The rally has legs

New record high close for the DOW today! The Christmas rally continues, my portfolio was up over 10% today, what a way to end the year! I hope everyone is enjoying the Christmas rally as much as I am.

In the short-term, don't forget about the "January Effect" , statistics has proven that market gain the most in January (due to tax sellers buying back mostly), especially in the small cap/micro cap sector!

Enjoy the rally and happy 2007!

The P/E of countries

Here is a list of P/E of various countries, one thing caught my eye is that China has the highest P/E of all, which confirms that the recent run of Chinese ADR stocks is indeed a bubble. We should see a fall of Chinese stocks before 2008.

Hong Kong	17.580
Thailand	10.624
Brazil	10.942
Korea , Rep.	11.415
China	39.397
Indonesia	12.559
Russia	6.344
Italy	17.866
Malaysia	15.165
Singapore	13.776
USA	17.499
Netherlands	11.926
Taiwan	12.827
Japan	31.606
Germany	15.064
UK	18.711
France	14.518
Mexico	13.889
Canada	16.727
South Africa	11.602
Spain	15.043
Portugal	19.700
Switzerland	15.717

Merry Christmas

This year, 2006, has been an extremely good year for myself and majority of investors. Looking ahead, 2007, there will be challenges, but the United States economy is very healthy, global economical prosperity will continue, if you thought 2006 was awesome, you haven't seen nothing yet!

Santa Clause Rally is here

Well, the widely expected Christmas rally is finally here, new high for the DOW today.

The market will be up from here until early next year.

In other news:

Japan business sentiment improves

Costco's 1Q profit up 10 percent

Fed: Moderate growth for upper Midwest

Asia: Robust Growth, Rising Risks

European Airlines: A Gradual Ascent

Due to demand and better oil prices, S&P says the major airlines are coming back from the disruption caused by the August terrorist plots

"European airlines should continue to benefit from rising passenger numbers, generally stable or rising yields, and a moderation in crude-oil prices in recent months to record strong improvement in operating profits in 2006. Credit quality in the sector should continue to gradually strengthen but is unlikely to improve materially given underlying cost pressures."

Market building momentum

There wasn't much of interest in this slow, tight-range, low-volume snoozefest. The bears were trying to gain an advantage all day but couldn't quite get there, on the other hand, the Bulls are also tired from recently rallies. Hopefully tomorrow we'll get back on track and have a better tape to work with. I believe the bulls are just resting and building up the upward momentum at the moment.

The Can't Lose Market

The can't lose market continues to push higher.


This morning's economic data helped relieve fears that the economy was slowing down too quickly and portfolio managers really didn't need much of an excuse to keep pressing. In addition, bottom calling in the housing market enabled that group to keep on rallying.

Today's market analysis

As I said a couple of days ago during the small correction, that the market trend is still very bullish, morning dips are routinely being bought, a clear sign of bull market. Today the bears received a fatal blow from the market makers, the bulls won a critical battle, new high for the S&P500. We are basically all set for the widely expected Christmas rally. Get ready to receive big gifts from Santa Clause.

The New CNBC.com

"Although I enjoy making fun of CNBC as much as most people there is some utility to the network. So it is with the new website launching today, um it is CNBC.com.

I think the biggest benefit will actually come from being able to access CNBC Europe and CNBC Asia which most folks cannot do as a function of their cable company or timezone issues. There is video available of different segments from those networks. These segments tend to be four to six minutes long which allow for a real delving in to the guest's process as opposed to maybe two minutes in a segment on CNBC USA. You will also hear more about foreign stocks and markets in these videos." -- Random Roger

The new CNBC.com also has a new stock screener, a very good screener for beginners.

Saturday thoughts: “Boomer Bust?” I Don’t Think So!

"One of the stories that I’m quite frankly getting tired of reading about, even peripherally, is the “boomer bust.” The most recent example comes from Random Roger, who references a Peter Brimelow column, which references a Richard Band newsletter. ARRGHH!!!

The typical “boomer bust” argument is that as boomers retire, funding will shift from growth stocks to income investments, and possibly away from stocks altogether. The typical “no bust” argument is that people are more fit and live longer today, postponing retirement and therefore delaying the bust, or forcing them to keep money at work in growth investments.

