STOCK MARKET WATCH, Tuesday 20 June

CELEBRATING JUNE 19th

In Canada, today – June 19, 2006 marks tax freedom day. Tax freedom day marks the date on the calendar when citizens have paid their share of incomes, to all levels of government in taxes, and begin working for themselves.

Canada’s Fraser Institute has been calculating Canada’s Tax Freedom date since 1977 on the basis of average family income. Variables that are factored into the calculation include: income, property and sales taxes, as well as profit taxes, health, social security and employment levies, import duties, license fees, taxes on the consumption of alcohol and tobacco, natural resource fees, fuel taxes and hospital taxes.

For all you American readers, your “Tax Freedom” day has already come and gone. I hope you all could afford to celebrate it! The date was April 26, 2006 - for a total average effective tax rate of 31.6 percent of the nation's income. According to Wikipedia,

“The latest that (U.S.) Tax Freedom Day has occurred was May 3 in 2000. In 1900, Tax Freedom Day arrived January 22, for an effective average total tax rate of 5.9 percent of the nation's income. According to the Tax Foundation, the most important factor driving changes in Tax Freedom Day from year to year is growth in incomes, as the progressive structure of the U.S. federal tax system causes taxes as a percentage of income to rise in along with economic growth.”

http://www.financialsense.com/Market/wrapup.htm

that. I gotta start paying more attention!

Nor 40 million uninsured citizens. It's a question of priorities.

8:30 AM Building Permits May
Briefing Forecast 1960K
Market Expects 1950K
Prior 1973K

8:30 AM Housing Starts May
Briefing Forecast 1900K
Market Expects 1870K
Prior 1849K

8:30 AM ET 6/20/06 U.S. HOUSING STARTS DOWN 3.8% YEAR-OVER-YEAR

8:30 AM ET 6/20/06 U.S. APRIL HOUSING STARTS REVISED TO 1.86 MLN VS. 1.85 MLN

8:30 AM ET 6/20/06 U.S. MAY SINGLE-FAMILY STARTS UP 2.1% TO 1.59 MLN

8:30 AM ET 6/20/06 U.S. MAY HOUSING STARTS STRONGER THAN 1.86 MLN EXPECTED

8:30 AM ET 6/20/06 U.S. MAY BUILDING PERMITS FALL 2.1% TO 1.93 MLN VS. 1.97 MLN

8:30 AM ET 6/20/06 U.S. MAY HOUSING STARTS UP 5% TO 1.96 MLN VS. 1.86 MLN APRIL

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB96EF281%2D7C7B%2D4A76%2D9F9C%2D226DF662662A%7D&dist=newsfinder&symbol=&siteid=mktw

WASHINGTON (MarketWatch) - New construction of U.S. houses increased 5% in May after three months of declines, the Commerce Department estimated Tuesday. Despite weakening confidence among builders, housing starts rose to a seasonally adjusted annual rate of 1.96 million in May, stronger than the 1.86 million pace expected by economists surveyed by MarketWatch. Starts of single-family houses rose 2.1% to 1.59 million in May, while starts of large apartment units rose 19.7% to 371,000. Building permits, a leading indicator of housing construction, fell 2.1% to a seasonally adjusted annual rate of 1.93 million from 1.97 million in April.

this sounds like decent to good news for the market to have an up day, if anyone of the "big dawgs" are announcing earnings today and have good results, and if the energy and materials do well then things surely will have a boost today.

SINGAPORE - Crude futures dipped slightly Tuesday, little changed from the $69 a barrel mark seen in recent days, despite President Bush's threats to Iran that nations worldwide will not back down from their demand that Tehran suspend uranium enrichment.

Concerns over Iran's nuclear ambitions have not abated, on mixed signals from Tehran over the program. Traders, meanwhile, are concerned that Iran, the world's fourth-largest oil producer, might reduce its oil exports as a result of its showdown with the West over its nuclear program.

On Monday, Bush said that if Iran's leaders reject the offer of incentives, they will face action before the U.N. Security Council and progressively stronger political and economic sanctions.

Light, sweet crude for July delivery fell 8 cents to $68.90 a barrel in electronic trading on the New York Mercantile Exchange.

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SAN FRANCISCO - Three former natural gas energy traders pleaded guilty to price manipulation charges Monday, bringing to at least six the number of traders convicted of illegally using energy trade publications to inflate prices, authorities said.

