ford will launch around the world based on its new global C-car platform – Ford's first truly global One Ford platform.

Ford's new generation of C-segment vehicles will be sold in more than 120 markets and will account for more than 2 million units annually. The C-segment accounts for one in four cars sold worldwide today and, in conjunction with the B-segment, is expected to rise to 50 percent of all cars sold globally by 2013.

The all-new C-MAX lineup also introduces a number of advanced new technologies to the compact multi-activity vehicle class. More often found only on larger or more premium cars, these technologies are focused on enhanced comfort, safety and sustainability, including the availability of new and powerful, yet highly fuel-efficient, low-CO2 Ford EcoBoost™ gas engines.

The previous European C-MAX established a reputation for providing a balance of enjoyable driving dynamics and impressive comfort. The all-new model is set to take that performance to a new level, giving drivers a class-leading combination of responsive, sporty handling and overall refinement approaching the standards usually associated with larger, luxury vehicles.

C-MAX Energi and C-MAX Hybrid are two of five electrified vehicles that Ford will bring to the North American market during the next two years. In addition, the Ford Transit Connect Electric small commercial van, built in collaboration with Azure Dynamics, began initial production at the end of 2010, and Focus Electric will launch in late 2011. A second next-generation hybrid electric vehicle will be announced later and available in North America and Europe in 2012.

About Ford Motor Company

Ford Motor Company (F: 18.27 +0.05 +0.27%), a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 163,000 employees and about 70 plants worldwide, the company's automotive brands include Ford and Lincoln. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford's products, please visit www.ford.com.  

Forex – EUR/CHF Down During The Asian Session

Forex Pros – The Euro was lower against the Swiss Franc on Monday.

EUR/CHF was trading at 1.2452, down 0.28% at time of writing.

The pair was likely to find support at 1.2444, today's low, and resistance at 1.2726, Wednesday's high.

Meanwhile, the Euro was down against the U.S. Dollar and the Japanese Yen, with EUR/USD shedding 0.02% to hit 1.2905 and EUR/JPY falling 0.04% to hit 107.26.

2011: Housing, Jobs, Stocks, Commodities And US Dollar

As the global economy shows continued signs of a sustainable economic recovery, there are two notable areas lagging behind; employment and housing in the United States. Continued trends in these areas could lead to renewed weakness in the U.S. dollar, which in turn could help boost stock and commodity prices. From a December 26th Bloomberg article:

A wave of foreclosures waiting to reach the market means home prices will remain under pressure in 2011, representing a risk to household finances. Rising equity values and an improving job market will probably help offset the damage, ensuring that confidence and spending continue to climb. "The inventory overhang is so big, with foreclosures looming, it'll take five years to absorb the supply," said Paul Ballew, chief economist at Nationwide Mutual Insurance Co. in Columbus, Ohio. "The consumer is feeling better although there is still a high level of caution and anxiety."

According to a December 29th NPR article:

Mark Zandi, chief economist at Moody's Analytics, says in 2010 the labor market was running hard, but going nowhere. The economy needs to generate about 150,000 jobs a month, Zandi says, just to keep up with population growth and people re-entering the workforce. It didn't do that in 2010. "It wasn't negative. We weren't hemorrhaging jobs," he says. "But in the context of 10 percent unemployment, standing still isn't all that great."

In general, a weak U.S. dollar is favorable to stocks and commodities, with the benefit of the doubt going to stocks in emerging Asian countries since their debt burdens are small relative to developed nations. The short-term outlook for the U.S. dollar is somewhat mixed presently with the bulls having the upper hand over the last seven weeks. Recent action in the U.S. dollar, aided by growing concerns about ongoing weakness in housing, has left the door ajar for the dollar bears. The dollar is also under assault from the Fed's quantitative easing program (a.k.a. money printing).

On December 17th, we noted the dollar had recently completed two of the three steps usually associated with a change in trend. As shown in the chart below, the dollar has been unable, thus far, to complete the third step, which is to close above 81.19. Recently, the dollar has made a lower high, which leans bearish (compare point A to point B). The Rate of Change (ROC – see bottom) indicator also tells us the recent push higher was lacking conviction from buyers (compare A1 to A2 below). As of the close on December 30th, nothing was settled from a very short-term perspective.