I find the longevity issue to be arguable, and I promise to argue it – in a later post – but I also find it to be immaterial.

Think about the distribution of wealth in this country.

The vast majority of invested and invest-able assets are controlled by a tiny percentage of the population – and those folks will keep their money hard at work long past their “retirement age,” possibly through trusts and foundations, possibly just growing it aggressively so that they can die with more toys.

There are the non-fabulously-wealthy in the boomer demographic, who may switch their asset allocation. Or they may not. Many of these “pedestrian wealthy” got that way, not from stock market investing, but from owning transmission shops, rental real estate portfolios, insurance agencies, and convenience stores. Even those with stock market holdings don’t comprise a huge portion of the everyday investment flows, and as Henry points out, the up-and-coming from the BRICs will be more than happy to buy some U.S.-market growth assets from them.

So what about the rest of the boomers, the remaining 80%+ of them? Those boomers who are pitifully unprepared for retirement, of whom more than 25% have saved nothing, and 43% of whom will re-enter the workforce almost as soon as they leave it?

Can you say, “Welcome to Wal-Mart!”?

Because that is what most of the boomers will be saying in their golden years! For them to have some impact in the market, they would have to have some impact in the market, if you know what I mean. Who really gives a monkey’s tookus about their negligible investing flows? When they move their four- or five-digit IRAs from growth funds into dividend or bond funds, will it move the markets?

I don’t buy it. For the boomer bust to happen, there would have to be some large portion of the current investment flow coming from boomers that were going to start living off of their assets, and I don’t see that. Most of the wealth is in the hands of those already living off of their assets and/or businesses, and most of the boomers will be spending their retirement showing you where the lawn equipment is at the Ace Hardware, or checking your receipt as you leave through the Garden Center. The few that do switch asset allocations will be more than compensated for by the foreign inflows of capital from the maturing emerging markets.

“Boomer bust?” I don’t think so!"

--From Bill Rempel

Bullishly Bearish

The month of December is off to a shaky start.

But as I pointed out previously, early day dips are routinely being bought. This is one of the obvious signs of a bullish market.

Chasing Nickels Around Dollar Bills

• Where is goldilocks in the ISM?


• Construction spending falls


• CME housing futures indicate more home price declines are ahead


• "Everybody has their hopes and wants, and everybody hopes and wants to avoid a recession. Often, when the signal comes in strongly like it is now, there’s a human nature tendency to say, this time it’s different." - Huge Moore


• Bonds scream recession


• Rapidly increasing inflation is good for stocks?


• I wouldn't rely on these 2007 inflation projections


• Bill Gross' investment outlook


• Brett Steenbarger offers thoughts on the market's U-turn


• Michael Kahn seeks dark clouds forming in the distance ($)


• Woody Dorsey shares some red flags ($)


• ICI provides a closer look at the all-important money inflows (take note the continued drop in liquid assets (see my previous post about this kind of data. The cash deficit is now at -2.91% according to Jason Goepfert))


• Was this summer's sell-off enough to qualify for a mid-term election year low? If so, the bulls are going to love this chart


• "The new high for the Dow Jones Utility Average is both bullish and impressive." - Richard Russell


• The falling dollar is on the Economist's front cover ($)


• Historically, the market doesn't like the falling dollar


• Further dollar weakness depends on Mr. Market's interest-rate forecasts coming good


• Retail investors are increasing their exposure to the currency markets


• Elliott Wave analysis for the gold market


• The Iraq Study Group plans to recommend withdrawing nearly all U.S. combat units from Iraq by early 2008


• What 2000 years of history tells us about China's economic future


• China's hawks a $203 desktop PC


• Yep, time to look at some Russian opportunities (In fact, have you noticed the TRF)


• U.S. nuclear firms eye Indian market


• Jon Markman sees opportunity in plastics


• Morningstar's Democrat-proof health-care stocks


• The drug store chains can't catch a break


• Making the case for USG


• SAC Capital goes long Casual Male (CMRG) ($)


• Lots of chatter these days about Mr. Softee


• George Soros' sells biotech, buys tech and retail. See his top holdings


• A quick performance check on the Dow & S&P 500 stocks


• Most overbought and oversold S&P 500 stocks


• Stocks down more than 20% over the past year and also have a five-star Motley Fool CAPS rating


• The Stockopoly Plan looks for frequent dividend income


• S&P's latest screen looks for top-to-bottom winners


• Large caps with low a p/e


• The top 10 performers (1996 - 2005)


• What are your best practices as a trader?