Christopher Joseph McDonald, 38, Paul Atha, 39, and Michael Whalen, 36, entered their pleas in U.S. District Court in San Francisco. The three acknowledged conspiring to report fictitious trades to an industry newsletter, Inside FERC, for about four months starting July 1, 2000, in an attempt to skew the published index prices of natural gas.

McDonald, of Atlanta, was a supervisor on the natural gas trading floor for Atlanta-based Mirant Corp; Atha, of Houston, was a trader for Mirant; and Whalen, of Houston, was a natural gas trader for Cincinnati-based Cinergy Corp. Whalen had previously worked for Mirant, authorities said.

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DARWIN (Reuters) - U.S. oil major Chevron (NYSE:CVX - news) said on Tuesday it still expected to secure environmental approval for its Gorgon gas project in the third quarter of 2006, despite concerns expressed by state authorities.

Chevron, which does not now expect to deliver first gas from Gorgon until after 2010, still expects to sign binding sales and equity agreements with Japanese customers before the end of 2006.

-cut-

The Gorgon LNG project, which will be operated by 50 percent stakeholder Chevron, has raised concerns about its potential impact on the ecology of Barrow Island.

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Oil Prices Flat Rise As Bush Presses Iran

They seem to keep adjusting the headline

http://biz.yahoo.com/ap/060620/oil_prices.html?.v=2


VIENNA, Austria (AP) -- Crude-oil futures rose Tuesday over Iran concerns after President Bush warned that nations worldwide will not back down from their demand that Tehran suspend uranium enrichment.

Concerns over Iran's nuclear ambitions have clouded the outlook for the nation's oil exports -- and global oil prices -- despite expectations that U.S. stock levels will remain healthy.

snip>

Traders had taken some relief from conciliatory remarks out of Iran on Saturday that the Western package of incentives meant to persuade the Islamic republic to give up its uranium enrichment program was "a step forward."

But the issue remains tense, with Bush saying if Iran rejects the incentives, it will face action before the U.N. Security Council and progressively stronger political and economic sanctions.

"The calming comments from Tehran have taken out part of the risk premium, but the threat of a potential supply disruption from Iran is still present, although not imminent," said Victor Shum, an energy analyst with Purvin & Gertz.

"In the short term, if we see progress toward a diplomatic resolution in Iran, prices will drop to the low- to mid-$60s," he said.

more...

10:04 AM ET 6/20/06 JULY CRUDE CLIMBS 52 CENTS TO $69.50/BRL IN MORNING TRADING

10:04 AM ET 6/20/06 AUGUST CRUDE UP 40 CENTS AT $69.95/BRL IN NY

10:04 AM ET 6/20/06 JULY NATURAL GAS FALLS 13.8 CENTS TO $6.755/MLN BTUS

London equities tracked Wall Street lower in morning trade on Tuesday after US stocks were hit overnight by further Federal Reserve inflation warnings.

The FTSE 100 was down 13.6 points or 0.2 per cent at 5,612.5 by mid-morning, coming off opening lows, while the mid-cap FTSE 250 fell 48.2 points, or 0.5 per cent, to 9,065.9.

Fears of a slowdown in US demand, and interest rates seen potentially rising by two quarter-point increases, hit metals and pushed oil below $69 a barrel.

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LONDON (Reuters) - U.S. stock futures ticked up on Tuesday ahead of the Wall Street open but investors were nervous before housing data later which could provide hints on the outlook for the monetary policy.

In corporate news, GE Healthcare (NYSE:GE - news) said it had made a recommended $436.3 million cash offer for Swedish medical instruments maker Biacore (BCOR.ST). Pfizer (NYSE:PFE - news), Biacore's largest shareholder, said it had committed to accept the offer.

By 0940 GMT, U.S. stock futures were showing gains of between 0.1 and 0.2 percent for the three main indexes , trimming their rise as European shares traded down.

Economists are split on the direction of May U.S. housing starts, which are due at 1230 GMT.

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NEW YORK - In 2003, Anita Britten refinanced her two-story brick cottage in Lithonia, Ga. using a hybrid adjustable rate mortgage, or ARM. Her lender reassured her that she could refinance out of the riskier loan into a traditional one when her interest rate started to reset.

Three years later, Britten can't get a new mortgage and her monthly payment has jumped by a third in six months. She can't afford her payments and may face foreclosure if her financial situation doesn't change.

As more ARMs adjust upward and housing prices begin to dip, many Americans like Britten can't refinance and are finding themselves trapped in too-high monthly payments. For those who can't make their payments, foreclosure — the legal process by which the lender reposseses the house because the owner has defaulted on payments — is the only way out.

