Visualize economic cyclicality

A chart on Brian Shannon's excellent Alphatrends blog of technical analysis ("Successful Speculation Begins With Objective Observation") struck me as familiar this afternoon.
The S&P 500 during the last two bear markets looks like the Fed Funds rate.

You can easily imagine how unprecedented and ongoing efforts to pump liquidity into the system could already be setting the stage for the next leg up (or "bubble").

Futures falter on Asian weakness

U.S. index futures are again flirting with limit down moves early this morning as overseas markets are reeling.  The Hang Seng lost over 12%, and the Nikkei marked its lowest close in 26 years.  The Japanese yen has surged 10% against the dollar in just a week, rising to a nearly 13-year high of 92 yen to the dollar, rendering the exporting nation's products more expensive.  The yen's strength has been even more dramatic against the euro.  On October 14, a euro would buy 139 yen.  Two weeks later the same euro will get you 115 yen.  The dollar continues to strengthen against the euro, now trading at $1.24 each.

Yen Index.

Nikkei.

Correlation Tool: new link

Great tool for finding analogs and opposites, just enter symbol.

Wordle

Solar tax credits jeopardized by financial crisis, end of congressional session

While both houses of Congress agree that tax credits for renewable energy industries should be extended, the Senate and House versions of the tax bill differ in how to pay for the plan.  Unless the impasse can be breached this week, the measure is likely to wilt on the vine.  Congress is already busy working overtime on relieving the financial system.   Without tax subsidies, solar energy can't compete on price against traditional sources.

"The AP report notes that lawmakers on both sides of the Capitol 'stressed that the tax relief bill would create tens of thousands of jobs and contribute to the nation's energy independence. House Democrats 'insisted that more of the package, totaling $138 billion in House bills, be paid for so as not to increase the deficit. Senate Republicans, averse to new taxes, said any changes in the Senate-passed tax bill would kill the entire package.'"

"'It would take us in exactly the wrong direction as a country, especially with respect to climate change,' said Peter Darbee, chief executive officer of Pacific Gas and Electric Co. The utility has signed contracts with several developers of major solar power plants and has repeatedly warned that some of the projects will fall through without the tax credits. The company is counting on those projects to meet a looming state deadline to increase its use of renewable power."

Selected solar stocks since Tuesday's  U.S. Senate vote approving the extension of solar tax credits for another eight years. 

3 month T Bill 5-day chart

Dow posts third largest point gain in history

Greatest DJIA Daily Point Gains
of All-Time
Rank	Date	Close	Net Chg	% Chg
1	3/16/00	10,630.60	+499.19	+4.93
2	7/24/02	8,191.29	+488.95	+6.35
3	9/30/08	10,850.66	+485.21	+4.68
4	7/29/02	8,711.88	+447.49	+5.41
5	3/18/08	12,392.66	+420.41	+3.51
6	3/11/08	12,156.81	+416.66	+3.55
7	9/18/08	11,019.69	+410.03	+3.86
8	4/5/01	9,918.05	+402.63	+4.23
9	4/18/01	10,615.83	+399.10	+3.91
10	4/1/08	12,654.36	+391.47	+3.19
11	9/8/98	8,020.78	+380.53	+4.98
12	10/15/02	8,255.68	+378.28	+4.80
13	9/19/08	11,388.44	+368.75	+3.35
14	9/24/01	8,603.86	+368.05	+4.47
15	10/1/02	7,938.79	+346.86	+4.57
16	5/16/01	11,215.92	+342.95	+3.15
17	12/5/00	10,898.72	+338.62	+3.21
18	10/28/97	7,498.32	+337.17	+4.71
19	9/18/07	13,739.39	+335.97	+2.51
20	8/5/08	11,615.77	+331.62	+2.94
21	11/28/07	13,289.45	+331.01	+2.55
22	10/15/98	8,299.36	+330.58	+4.15
23	7/5/02	9,379.50	+324.53	+3.58

