Quest for the Golden Cross

By Rodrigo Campos

NEW YORK (Reuters) – January has turned out strong for equities with just two trading days to go. If you’re afraid to miss the ride, there’s still time to jump in. You just might want to wear a neck brace.

The new year lured buyers into growth-related sectors, the ones that were more beaten down last year. The economy is getting better, but not dramatically. Earnings are beating expectations, but at a lower rate than in recent quarters. Nothing too bad is coming out of Europe’s debt crisis – and nothing good, either – at least not yet.

“No one item is a major positive, but collectively, it’s been enough to tilt it towards net buying,” said John Schlitz, chief market technician at Instinet in New York.

Still, relatively weak volume and a six-month high hit this week make some doubt that the gains are sustainable.

But then there’s the golden cross.

Many market skeptics take notice when this technical indicator, a holy grail of sorts for many technicians, shows up on the horizon.

As early as Monday, the rising 50-day moving average of the S&P 500 could tick above its rising 200-day moving average. This occurrence – known as a golden cross – means the medium-term momentum is increasingly bullish. You have a good chance of making money in the next six months if you put it to work in large-cap stocks.

In the last 50 years, according to data compiled by Birinyi Associates, a golden cross on the S&P 500 has augured further gains six months ahead in eight out of 10 times. The average gain has been 6.6 percent.

That means the benchmark is on solid footing to not only hold onto the 14 percent advance over the last nine weeks, but to flirt with 1,400, a level it hasn’t hit since mid-2008.

The gains, as expected, would not be in a straight line. But any weakness could be used by long-term investors as buying opportunities.

“The cross is an intermediate bullish event,” Schlitz said. “You have to interpret it as constructive, but I caution people to take a bullish stance, if they have a short-term horizon .”

Read the rest here.

ROCKVILLE, Md. (AP) — A woman convicted of killing her co-worker at an upscale yoga clothing shop in the Washington suburbs, then spinning an elaborate lie about being attacked by two masked men, was ordered Friday to spend the rest of her life behind bars.

Brittany Norwood tearfully apologized to the family of her victim in her first public statements since her arrest in March. A jury two months ago convicted Norwood of first-degree murder for bludgeoning and stabbing 30-year-old Jayna Murray, a co-worker at the Lululemon Athletica shop in Bethesda. Murray had more than 330 distinct wounds on her body, and investigators believe she was alive for the duration of the attack.

Read the rest here.

“Fools trade everyday while professionals look for exhaustion or exuberance.” That’s mine, by the way.

——————————————————————————————-

By Jason Zweig

In a speech to the Wisconsin State Agricultural Society in Milwaukee on Sept. 30, 1859, Abraham Lincoln told this anecdote:

“It is said an Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: ‘And this, too, shall pass away.’ How much it expresses! How chastening in the hour of pride!—how consoling in the depths of affliction! ‘And this, too, shall pass away.’  And yet let us hope it is not quite true.”

I was recently reminded of Lincoln’s wonderful speech when someone asked me if I could summarize my investing beliefs in no more than 10 words. I laughed and said, “Of course not!”

But right afterward, I realized to my surprise that I could. I banged this out almost instantly:

Anything is possible, and the unexpected is inevitable. Proceed accordingly.

I asked some leading investors and financial thinkers for their own contributions.  Here are a few:

Read the rest here.

By DAVID CRARY
AP National Writer

NEW YORK (AP) — Twitter, a tool of choice for dissidents and activists around the world, found itself the target of global outrage Friday after unveiling plans to allow country-specific censorship of tweets that might break local laws.

It was a stunning role reversal for a youthful company that prides itself in promoting unfettered expression, 140 characters at a time. Twitter insisted its commitment to free speech remains firm, and sought to explain the nuances of its policy, while critics – in a barrage of tweets – proposed a Twitter boycott and demanded that the censorship initiative be scrapped.

“This is very bad news,” tweeted Egyptian activist Mahmoud Salem, who operates under the name Sandmonkey. Later, he wrote, “Is it safe to say that (hash)Twitter is selling us out?”