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When the bank reposes your home, do you still owe on the loan? I know people who have had their cars reposed and after the bank sold the car, they still owed on the car loan because the bank didn't sell it for what the remainder of the loan was worth. Is it the same with a home foreclosure? Can you have your home foreclosed and still owe a mortgage on a nonexistent home?

The Bank will still be after you once they have your home, if you still owe them money. As there are more forclosures, there will be more under valued houses going to the market place. As they bring down the prices of all houses it will get to the point where a lot of people owe more then the house is worth, Then the fire sales will start for all the toys that have be bought with home equity loans.

Latr
Chris

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 86.32 Change -0.05 (-0.06%)

Even Weak Housing Data and North Korea Fails to Keep Away Dollar Bulls

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/Even_Weak_Housing_Data_and_1150754461502.html

US Dollar

On the first day of the new trading week, we learned early on that inflation will continue to be the market’s primary focus – regardless of how bad the news may be for the US dollar. The housing market is showing more signs of giving way, which is an extremely dangerous development for the US economy. The National Association of Home Builder’s confidence index fell from 46 to 42 to an eleven year low. Homebuilders are becoming increasingly pessimistic on the future outlook for sales as prospective buyers begin to dissipate. Even if we do not see an immediate slowdown in new or existing home sales, we will probably begin to see the rapid pace of new home construction slow significantly. This trend will have ripple effects far beyond the construction sector to the viability of real estate agents and brokers as well as the profitability of home improvement stores such as Lowes and Home Depot. A deflation of the housing market bubble is inevitable, but the question that remains is whether we will just see some modest cooling or an all-out collapse. So far, the housing market only appears to be cooling but with signs of trouble reported in states such as California and Arizona, the risks are clear. Much of the country’s growth and consumer spending has been fueled by the rise in the housing market. If it gives, we could be facing a great deal of volatility. Therefore is the Federal Reserve’s strong stance on inflation and the market’s clear disregard for the data the smartest move? Regardless of the answer, it is what is happening right now as traders shrug off the housing market index and fresh tensions with North Korea to key completely off of the hawkish comments from Fed Presidents Guynn and Fisher. With the Federal Reserve meeting less than 10 days away now, another dose of tightening has become a reality. Yet, it may soon begin to be important to think about what comes after the June meeting. Even though the Fed is set to deliver another quarter point hike, will they signal that more is to come or will they opt to neutralize their statement? This remains the key question, especially since the market has already fully priced in the rate hike. Meanwhile, to our dismay, having finally had a chance to breathe a sigh of relief that Iran has called the international package of incentives for an end to their nuclear enrichment program a “step forward” in a long and tension filled battle of who will blink first, an old aggressor has reemerged. Although North Korea does not control a large part of the world’s oil stockpiles like Iran does, their proximity to Japan and the US’ already difficult relations with them still makes their threat risky. If tensions escalate and North Korea moves forward with testing of their long-range missile, expect the markets to become even more jittery.

...more...

IMF´s Rato says inflation, rates pose growing economic risks, urges dollar falls
http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1150795775-a0a30f08-14930

IMF's Rato says inflation, rates pose growing economic risks, urges dollar falls BRUSSELS (AFX) - IMF director-general Rodrigo Rato said the world economy faces growing risks from fears over rising inflation and tightening monetary policy, and called for further depreciation of the dollar to correct global imbalances

In an interview with Belgian newspaper L'Echo, Rato said the performance of the global economy "remained impressive" in the first quarter, and the IMF still predicts growth of around 5 pct for 2006

"Nevertheless, recent (market) turbulence is the result of uncertainties, which implies that the risks to the future outlook are larger," he said

"First, the recent rise in inflation in industrialised countries led to uncertainties over the evolution of short-term interest rates following the reaction of central banks to the latest data," he said

Rato warned that this could result in higher long-term rates and further market volatility

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banana republic.

The loss of our brief place as masters of the financial universe parallels our new role in the economy. "We are becoming a postindustrial society that specializes in consumption and leisure," writes Fareed Zakaria, Newsweek's foreign affairs editor, "How Long Will America Lead the World?" The investor's loss of power parallels America's drift into second place behind Asia.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B2B0F6CC2%2D757A%2D4FE9%2DAC58%2D6A251339EBD1%7D&dist=newsfinder&symbol=&siteid=mktw

NEW YORK (MarketWatch) - Herley Industries Inc. (HRLY : 10.68, +0.01, +0.1% ) said Tuesday it received a delisting notice from the Nasdaq Stock Market for failing to file a required quarterly report. The Lancaster, Pa., maker of microwave components said its accountants had yet to complete a review of the 10-Q report because of an indictment over charges in Department of Defense contracts.

