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Quote of the Day

Wednesday, January 18, 2012

January 18, 2012 -- "You can have the top 20%, and the bottom 20%, I'll take the middle." -- Baron Rothschild

 

Crazy numbers -- Number of European nations down-graded last week by S&P -- nine.

 

Number of prisons in the state of Texas -- 111. One hundred and eleven. Texas also leads the states in the number of death penalty executions.

 

One of the most frequently asked questions is "Where can I park my money where it won't get whittled away?" One answer I've come up with is Harry Browne's Permanent Portfolio (PRPFX). This is four separate portfolios that are combined into one portfolio that is called the "Permanent Portfolio." Two of the portfolios are bonds and gold. The idea is that if one portfolio sinks, the other one or two may rise. The details are explained on their site http://www.permanentportfolio.com/.

 

The chart below shows the path of the Permanent Portfolio over the last three years along with its 200-Day MA. The high was just below 50 and the recent closing price was 47.07, so you can see that PRPFX has done quite well during a difficult high-volatility period.

 

You buy PRPFX for stability and safety, although it pays a small dividend of only 0.89%.

 

 

 

Returning to the broad stock market, we have the so-called Santa Claus rally and the "January effect" rally. We also have the first presidential year effect. All of these supposedly are bullish for the market. What the market does in January is supposed to set the direction for the entire year.

 

But trumping all is the character of the market. Below is a three year chart of the NYSE showing volume. What I see here is that there is no noticeable increase in volume as the Index rises. Actually, volume has been dropping off on the most recent rally. During legitimate and sustainable rallies, volume should increase as prices move higher. Thus the word continues to be caution.

 

  

 

There has been a slight improvement in the Lowry's statistics for the NYSE, this should help keep the market afloat.

 

Gold has now crossed above its 200-day MA (see chart below) and is heading towards its 50-day MA, which stands at 1678. If gold can close above 1678 it will have turned clearly bullish and should head for the 1700s.

 

 

 

 

Closing out for Wednesday,

 

Russell

 

 

TODAY'S MARKET ACTION:

 

My PTI was up 6 at 6359. The moving average at 6320, so my PTI is bullish by 39.

 

The Dow was up 96.88 to 12578.95.

 Transports were up 49.45 to 5218.18.

 

Utilities were up 0.06 to 451.75.

 

NASDAQ was up 41.63 to 2769.71.

 

S&P 500 was up 14.37 to 1308.04.

 

February crude was up 0.17 to 101.88.

 

Total Volume on the NYSE and associated exchanges was 4.0 bn.

 

There were 2405 advances and 648 declines on the NYSE.

 

There were 131 new highs and 16 new lows.

The Big Money Breadth Index was up 8 at 984.

 

Bonds: Yield on the 10 year T-note was 1.90. Yield on the long T-bond was 2.95. Yield of the 91 day T-bill was 0.03%.

 

Dollar Index was down 0.68 at 80.49. Euro was up 1.16 at 128.40. Yen was up 0.07 at 130.32. Currency Prices as of 1 PM Pacific Time.

February gold was up 4.30 to 1659.90. February silver was up 0.40 to 30.54.

 

My Most Active Stocks Index was up 13 at 258.

 

GDX was up 0.06 at 53.24.

 

HUI was up 1.41 to 512.92.

 

CRB Commodity Index was down 0.32 at 310.51.

 

The VIX was down 1.31 to 20.89.

Permanent Portfolio Fund (PRPFX) was up 0.34 at 47.41 (previous day closing). YTD Return: 2.86%.