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| Author: Mike Celeste | Editor: Tony Ponzo | August Circulation: 13041 |
STAT SHEET WEEK ENDING Aug. 13/ 05
**************** Percent / Points
Dow Weekly Change + 0.4 % + 42
S&P Weekly Change + 0.3 % + 4
Nas Weekly Change - 1 % -21
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Comments:
I said it before, and I will repeat it again---I hate August re the markets. The major indexes are down for the month, thus far, and I believe the larger market has seen even larger drops. This past week the main culprit has been oil, with it surging well over $60/barrel to close the week at $66.86/barrel. Friday, alone, it was up $1.06, and that was the 4th record close in the last 5 days. I will repeat--4 RECORD closes in the last 5 days. Everyone I ask tells me that they have cut back in some way in their driving habits. Even driving to work has seen people riding bikes, taking busses, trains, subways, etc. I keep saying that if you have to spend more on gas, you spend less on something else, unless you borrow or tap savings. Speaking of savings, a report came out in the past week that says that the savings rate in the US is at a 0 rate, the lowest in how long. That means the rate is less than 1%. Could much of the decline be laid at the feet of gas? It wouldn't surprise me. What does surprise me is the fact that the media keeps reporting what looks to me to be false information. Today's Los Angeles Times, for example, states "Those fears also were reflected in the US gasoline market, where inventories have been falling....." Match that statement up against the latest report from "This Week in Petroleum" which give weekly updates on supply and demand in the oil, gas, etc. businesses. Their stat sheet says that oil inventory this past week is 2.8 million barrels above last week and 26.5 million barrels above this point last year. At one point we were at a 6 year high in inventory. Now those figures were out of a total inventory this past week of 321 million barrels. In percent terms, we are over 8% higher in inventory that at this point last year. In demand for gas, the report states that the past week demand was 9.483 million barrels per day, compared to 9.472 barrels per day---that's less than one tenth of 1% of an increase. If you measure the number of vehicles on the road, you will see more vehicles now than last year. Also, if you figure in population, you will see an increase in population higher than that. As I said, everyone I ask is cutting back somewhat--how about you and people you know? We are being lied to. Everything I read that has any credibility to it in this area centers around the fear of a cut in supply. Anticipation always has more effect than reality---just like in the stock market--we anticipate and that is what drives the markets, and along with that comes the emotion that plays such a large part---with fear being the number 1 degree of emotion. Many sections of the transportation industry have already raised prices---prominent among them being the airlines. However, smaller players are right there, too, with all types of delivery costs going up. How these government people can say that inflation is under control and not a significant factor is beyond me. You regular shoppers know that isn't the truth--and what do they count toward inflation?--Besides the oil area, and we look at energy and include utilities there. Here in my area of California I have received notices of price increases applied for in electric, gas heating, and water. Mortgage rates are increasing and another story in today's LA Times makes prominent mention of what I have been saying for a long time---"Mortgage Defaults Expected to Grow" "With home-price rises slowing, many Californians behind on payments won't be able to avoid foreclosure, a research firm says."---"We're currently at a floor level. Any movement now is going to be up." said John Karevoll, DataQuick's chief analyst. By the way, we have dealt with DataQuick in another business a family member has, and John Karevoll is very respected in our books.
Combine just the 2 sectors of Energy and Housing and you have a very volatile and dangerous outlook. People that say housing prices in CA will just level out, but not drop are dreaming, as far as I'm concerned.
How does all this tie in to the stock market? Pretty obvious, it seems to me. Be careful out there, as the sergeant used to say on that great TV show "Hill Street Blues".
We checked back the last 4 years since the bubble broke and looked at August and September in the Nas and Dow. Not good. For August starting in 2001 and going to 2004, we see Nas losing 246 points in 2001, 7 points in 02 (pretty good), gained 75 points in 03 and lost 76 points in 04. In Sept. 01 Nas lost 300 points, -130 in 02, -35 in 03 and gained 64 in 04.
The Dow--For August, it lost 577 points in 01, 69 in 02, gained 182 in 03 and gained 36 in 04. For Sept., tho, it lost every year--losing 1100 points in 01, 1067 in 02, 142 in 03 and 90 in 04. It was much better in the recent years as you can see , so hopefully this year will be better as well.
Not very pretty reading, is it? SplitMaster, as expected though, did much better - having only one bad month during all those years. What we are doing for our personal investing is cutting back on the number we get into, and waiting for Big Dippers to hit. In this downturn we have 3 Big Dippers currently going, with a couple more fairly close. Of the 3, we have 1 winner and 2 are currently at a loss--but--by less than $1 and if they follow the past, they will become profitable soon. We remain confident in our historical data and look forward to seeing the results. On Monday the stock split onslaught continues from the July announcements. We have 4 new plays coming up, all with options. Those that thought it was too slow in July are certainly getting what you wanted. Remember, for our own personal investing, we are looking more at the Big Dipper and the options with those BD prices. Also, note that our Chart Indicator break-even Positive/Negative line has been breeched, the Nas now under the line, but it hasn't been verified as negative as yet, so we have to wait a bit longer.
So, there you have it---our 3 main areas of concern this week are the energy, housing and time-frame for this point in the year--August and September. Every once in a while I repeat part of Dad's old theory--buy in Sept. In thinking that out, if Sept. is bad, then that's when there could be many lows--and buying near the lows is a desirable goal, we think.
Today's Question---
How many time zones are there in China?
Answer--There is only one time zone. There could geographically be 5 time zones but the government requires clocks to be set at the same time as those in the capital.
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