I guess when you have committed fraud, it's a bit difficult to get those reports cooked just right. :eyes:

http://www.marketwatch.com/News/Story/Story.aspx?guid=286f2854-d3cb-463c-98fb-08a1914d78d4&siteid=mktw&dist=MorePulse

SAN FRANCISCO (MarketWatch) -- American International Group (AIG : 59.47, -0.40, -0.7% ) said late Monday that it has amended several Securities and Exchange Commission filings to provide more information on AIG shares which may be delivered to its employees by Starr International Co. as part of that firm's deferred compensation plans. The amendments, which included AIG's 10K annual report for 2005, don't involved any restatement of financial results, the insurer added. Starr International was used for years by AIG as a way to reward its top executives, but that system ended last year when longtime AIG Chief Executive and Chairman Maurice "Hank" Greenberg left. Greenberg still runs Starr International.

Will their books show those payments to Grasso? :eyes:

Greenberg was AIG, no? The Starr Foundation's assets are made up of mostly AIG stock.

Starr, which is chaired by AIG's former CEO, owns 300 million AIG shares worth about $18 billion ... billion!

It's all very strange. The 2 son seem neck-high involved, too.

http://www.the-catbird-seat.net/Starr-Foundation.htm

I wouldn't be surprised to find dotted lines from Nixon Center's Chairman Greenberg and events surrounding 911. Kissinger's name crops up with Greenberg's at the Nixon Center and at AIG ... as does Paul Bremer. How odd that Kissinger was first up to chair the 911 cover-up commission.

I just wish some shoes would drop.

and approved the $26 million that Grasso was paid along with his golden parachute.

There's an awful lot of backscratching and pocketpool goin' on.

http://www.bloomberg.com/apps/news?pid=10000103&sid=an9UsfFBthUk&refer=us

June 20 (Bloomberg) -- Americans' wage gains are evaporating as inflation accelerates, helping explain why confidence in the economy isn't soaring along with job growth.

Weekly wages adjusted for inflation fell 0.7 percent last month and are down 0.2 percent over the past year, according to a report last week by the Labor Department. Pay has been flat or declined in more than half of the 65 months since January 2001, when President George W. Bush took office.

Those numbers contrast with other government reports showing incomes for all workers staying a step ahead of prices, highlighting a growing disparity between the wealthy and those of more modest means. The difference may explain why the economy's performance isn't translating into greater popularity for Bush, whose poll ratings hover near record lows.

``People at the high end of the income scale are doing a lot better than people in the middle or low end, but there are a lot more people in the middle and low end,'' said Douglas Lee, president of Economics From Washington, a Potomac, Maryland, consulting firm. ``For those people, inflation is eating into their income gains.''

Adjusted for inflation, the median income for the top 10 percent of U.S. households rose 2.3 percent between 2001 and 2004, covering much of Bush's first term in office, according to the Federal Reserve's Survey of Consumer Finances, issued in February. For the other 90 percent of households -- which earned less than $184,800 in 2004 -- the median fell 0.5 percent over the same period.

Obscuring the Decline

more...

http://www.washingtonpost.com/wp-dyn/content/article/2006/06/19/AR2006061901187.html

Investors craving pure gold now have an American supplier: The U.S. Mint plans to unveil today the nation's first 24-karat gold coin at an official strike ceremony at its West Point, N.Y., facility.

Modeled on the traditional buffalo nickel, the American Buffalo coin has a buffalo on one side and a Native American on the other. It comes in two versions, both stamped with a $50 face value but worth substantially more because they are made of pure gold.

A "proof" version with a high-relief, mirror finish aimed at collectors will sell for $800, while the less flashy bullion version of the coin -- targeted at investors known as "gold bugs" -- will retail for the price of an ounce of gold plus a 5 to 7.5 percent markup to cover the cost of making and selling it. The $50 face value is symbolic and set by Congress, just as most commemorative silver coins sold by the mint have a face value of $1 but are sold for $35 or more because of their silver content.