For now, the dollar sits in a technical no man's-land from a short-term perspective. A close below 79.29 would increase the odds of a resumption of the greenback's longer-term downtrend. Should the bears regain control of the dollar, it would continue to favor commodities such as copper (JJC: 59.10 0.00 0.00%), silver (SLV: 30.18 0.00 0.00%), oil (USO: 39.00 0.00 0.00%), and agriculture (DBA: 32.35 0.00 0.00%). Significant weakness in the dollar may be followed by a resumption of leadership by emerging market stocks (EEM: 47.642 0.00 0.00%) relative to U.S. stocks (SPY: 125.75 0.00 0.00%).

With a six-to-twelve month time horizon, favored sectors for 2011 include energy (XLE: 68.25 0.00 0.00%) and materials (XLB: 38.41 0.00 0.00%). Strength in these sectors tends to be associated with periods of weakness in the U.S. dollar. From a bullish perspective, we could see strength in energy and materials, coupled with strength in the dollar, if U.S. growth, housing, and/or employment surprise on the upside, but that may be an ambitious scenario. Our 2011 outlook for stocks does not rule out better than expected economic outcomes in the first of 2011, based on recent technical deveopments.

We will continue to monitor the U.S. housing and labor markets along with relative moves in global currencies. Markets have a lot of moving parts; keeping an open mind, paying attention, and remaining very flexible are sound practices for all investors.

Crude Oil Grinds Higher On Outlook, Gold Edges Lower After 30% Gain In 2010

Commodities – Energy

Crude Oil Grinds Higher on Outlook

Crude Oil (WTI) – $91.71 // $0.33 // 0.36%

Commentary: Crude oil is kicking off the new year on a positive note, with WTI rising close to $92 and Brent surpassing $95 in overnight trade. Loose monetary conditions and a strong economic outlook remain the two bullish underpinnings of crude. Prices will likely gravitate higher as long as news flow stays positive. We would wait for the inevitable correction, however, before initiating fresh long positions. An excerpt from our latest special report:

"All things considered, benchmark crudes have accounted for quite a bit of bullishness with prices sitting in the mid-$90's. There will likely need to be evidence that the market has tightened more-than-expected before a move into the triple digits. As stated [previously], the bullish wildcard is demand growth from developed economies, while the bearish wildcard is non-OPEC supply. Additional variables to consider include China's demand growth as the country's central bank tightens monetary policy and OPEC crude supply as Iraq lifts production and quota compliance falls due to higher prices."

Technical Outlook: Prices are range-bound between $91.88 – the recent swing high – and the 23.6% Fibonacci retracement at 11/17-12/27 rally at $89.09. A break higher exposes the top of a rising channel set from August at $93.22 while a reversal lower exposes the 38.2% Fib at $87.36.

Commodities – Metals

Gold Edges Lower After 30% Gain in 2010

Gold – $1416.95 // $3.83 // 0.27%

Commentary: The numbers are officially in—gold rose 29.5% in 2010, its tenth straight annual gain. Prices closed out the year just shy of the record nominal high of $1431.25. The fact that the U.S. Dollar fell for seven straight sessions to close out the year helped give a final boost to gold.

Can the bull market continue in 2011? All the ingredients are still there for gold to continue its rally—investor interest remains high, with demand from China, in particular, surging. Furthermore, this interest has been consistent, as flows into gold ETFs have risen steadily since these financial products were introduced almost seven years ago.

2011 will be interesting, however, as it may be a transition year. By the end of 2011 we may actually see the major central banks begin to tighten monetary policy. As rates in the U.S., for example have been flat since the end of 2008, this will be a dramatic shift that could spur profit-taking in gold.

Technical Outlook: Prices have taken out resistance at $1414.34, the 14.6% Fibonacci retracement of the 10/22-12/7 rally, with the bulls now poised to challenge the record high at $1431.25. The 14.6% level has been recast as near-term support.

Silver – $30.82 // $0.10 // 0.33%

Commentary: Silver advanced an incredible 83% in 2010, as investor interest shifted meaningfully in favor of the cheaper precious metal. At one point in 2010, the gold/silver ratio hit a high of almost 71, but by the end of the year the ratio plunged to 45, the lowest since early 2006. The culprit was aggressive investment flows into the metal, especially via financial products such as ETFs. Silver ETF holdings rose by almost 100 million troy ounces to 485 million over the course of the year. That is significant in a market that is roughly 900 million troy ounces in size.

