Weekly Strategic Plan 04232012

7/28/2019 Weekly Strategic Plan 04232012

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Liquidity Cycle

THIS COMMUNICATION IS INTENDED ONLY FOR THE USE OF INFINIUM CAPITAL MANAGEMENT, LCC AND ITS EMPLOYEES TO WHICH IT IS ADDRESSED AND CONTAINS OR MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL OR EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. If the reader of this communicati on is not the intended recemployee or agent responsible for delivering to the intended recipient), you are hereby notied that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please immediately inform Innium Capital Management, LLC and then disregard and delete this communication. Do nretain any copy of this communication.

A choppy, indecisive market performance this past week. Earnings reports better than downwardly revised estimates left the bulls crowing

over earnings beats while the bears noted a pace of increases that was below last years gains. More earnings this week so perhaps a

clearer message will emerge. The action of Apple, darling of the big hedge funds, was notably different should be watched. I have included a

couple of relevant charts a ways below here.

The mild set back for the Liquidity Cycle Indicator over the past couple of weeks deepened this week making the recent congestion in equity

indices appear more threatening. Seasonal pauses that occur after tax time, French elections going Hollande s way, and more Greek centric

political language being used in the run up to the parliamentary elections in Greece, are contributing to a new rise in uncertainty after the

calming of LTRO.

The chart of the Nasdaq composite, which has been a leader among the indices, clearly reveals the congestion and slowdown that has occurr

10 days. Also the frequency of strong down days has markedly increased. So far this is not more than a needed correction to a strong bull run

through the bottom of this support would indicate more to come on the down side.

Earlier I mentioned Apple which has been the leading the markets with its extraordinary success. This next chart is the ratio of the Nasdaq to

gained steadily as a percentage of the Nasdaq until just recently when Apple has experience a pullback. This bears watching. When the bell c

course the herd usually come along.


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Apple also has been the big leader in the technology sector which is one of the stage 1 early cycle components. The stage 1 components have powered

the run up this year. But, with Apple pausing a big push has been removed and the stage 1 components have lost momentum the last 10 days.

The mid-cycle components of the LCI which have been weak since early March moved mostly sideways as recent forecasts for the growth of the global

economy have been reduced. Some possible good news on that front may be seen in positive price action coming from the China Shanghai Index. The

rally here needs to take out the resistance up at 2600 to be convincing but the reversal off of the sharp plunge in March is a good start.

FIXED INCOME

Treasury securities rallied and yields declined back into the middle of the sideways range of the last 6 months. The worry about Spanish and Italian

debt revived last week and a bit of risk off trade ow in European peripheral xed income issues helped support the US xed income. That had calmed

by weeks end though the reaction to G20 and French election news may cause movement Monday.

Banks in Europe experienced a bit of risk off pressure too. These banks are full of sovereign notes and bonds and cannot sidestep weaknes

sovereign itself.

The left edge of the long term chart of US 30yr bond rates is almost exactly when I started in the futures business. Like most old bond trade

it hard to accept that rates can keep going lower. Who would lend for 30 years at this miniscule rate with our history of ination and lack of mintegrity in Washington? But Japan offers evidence that rates can go lower, for longer than common sense might expect. Keep an ear out fo

Schilling though. Dr. Schilling turned bearish bond yields right near the top in the early 1980s, plus he put his reputation on the line in public an

calling for this move and has never relented. He made a lot of money by putting his money where his mouth was. When and if Gary turns bea

out of bonds and if you have t he stones get short.


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COMMODITIES

This chart of the CRB says most of what we need to say about commodities for now. Should the positive indications appearing in the Shanghai Index be

veried by policy change in China that may lead to the DRB nding a bottom. For now however, the trend is your friend and the trend is lower.


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Palladium had a small gain but most metals both Precious and industrial remained sideways or soft in price. These markets need the demand

from China and Asia infrastructure development to ignite a rally. No evidence so far.

Almost everything in the Agricultural commodities was under pressure this past 5 days.