The U.S. Mint has sold 22-karat gold coins known as American Eagles since 1985, but Deputy Director David A. Lebryk said the new offering is aimed at investors who want coins that are pure gold. He estimates that the world market in gold coins is divided between sales of 24-karat coins such as the Canadian Maple Leaf, which account for 60 percent of the market, and more durable 22-karat coins, a category dominated by the American Eagle. Last year the mint sold 420,000 American Eagle coins, which also have a face value of $50 and contain 1 ounce of gold plus some alloy metal for durability.

snip>

The coin's debut in West Point comes at a time when gold prices have spiked and then dropped significantly. Gold prices hit a 26-year high of $732 an ounce in mid-May but have now dropped more than 22 percent to close at $568.80 yesterday. The fall has already prompted the mint to drop the planned price of the collector's edition coin from $875, and the bullion coins will rise and fall with the market.

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You're paying the prevailing gold price plus a premium. You might as well have something nice and ORIGINAL to look at. A young 1890's girl "Liberty". Maybe pair her up with a chiseled, square-jawed male counterpart holding a flag (if you want to be PC). Include lots of detail and high relief - you're working with a decent-sized piece of nice maleable GOLD, forchrissakes.

Wrinkled old Indian with a buffalo. Been there, done that. Grandpa probably still has a jarful of old nickels.

really matter. If I was going to pay a premium for "looks", I'd rather get a couple of Philharmonics. Guess I'm more into music than buffalo meat. It always stuck me as rather hypocritical to use the image of an American Indian on our money after what was done to them. Makes me think of that old Michael Murphy song - Geronimo's Cadillac. :shrug:

I'd be able to send both my daughters to Harvard or something *and* build a big ol' house *and* afford vacations *and* ...

Dow 10,969.08 +26.97 (+0.25%)
Nasdaq 2,114.81 +4.39 (+0.21%)
S&P 500 1,242.31 +2.17 (+0.17%)
10-Yr Bond 5.141 -0.04 (-0.08%)

NYSE Volume 80,387,000
Nasdaq Volume 74,071,000

09:15 am : S&P futures vs fair value: flat. Nasdaq futures vs fair value: flat. Futures trade continues to strengthen heading into the opening bell, now indicating that equities may open relatively flat. While an increase in housing starts following three months of declines may ease concerns about slowing economic growth, the data also suggest that the Fed may have further to go with its tightening, as evidenced by the subsequent pullback in Treasuries following the report.

09:00 am : S&P futures vs fair value: -0.8. Nasdaq futures vs fair value: -1.2. Futures indications are near their best levels of the morning but still set the stage for a lackluster open. While investors may be finding some comfort in the fact that, albeit weakening, a rebound in housing starts stalls concerns about the sector completely rolling over. Target (TGT) noting that June same-store sales are running near the upper end of their 3-5% forecast and an analyst upgrade on Costco (COST) are also providing industry-specific (retail) sources of support.

08:35 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -4.0. Futures trade improves slightly following housing data, but not enough to change sentiment as indications still signal a sluggish start for the cash market. May Housing Starts rose 5.0% to 1.95 mln units (consensus 1.87 mln) while Building Permits fell 2.1% to 1.93 mln units, slightly below an expected 1.95 mln. Bonds, which were up modestly ahead of the data, have weakened a bit, as the yield on the 10-yr note climbs to 5.13%.

You all will be glad to hear that I did a Call play today and was able to strike while the iron was hot, was in 10 minutes and got out for a 17% return. (insert smiley guy rolling around in money here)

I am staying out the rest of the day too much range trading right now.

So did they just run over to the cash store and pick some up?

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-06-20T120043Z_01_N19372218_RTRIDST_0_FINANCIAL-CASH-SURVEY.XML

NEW YORK, June 20 (Reuters) - Wealthier Americans say they are keeping more assets in cash than advisers often recommend, a new survey shows, suggesting growing comfort with rising cash yields amid unease about prospects for stocks and bonds.

The findings from HSBC Bank USA's survey, released Tuesday, suggest that wealthier investors are cautious in a year when cash has outperformed stocks and bonds and as yields on some cash investments approach 5 percent.

It also suggests there might be plenty of cash available to deploy in riskier investments if sentiment improves.

"Individuals and corporations feel it's a more dangerous world, since 9/11 in particular," said Money Fund Intelligence publisher Peter Crane, a specialist in cash investments. He had not seen the HSBC survey.

"There is also a realization that returns on other investments have been good for a while," Crane added. "Cash returns approaching 5 percent may seem a no-brainer if expectations for returns on stocks and bonds are lower."

HSBC's survey covered 472 individuals with up to $1 million of investable assets, a group sometimes called the "mass affluent," plus 251 financial advisers.