The gold/silver currently stands at 46, near the lowest levels since April 2006. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance).

Technical Outlook: Prices set a new 30-year high last week but positioning hints a reversal lower is ahead. Prices have carved out a bearish Rising Wedge formation since early November, a setup reinforced by clear-cut negative divergence on RSI studies. Confirmation of a downward breakout requires a daily close below the wedge bottom, now at $29.39. More immediate support lines up at $30.17.

 

Bear Of The Day: FTI Consulting (FCN)

FTI Consulting's (FCN: 37.28 0.00 0.00%) third quarter 2010 earnings were below the Zacks Consensus Estimate. The company's corporate/restructuring segment remains a drag on its growth due to softer trend in restructuring activities and a slowdown in new cases.

The company is also experiencing a tepid pace of recovery in the Merger & Acquisition markets. Overall, the near-term visibility remains unclear, as demand environment for practices remains uncertain given the current market volatility and clients cautious aggregate spending.

Going forward, we remain skeptical about the growth prospects of the company. Hence, we maintain an Underperform rating on the stock.

How To Trade Gold, Stocks And ETFs In 2011

I hope everyone had a great holiday and new years!

It's time to reset our profit counter to zero and start looking for new profitable trades along with managing our current open positions on our small cap stocks which we continue to hold with gains of 66%, 35% and 10%.

Last year was a tough one as the stock market chopped around in a very large range giving off buy and sell signals every week and some times every other day…

Those who follow me or trade with me through my trading newsletter know how conservative I am when looking for low risk setups in both ETFs and stocks. And no doubt agree there were some extended periods of time when we did not have any trades because the volatility on a daily basis was making it the risk higher than what I wanted us to take, thus we waited for setups instead of chasing prices. We still locking in some solid gains with 8 winning trades, but feel we can better this year especially if we get less chop and more of a trending market.

It's safe to say some people just do not like being in cash, hence the reason so many want stock picks and trades all the time. But to be flat out honest, I love being in cash or at least holding a good chunk in cash waiting for a high probability opportunity to pop up on my charts before committing my hard earned cash. It's better to be wishing you were in a trade than to have all your money tied up in losing positions just because you wanted to be active… Because I give you only the trades I am making with my own money, I think that is the reason things are slower paced, unlike some other newsletters in this industry which fire off new trades each day or week just to keep those addicted (wanting stocks picks all the time) happy.

Anyways, 2011 should be a great year for trading, investing and education. Last year's fast paced market I know either took your money and got you really frustrated, or you made money and was able to use the difficult conditions to fine tune your trading and money management stills like I did. 2011 feels like it's going to start out similar to 2010 where we get a move up into mid January, but once earning season starts the market sells off on the good news for an 8-10% correction.

The good news is that after last years fast paced market and my constant refining of my strategy and money management rules, we should be able to catch the majority of the trends this year both up and down using stocks, regular ETFs and Inverse ETFs.

As much as I would like to forecast what I think will happen this year, I have decided to take the market one quarter at a time to keep everyone more in tune with what's happening now and a glance forward up to 2-3 months.

Take a look my SP500 charts for the next 3-8 weeks below.

SP500 Index – Daily Chart

On this chart you can see that the overall trend right now is still clearly up. But with this current situation I feel one should be on the sidelines waiting for the market tip its hand telling us its headed higher or lower. If it prices start to fall we will look to short the market in order to profit from the correction as long as the market provides an optimal opportunity.

Currently the market sentiment levels are at extreme highs, which is the same as last January and April's highs. With extreme sentiment, light volume (lack of buyers) and earning season just about to start I cant help but think a nice correction is about to take place which will cleanse the market before the next big leg higher.

If all goes according to plan we should see an 8-10% correction. A pierce of the November low is what I am looking for as that would trigger a lot of protective stop orders and create panic selling in the market. It is panic selling which creates a market bottom. That being said we may not get that large of a correction which is why we must continue to monitor the market closely as my analysis will change with the market.

