If you have been following my work, you already know I attribute a lot of my learning to Bill Cara and his work. He is relaunching an extensive Weekly report that covers the entirety of the market and it is over 200-300 pages long with institutional level insight with a macro lens on the global machine that is the “Market”.

When Bill used to publish these weekly reports I initially understood a very small percentage of the report. I slowly began to chip away and tried to learn as much as I could week to week, researching the topics I did not understand. I then began to question him and do my own research on why Bill said certain things or why he was focusing on a particular piece of the jigsaw puzzle.

Here is the latest Week in Review with an AI generated podcast that summarizes the full report which is available for all subscribers. The 300 page report is free now but I suspect this will eventually become locked behind a paywall. It is 100% worth it.

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Briefing Doc

Executive Summary:

These two "Week in Review" documents provide a comprehensive overview of global financial markets, focusing on currencies, government bonds, equity indices, and individual stocks across numerous countries. They emphasize technical analysis, specifically using moving averages, RSI, and MACD, to assess market trends. The documents also highlight the importance of understanding the underlying economies of nations, particularly the U.S., and its effect on market performance, as exemplified by the Dow Theory. There's a focus on international diversification and arbitrage opportunities through various investment instruments. A recurring theme is the importance of both fundamental analysis (economic drivers) and technical analysis in making informed investment decisions.

Key Themes and Ideas:

* Global Currency Markets:

* Extensive Currency Pair Coverage: Both documents list a very large number of currency pairs, which includes most major currencies such as the British Pound (GBP), Canadian Dollar (CAD), Euro (EUR), Japanese Yen (JPY), Mexican Peso (MXN), New Zealand Dollar (NZD), and Swiss Franc (CHF) against a wide range of other currencies. This highlights the interconnectedness of global economies. The notation "NBD" (Next Business Day) and "EOD" (End of Day) suggests the timing of data provided.

* Forex Trading: Specific currency pair trading is identified for international Forex trading, particularly within the context of the Italian currency pairs, for example.

* Government Bonds and Treasury Yields:

* Importance of Government Debt: The documents emphasize the foundational role of government bonds in national economies, stating that they are "treasury debt instruments backed by the goodwill of the issuing country" and "the ability of the country's treasury department to pay the interest and repay the debt at the end of the term."

* Central Bank Control: The role of a country's central bank is described in setting interest rates when issuing treasury debt through managing the funds available to private banks for purchasing.

* Maturity Terms: U.S. Treasury securities are issued in different terms: bills (months), notes (few years), and bonds (10 to 30 years).

* Global Tracking: Links are provided to track world government bond rates at sites like Investing.com, suggesting the need to monitor yields across different countries (e.g., Germany, Japan, UK, US).

* Dow Theory and U.S. Economic Benchmarks:

* Legitimacy of Dow Theory: The documents contrast the Dow Theory with cryptocurrencies, arguing that Dow Theory "actually has a legitimate foundation – the US economy."

* Three Dow Indexes: The documents focus on the three Dow Jones indices (DJIA, DJTA, DJUA) as measures of the health of the US economy. The Dow Jones Industrial Average (DJIA) reflects industry, the Dow Jones Transportation Average (DJTA) represents commerce, and the Dow Jones Utilities Average (DJUA) highlights finance. These three together are the basis for the Dow Theory.

* Components Lists: The documents provide detailed lists of the companies that make up these Dow indices.

* Economic Drivers: It is explained that an economy is driven by industry, commerce, and finance and that the Dow Jones Averages are key benchmarks.

* Technical Analysis Tools:

* Moving Averages, RSI, MACD: The documents repeatedly mention technical indicators like moving averages, the Relative Strength Index (RSI), and the Moving Average Convergence Divergence (MACD) as key tools for assessing price momentum and market trends.

* Buy/Sell Signals: A clear system is outlined to interpret these indicators, with buy signals being +1, sell signals -1, and neutral signals at 0.

* Overall Rating: An "Overall Rating" is used to combine scores from multiple indicators, classified as "Strong Buy," "Buy," "Neutral," "Sell," and "Strong Sell."

* RSI Interpretation: Specifically, RSI values above 70 are considered "overbought" and potential sell signals, while values below 30 are seen as "oversold" and potential buy signals.

* Gold and Precious Metals:

* Gold Mining Companies: A large list of individual gold mining companies and related ETFs is given (e.g. Agnico Eagle Mines Ltd., Barrick Gold Corp., VanEck Vectors Gold Miners ETF), indicating their importance within the resource sector.