...more...

http://www.hussmanfunds.com/wmc/wmc060619.htm

snip>

The actual growth rate for S&P 500 dividends since 1940 has averaged just 5.7% annually. Using that growth rate, the implied value of the S&P 500 is just 607. Using more optimistic assumptions, the fastest 25-year growth rate for S&P 500 dividends over the past century has been 6.7% annually. If we assume that growth rate for future dividends, the implied value of the S&P 500 would presently be about 788. Though the higher range of that 607-652-788 area seems about right to me, given other information such as earnings, profitability, and so forth, all of these figures are plausible regions of “fair value” on the assumption of 10% long-term equity returns.

One might scoff that such levels on the S&P 500 would put its price/earnings ratio at about 10, but that is, in fact, about the price/earnings ratio that the S&P 500 has averaged when earnings have been at fresh highs near their long-term 6% peak-to-peak growth trendline (as they are currently). The belief that price/earnings ratios should “normally” be much higher is based on earnings that have typically been well below that peak-to-peak growth trendline. You don't pay rich multiples on peak earnings and record profit margins late in an economic expansion if you want to keep your money.

Of course, it is possible to “fit” the green line so that it matches the value of the S&P 500 at current levels. This requires the assumption that the long-term dividend growth rate will be 8%. Not only has that never been observed historically, and not only is it inconsistent with the constraints imposed by nominal GDP growth, but that assumption also implies that stocks were fairly valued at every previous market top except 1929 and 2000, including 1972 (just before the S&P 500 lost half of its value) and the 1987 pre-crash peak. Reasonable assumptions should generally be at least slightly consistent with observable facts.

Historically, deviations between the actual S&P 500 value and the implied fair value (depicted above) have displayed a 70% correlation with subsequent 10-year returns on the index (a lack of explanatory value would be a 0% correlation). In other words, the stock market has historically had a strong tendency to deliver above-average returns from favorable levels of valuation, and to deliver unsatisfactory returns when valuations have been elevated (as they are today).

In my view, the stock market remains richly valued, and investors should not rule out an S&P 500 trading in the 700-800 range in the years ahead as a reasonable (not catastrophic) probability. Investors should not be misled to believe that broad exposure to stock market risk represents sound investment here, or that a shallow decline of a few percent has suddenly made the stock market a bargain.

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A combination of earnings yield and dividend yield is needed. Either one by itself is incomplete. For example, a stock with a PE of 20 and a dividend yield of 2% has an implied total yield of 7% whereas a stock with a PE of 20 and no dividend has an implied yield of only 5%.

words to toss at one of the top 10 fund managers.





http://www.businessweek.com/magazine/content/04_06/b3869124_mz070.htm

In 2003, when the average equity mutual fund delivered a 32% total return, the $771 million Hussman Strategic Growth Fund (HSGFX ) earned just 21%. But portfolio manager John P. Hussman need not make apologies. During the bear market, when most funds were awash in red ink, he ran one of the few diversified equity funds to rack up double-digit returns. Since the fund's July, 2000, launch, it has returned on average 19.5% annually. What's more, the 41-year-old Hussman produced these gains without making big bets in sectors that performed well then, such as real estate and gold.

Hussman's edge is that he hedges his portfolio, while most funds, as a matter of policy, do not. When he thinks market conditions are unfavorable, Hussman can take steps such as buying put options, which increase in value when stock indexes, such as the Standard & Poor's (MHP ) 500-stock index and the Russell 2000, fall. If conditions improve, as they did in 2003, Hussman removes all or part of the hedge. He's not a hyperactive hedger, making changes just once or twice a year. Nor does the hedging service add much to overhead. The expense ratio for this no-load fund is 1.35%, slightly below average.

Such flexibility sets Hussman Strategic Growth apart from bearish, or short-selling, funds, which go up when the market goes down, or market-neutral funds, which seek to neutralize the market's impact. Most of those funds lost money in 2003.

Hussman developed his strategy as a PhD candidate in economics at Stanford University. In his thesis on "market efficiency and information economics," he concluded that by analyzing both stock valuations and price movements, one could identify favorable and unfavorable market climates. Hedging during unfavorable ones would produce higher returns with less risk.

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there appears to be a small cup and handle forming on the intradays for the DJIA, S&P, and the NASDAQ - we will see if this will give the market some upward thrust for the rest of today - if the handle breaks out of the formation.

looks like today will be good for the Bulls

will the DJIA break 11055 around yesterday's high?