Jan 2010 SP500 Correction

This time last year the market was in a very similar situation with market sentiment, light volume, and earning season just around the corner…

It's difficult to pick tops because they can stay overbought for an extended period of time, bottoms are a little different simply because fear is more powerful than greed and shows it's self on the charts once you know what to look for and how to trade it. My point here that you should not jump the gun and start shorting just because you think one is around the corner. I prefer to wait for more of a clear signal that sellers are in control then ride the short term down trend and hope it blows up into the correction I think we are about to see.

During bottoms there are new low washouts, and the same goes for tops, we get several small new highs just before the price rolls over, and that has yet to happen.

Weekend Market Trend Conclusion:

In short, 2011 should have several great plays as I am looking at the SP500, Precious Metals, Oil, US Dollar, Bonds and Emerging Markets for some big moves.

Euro Zone Manufacturing PMI Rises More-than-expected

Forex Pros – Manufacturing activity in the euro zone increased more than initially forecast in December, rising to an 8-month high, industry data showed on Monday.

In a report, market research group Markit said that its euro zone manufacturing PMI rose to a seasonally adjusted 57.1 in December, compared to a preliminary reading of 56.8.

Analysts had expected the manufacturing PMI to rise to 56.9 in December.

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

According to the data, the level of the PMI has remained above the neutral 50.0 mark for 15 months in a row.

Commenting on the report, Chris Williamson, chief economist at Markit said, "Germany remained the star performer, seeing near-record growth, followed by France, where the PMI slipped only slightly from November's ten-year peak. However, welcome signs of recoveries were also evident in the periphery, where export sales helped boost output growth in all cases except Greece, where the rate of decline at least moderated."

He added, "The data suggests that the manufacturing recovery may be broadening out to help lift economic growth outside of the French-German core in early 2011."

Following the release of the data, the euro was down against the U.S. dollar, with EUR/USD tumbling 0.62% to hit 1.3306.

Meanwhile, European stock markets were broadly higher. The EURO STOXX 50 climbed 0.66%, France's CAC 40 jumped 1.39%, Germany's DAX surged 0.87%, while the FTSE 100 was closed due to the New Year's holiday.

Stocks Markets – Anticipating Economic Growth?

This article is a combination and update of two posts published separately a few weeks ago.

Stock markets have been heading north over the past few weeks while market commentators question the health of the world economy and especially the situation in the U.S. and China. But who is right and who is wrong? This very question prompted me to look at the ability of stock markets to anticipate the fortunes of the underlying economies.

The methodology I applied was to calculate Monthly Smoothed Annualized Growth Rates (MSAGR for short) of the major representative stock exchanges and compare that with leading indicators of the respective economies where possible. To calculate the MSAGR I compute a weighted index on the basis of increased weights for the past 12 months instead of using a simple moving average. The most recent value therefore carries a significantly higher weight than that of the first month of the past 12 months. The weighted index is then smoothed by calculating a 4-month moving average of the weighted index. The month-on-month growth rate is then calculated and annualized.

In the graph below, I have depicted the MSAGR of the S&P 500 Index against the 12-month momentum of the USA Composite Coincident Indicator and it appears that the MSAGR of the S&P 500 leads the coincident indicator and therefore the U.S. economy by approximately four months.

Sources: I-Net; Plexus Asset Management.

What is remarkable is that in all instances when the MSAGR fell below zero, growth of the U.S. economy as measured by the coincident indicator declined approximately four months later, except in 1994 when the MSAGR only briefly turned negative.

As in 1994 the MSAGR briefly turned negative in August this year at -1.17% but bottomed and soon moved to positive territory again. The message I am getting is that the slowdown in growth of the U.S. economy in recent months is something of the past and that the first quarter of 2011 will show improvement. It is clear that those at the Fed are heavily influenced by the trend in the stock market and therefore felt strongly about implementing QE2 to prevent the ship from sinking.

The Eurozone displayed characteristics similar to those of the S&P 500 Index and MSCI World Index in US dollars. The zero line is of utmost importance. When the MSAGR of the Eurozone breaks decisively into negative territory it heralds a drop in economic activity approximately four months hence. A few months ago (in September) it came precariously close but rebounded, indicating that the leading indicator of the Eurozone has likely gained momentum.

Sources: I-Net; Plexus Asset Management.