Read the rest here.

via Ritholtz Blog

There are some interesting charts there for your consideration.

‘Buffett Rule’ Could Create Unintended Consequences

The provision could create unnecessary complexity, raise little revenue

Williams says at a certain point, there are diminishing returns on levying tax increases on the wealthy. Even the rich don’t have unlimited wealth, and Williams adds that, “to close the budget deficit by half, you’d have to raise top rate to about 90 percent from current 35″—a politically untenable rate, to put it mildly.

Read the rest here.

By Pedro da Costa and Jason Lange

(Reuters) – It has only been a few days since the Federal Reserve adopted a formal goal for inflation, and already policymakers are missing their target.

The U.S. central bank’s preferred measure of inflation sank to its lowest level in more than a year in the fourth quarter, data showed on Friday.

Growth in the government’s personal consumption expenditure index, which the Fed now targets at 2.0 percent, dropped to a 0.7 percent annual rate, about a third of its pace during the previous three months.

Of course, the Fed aims to hit its target over the longer run and will be willing to look through often volatile food and energy prices.

But even stripping those costs out, the inflation rate fell sharply to 1.1 percent over the past three months, a potentially troubling sign that the trend is not the Fed’s friend.

With unemployment still at an elevated 8.5 percent, Friday’s data could buttress the case within the central bank for taking new action to boost the economy.

Read the rest here.

By Fred Lucas

(CNSNews.com) – Ener1–a company that manufactures batteries for electric cars, and that received $118.5 million in federal stimulus money, and that Vice President Joe Biden visited last year the day after President Obama’s State of the Union Address—announced today that it has filed for Chapter 11 bankruptcy protection.

Read the rest here.

By Ellen Connolly

Sweeping protests around the world made it an extremely difficult year for the media, and tested journalists as never before, the annual report into press freedom reveals.

The annual report by Reporters Without Borders has been released, showing the United States fell 27 points on the list due to the many arrests of journalists covering Occupy Wall Street protests.

The slide in the United States places it just behind Comoros and Taiwan in a group with Argentina and Romania.

There’s no compelling scientific argument for drastic action to ‘decarbonize’ the world’s economy.

Editor’s Note: The following has been signed by the 16 scientists listed at the end of the article:

A candidate for public office in any contemporary democracy may have to consider what, if anything, to do about “global warming.” Candidates should understand that the oft-repeated claim that nearly all scientists demand that something dramatic be done to stop global warming is not true. In fact, a large and growing number of distinguished scientists and engineers do not agree that drastic actions on global warming are needed.

In September, Nobel Prize-winning physicist Ivar Giaever, a supporter of President Obama in the last election, publicly resigned from the American Physical Society (APS) with a letter that begins: “I did not renew [my membership] because I cannot live with the [APS policy] statement: ‘The evidence is incontrovertible: Global warming is occurring. If no mitigating actions are taken, significant disruptions in the Earth’s physical and ecological systems, social systems, security and human health are likely to occur. We must reduce emissions of greenhouse gases beginning now.’ In the APS it is OK to discuss whether the mass of the proton changes over time and how a multi-universe behaves, but the evidence of global warming is incontrovertible?”

In spite of a multidecade international campaign to enforce the message that increasing amounts of the “pollutant” carbon dioxide will destroy civilization, large numbers of scientists, many very prominent, share the opinions of Dr. Giaever. And the number of scientific “heretics” is growing with each passing year. The reason is a collection of stubborn scientific facts.

Perhaps the most inconvenient fact is the lack of global warming for well over 10 years now. This is known to the warming establishment, as one can see from the 2009 “Climategate” email of climate scientist Kevin Trenberth: “The fact is that we can’t account for the lack of warming at the moment and it is a travesty that we can’t.” But the warming is only missing if one believes computer models where so-called feedbacks involving water vapor and clouds greatly amplify the small effect of CO2.