If it does then that will be worth noting ;)

12:00 pm : Market is holding onto the bulk of its solid gains midday as a stronger than expected rise in May housing starts eases concerns about slowing economic growth. Even though the 5.0% increase was due entirely to a bounce from an aberrantly sharp 6.7% drop in April and doesn't change the outlook for a slowing housing market or Fed policy, the report has reassured investors that housing isn't slowing as drastically as initially thought, especially after yesterday's report from the NAHB showing homebuilder confidence slumped to an 11-year low contributed to the negative tone that carried into the close of trading. :crazy:

The return of spirited leadership is also helping stocks snap a two-day losing streak. Energy and Materials, yesterday's biggest laggards, are pacing the way higher this morning with gains of more than 1.0%. The influential Financials sector climbing back into positive territory on the year with a respectable 0.8% gain, in the face of rising bond yields no less, is also acting as a source of support. Caterpillar (CAT 71.60 +1.65) saying that dealer retail sales were stronger through May is helping the Industrials sector extend its 4.0% year-to-date advance while Technology, led by strength in software, networking and a recent turnaround in semiconductor is also providing some leadership. Consumer Staples is trading higher following a strong earnings report from Kroger (KR 20.50 +1.04) and an analyst upgrade on Costco (COST 55.09 +1.54). DJ30 +84.80 NASDAQ +12.27 SOX +0.3% SP500 +7.42 NASDAQ Dec/Adv/Vol 1085/1739/734 mln NYSE Dec/Adv/Vol 1039/2025/624 mln


12:24 numbers
Dow 11,021.75 +79.64 (+0.73%)
Nasdaq 2,121.97 +11.55 (+0.55%)
S&P 500 1,246.92 +6.78 (+0.55%)
10-yr Bond 51.65 +0.20 (+0.39%)
30-yr Bond 52.06 +0.23 (+0.44%)
NYSE Volume 1,090,370,000
Nasdaq Volume 810,240,000

as noted in post# 36 lets see if the DJIA can break yesterday's high of 11055 or there abouts, if it can't then this is all hot air, if it can then we need to take note of it.

http://news.yahoo.com/s/huffpost/20060619/cm_huffpost/023345

excerpt:

We have had a slow recovery. Bushenomicists blame it on Clinton, on 9/11, and the subsequent wars. What George Bush fondly calls the 'trifecta.'

The first of these is odd because under Clinton the economy grew like gangbusters. It produced jobs, the Dow Jones went up over 350%, the deficit left by Bush the Elder turned into a surplus. So Clinton policies should have been a perfect 'how to." The second was reasonable, but only for a brief period. A month, two months, perhaps a quarter. That's all. The third is absurd. War normally produces growth. All around growth. Including jobs.

The so-called recovery has been treated as very mysterious. First, because it did not produce jobs. Now, because it is not producing business either. Yet it has produced an increase in corporate profits and a great rise in the real estate sector.

If you just take the facts and forget about the fantasy, there's nothing mysterious about any of it.

The great bulk of the tax cuts went to rich people. If someone making a million a year gets to keep an extra hundred thousand, what do they do with it? Go out and start a company? No. They put it in the stock market or real estate. In this case, business has not really been growing. The Dow is still only a few points over where it was when Bush took office. Other factors, like low interest rates, favored real estate. So the money flowed there.

<snip>

Actually, as wages are driven down, pension funds are under funded or looted, public services are cut and the public debt is increased, it means that the money Bushenomics is spending is from the general population. In that circumstance, corporate profits are not so much profits, but a transfer of value and productivity into cash. It is a sort of hollowing out of our businesses and indeed of the entire country.

...more...

Dow 10,988.35 +46.24 (+0.42%)
Nasdaq 2,110.32 -0.09 (-0.00%)
S&P 500 1,242.44 +2.30 (+0.19%)
10-Yr Bond 5.147 +0.02 (+0.04%)

NYSE Volume 1,536,051,000
Nasdaq Volume 1,110,943,000

2:00 pm : A renewed wave of selling interest sends the indices to afternoon lows. The Nasdaq is now clinging to a small gain while the Russell 2000 small-cap index is now in negative territory. Of the 21 components providing support on the Dow, Caterpillar (CAT 71.26 +1.31) is leading the way while AXP, JPM, MRK, PG, and VZ are also posting gains of more than 1.0%. DJ30 +48.42 NASDAQ +0.99 SOX -0.4% SP500 +2.47 NASDAQ Dec/Adv/Vol 1412/1519/1.07 bln NYSE Dec/Adv/Vol 1434/1738/940 mln