Germany was the stalwart in the Eurozone, though. Although the Dax's MSAGR trended down, it never came close to zero.

Sources: I-Net; Plexus Asset Management.

Elsewhere in the Eurozone things did not look rosy. Even France's relatively strong economy became extremely vulnerable as indicated by the stock market's smoothed growth rate. The MSAGR of the CAC 40 appears to have bottomed and is heading for positive territory.

Sources: I-Net; Plexus Asset Management.

The outlook for the economies of the so-called PIIGS, the Eurozone's problem children, is dire, though. Greece's stock market prices are anticipating a deep recession.

Sources: I-Net; Plexus Asset Management.

A similar picture is evident for Ireland.

Sources: I-Net; Plexus Asset Management.

Italy's stock market is holding up reasonably well, indicating that the economic outlook is less bad than anticipated.

Sources: I-Net; Plexus Asset Management.

Although the smoothed growth rates of the stock markets in the Iberian Peninsula indicate contraction of the economies in Portugal and Spain, it is relatively shallow and appears to have hit bottom.

Sources: I-Net; Plexus Asset Management.

Sources: I-Net; Plexus Asset Management.

The MSAGR of the FTSE 100 briefly dropped to below zero but staged a strong rebound, indicating that the market is anticipating stronger economic activity in coming months.

Sources: I-Net; Plexus Asset Management.

In the Far East investors in the Japanese stock market are significantly less optimistic than the momentum of the official leading indicator suggests. However, the stock market's smoothed growth rate is heading for positive territory again.

Sources: I-Net; Plexus Asset Management.

Using the same algorithm, I calculated the MSAGR for the MSCI World Free Index in U.S. dollars and compared it to the 12-month momentum of the OECD Leading Indicator. While there is a close relationship between them, the MSAGR of the MSCI World Free Index is in fact more reliable than that of the OECD Leading Indicator. It was especially evident in 2002 when the OECD Leading Indicator's momentum turned positive while the MSAGR stayed in negative territory and therefore did not fall into the trap of the double-dip in global economic activity. In fact, since the start of last year the MSAGR of global stocks has led the OECD Leading Indicator's momentum.

Sources: I-Net; Plexus Asset Management.

My MSAGR of the MSCI Emerging Market Index in U.S. dollars had a solid uptrend that started when the Asian crisis ended at the end of 1998 but collapsed in 2008 with the Lehman saga.

The MSAGR of the MSCI Emerging Markets Index in U.S. dollars follows the same trend as that of the MSCI World Free Index in U.S. dollars. The growth is more elevated, though, and indicates the stronger growth in emerging economies compared to mature economies. It is interesting to note that unlike mature markets the MSAGR of emerging markets did not bottom in negative territory recently.

Sources: I-Net; Plexus Asset Management.

In South America the Argentine bourse is anticipating stronger economic growth in the near future.

Sources: I-Net; Plexus Asset Management.

The Brazilian market players do not share the optimism of their Argentine partners, though.

Sources: I-Net; Plexus Asset Management.

It is no wonder the Brazilians and Russians are crying foul about the strength of their currencies!

Sources: I-Net; Plexus Asset Management.

The smoothed growth rate of India's stock market has resumed an uptrend into positive territory.

Sources: I-Net; Plexus Asset Management.

Commentators are still focusing on the extremely weak OECD Leading Indicator for China and the potential effect thereof on the Chinese stock market. The MSAGR of the Shanghai Composite Index has bottomed in negative territory, though. It indicates to me that yes, economic growth is likely to slow in the next few months but it will be short-lived as the smoothed growth rate of the Index is again approaching positive territory.

Sources: I-Net; Plexus Asset Management.

Looking at my home country, South Africa, it is evident that the MSAGR of the South African stock market in local currency [[rand]] terms leads the economy as measured by the momentum of the SA Coincident Indicator by approximately four months. The MSAGR therefore points to the slowdown in growth of the SA economy bottoming in the final quarter of 2010 and activity strengthening in the first quarter of 2011.

Sources: I-Net; Plexus Asset Management.

Bottom line: The stock market is probably right regarding an improved global economic outlook for the first quarter of 2011. Overbullish sentiment can turn quickly, though. With a number of black swans on the radar I will be keeping a close watch on the MSAGRs of the different markets.