Market Talk / Jan. 7 - 13

[grandma]

Something is obviously up! I got in fine about 0830; rechecked now d/t these complaints - all I get now is the top & bottom thirds of the Account Access page with a note `error occurred' in the section the sign-in should be. Did they get `too secure'??:worried:

 

[nnuut]

Same thing is happening to me now, guess it's not the popup blocker this time? Increased security, good stuff!

 

[Nimrod1193]

I'm into my account now. you may want to try again before it goes back down.

 

[James48843]

By the way, the November minutes of the Thrift Investment Board are now posted on-line.

See this web address:
http://www.frtib.gov/FOIA/minutes-board-member-meetings_2006Nov.pdf

Highlights include noting that expenses have been cut by a third, and now are just 3 basis points, and the funds have accumulated over 200 billion dollars, doubling in the last four years.

 

[Oldcoin]

Same thing is happening to me now, guess it's not the popup blocker this time? Increased security, good stuff!

Yeah, it’s so secure no one can get in!

 

[fedgolfer]

`error occurred'

The website has shown many glitches lately, including not processing IFTs during high traffic times!!!

 

[Pilgrim]

its back up

 

[nnuut]

TSP works now!!!! If you block Popups it will block two screens that require your input (AGREE) You must allow popups!

 

[robo]

BEING STREET SMART

by Sy Harding

ARE COMMODITIES OVERSOLD? Jan. 12, 2007.

The dramatic plunge in commodity prices over recent weeks has received a lot of attention. Crude oil prices have plunged 15%, copper 12%, gold 5%, just since the beginning of the year. Economists and analysts are having a field day forecasting what it means for inflation, the economy, bonds, and the stock market.

However, the collapse in commodity prices has been underway for quite some time, mostly unnoticed until the further ‘crash’ of the last two weeks produced a frenzy of attention.

For instance, the price of crude oil actually topped out last summer, after reaching a peak of $78 a barrel. Oil hovered mostly in the low 60s until year end, down 20% from that peak, but then broke below $60, getting as low as $52 a barrel this week. That’s 33% below its level of last July. The price of lumber futures topped out a year ago, in January, 2006, as signs of the real estate slow-down became more apparent. Lumber futures have declined 30% in the year since. The plunge of 12% in copper prices of the last two weeks was indeed dramatic. However, the price of copper actually topped out last May, and it has declined 35% since. Gold reached a high of $725 an ounce last May, and was already down 23% by last October.

When prices were rising the consensus was that they would continue to rise. It wasn’t just conditions in the U.S. For instance, China has become a giant world economy and its demand for energy, building materials and raw materials alone would keep commodity prices rising for years to come.

Now commodity prices have been falling dramatically for six to twelve months. And only with the dramatic washout selling of the last two weeks has the consensus opinion become that prices will drop a lot further. Several analysts on Friday predicted the price of crude oil will probably decline all the way to $40 a barrel, perhaps $30.

That could be. But I’m skeptical of forecasts that change only after a trend has been underway for a long period, much as Wall Street only moves to sell signals on stocks after the damage has been done. I’m also skeptical of forecasts that are based on simply extending the trend endlessly into the future without factoring in that trends continue only until conditions change.

And there are conditions in place now that have me wondering if the decline in commodity prices has not pretty well run its course. Price corrections in any market in the range of 30% over a period of six months to a year are frequently sufficient to bring overbought prices back to normal, or even to undervalued levels.

My work shows that oil, copper, lumber, and gold are becoming technically quite oversold on charts.

Additionally, when the ‘crowd’ becomes one-sided in its thinking, and the media is all over the case, in this case the consensus being decidedly bearish on the price of commodities, the bottom is frequently near.

When we look at the catalysts for the declines, we see anticipation of the slowdown in the real estate sector as having been a major factor in having lumber and copper prices top out a year ago. We can see that the slowing economy of the last year was a factor in the general decline of commodity prices, on the expectation that in a slowing economy demand for goods would decline. In addition to the slowing economy, the decline in the price of oil had the additional issue of the abnormally warm weather so far this winter.

So what could provide the catalyst for an upside reversal in commodity prices?

How about stronger economic numbers? If that happened, commodity traders could get the idea that the economic slowdown has ended and expect demand for commodities to pick up again. And there were the stronger than expected employment numbers for December, including a larger increase in hourly wages than forecast. There was the report on Friday of significantly higher than expected retail sales in December.

Then there was the news Friday that the OPEC oil-producing countries have called an emergency meeting for later this month, to consider a reduction in oil production aimed at driving oil prices back up.

Why we could even expect more normal winter weather to arrive and drive up demand for heating oil.

But mostly I look at the oversold technical condition on the commodity charts. It makes me wonder if the consensus opinion that still lower prices lie ahead is not similar to the ‘crowd’ being sure at the stock market top in 2000 that the trend would continue much further, or at the end of the bear market in October 2002, when the crowd consensus had become that the downtrend of the bear market had a lot further to go.

The similar current situation with commodities, particularly oil and gold, of simply extending the trend in the same direction without consideration of the potential for changing conditions, has me watching for a potential upside reversal and a good buying opportunity in those areas.

http://www.streetsmartreport.com/comm3.html

 

[Spaf]

Thanks for all the posts and views!​

Will be closing out this week's thread a few hours early and will be posting the new Market Talk thread later in the morning tomorrow.​

HS wireless has been down, electricity down, so is the fence, and a bunch of trees. Oh well!​

Regards!...and be careful!​