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Quote of the Day

Thursday, January 19, 2012

January 19, 2012 -- "At its beginning in 1966, Medicare cost $3 billion. The House Ways and Means Committee along with President Johnson estimated that Medicare would cost an estimated $12 billion by 1990. In 1990 Medicare topped $107 billion. That's nine times Congress's prediction. Today's Medicare tab comes to $523 billion, and shows no signs of leveling off. The 2009 Medicare trustees report puts the unfunded Medicare liability at $89 trillion." --Walter Williams, Columnist, Courtesy of James Cook.

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The character of the market is improving. Volume on Friday's buying was the strongest of the year with upside volume being 85% of total upside plus downside volume. The negative spread between Lowry's downside and upside volume contracted from 190 last Friday to 169 yesterday, a huge improvement.

 

After years of outperforming stocks, gold is now weakening on a relative strength compared with stocks. The chart below shows the ratio of stocks to gold. After plunging in July in favor of gold, the ratio has been surging higher in favor of stocks over gold.

 

 

 

 

TODAY'S MARKET ACTION:

 

My PTI was up 3 at 6362. The moving average at 6321, so my PTI is bullish by 41.

 

The Dow was up 45.03 to 12623.98.

 Transports were up 83.69 to 5301.87.

 

Utilities were down 4.51 to 447.24.

 

NASDAQ was up 18.62 to 2788.33.

 

S&P 500 was up 6.46 to 1314.50.

 

February crude was down 0.17 to 101.42.

 

Total Volume on the NYSE and associated exchanges was 4.4 bn.

 

There were 1968 advances and 1043 declines on the NYSE.

 

There were 182 new highs and 20 new lows.

The Big Money Breadth Index was unchanged at 984.

 

Bonds: Yield on the 10 year T-note was 1.98. Yield on the long T-bond was 3.03. Yield of the 91 day T-bill was 0.04%.

 

Dollar Index was down 0.50 at 80.10. Euro was up 0.97 at 129.37. Yen was down 0.65 at 129.67. Currency Prices as of 1 PM Pacific Time.

February gold was down 5.40 to 1654.50. February silver was down 0.03 to 30.50.

 

My Most Active Stocks Index was up 7 at 258.

 

GDX was down 1.09 at 52.15.

 

HUI was down 10.85 to 502.07.

 

CRB Commodity Index was up 1.45 at 311.96.

 

The VIX was down 1.02 to 19.87.

Permanent Portfolio Fund (PRPFX) was up 0.29 at 47.70 (previous day closing). YTD Return: 3.49%.

 

 

Late Notes -- After creeping higher day after day, the Dow is still below its July 7th peak and its 50-week MA. However, the quality of the advance is improving.

 

Gold is still struggling to close above its 50-Day MA of 1676, but I think it will do so within a matter of weeks. MACD and RSI remain bullish for gold.

 

 

 

 

Looking forward to Friday, I am.

 

Richard Russell