Technically Speaking

Looking at Currency ETF's

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Tue, 16 Mar 2010 10:55:00 GMT

I look at this chart and scratch my head. What happened?

This is crazy and relative to the U.S. Dollar.

So I ran a one year chart post whatever seismic event in the Fall of 2008 and see if the lines are as flat as this chart implies.

Pay attention to currencies - it matters in your asset allocation and long-term wealth protection.

Three month look at FXI versus QQQQ, IWM, SPY

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Fri, 05 Mar 2010 20:32:00 GMT

Interesting look over the short-term. So who has been talking down China? Are they done? How long can US stocks out perform China?

because we all know, if the US rebounds, China's growth will accelerate.

China compared to other emerging markets

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Thu, 04 Mar 2010 12:26:00 GMT

Best I start with the chart.

I was surprised to see ILF take the lead from FXI. I am a bit surprised that both ILF and FXI are doing so much better than EEM and EPP. EPP wants me to investigate who is the drag on return and see if there is an mean reversion opportunity.

I tossed the SPY in just because investors need to see where the growth is.

No mans land

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Thu, 25 Feb 2010 14:52:00 GMT

Looking at the charts, I call this no mans land. Risk to missing a potential rally and risk of a large decline are available and no clear indication which way the market may go. March is earnings warning season and my expectation is March weather reversed, in like a lamb out like a lion.

Look out bears, you are going have to share with the lions and tigers oh my! I am looking to visit the 200 day moving average, but look at the last four bottoms, each was preceded by a large red bar, and each is higher than the previous. Just saying risks abound, my inclination is for a decline, but I am prepared to be wrong.

Time to take profits on CREE

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Fri, 05 Feb 2010 17:08:00 GMT

I love CREE! I think it has the right product for the next decade and will become a major lighting company on planet earth.

But today, I think it is over valued. The 200 day moving average is around $40 and the current price is around $55, roughly a 38 percent premium over the 200 day. The 20 day moving average has rolled over and has a negative slope and the 50 day is approach a slope of 0 very fast.

Save yourself a 27 percent decline in the price, sell today buy in May.

Time to re-write pension law

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Thu, 04 Feb 2010 16:03:00 GMT

It is time to take our retirement accounts out of Wall Street.

Pension law has re-allocated investment capital from our local communities and funded the crooks on Wall Street. We are required to give our retirement funds to this system prone to corruption, high fees and poor returns. It is time to realize the securitization of America is a failed experiment and we must restructure the capital of America. We have seen capital move from the local bank, to money market funds, to high frequency day trading in equities, to the most irresponsible leveraged hedge funds gambling our future, and we are all poorer for it.

Public Pension funds used to make investments in their communities, earning a return for the participants and building their local economy. I know in Alaska, very little of the $17 billion PERS/TERS, $10 billion plus CBR or the big Kahuna $35 billion Alaska Permanent Fund is invested in the local economy. As the Trustees chase returns in hottest markets overseas or the newest, never fail formula from Wall Street, local communities starve for investment capital. Only those who can attract the attention of Wall Street have access to capital, "to small to start".

I wonder just how many IRA's or 401ks are invested in local businesses or real estate?

We must remove the legal impediments to investing our retirement savings in our local economy by expanding local investment alternatives for individual retirement accounts, 401K's and the like. Why should the retirement investor be denied the opportunity to invest in the local community on a tax advantaged basis? We need to encourage the large public funds to start investing in our communities and local businesses in order to create a stronger local economy.

We must stop the forced export of local retirement funds out of our communities to Wall Street. Wall Street has not treated our investment capital well - charging excessive fees, making poor investments, exacerbating volatility for their own profit and paying themselves absurd salaries and bonuses.

Looking at index moving averages

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Sun, 31 Jan 2010 16:02:00 GMT

I was looking at some charts the other day and figured I had better post them. I run the basic equity indexes on a six month charts with three moving averages: 20, 50 and the 200 day. The shorter averages slopes are 0 or negative and the 20 is approaching the 50. Neither of these developments are good signals for being long equities.