Biggest one-day Dow point drop in history

Greatest DJIA Daily Point Losses
of All-Time
Rank	Date	Close	Net Chg	% Chg
1	9/29/08	10,365.45	-777.68	-6.98
2	9/17/01	8,920.70	–684.81	–7.13
3	4/14/00	10,305.78	–617.77	–5.66
4	10/27/97	7,161.14	–554.26	–7.18
5	8/31/98	7,539.06	–512.62	–6.37
6	10/19/87	1,738.74	–508.00	–22.61
7	9/15/08	10,917.51	-504.48	-4.42
8	9/17/08	10,609.66	-449.36	-4.06
9	3/12/01	10,208.25	–436.37	–4.10
10	2/27/07	12,216.24	–416.02	–3.29
11	6/6/08	12,209.81	–394.64	–3.13
12	7/19/02	8,019.26	–390.23	–4.64
13	8/9/07	13,270.68	–387.18	–2.83
14	9/20/01	8,376.21	–382.92	–4.37
15	10/12/00	10,034.58	–379.21	–3.64
16	3/7/00	9,796.04	–374.47	–3.68
17	9/22/08	11,015.69	-372.75	-3.27
18	2/5/08	12,265.13	–370.03	–2.93
19	10/19/07	13,522.02	–366.94	–2.64
20	11/1/07	13,567.87	–362.14	–2.60
21	11/7/07	13,300.02	–360.92	–2.64
22	1/4/00	10,997.94	–359.57	–3.17
23	6/26/08	11,453.42	–358.41	–3.03
24	8/27/98	8,165.99	–357.36	–4.19

Traders eye the VIX

Traders hoping for a bounce in the markets are looking for solace in the VIX volatility index. The so-called "fear index" closed over 36 today, its highest level since 2002. Prior spikes above 30 this year have indicated short-term bottoms. 

Charts of the VIX were the most requested among all issues on stockcharts.com Wednesday evening.

Earnings This Week

Monday

ELON pm analysts (-15) cents EPS on $33.2 mil MET, guides above consensus
EXM pm analysts $1.79 EPS on $61.8 mil BEAT by 14 cents
LFT pm analysts 9 cents EPS on $12.6 mil BEAT by 3 cents
PWRD pm analysts 35 cents EPS on $39.4 mil BEAT by 3 cents

CNTF ah analysts 8 cents on $48.7 mil
DRYS ah analysts $4.05 on $218.6 mil
GRRF ah analysts (-25) cents EPS on $8.4 mil
LORL ah priced below NTA no estimates
NCTY ah analysts 32 cents EPS on $58.1 mil

Tuesday

CSUN pm analysts (-5) cents EPS on $73.3 mil
MBT pm analysts $1.63 on 2.34 bil
MF pm analysts (-20) cents on $1.41 bil
UNFI pm analysts 29 cents on $879.2 mil

HPQ ah analysts 85 cents on $28.1 bil
VRTU ah analysts 19 cents on $45 mil

Wednesday

BJ pm analysts 28 cents on $2.27 bil
SOLF pm analysts $1.12 on $961.8 mil

CHINA ah analysts (-1) cent EPS on $97.7 mil
CTRN ah analysts 34 cents on $120.9 mil
HOTT ah analysts (-4) cents on $159.3 mil priced at NTA
NTES ah analysts 31 cents on $82.3 mil
QXM ah no analysts

Thursday

BCSI pm analysts 40 cents on $89.5 mil
FRO pm analysts $2.35 on $392.5 mil
GSOL pm analysts 11 cents on $39.9 mil
OPXT pm analysts 6 cents on $68.8 mil
STP pm analysts 27 cents on $376.1 mil

HRAY ah analysts (-3) cents on $14 mil

The Week Ahead: Earnings of Note

Monday

Premarket
ANSW Internet search portal,
AEY Cable equipment distributor,
CCGY.ob Chinese chemicals/biodiesel,
CHME.ob Chinese pharmaceuticals,
HOC Oil refiner, reports 17 cents vs. 15 cents consensus on $1.48 billion vs. $1.35 billion estimates
HWCC Specialty wire distributor,
IPSU Sugar processor coming off fatal refinery explosion,
JASO Chinese solar, reports 14 cents vs. 10 cents consensus on $160 million vs. $146.6 mil estimates, reiterates revenue guidance above estimates
MBI Frail bond insurer,
MED Weight loss centers, reports 10 cents vs. 11 cents consensus on $25.2 million vs. $22.05 mil estimates, guides 2008 net income above consensus
PETS Online pet meds,
VSR Multi-function contractor

After Hours
BWTR
CBAK
DXPE
FLR
LDK
MDR pre-warned
PAL
WNR
XFML

Tuesday

Premarket
CSIQ
CFSG
GIGM
GLUU
GU
HOKU
KEM
NTWK
PTG
TGIC
TRT ?
XNN

After Hours
AMAT
GIGA
ICOP
ENPT ?