• Michael Sincere's 10 common trading errors


• Always try to admit your mistakes early and often


• Are you a trading idiot?


• WileyTrader shares his thoughts about using the TRIN


• The end-of-the month phenomena


• Investing well requires more than ratio analysis, but it can help


• Victor Niederhoffer's reading list has some unusual suggestions


• The Money Men


• Finding valuable financial lessons in everyday conversations


• A nice look at the hedge fund industry


• You can't judge a hedge-fund index by its coverage


• Some more new ETFs


• As usual, Roy Weitz shares his interesting finds in the mutual fund industry


• Five steps to fiscal fitness


• Yikes! Did you know that the average annual interest rate on payday loans runs about 400%?


• Some large-scale personal data thefts are being buried by the mainstream press


• Have you been SMiShed yet?


• The Feds condemn electronic voting


• Pick up the tab by texting


• Profit and questions on prostate cancer therapy


• Better oversight of 401(k) plans urged


• Right on cue - regulations are hampering capital markets, CEOs say


• The coming crackdown on CEOs (I wouldn't count on it)


• Want to be a venture capitalist? Take Guy Kawasaki's aptitude test


• I wonder how many economists are paying attention to the virtual world headlines


• Deals, Deals, Deals!


• Sign of the times - the new Dealmaker magazine


• The Vigilant Investor's podcast


• Economists, turned bloggers, are drawing fans


• Free stock alerts by phone (I suggest using a throwaway number first)


• What is slowing your computer?


• Google's browser sync


• Google's mobile strategy in a nutshell


• Forget about Friday the 13th! Just be careful on Monday the 27th


• College kid tries to sell his future on eBay


• Funny stuff - have you ever dialed 9-1-1 for yourself?


• Backscatter!


• Too many Americans are failing at being good


• "The pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." - Winston Churchill

-- Kirk Report

Blind Man Trading

Today's performance was better than I expected. I don't know why I say that because even a blind man can see that the morning dips are routinely getting bought.

Sector rotation was the theme and the homebuilders (see XHB) are today's big winner (up +4%). Other bullish contenders were found in precious metals, healthcare, and energy. In case you are curious (or a closet indexer), for the month of November the Dow rose +1.2%, the S&P 500 gained +1.6% and the Nasdaq rallied +2.7%.

See you in December.

-- Kirk Report

Last Day of November

Mixed reports from retailers, higher-than expected inflation and rising jobless claims top this morning's headlines. Once again the combination of higher oil and gold prices and a weak dollar are back in play.

Upside movers in premarket trading are DRRX, DGIN, SNPS, HEPH, APTM, HOTT, MEDX, LTXX, ORCT, PSUN, BEAS, and ECMV. Downside movers are SCSS, RNIN, ZOLT, TIVO, BEBE, NPSN, CTDC, ARNA, GYMB, TGEN, and RYAAY. Premarket indications point to a relatively flat open and the help wanted index and NAPM-Chicago reports will be released at 10:AM.

The S&P 500 has risen +1.6% in November and is currently headed toward its sixth straight monthly gain which is the longest stretch of advances since August 2003. In addition, according to Stock Trader's Almanac, there have only been four down Decembers in the last 14 midterm election years. While the last trading day of November tends to be a weak one historically, December usually starts off strong. While historical tendencies have been useless tells this year, that certainly won't stop folks from being aware of them. Have a good one!

-- Kirk Report

Europe May Bear Burden of Dollar's Swoon

Global investors are keying in on the surprising rout of the dollar in recent trading sessions. On Nov. 27, the Dow Jones Industrial Average tumbled 158.46 points, or 1.3%, in its most severe decline since July. Part of the reason (disappointing sales by Wal-Mart played a role, too) has been the dour outlook for the dollar, which could weigh down U.S. stocks for some time to come. The greenback has fallen to its lowest levels since March, 2005, when compared to a basket of major currencies.

