Stocks, Dollar and Commodity Markets Trend Forecasts into February 2013

“Well how was that for the start of a new intermediate cycle? While many analysts were calling for continued losses or even a market crash I repeatedly warned traders that an intermediate degree bottom was coming and that markets routinely rally violently out of those bottoms, often generating 5-8% gains in the first 12 to 15 days. This particular intermediate bottom has already gained 5% in just the first five days.

As I’ve been saying all along, I think the market will easily make new highs in the next two or three months, possibly even significant new highs, or a test of the 2007 top as QE3 starts to work its magic.

That being said, stocks and gold are now due for a short-term breather. Why is that you ask, if all markets have just formed major intermediate cycle lows? The reason has to do with the daily dollar cycle. Friday marked the 24th day in the current daily cycle. That cycle generally runs about 18-28 days trough to trough. At 24 days the cycle is well into the timing band for a bottom and bounce.

Full article with serious chart porn

Gapping up 

RIMM +5.2%, MCP +4.4%, ALU +3.6%, KCG +3.6%, FB +1.3%, JRCC +6%,

LMT +0.7%,  YHOO +2.3%,  SRPT +1.9%,  PHH +1.8%, AMRN +1.7%,

DECK +1.8%, EBR +8.2%, CIG +3.7%, CPL +1.4%, HOGS +15.1%,

Gapping down 

BCS -4.2%, GOLD -2.2%, NOK -2.0%, C -1.5%,  ARO -3.7%, CHS -1.9%,  MCD -0.9%,

BLL -1%,  GNRC -2.1%, DWA -4.2%,  HAIN -2.3%, RBS -3.2%, LYG -2%,

DB -2%, HBC -1.4%, MS -1.2%, BAC -1.2%, UBS -1%,

In Play ,

On the Wires 

“U.S. shoppers went to stores earlier and bought online more than before this Thanksgiving weekend, giving retailers a strong start to the holiday shopping season, data showed on Sunday.

Likely beneficiaries included retailers that have done a better job of combining their physical stores with their online and mobile channels into a seamless shopping experience, analysts said, mentioning the likes of Wal-Mart Stores Inc and Macy’s Inc.

“The more you can make a shopper shop multiple channels, they are at least twice as likely to be a loyal shopper and spend tons of money,” Patty Edwards, chief investment officer at Trutina Financial, said.

Total spending for the weekend rose nearly 13 percent to $59.1 billion from $52.4 billion last year, according to a survey from the National Retail Federation. An estimated 139.4 million adults visited U.S. stores and websites from Thanksgiving through Sunday, up from 131 million last year, the survey, conducted for the industry trade group by BIGinsight, said.

In the latest sign of the growing importance of Internet-based retailing, comScore Inc said “Black Friday” online sales topped $1 billion for the first time, while IBM said online sales rose 16.9 percent year-over-year on Saturday.”

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Now that earnings season is over we have a chance to review some of the macro details. We find overall earnings were better than expected, but over 61% of the S&P 500 companies have reported shortfall in revenues. Is this trend going to continue ? Pay close attention to your company pre-announcements.

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“One of the big calls of the day: Citi is out with a ‘Buy’ rating on Apple and a price target of of $675/share. That’s about $100 per share or 20% above the current price.

Here are the key points of the call, made by Glen Yueng, Walter H. Pritchard, and Jim Suva.

The company’s pullback is consistent with other big selloffs in the company’s history. Those were then typically followed by rallies of 20 to 50%….”

Full report

“You wouldn’t know the Federal Reserve has done nothing but add to its record monetary stimulus from looking at short-term funding markets.

The federal funds effective rate on overnight loans between banks was 0.16 percent on Nov. 21, up from 0.06 percent at the end of September 2011, the month Fed officials announced they would begin swapping short-term securities in their portfolio for long-term debt under Operation Twist. The rate for borrowing and lending Treasuries for one day through repurchase agreements also has surged.”

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WTI and Brent are off by a scant amount as they come off a nice rally….

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Israel – Hamas ceasefire holds

“European stocks are trading at levels that show investors anticipate no profit growth for 2013, increasing optimism among strategists who say equities will rise to a five-year high.

The Stoxx Europe 600 Index (SXXP) is priced at 11 times estimated profit, down from 13 before the financial crisis, according to data compiled by Bloomberg. Even though the region entered a recession last quarter, earnings will climb almost 5 percent next year, according to the average of seven strategist forecasts in a Bloomberg survey. They predict the benchmark gauge will gain 10 percent to the highest level since 2008.”

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No lobbying balls in this arena…

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“UBS AG (UBSN) was fined 29.7 million pounds ($47.6 million) by the U.K. and told by the Swiss that it may have to increase capital levels for operational risks as regulators levied penalties after Kweku Adoboli’s $2.3 billion trading loss.