1:30 pm : Not much has changed in the last 30 minutes as the indices settle into a narrow trading range. Crude oil prices, though, have turned positive and are helping the Energy sector regain some leadership; but the broader market has yet to take notice. Oil has been up most of the day amid remarks from the Saudi Ambassador that world oil prices could triple if the U.S. takes military action against Iran and an EIA forecast for strong world energy demand through 2030. However, with the July contract set to expire today and traders awaiting an eighth straight weekly build in gas supplies, the commodity has recently been volatile going into the close.DJ30 +61.87 NASDAQ +5.91 SP500 +4.47 NASDAQ Dec/Adv/Vol 1319/1596/964 mln NYSE Dec/Adv/Vol 1365/1766/848 mln

:eyes:

Just like Ford!




WHEEEEE!!!!!!!!!

Dow 11,002.94 +60.83 (+0.56%)
Nasdaq 2,113.07 +2.65 (+0.13%)
S&P 500 1,243.22 +3.08 (+0.25%)
10-Yr Bond 5.157 +0.12 (+0.23%)

NYSE Volume 1,810,960,000
Nasdaq Volume 1,299,893,000

3:00 pm : Indices regain some momentum but the lack of volume and negative market breadth continue to lend little credence behind the day's modest gains. The NYSE did not see 1.0 bln shares exchange hands until 30 minutes ago and with only an hour left in the trading day, limited participation could lead to some volatility going into the close. Decliners reclaiming an edge over advancers on both the NYSE and the Nasdaq also suggests little conviction behind today's rebound. DJ30 +61.47 NASDAQ +2.33 SP500 +3.35 NASDAQ Dec/Adv/Vol 1590/1393/1.26 bln NYSE Dec/Adv/Vol 1708/1492/1.12 bln

2:30 pm : Equities continue to lose ground late in the day as the bulk of industry leadership turns negative. The indices are now retracing lows not seen since the opening bell, spurred by reversals in Technology and Industrials as well as further deterioration in Health Care and Energy. While Financials and Consumer Staples continue to post modest gains, they're only being accompanied in positive territory by Telecom and Materials -- two of the least influential SnP economic sectors.DJ30 +38.75 NASDAQ -3.01 SP500 +1.04 NASDAQ Dec/Adv/Vol 1554/1404/1.16 bln NYSE Dec/Adv/Vol 1601/1586/1.03 bln

as the markets are comforted that houses are still being built, just blind to the fact that they are not being bought :eyes:

Stocks finished relatively unchanged as ongoing interest rate concerns, a lack of volume, and negative market breadth conspired to pare early gains.

During a day that offered little in the way of market-moving news and a session without Fed speak to worry about, investors found some early comfort in stronger than expected housing data. Before the opening bell, the Commerce Dept. reported a 5.0% rise in May housing starts, which followed three months of declines and offered investors some assurance that the economy remains solid despite higher mortgage rates. Nevertheless, since the increase in starts, which was due entirely to a bounce from an aberrantly sharp 6.7% drop in April, didn't change the outlook for a slowing housing market or Fed policy, the momentum enjoyed midday faded throughout the session and closed the major averages in mixed fashion.

The absence of stronger leadership from the more influential of the economic sectors dictated much of the day's action. Energy paced the way lower again, as Drillers and Oil and Gas Equipment were among the day's worst performing SnP industry groups. Consumer Discretionary turned in the next poorest performance. Apollo Group (APOL 51.91 -2.91) led the sector lower after it reported a 6% in drop in Q3 earnings while Home Depot (HD 36.42 -0.44), which became the latest and among the largest companies so far admitting to problems with past stock-option grants, came close to hitting a 52-week low.

Of the four sectors trading higher, Consumer Staples was the only sector posting a noticeable gain, following a strong earnings report from Kroger (KR 20.47 +1.01) and an analyst upgrade on Costco (COST 54.88 +1.33). However, the leadership of the Consumer Staples sector, known more for its defensive characteristics, merely added to the lack of conviction on the part of buyers to recover much of Monday's broad-based decline.BTK -0.9% DJ30 +32.73 DJTA +0.4% DJUA +0.5% DOT -0.1% NASDAQ -3.36 NQ100 -0.04% R2K -0.5% SOX -0.7% SP400 -0.4% SP500 -0.02 XOI -0.1% NASDAQ Dec/Adv/Vol 1691/1338/1.60 bln NYSE Dec/Adv/Vol 1812/1433/1.49 bln