SP 500

EFA

QQQQ

Russell 2000

Emerging Markets

In my opinion, we are going to test the 200 day moving average at a minimum. If President Obama makes a significant pivot to the middle like President Clinton it will only be a test of the 200 day moving average. If his administration stays the course, we could have only hoped for a test, because it will be much worse.

So what about China?

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Thu, 28 Jan 2010 16:04:00 GMT

A number of folks have been coming out and talking down China. I just want to show you that they have been successful. However, it was this week that Jim Chanos said that China is a bubble.

Well, FXI is down 18 percent in the past three months from its post crash high. My eyes are open, but I am looking to buy it, not sell it.

President Obama gets early start on prediction #10

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Fri, 22 Jan 2010 15:42:00 GMT

It was just 21 days ago that I posted my predictions and President Obama has taken #10 to heart and got the process rolling. I was not expecting the prediction to be confirmed so soon, I was thinking in the April time frame.

Here is prediction #10.

Congress will be put in a position it must make real decisions with immediate consequences regarding spending, borrowing and the realization of trillions of dollars of losses at the Fed and Treasury. It will be their action that creates the double dip in the economy and the slope of the following recovery.

You cannot say that a double dip has started, but more "banking" type announcements from Mr. Obama, will nearly guarantee its arrival.

A look at equity index performance through time

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Wed, 20 Jan 2010 16:05:00 GMT

Just wondering where were are in terms of equity valuations. Today being down 200 points on the DJIA is forcing me to think maybe the first quarter momentum may not carry us any farther.

One year

Three Years

Five Years

and Ten Years

Asset allocation matters!

Five year look at SPY verses the Sectors

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Mon, 11 Jan 2010 16:24:00 GMT

I like looking at history and see what it tells me.

Only two sectors are under-performing the SPY, XLF (Financials) and XLY (Consumer Discretionary).

Even with this chart, I just wonder if XLF is worth going into? at this point NO!

Last decade of Large Cap Tech

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Sat, 02 Jan 2010 16:36:00 GMT

I was a bit surprised by this chart, namely the performance of HP, not so much Apple given its innovation and new products.

It makes you wonder what the "experts" are talking about calling for large cap technology as a leading industry. Are these companies total 90's, not quite this Century?

Innovation is the key to long-term growth of growth companies, otherwise own utilities and real estate if you want coupons.

2010 The year of Financial reckoning!

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Fri, 01 Jan 2010 15:30:00 GMT

Year four and as always this list is in no particular order

1. Total U.S. consumer consumption will continue to contract in 2010 as consumers pay off negative savings from the past and begin building a savings buffer. The consumer deleveraging trend will continue.

2. The dollar rebound will last through most of the first quarter, but will hit new lows by year's end.

3. Small Cap Growth will be the top performing asset class in the US. Look for outsized returns in this sector, they get to make up for 2009's underperformance and put in 2010's natural premium. If the normal premium is 3-5 percent, look for 6-10 percent of excess performance.

4. By year's end the number one topic will be inflation. TIP and WIP will be top fixed income asset classes. This means interest rates will be going up - dramatically. Rates to double! 10-year US Treasury at 3.50% will be 7.00%.

5. Total Global demand will increase even with the US consumer deleveraging. US may stop losing jobs, but it will not be creating new ones. Productivity will make up US's portion of increase global sales. Exporters will have the best year. XLK, XLI and MOO will be the sweet spot in U.S. Large Cap equity market.

6. Local governments will struggle with declining revenues as the US consumer market contracts. Just like people, local governments are spending all their savings before cutting staff and services. When the savings run out - dramatic cuts will be the only option. If you own Muni's, do your due diligence. Once the downgrades begin you will not find the exit fast enough.

7. Emerging market equities (EEM) will be the top overall major asset class. I am thinking between 25-40 percent by year's end and will have two really great trades during the year. If you own it now, a sell and a buy. If you don't own it now, a short and a cover and buy long.

8. IYR and XLU will be the most stable coupons earned 2010.

9. US Equities at this point in time are fairly if not slightly over valued. How they do will depend on how bad the dollar falls. Equities will earn about three quarters of what the US dollar falls.

