Bank Of America Rallies The Value, Financial, Basic Material, Consumer Discretionary Shares As Well As The Morgan Stanley Cyclicals Index

Financial Market Report for January 3, 2010

Bank of America Rallied The Financial And Value Sectors
Bank of America, BAC, 6.3%
Pure Cap Small Value, RZV, 2.3
Insurance, KIE, 2.3
Chinese Financials, CHIX, 2.3
Banks, KBE, 2.2 The strong rise on an ascending wedge from 22 on November 30, 2010 to today’s 26.5, suggests that the gains cannot be sustained much longer.   
Financial, XLF, 2.2
Small Cap Revenue, RWJ, 1.9
Nasdaq Banks, QABA, 1.7
European Financials, EUFN, 1.4
Emerging Market Small Cap Dividend, DGS, 1.0
Leveraged Buyouts PSP, 1.2
Emerging Market Financial EMFN, 1.7
Insurance KCE, 1.3

General Sectors Rallied By Bank Of America
Housing, ITB, 1.9%
Health Care IHF, 1.8
Russell 2000, IWM, 1.7
Small Cap Discretionary, XLYS, 1.7
Small Cap Industrial XLIS, 1.5
Networking, PXQ, 1.5
Telecom IYZ, 1.4

Basic Material Sectors Rallied By Bank of America
Global Industrial Metals, CRBI, 2.5
Coal, KOL, 2.2
Metal Manufacturing, XME, 2.0
Copper, COPX, 1.9
Steel, SLX, 1.7
Energy, XLES, 1.5
Basic Materials, IYM, 1.0
Energy Services, OIH, -0.5

Basic Material Shares Rallied
Alcoa Aluminum, AA, 2.6%
China Materials, CHIM, 1.2
Alpha Natural Resources, ANR, 2.4
Arch Coal, ACI, 1.5
Southern Peru Copper, SCCO, 1.7
Exxon Mobil, XOM, 2.0
Insteel Industries, IIIN, 3.9%
Schnitzer Steel, SCHN, 1.8%

Countries Rallied
Emerging Markets EEM, 1.0
Mexico EWW, 0.8%
Brazil Small Caps, BRF 1.7
Russia, RSX 1.9
Sweden, EWD 1.8
India Small Caps SCIF 3.0
Latin America, LATM 1.3
Korea, EWY 1.0
China, Hong Kong, Shanghai and China Small CapsFXI, EWH, CAF and HAO 1.5, 2.3, 2.3 1.9
Indonesia, IDX 1.2
Israel, EIS 1.3

VSS 0.8%
SPY 1.0
IWM 1.8
RZV 2.8 (Chart suggests that a top has likely been achieved)
QTEC, 1.3  

Financial Stocks Rallied
Citigroup, C, 3.6%
Goldman Sachs, GS, 2.9
Dollar Financial, DLLR, 6.8
SVB Financial, SIVB, 3.5
World Acceptance WRLD, 3.2
Istar Financial, SFI, 2.8
Capital Source, CSE, 1.0
Cathay Bancorp, CATY, 1.8

Restaurant Stocks RalliedCMG, DIN, MIDD, PNRA, RUTH, KKD
CMG, 5.2%
DIN, 2.5
MIDD, 3.0
PNRA, 1.2
RUTH, 1,9
KKD, 1.4

Bank of America Rallied The Morgan Stanley Cyclicals Index
The Morgan Stanley Cyclicals Index, $CYC, rose 1.8% higher on mostly the following stocks:
Alcoa Aluminum, AA, 2.6%
Citigroup, C, 3.7%
Eaton Corp, ETN, 2.1%
International Paper, IP, 2.8%
Masco Corp, MAS, 3.0; The home building industry, ITB, has already started to turn down.
Temple Inland, TIN, 6.5; Like Masco, the paper producers have started to turn to turn lower; see the chart of Buckeye Technologies, BKI,
US Steel, X, 3.1%

Summary
The rally in Bank of America gave a false rise the Morgan Stanley Cyclicals Index. The rallied cannot be sustained as it lacks currency support; the only currencies rising today were the Mexico Peso, FXM, the Brazilian Real, BZF, and the Canadian Dollar,FXC. The US Dollar, $USD rose slightly to $79.12.

Are world stocks, VT, about to enter to enter an Elliott Wave 3 Down?