Yet the biggest loser in any major realignment of the dollar likely will be the Europeans. It is the euro that has appreciated most dramatically against the dollar. It's up 10.9% vs. the greenback on the year. Key Asia currencies such as the yen, up 1.5% vs. the dollar this year, and the Chinese yuan (which trades in a narrow band against the U.S. and other foreign currencies) haven't moved much at all. The Korean won, up about 8.5% vs. the dollar, is the big exception.

That means European exporters are losing their price competitiveness against both U.S. and Asian rivals. And France's Finance Minister Thierry Breton on Nov. 27 urged "collective vigilance" by the European Central Bank to the alarming rise of the euro vs. the dollar to 20-month highs in recent trading sessions.

Asia: Best of Both Worlds

The ECB is expected to raise a key interest rate by a quarter of a percentage point next week because of inflation worries driven by the improving economic performance in the euro zone. By contrast, the Bank of Japan's key interest rate is all of 0.25% while the U.S. has left the closely watched Fed Fund rate of 5.25% untouched over the last three months. It isn't likely to move to raise rates as long as the housing slump is depressing growth in the U.S., so the euro looks like the most likely candidate to appreciate going forward.

Asia, meanwhile, is far more dependent on export growth and more likely to manage its currencies to maintain price competitiveness for its big export sector. In fact, the region by and large is pretty much enjoying the best of both worlds. The euro is trading at record high levels against the Japanese yen and the yuan is widely decried in Europe as being grossly undervalued.

As a result, big Japanese automakers such as Toyota (TM), Honda (HMC), and Nissan (NSANY) are enjoying robust sales and market-share gains in both regions. Chinese low-end exports such as textiles and toys, plus higher-end stuff like consumer electronics, are also streaming into the U.S. and Europe.

No End in Sight

Of course, a sharp and sustained crash in the dollar would be bad news for the entire world economy. When asked about big risks out there for the global economy, during a recent interview with BusinessWeek editors (see BusinessWeek.com, 11/3/06, "Paul Volcker Talks Trade at BW CEO Forum"), former U.S. Federal Reserve Chairman Paul Volcker asked, "suppose there is a crack in the dollar?"

The U.S. stock market likely would sustain severe wounds and the planet's biggest economy might even fall into recession. Right now, though, few economists are predicting economic Armageddon.

The U.S. would actually welcome an orderly dollar correction, given the country's gargantuan current-account deficit, the broadest measure of U.S. trade in goods and services. It clocked $431 billion in the first half of 2006, a figure that represents about 6.6% of U.S. gross domestic product and that isn't considered sustainable.

Dollar's Advantage

A gradual decline of the dollar would make exports—from Microsoft (MSFT) software to GM (GM) Cadillacs—more competitive in international markets, and likely wouldn't cause the U.S. economy too much grief. One big advantage of the dollar's status as the dominant international currency is that U.S. companies don't have to worry about currency risk since debt is raised in greenbacks and most major commodities transactions, such as oil, are in dollars.

Also, both Japan and South Korea have a track record of intervening heavily in global currency markets to prevent the yen and the won from appreciating too dramatically against the dollar. And Chinese financial authorities don't seem to be in a huge hurry to let the yuan float more freely against the dollar and other international currencies.

All this suggests that the Europeans could carry the burden of the current dollar adjustment. It's not a terribly fair deal, but seems the state of play for the moment.

Brian Bremner is BusinessWeek's Asia Regional Editor based in Hong Kong.

Bears Get Shot Down Again

That sure didn't take long. With today's upside move the bulls were able to dust themselves off and wipe away Monday's sell-off.


These kind of dramatic reversals will only serve to embolden the bulls and put the bears back on defense. For anyone looking for confirmation that the rally is over, today's market action quickly shot down that view. While end-of-the-month games probably helped quite a bit, unless we see a quick pullback under Monday's lows, the bulls still have firm control.

-- Kirk Report