10. Congress will be put in a position it must make real decisions with immediate consequences regarding spending, borrowing and the realization of trillions of dollars of losses at the Fed and Treasury. It will be their action that creates the double dip in the economy and the slope of the following recovery.

I see a big V coming in the stock US Stock Market this year and all fingers will be pointing at the Administration, FED and Congress in this election year. Congress will do what it should have done last year and not have spent all that money and let the Fed and Treasury leverage themselves up.

2010 the year of Financial Reckoning!

2009 RMD

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Mon, 28 Dec 2009 16:28:00 GMT

So it is that time of year you need to make a RMD decision. Yes, I know Congress waived the requirement but is that the smart decision?

If you believe as I do that income tax rates for high net worth individuals will be increasing in the very near future. Some of you may have seen a drop in taxable income besides not having to take the RMD in 2009. No longer earning a wage or board fee, taxable portfolio income or rental income fell whatever the reason, you might want to consider withdrawing more from your IRA this year and incur the tax now rather than later.

Tax preparation is between you and your accountant, but from an economic perspective you might be money ahead by paying the lower tax rate now and not waiting to see how high Congress and President Obama raise them.

Make the call to your accountant today if you have not already done so and ask the question "How much of a tax increase would make me wish I made a withdrawal this year and not waived the RMD?"

2009 Mutual Fund Challege Wrap

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Thu, 24 Dec 2009 15:37:00 GMT

January 11, I posted the 2009 Mutual Fund Challenge. I screened in Yahoo Finance, Large Cap Blend, Top 10 percent of any family of funds.

Well, how did they perform against the SP 500?

Only one fund clearly outperformed the SP 500 and some significantly underperformed over the period.

The three chart offers some hope for active management. One major point on this analysis is last years top performers were last years top performers and that has little value in predicting next years top performers.

I was on the radio today!

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Fri, 18 Dec 2009 03:53:00 GMT

So I was on the radio today, KJNO Action Line with Murray Walsh.

So I want to explain the contraction of the consumer market. I don't know why the best thoughts happen about 15 minutes after the microphone is gone.

So let us say that there the USA has $100 of earnings per year and we have been spending $110 per year for the past several decades. All of a sudden that $10 of spending in excess is no longer available, for whatever reason! Now USA must contract its demand by $10 and in doing so a recession begins and many suffer in the economic dislocation. In fact, the economic dislocation of some impacts the many who have also been living beyond their means, contracting demand even more. Now, where there was $110 of demand and only $100 of ability to pay; assume the ability to pay remains constant (a generous assumption, most likely contracted) there is only $85 of demand or a contraction of nearly 25%.

Negative savings is eliminated.
Paying back negative savings from previous decades (national debt + state and local debt + consumer debt)
Actual savings

Those three things will significantly reduce consumer demand and society will experience the consequences, and they will not be pleasant.

Greatest Double Top in history!

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Wed, 16 Dec 2009 02:53:00 GMT

hey the chart speaks for itself!

How did I do in 2009?

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Tue, 15 Dec 2009 17:23:00 GMT

How did I do in 2009?

Well let us see how I did!

We are almost half way through the economic contraction as measured by GDP. Third quarter 2009 will be the first positive one, but will be very weak.

If you think about it there are two predictions here, which quarter and magnitude. Both were dead-on BULLS-EYE.
Consumers will discover that non-consumption is a good thing and will start demanding higher quality products. A notion will be put forth that most of the planets environmental problems are caused by the disposable society. This recession will be credited with saving the planet by changing consumerism forever.

This one did not pan out as I envisioned, but in the next few years I believe you will see this work out to be one of the best predictions.
Ford will be the only major US auto manufacture remaining at the end of 2009. GM and Chrysler will be so radically changed it would be hard to describe or compare them to what they are now or were in the past.

Dead-on BULLS-EYE!
SELL US Treasuries and sell duration unless they are Treasury Inflation Protected Securities which you should keep. Interest rates are going to rise and spreads will narrow a bit. Short duration corporate bonds will be the sweet spot in the fixed income markets.