Did world stocks monthly, VT Monthly, top out on December 31, 2010 at 47.80?

Did world stocks weekly, VT Weekly, put a high in on December 31, 2010 at 47.80?

Did world stocks weekly, ACWI Weekly, put a top in December 31, 2010 at 46.81; and is this an Elliott Wave 2 high and entrance into an Elliott Wave 3 Down?

Did the S&P Weekly, SPY Weekly, put a market high in on January 3, 2011 at 127.05; and did the S&P establish an Elliott Wave 2 high and entrance into an Elliott Wave 3 Down?

Major currencies, DBV, turned down on November 4, 2010 and then turned down again in front of the European Leaders Summit of December 14, 2010. But rallied into the actual meeting. As John Mauldin relates, they failed to come to a comprehensive solution to the European Sovereign and Bank Debt Crisis, their meeting was simply “kicking the can down the road”. The world currencies, DBV, fell lower then rose to what is likely an Elliott Wave 2 high today January 3, 2010, and will  likely be induced lower in an Elliott Wave 3 Down after the Fed meets, as the bond vigilantes will likely be calling interest rates higher globally, as will likely be seen in world government bonds, BWX, and world corporate bonds, PICB, falling lower.     

The emerging market currencies, CEW, turned down as well on November 4, 2010, and their strong rise, has caused a double top in the emerging market stocks, EEM. World currencies are likely making an Elliott Wave 2 high today January 3, 2010, and are likely to enter an Elliott Wave 3 Down this week.

It is likely that 2010 will be seen as the year that the European Sovereign Debt Crisis and Bank Debt Crisis as well as anticipation of US Federal Reserve Quntatative Easing gave moneyness to the 30 10 US Sovereign debt yield curve up until October, as well as moneyness to investing in the emerging markets, EEM, with yen carry trade and dollar carry trade investing providing hot money flows.     

The carry trade ETN, ICI, entered an Elliott Wave 3 Down on December 29, 2010 as the Yen, FXY, peaked at 121.20, forcing investors out of their carry trades.

It will be interesting to track Peru, EPU, Indonesia, IDX, Thailand, THD, Philippines, EPHE, Chile, ECH, Columbia, GXG, Turkey, TUR, Russia, RSX, Sweden, EWD, Mexico, EWM, Latin America, LATM, and Austria, EWO, to see their competitive rates of fall as seen in the chart of EPU, IDX, THD, EPHE, ECH, GXG, TUR, RSX, EWD, EWM, LATM, EWO

I expect the currency traders to reinstitute the global currency war that they started November 4, 2010 against the world bankers for control of the worlds people and resources: 2011 will be the year of competitive currency deflation, that is competitive currency devaluation, at the hands of the FX traders as bond vigilantes call interest rates high on the European Sovereign Debt Crisis and Bank Debt Crisis as well as on the fact that Ben Bernanke’s Quantative Easing, QE 2, and US Deficit Spending, constitutes monetization of debt. I envision that all currencies, probably led by the Swiss Franc, FXF, will be falling lower in early January with the US Dollar, $USD, rising for a brief period. All currencies will be heading lower at differing rates: FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, CYB, BZF, XRU, FXY, BNZ, DBV, CEW.  In Terminator Fashion, It’s hasta la vista baby to the neoliberal Milton Friedman Free To Choose currency regime.

Project Syndicate, an international not-for-profit newspaper syndicate, in its January 2011 issue, presents global thought leader, Kenneth Rogoff, a Professor of Economics and Public Policy at Harvard University, and former chief economist at the IMF.  In article Armageddon Can Wait, he says:

“The intellectual father of the euro, Columbia University’s Robert Mundell, once famously opined that the optimal number of currencies in the world is an odd number, preferably less than three. It is hard to see why right now.”

“Perhaps when we have one world government, it will make sense to have one world currency.”
“But, even setting aside the equilibrating benefits of flexible currencies, the prospect of a single, omnipotent central bank is not particularly appealing. Witness the vitriol and hysteria that accompanied the US Federal Reserve’s policy of so-called “quantitative easing.” Imagine the panic that would have ensued in a world where gold, storable commodities, and art were the only ways for investors to flee from the dollar.”

There you have it — the globalist are coming out quite boldly for use of a global currency. I made the decision long ago to be invested in gold bullion. The chart of gold in terms of Australian dollars, GLD:FXA, shows that gold is the sovereign world’s currency.

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