5/8THIS COMMUNICATION IS INTENDED ONLY FOR THE USE OF INFINIUM CAPITAL MANAGEMENT, LCC AND ITS EMPLOYEES TO WHICH IT IS ADDRESSED AND CONTAINS OR MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL OR EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. If the reader of this communicati on is not the intended recemployee or agent responsible for delivering to the intended recipient), you are hereby notied that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please immediately inform Innium Capital Management, LLC and then disregard and delete this communication. Do nretain any copy of this communication.

FOREIGN EXCHANGECrude Oil and Products

Some up and down in the crude prices during the week but prices ended modestly higher, very modestly. Spreads on the other hand lost some

ground so signals were mixed and mildly contradictory.

Currency rates are being tossed about by the risk on /off much like equities.

This is the developed country currency ranker.


6/8THIS COMMUNICATION IS INTENDED ONLY FOR THE USE OF INFINIUM CAPITAL MANAGEMENT, LCC AND ITS EMPLOYEES TO WHICH IT IS ADDRESSED AND CONTAINS OR MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL OR EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. If the reader of this communicati on is not the intended recemployee or agent responsible for delivering to the intended recipient), you are hereby notied that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please immediately inform Innium Capital Management, LLC and then disregard and delete this communication. Do nretain any copy of this communication.

SECTORS: These sector etf charts reveal a loss of momentum in the stronger groups.Here is the emerging country ranker.

The developed equity market ranker for the dollar based investor.

There are now only 3 permissioned sell countries, Spain, Italy, Portugal. No surprises there, though there is some oversold risk. The buy side

candidates Including Ireland and Denmark, which is a bit surprising.


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Volatility Environment: Cocoa, Orange Juice, and the meats give volatile readings but other markets read as quiet.

The emerging equity index ranker

Only 2 sell permissioned candidates: Czech Republic and Argentina.

Best buy candidates are Peru, Columbia, and Thailand though others also look favorable.


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Thanks to Mark Perry for posting this article.

ARTICLES & COMMENTARY

I turn over this part of the letter to Grant Williams who writes the Thing That Make You Go HMMM newsletter. In addition to his

opening essay he has 5 different posts from others that I had planned too include myself. So I will let him do the heavy lifting

provides this letter for free so I suggest signing up.

What Can Onions Teach Us About Oil Speculators?

Onions have no futures market, yet their price volatility makes the swings in oil prices look tame.

Fortune Magazine (June 30, 2008) -- Before the government starts scrutinizing the role that speculators may have played in driving up fuel and food

prices, investigators may want to take a look at price swings in a commodity not in todays news: onions.

The bulbous root is the only commodity for which futures trading is banned. Back in 1958, onion growers convinced themselves that futures traders

were responsible for falling onion prices, so they lobbied an up-and-coming Michigan Congressman named Gerald Ford to push through a law

banning all futures trading in onions. The law still stands.

And yet even with no traders to blame, the volatility in onion prices makes the swings in oil and corn look tame, reinforcing academics belief that

futures trading diminishes extreme price swings.

MP: The chart above shows the monthly percent changes in spot prices for crude oil and onions between January 2000 and March 2012. Duringthat period, onion prices have been about 7 times more volatile than oil prices, based on the differences in: a) mean monthly price changes (7.7% for

onions vs. 1.3% for oil), and b) the standard deviations of monthly price changes (59.4% for onions vs. 8.6% for oil).

Update: The chart below compares the monthly percent changes in spot prices for onions and corn over the same period as onions and oil prices

above, as an exercise in comparing the volatility of the prices of two agricultural commodities. One might argue that a comparison of oil and onion

prices might not be valid if there are differences in agricultural commodity prices and energy prices. The fact that the volatility of onion prices is so

much greater than the volatility of corn prices lends further statistical support to the notion that markets with futures trading like corn have lower price

volatility than markets without futures contracts like onions.

A copy of TTMYGHmmm is attached to the email.

Bruce Lawrence April 22, 2012
http://ethreemail.com/subscribe?g=bdc736be

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Weekly Strategic Plan 04232012