Out of TLT, IEF, SHY and TIP the first sentence was perfect! Interest rates did rise and spreads narrowed a lot!. Short Corporate bonds were the sweet spot. All in there were four predictions in this one and three were BULLS-EYE and one off in magnitude but right in directions.
Chairman Bernanke will print as much money as possible and be very accommodative with the new administration in order to keep his job. Sell dollars and buy a portfolio of other currencies Friday, January 2. Move back into the dollar late in the fall of 2009.

Rarely do I get the politics as right as I did on this one, but there are two market predictions in this expectation: Sell dollars 1/2/09 (BULLS-EYE) move back into dollar late fall, (BULLS-EYE)
Jobs will continue to be lost. Some talking heads are noting that the initial claims are running up to the 80-81 record levels. The US population is 50 percent larger than it was in 1981 so it would not surprise me to see several, million job lost months in the very near future.

Jobs continued to be lost BULLS-EYE but never did achieve a million job month in losses.
China and India will lead the world out of this recession as they start building out their domestic infrastructure and develop their middle classes. Southeast Asia will be the top performing region in the world in 2009.

It is hard to say the first two points are wrong but you cannot really call them bulls-eyes either. Pretty certain Latin America as a region outperformed S.E. Asia.
I do not think peace will break-out all over the world and in fact this global economic contraction is only exacerbating many of the regional conflicts. These conflicts will start changing US policies and President Obama will implement a national self-sufficiency program for energy and food. Pakistan is the powder keg and there are multiple fuses running in many directions.

No real market predictions in this mess, but the response in #2 is appropriate here as well.
Energy and Commodities will be the best performing sectors for 2009, but financials will make a major recovery at the end of the year.

XLK is the top performer so far followed closely by XLY and XLB. Energy actually has underperformed the SPY. XLF recovered before I expected but the magnitude was a little short. I almost want to call this a bulls-eye, it is only 95% right.
2009 will be a year of conflict, false starts and significant changes in behavior. Returns will be below historical norms but the foundation for a better 2010 and 2011 will be laid.

The strong market performance in 2009 will lay the foundation for 2010, but since 2009 was exceptional, 2010 will not be.

All in all, not bad predicting. I added up a total of 24 predictions of which

11 were Bulls-eyes, 8 were accurate, 5 were wrong

Preparing for 2010

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Sun, 13 Dec 2009 15:08:00 GMT

I have been thinking about my predictions for 2010 and getting ready for my fourth year in a row of published predictions on the markets and global economy. The next post will be an evaluation of my 2009 predictions which I know I nailed a couple.

Good expectations and predictions are built on a couple of fundamental building blocks: A knowledge of history (especially recent history) and knowing that it will not be what it just was. Who would think cause would beget identical cause? No, cause creates effect or affect (is there a difference?) anyway look at history and predict the reaction to that cause with a time lag.

So in the effort, time for a history lesson.

That is the SP 500 against the sector funds. I added a new one, MOO. It is in some accounts and I have not looked at it in this context before. Needless to say, I am a bit surprised how well it has performed.

At this point, XLU looks kind of attractive with a dividend of nearly 4 percent and the worst performing sector for the past twelve months. Our focus is forward and extreme performance - good or bad is more predictable going forward if you accept mean reversion.

Dear Congress

brad@fluetschfinancialservices.com (Bradley Fluetsch) — Mon, 30 Nov 2009 16:10:00 GMT

Dear Congress,

I was watching Bloomberg News and someone was interviewing Senator Bernie Sanders, VT who sits on the Senate Finance committee and they were discussing whether Chairman Bernanke should be confirmed and whether the Federal Reserve should disclose who the lent money too.

At that moment a lighting bolt struck me.

The American taxpayer is borrowing money from China at 2 - 2.5 percent, lending it to Bank of America, Citibank and Wells Fargo at 0 percent so they can lend back to the American taxpayer at 28%.

If this is too complex for you to understand, then Robert Rubin (Clinton Secretary of the Treasury, Vice Chair CitiGroup) was right in a recent speech, "the problem is an uninformed electorate".

Wake up America and let us take back our Country, take back control of America's finances.