The lack of warming for more than a decade—indeed, the smaller-than-predicted warming over the 22 years since the U.N.’s Intergovernmental Panel on Climate Change (IPCC) began issuing projections—suggests that computer models have greatly exaggerated how much warming additional CO2 can cause. Faced with this embarrassment, those promoting alarm have shifted their drumbeat from warming to weather extremes, to enable anything unusual that happens in our chaotic climate to be ascribed to CO2.

The fact is that CO2 is not a pollutant. CO2 is a colorless and odorless gas, exhaled at high concentrations by each of us, and a key component of the biosphere’s life cycle. Plants do so much better with more CO2 that greenhouse operators often increase the CO2 concentrations by factors of three or four to get better growth. This is no surprise since plants and animals evolved when CO2 concentrations were about 10 times larger than they are today. Better plant varieties, chemical fertilizers and agricultural management contributed to the great increase in agricultural yields of the past century, but part of the increase almost certainly came from additional CO2 in the atmosphere.

Read the rest here.

A must-read post from a Zero Hedge guest contributor.

Gold Bonds: Averting Financial Armageddon

***Warning*** NSFW

Jim Cramer made positive mention of Westport, calling it a solid play on natural gas should Congress pass its pending Natural Gas Act. Westport converts diesel engines (i.e. – those found in semi trailers) into ones that run on natural gas.

Benefiting Westport is that it’s: A) basically first to the market, at least in terms of mass production, and B) high barriers of entry for competition because of the complex technology involved in the transformations.

Read the rest here.

By JOHN HEILPRIN | Associated Press – 12 hrs ago

DAVOS, Switzerland (AP) — Bill Gates pledged $750 million on Thursday to fight three killer diseases and rescue a beleaguered health fund whose financial losses have cost it donor support.

The Microsoft founder said he is lending his “credibility” to the Geneva-based Global Fund to Fight AIDS, Tuberculosis and Malaria by making the donation through a promissory note so the fund “can immediately use the money and save lives.”

Gates’ announcement at the World Economic Forum — a magnet for the world’s business and political elites who pushed for the fund’s creation — was part of an orchestrated attempt by the fund to galvanize donors on its 10th anniversary.

“These are tough economic times, but that is no excuse for cutting aid to the world’s poorest,” Gates told reporters.

Read the rest here.

By Sudeep Reddy

The Financial Trust Index has been tracking public sentiment toward the financial system for more than three years. And sentiment isn’t good.

In the latest release today, the survey found that just 23% of Americans say they trust the U.S. financial system. That’s as low as the earliest months of the economic crisis. And 62% describe themselves as angry, or very angry, about the nation’s economic situation — the highest level since March 2009. (The index is a joint project of the University of Chicago Booth School of Business and Northwestern University Kellogg School of Management.)

For its latest quarterly survey, the Financial Trust Index took its responses from average Americans to a series of economic assertions and put them up against the responses from an expert panel of economists. The results are striking:

Read the rest here.

A quick observation.

I could not help noticing that China’s imports from Japan fell 16.2pc in December. Imports from Taiwan fell 6.2pc.

The Shanghai Container Freight Index fell 1.4pc to a record low of 919.44 in November, after sliding relentlessly for several months. It has picked up slightly since.

Read the rest here.

• Stacey Irvine has breathing problems and anaemia
• Only other food she eats regularly are fries
  
• But despite warnings cannot resist McDonald’s treats

Paul Roderick Gregory, Contributor

Warren Buffet’s secretary, Debbie Bosanek, served as a stage prop for President Obama’s State of the Union speech. She was the President’s chief display of the alleged unfairness of our tax system – a little person paying a higher tax rate than her billionaire boss.

Bosanek’s prominent role in Obama’s “fairness” campaign piqued my curiosity, and I imagine the curiosity of others. How much does her boss pay this downtrodden woman? So far, no one has volunteered this information.

Read the rest here.

First Estimate of Solar Cycle 25 Amplitude – may be the smallest in over 300 years

As shown in the chart below, 86% of the stocks in the S&P 500 are currently trading above their 50-day moving averages.