* Watchlist: A gold miner stocks watchlist is included for trading performance.

* International Equity Markets:

* Broad Global Coverage: The documents cover numerous countries' stock markets including the UK, France, Germany, Netherlands, Sweden, Italy, India, Singapore, Australia, Japan, South Africa and many others.

* Sector Indices: For countries such as the Netherlands and Sweden, the documents provide lists of sector indices.

* ADRs: The documents explain that foreign companies sometimes list their stock as American Depositary Receipts (ADRs) to facilitate trading in the US. These can be sponsored or unsponsored.

* International Arbitrage: The material specifically suggests tracking stocks across markets for arbitrage opportunities.

* Specific Country and Regional Analysis:

* Germany: Both the German bond market and German stocks receive considerable attention, providing lists of both ETFs and individual company stocks. It is noted that there are both "Domestic" and US listings of German company stock.

* Netherlands: The Netherlands stock market is noted to be bullish. Both domestic listings and ADRs are available. Lists of relevant sector indices and ETFs are provided.

* Sweden: Technical outlook of Swedish stocks are described. A sector indices list and a specific company stocks list are also given.

* Italy: It is noted that the Italian stock market is bullish, but not yet overbought. Lists of relevant stocks and ETFs are provided.

* UK: The document highlights the key UK stock indices and the domestic trading environment.

* India: Specific details are provided about India's NIFTY stock market indices and listed companies.

* Singapore: The Singapore Stock market is noted to be a high-risk buy. The Monetary Authority of Singapore (MAS) is identified as the country's central bank.

* Other Countries: Specific details are also given about individual companies trading in countries such as Denmark, Finland, Hungary, Indonesia, Israel, Portugal, Saudi Arabia, and South Africa.

* Sector Analysis:

* The documents categorize many companies by sector, including Oil & Gas, Basic Materials, Industrials and Transports, Telecom Services, and Utilities. This information is provided on a global basis.

* Importance of Monitoring Data Sources

* The documents provide links to numerous websites, including Investing.com, StockCharts.com, Yahoo Finance, MarketBeat.com, and FinViz.com, indicating the need to access these to keep data current.

Notable Quotes:

* "Unlike so-called cryto currency, Dow Theory actually has a legitimate foundation – the US economy." (Emphasizing the fundamental nature of the Dow Theory)

* "A nation's economy is driven by its industry, commerce, and finance." (Describing the drivers of the economy.)

* "All government securities are treasury debt instruments backed by the goodwill of the issuing country...and the ability of the country's treasury department to pay the interest..." (Defining government debt securities).

* "The US government debt securities are issued in terms of months, called bills; a few years, called notes; and 10 to 30 years, called bonds." (Defining US Treasury security terms).

* "Presently, the Yen trade is particularly volatile and continues to weaken substantially." (Highlighting the current state of the Japanese Yen)

Key Takeaways:

* Active Market Monitoring: These documents emphasize the need for active monitoring of both global and domestic markets, using both technical and fundamental analysis.

* Importance of Economic Health: The health of the underlying economies of countries is a crucial factor to consider when investing, particularly the U.S. economy.

* Technical Tools are Critical: Understanding and applying technical analysis tools (moving averages, RSI, MACD) is key to identifying market trends and potential entry/exit points.

* Diversification Opportunities: The documents highlight the vast diversification opportunities across different asset classes, countries, and sectors.

* Arbitrage Potential: The documents suggest the possibility of arbitrage opportunities when tracking a specific security across different markets and forms (e.g. ADRs vs domestic stocks).

* Dynamic Nature: The global markets are presented as highly dynamic, implying a constant need for updated information and active strategy adjustment.

Conclusion:

These "Week in Review" documents function as a comprehensive briefing on global financial markets. They provide a mix of data, analysis tools, and insights needed to make more informed investment decisions. The emphasis on both fundamental and technical factors, alongside the focus on international diversification, makes these documents valuable tools for anyone seeking to understand the complexity of today's global financial landscape.

Study Guide

Quiz

Instructions: Answer each question in 2-3 sentences.

* What are the three Dow Jones Averages, and what economic sectors do they represent?

* Explain the significance of treasury yields and how a country's central bank influences them.

* What does the Relative Strength Index (RSI) measure and what do overbought and oversold signals indicate?

* What is the difference between a sponsored and an unsponsored American Depositary Receipt (ADR)?

* What are some of the potential benefits of investing in the utility sector?

* What is the purpose of tracking currency pairs like EUR/USD? Give one example.

* According to the text, what factors drive a nation's economy?