The Financial Services Authority in the U.K. issued the fine today, saying the loss revealed serious weaknesses in management systems and internal controls. Finma, the Swiss regulator, said it instructed UBS to appoint an independent third party to report on the progress and completion of a program to fix these failings. The effectiveness of controls against unauthorized trading will also be checked by an auditor once the program is finished, Finma said.”

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“Europe’s answer to the U.S. shale boom may lie beneath the Sahara desert.

While environmental regulation and disappointing drilling tests have held back the development of shale gas reserves in Europe, Algeria is using tax breaks to encourage exploration. Pipelines under the Mediterranean to Spain and Italy already link Africa’s largest gas exporter into Europe’s grid.

The North African nation is holding talks with Exxon Mobil Corp. (XOM) over shale, Ali Hached, an adviser to Energy and Mines Minister Youcef Yousfi, said in an interview. Eni SpA (ENI),Royal Dutch Shell Plc (RDSA) and Talisman Energy Inc. (TLM) have already signed shale exploration accords with Algeria, which expects tax breaks for gas exploitation and drilling shale to get parliamentary approval within weeks.”

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“Goldman Sachs Group Inc. (GS), the No. 1 stock underwriter in Europe, turned down roles in offerings by banks in Spain and Italy this year, the only top U.S. securities firm not to take part in the fundraisings by southern European lenders as the region’s debt crisis stretches to a fourth year.

The firm declined a role in Banco Popular Espanol SA (POP)’s 2.5 billion-euro ($3.2 billion) rights offering this month because it wanted greater protection to avoid potential losses on the sale, two people familiar with the talks said. JPMorgan Chase & Co. (JPM) and Morgan Stanley are helping to guarantee the deal. Goldman also didn’t underwrite this year’s share sales by Italy’s UniCredit SpA and Portugal’s Banco Espirito Santo SA (BES), which drew Bank of America Corp. and Citigroup Inc.”

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“Online retailers are poised for a record $43.4 billion holiday sales season as shoppers increasingly rely on social networks and mobile devices to find and buy merchandise.

Internet sales will grow 17 percent from a year earlier and make up more than 10 percent of U.S. retail spending, excluding gas, food and cars in the last two months of the year, saidAndrew Lipsman, vice president of industry analysis at ComScore Inc. (SCOR) That compares with $29.2 billion spent online during the same period in 2007, when electronic commerce made up 7.4 percent of total spending.”

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“A government-backed fund is preparing to spend more than 180 billion yen ($2.2 billion) for two-thirds of Renesas Electronics Corp. (6723) as shareholders in the ailing Japanese chipmaker consider the deal, a person with knowledge of the plan said.

Renesas’s three biggest shareholders — Mitsubishi Electric (6503) Corp., NEC Corp. (6701)and Hitachi Ltd. — are close to agreeing on a stake sale to Innovation Network Corp. of Japan, the person said, asking not to be named because negotiations aren’t public. Eight companies, including Toyota Motor Corp. (7203), will invest more than 10 billion yen total for minority stakes under the proposal, which could still change, the person said.”

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“Gold Fields Ltd. (GFI), the world’s fourth-largest producer of the metal, said third-quarter profit fell 11 percent as strikes and a fire cut output in its core mining region of South Africa.

“You’ve gone through a strike that’s cost you 2 billion rand ($230 million) in revenue, we’ve lost 145,000 ounces of production, it’s worsened our financial position, and some of those areas that we didn’t mine for a while we’re still trying to build back up, so it’s a big headwind,” Chief Executive Officer Nick Holland said in an interview today at Bloomberg’s office in Johannesburg.”

Full report

“L’Oreal SA, (OR) the world’s largest cosmetics maker, agreed to buy the Urban Decay brand from U.S. private-equity firm Castanea Partners to expand in specialty makeup.

Urban Decay had sales of $130 million in the year ended June 2012, the French company said today in a statement without disclosing terms of the deal. Regulatory approval is expected before the end of the year, L’Oreal said.

“Urban Decay is exactly the type of brand L’Oreal needs to beef up its makeup portfolio in the prestige channel,” Pablo Zuanic, an analyst at Liberum Capital in New York, wrote in a note today. He estimates that L’Oreal purchased the Newport Beach, California-based company for about $250 million to $300 million.”

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“Most emerging-market stocks rose after Taiwan said it’s considering ways to bolster equities, speculation increased that Japan will boost stimulus efforts and euro-area finance ministers prepared to meet on Greek aid.”

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“U.S. stock-index futures fell while European shares dropped after their best week this year as American leaders prepared to wrestle with a budget agreement and European finance chiefs meet on Greek aid. Treasuries rose for the first time in a week.

The Stoxx Europe 600 Index lost 0.4 percent at 6:45 a.m. in New York after the gauge surged 4 percent last week. Futures on the Standard & Poor’s 500 Index declined 0.3 percent, after falling as much as 0.6 percent. Treasury 10-year yields fell three basis points to 1.66 percent. Gold snapped a three-day advance, while soybeans extended the biggest weekly gain in three months.”

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