Wednesday

DE premarket
DSX premarket
ELOS premarket
FRE premarket
HAUP ? premarket

ENTN after hours
ETEL after hours
SINA after hours
STV after hours
TSTC after hours

Thursday

ACAT premarket
KRSL ? premarket
YGE premarket

BSIC.ob ? intraday

GA after hours
HPQ after hours
IPII after hours
KONG after hours
NINE ? after hours
SYNX ? after hours

Weekly EIA data

Actual:
Oil +3.8 million barrels
Gasoline -1.5 million barrels
Capacity utilization: 85.4%

Expected:
Oil +500k barrels
Gasoline -800k barrels
Capacity utilization: 85.9%

The Week Ahead: Selected Earnings Reports

Monday
BEAV premarket
HUM premarket
SOHU premarket
TGE premarket
FLS after hours
MTW after hours
TITN after hours
UCTT after hours
V after hours

Tuesday

BNI premarket
BYD premarket
GLW premarketMA premarket
MAG premarket
UA premarket
VLO premarket
ALGN after hours
BWLD after hours
KTCC after hours

Wednesday

CMI premarket
FSLR premarket
GRMN premarket
NOV premarket
AMKR after hours
DVR after hours
OII after hours
TRN after hours
Thursday

ATRO premarket
PDE premarket
PMTI premarket
PTEN premarket
RAIL premarket
BOOM after hours
CHK after hours
MNST after hours
WLT after hours

Friday

AGU premarket
ICE premarket

Cartoon Theme O' the Week: Food Prices

POT crushes Q1 estimates, significantly raises 2008 guidance

The company earned $1.74 per share versus consensus of $1.52.
Earnings guidance for full-year 2008 was steeply hiked up from $6.25-$7.25 per share to $9.50-$10.50 per share. Analysts currently expect $8.62 for 2008.
For the second quarter POT expects to earn $2.20-$2.50 versus $2.27 consensus.
"Another record quarter for our company reflects the ongoing growth in global demand for food and the fertilizers that are essential to maximizing crop production," said PotashCorp President and Chief Executive Officer Bill Doyle. "This is especially true of potash, where we have unmatched assets that continue to elevate our performance. In this environment, we are demonstrating the increasing value of our company - as an essential part of the solution to concerns about the world's food supply."

"The global need to increase food production is real and immediate, and it will be a part of our world for the foreseeable future," said Doyle. "It took nearly a decade to empty the global grain cupboard and we can't refill it overnight. The good news is that the world is more than capable of producing enough food, but improved farming and fertilization practices will be required. With our unique ability to incrementally raise our potash production to meet world demand over the next several years, we look forward to helping farmers increase food production as we deliver continued growth for our shareholders."

IPI pulled back yesterday following its stellar debut on Tuesday. It could be off to the races again today on both the strength of POT's earnings and the saturating media coverage of the global food crunch.

Despite recent data, gasoline stocks still 7% above last year's level

Refiners have operated at highly reduced run rates the past month to try to work off supply overhang ahead of the summer driving season.

With the NYMEX 3-2-1 crack spread still struggling to hold the lower teens, industry-wide attempts to boost margins could be a case of too little too late.

Oil stocks are still below levels of a year ago. And momentum in crude futures is so overwhelming that any data point, negative or positive, within the petroleum complex can and does get spun into a bullish scenario.

So oil continues higher and refining margins stay compressed. Even though gasoline at the pump is crossing $4/gallon in some areas of the country, refiners' share of the pie is only one-third of last year's take.

Weekly EIA data: Bigger build in crude, bigger draw in gasoline

Actual:
Oil +2.4 million barrels
Gasoline -3.2 million barrels
Capacity utilization: 85.6%

Expected:
Oil +1.1 million barrels
Gasoline -2.1 million barrels
Capacity utilization: 82.1%

Large-cap Chinese energy companies worth a look

With shares of American energy companies like APA(nat gas), ACI(coal), and XOM(oil) hitting new 52-week highs on an almost daily basis, it's worth looking abroad for underperformers in the sector
Chinese firms PTR and SNP have come well down off their highs in conjunction with the Shanghai Composite, which at 3147 is roughly 50% off of its October highs over 6000. But they're starting to define a bottom ahead of the major index.

Shanghai made a bit of a stand last night to close in positive territory after dipping below the 3000 mark intraday(night).


SNP sports a P/E below 11, and @ $100/share is 45% below its 52-week high over $178.


The chart for PTR looks the same, as shares have retreated 48% since October.
PTR is now trading at a P/E under 12.


Much has been made about P/E ratios on the exchange, but when China's GDP growth rate is factored into calculations, the Shanghai Composite is valued equitably relative to the exchanges of other countries. This chart is from November.