Month: February 2006

Possible Breakout But…


Here we see the Cubes gap up at the open and rally on increased volume to close above the recent highs and above the 50-day EMA.  BUT: The rally came on below average volume and the market sold off some in the final 30 minutes, which shows on this chart as an upper shadow on the daily candle.  Click through to the continuation of this post to see the intra-day action.


The Drumbeat Gets Louder


In summary: Despite the warmest January in more than 100 years, new single-family home sales fell 5% in January to the lowest level in a year and inventories (both absolute and months’ supply) hit another record high.  Mortgage rates steady to slightly higher. Chart from

Introducing Stock Idea Lists

Cubetraderstockidealist2006227e A couple of times per month I will publish a list of growth stock ideas for you to research.  It will likely contain some familiar names and some new ones.  It’s the new names that you’ll want to focus on.  These are the ones that many/most other investors also are not yet familiar with.  You will certainly not see them featured on the magazine covers (yet).  So while the Wall Street herd will be picking over yesterday’s pastures and touting yesterday’s winners you will be turning over stones down at CubeTrader Creek, looking for, and sometimes finding, tomorrow’s winners.


A Weekly Picture of The Cubes

Qqqq2006224 The weekly chart of the NASDAQ QQQQs shows four main points of interest, which, when combined, suggest that the Cubes may be trying to round out the bottom of their thus far 7-week base, which began on January 11th at $43.31, the current 52-week high.


Quick Update on the Cubes

Qqqq2006223 Just a quick post to highlight the recent action in the NASDAQ QQQQ ETFs.  The chart above shows the most recent month, which has thus far seen the Cubes gap below the 50-day moving average and, so far, fail to regain it.  On the positive side is the tight price range and generally low volume we have seen.  On unknown side are the most recent two day’s of trade, highlighted with purple circles on the chart.  The candles are a little different that what we have seen recently, as they have long upper shadows, which indicate intraday reversals at $41.50, just above the 50-day moving average.  The long upper shadows also coincide with a minor new low in the Money Flow indicator, as highlighted at the bottom of the chart.  What’s it all mean?  It means that until we see a decisive move one way or the other it might be wise to refrain from entering any large new trades.  Cheers!

Taking the Pulse of America (Income, Assets, Liabilities, Net Worth)

Here’s the short version.  Click to read the continuation of this post for today’s Washington Post article and a blurb from IBD.


Corporate Profits: Up big time.

Executive Compensation: You don’t even want to know.

Wages for Everyone Else: Down.  That’s right, real wages FELL 2.3% over the most recent three years (2001 – 2004).  The three prior years, from 1998 – 2001, saw real wages rise.

Consumer Debt: Up big time.

Housing Price: Up big time.       

Consumer Savings: Negative.

Consumer Net Worth: Flat.

Federal Budget Deficit: We went from the largest surplus ever when Bush took over to largest deficit ever in four years.  The budget deficit is still booming as government and defense spending explodes.  What’s the government to do?  Cut taxes.  Smart, huh?

Federal Current Account Deficit: We are in uncharted territory, folks.  Currently at 6.8% of GDP and rising.  What’s that mean?  It means


needs $3 billion (and rising) in foreign capital per day.  Alan Greenspan labeled this unsustainable a couple of yours and a couple of percentage points ago.  What song is he singing now?  “This time is different.”  Actually, now he’s saying “I’m retired, it’s Ben Bernanke’s problem now!”

Economic Growth: The headline number looks good…  And the headlines and sound bites are all “they” want you to look, of course.  But if you ask “why” a couple of times, shoot even once, you will see that the drivers of that growth are not sustainable: (1) consumer spending driven by the housing boom and all manner of consumer debt, and (2) government and defense spending, driven by the most aggressive and reckless fiscal (and possibly monetary) policy in modern history (ok, maybe you can think of examples that are more aggressive and reckless, but what we’ve got going on now is definitely on the list).

Yield Curve: Inverted in December and has become more inverted since then.

What’s it Mean?  Dollar at risk, economic growth at risk, consumers at risk.

Ok, enough of my rant.  On to the IBD blurb and Washington Post article.  Cheers!


Bagman Ben on the Inverted Yield Curve: “This time is different”

Testifying before the House Committee on Financial Services last week, Federal Reserve Chairman Ben Bernanke, nicknamed “Bagman Ben” by us at / because Greenspan so smoothly retired and left “Bend Over Ben” (BOB) holding the bag, stated that: “Historically, there has been some association between inversion of the yield curve and subsequent slowing of the economy. However, at this point in time, the inverted yield curve is not signaling a slowdown.”

Ben’s “this time is different” argument is disturbing because historically inversions almost always foreshadow a slowdown and/or a recession.


Foreigners Buy Fewer U.S. Securities

Foreigners bought $56.6 billion of U.S. securities in December, off 38% from November’s $91.6 billion and a 7-month low. The monthly trade deficit for December was $65.7 billion. Why are these figures important?  Because the U.S. needs ever increasing amounts of foreign capital to finance its ever increasing current account deficit. Why does America have an ever increasing current account deficit? Because it spends more than it earns, which is only sustainable to the extent that its lenders and merchants are willing and able continue building up the house of cards. Of course, if any of them blink, however, it could spark a rush for the exits, which would be bad for everyone of course, except perhaps speculators who are able to get in front of the adjustment. Cheers!

Mortgage Applications at 2-Year Lows

Purchase money home loan applications fell 7.9% in the latest week, setting the lowest rate since December 2006.  Refinance mortgage applications fell 6.5%.  The Mortgage Banker’s Association continues to forecast fewer mortgages and home sales this year.

Greenspan Speaks (for $250,000) to Lehman’s Best Hedge Fund Clients

Is this sounds thinking (see continuation of this posting for MSNBC story)? To take a $250,000 speaking fee and make market moving comments to a hand picked few of the richest hedge fund managers in America? Not a week after retiring and before the new Fed Chief even utters his first word?? Doesn’t make sense to me and is another reason I’m glad I’ve renamed my blog Alan’s Bubble ( or