* What is the significance of the term "full faith and credit" in relation to government securities?

* Explain the role of the Monetary Authority of Singapore (MAS).

* How can investors use online screeners and links to track global stocks?

Answer Key

* The three Dow Jones Averages are the Industrial Average (DJIA), which represents industry; the Transportation Average (DJTA), which represents commerce; and the Utilities Average (DJUA), which represents power. These averages serve as benchmarks to assess the overall condition of the U.S. economy.

* Treasury yields are the returns on government debt instruments, indicating investor confidence and future economic outlook. A central bank influences these rates by controlling the funds available to private banks to purchase them, affecting overall market interest rates.

* The RSI measures the momentum of price changes over a given period, typically 7 or 14 periods. An overbought signal (RSI > 70) suggests a potential sell, while an oversold signal (RSI < 30) suggests a potential buy.

* A sponsored ADR is one where the foreign company actively participates in the ADR program, often allowing for greater access and trading in the U.S. market. An unsponsored ADR, however, is created by a depositary bank without the direct involvement of the foreign company and typically trades over-the-counter (OTC).

* The utility sector offers stable, long-term investments with regular and attractive dividends, and acts as a haven during economic downturns. Investors have options to invest in bonds, ETFs, and individual utility companies.

* Tracking currency pairs, such as EUR/USD (Euro to US Dollar), helps investors understand the relative value of different currencies and informs decisions for forex trading and international investment. These pairs show the exchange rate of one currency to another.

* A nation's economy is driven by its industry, commerce, and finance, as exemplified by the Dow Jones averages that reflect the interplay of these three elements in the U.S. economy. These three sectors are the engines of the economy.

* The term "full faith and credit" refers to the concept that government securities are backed by the trustworthiness and financial capacity of the issuing country, ensuring that the debt and interest will be repaid. This promise is foundational for government debt.

* The MAS (Monetary Authority of Singapore) is Singapore's central bank, responsible for overseeing monetary policy and the stability of the country's financial system. It plays a crucial role in regulating financial institutions and maintaining currency stability.

* Investors can use online screeners like those found at Finance.Yahoo.com or FinViz.com to filter stocks by country or other criteria, enabling them to track performance and make informed decisions. They also provide access to up-to-date prices and detailed information about global markets.

Essay Questions

* Discuss the significance of the Dow Theory, referencing specific Dow Jones Averages, and explain how they can be used to assess the health of the U.S. economy. Include a discussion of the Dow's underlying assets.

* Explain the relationship between government bonds, central bank policy, and economic stability. Analyze the factors that influence treasury yields, such as central bank actions, and their impact on financial markets.

* Compare and contrast the key aspects of two different international stock markets, using the Netherlands and Japan as examples. Include a discussion of local indices, ETFs, and methods for tracking stocks in foreign markets.

* Describe the role of ADRs in international finance, highlighting the different types and their implications for investors. How does the structure of the ADR market facilitate or impede global investment strategies?

* Analyze the significance of technical indicators like RSI and MACD in assessing market conditions and informing trading decisions. Provide examples of how these indicators can be used in conjunction with other information to identify potential trading opportunities and risks.

Glossary of Key Terms

* American Depositary Receipt (ADR): A certificate representing shares of a foreign stock trading on a U.S. exchange. ADRs are categorized as sponsored or unsponsored.

* Dow Jones Industrial Average (DJIA): A stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange (NYSE) and the Nasdaq. It serves as a benchmark for the overall U.S. economy.

* Dow Jones Transportation Average (DJTA): A stock market index tracking 20 prominent U.S. transportation companies. This index is an important gauge of the transportation sector's performance.

* Dow Jones Utilities Average (DJUA): A stock market index that tracks 15 significant utility companies. This index serves as a benchmark for the performance of the utilities sector.

* Full Faith and Credit: A concept indicating that government securities are backed by the trustworthiness and financial capacity of the issuing country. This promise assures repayment of both the debt and interest.

* MACD (Moving Average Convergence Divergence): A trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. It helps traders identify potential buy or sell signals based on price trends.

* Monetary Authority of Singapore (MAS): The central bank of Singapore responsible for overseeing monetary policy, financial stability, and regulation of financial institutions.

* Relative Strength Index (RSI): A momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. RSI signals often are used to make trading decisions.

* Treasury Yields: The return on government debt instruments, reflecting investor confidence and expectations of future economic conditions. These yields are crucial to determine interest rates.

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit www.notyouradvisor.com/subscribe

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Bill Cara Week in Review #4