Monday, June 30, 2008
By now most people realize that the yield curve going from inverted to rising is not good for the economy. Sure, Wall Street troubadours can trumpet that banks are able to borrow short and lend long but right now many are trying to remain solvent with no thought of playing the yield differential game with the always consumption-willing American public. Like Marc Faber, I would be very cautious on commodities - including oil - here as a rising yield curve signals the next phase of economic crisis. The curve looks to have turned back up, needing only a rise above 20 on the STO by this chart to confirm the next leg. The Dollar is not broken and there is a chance it will NOT break lower from here as has been written in stone by virtually everyone. That could be a bear flag however and another leg lower would mean shear destruction of the American economy as inflation fears spin way out of control. No, best that Uncle Buck pulls the contrary move of all time here and heads up toward some of his resistance zones to relieve the pressure. Conveniently, many people are feeling the pressure to 'get to cash'. Go figure. ;-)
Friday, June 27, 2008
- Five incredibly risky banking conditions.
- How even the FDIC can't really guarantee your money.
- The Top 100 Safest U.S. banks (two for each state)
- How you can choose a safe bank.
- Tips on international safe banking.
I had been getting beaten like a red headed step child on my (mostly smaller) gold stocks for so long that it seems like I lost energy on posting about them. I held them and added the washouts, but really didn't watch them too closely, having made my decision to bag hold rather than trade at a certain point. It is funny how you can see a correction coming (all that Dow-Gold ratio reset/recalibrate stuff I wrote) and still get mentally fatigued by it.
But yesterday shouted WAKE UP! In that light I present below charts of some of the precious metals stocks I favor. I own several of them as they are among those about which I said "nuh uh, not selling" when I was preparing for the oncoming correction with HUI over 500 back in March. These are stocks, yeh? Well, shortly I'll be back to posting about what I think is really important like the Gold-Oil ratio (Otto's all over it too), Gold-Silver, Dow-Gold, etc. But for today given that a lot of people are trying to make up their minds about whether to take a poke at the sector again, we got stock charts.
Thursday, June 26, 2008
The Dow is terminal here if this breakdown below 2008 lows and the 1999 highs is not reversed pronto. However the NDX is merely doing what I mentioned it would do weeks ago as it lost the rising wedge amid bearish divergence; it is filling gaps.
As for the precious metals let me just say EFFIN' BOOOYAAA YOU DOPEY CNBC BULLS!! Err, excuse me but I have been bleeding day after monotonous day as the jawbones and blow horns attempted to suck in a gullible public and whether or not this starts a trend - I think it will be at least a healthy rally - it was great to come back and see Huey up 23 points with conviction, all due to the Fed's lack of same. The above was very real emotion and you will not see it often because it is hazardous to your health as an investor or trader. Anyway, the charts...
Your EWH chart scared me, as I'm short the Hang Seng...but then I looked at the actual $HSI chart of the underlying index, and the technical pattern you see on the etf EWH just ain't there on the $HSI.
The EWH is in USDs, and is distorted by currency fluctuations. It's the underlying index chart that tells the real tale, and as far as I can see, it looks fairly bearish, and did not just bounce off any long term support trend line today!
If you draw an equivalent long term trend line on $HSI as you show on EWH, joining weekly lows from '06 and '07. That line got violated in March on $HSI , recovered, and broke below it again this Monday. The $HSI today remains below that equivalent trend line, not above as in the EWH!
I'd rather bet on the index's indicators, not the USD-distorted etf's! --Bob
Now, I went in to the EWH trade without the feeling of "Dood, you got a no brainer here if you stick with it" that I like to have going in. It was more of a "let's take a stab at this POS and see if we can't ride along as a bull for a bit". It is a small position in relation to my overall stance and I am by no means a 'China, India, LatAm (BRIC), commodity mania, everything's gonna sky here!' bull. But nor am I a deflationist as you may know. I think all this stuff is going to take a righteous drubbing before any coming deflation scare ends. But with the US market sentiment in the toilet and touching the highs of last real bull market, and with the $HSI still not breaking major trends, I take a stab and control downside risk. I want to thank Bob for his views because they caused me to think really hard about this before I even finished my first cup of coffee. Edit (10:26) Way to go Bob! I am going to set a stop here that will likely be triggered shortly. Edit (11:02) And there ya go; 3% loss booked.
Wednesday, June 25, 2008
Monday, June 23, 2008
But what really caught my attention was the great offer they presented for their most popular U.S. analysis package, the Financial Forecast Service, which combines Bob Prechter’s famous Elliott Wave Theorist with two other short- and intermediate-term U.S.-focused publications.
In the email was a forecast that was delivered by the EWI back in July 2005:
"This time, there’s no mistaking who the Enrons of the bust phase will be. They will be the firms now peddling adjustable-rate, no interest/nothing down and assorted other types of subprime mortgages."– The Elliott Wave Financial Forecast, July 2005
With the downfall of some of the biggest investment companies (i.e. Bear Sterns) and departure of dozens of CEOs fresh in the public consciousness – and in the news headlines – I appreciate this forecast. It was delivered when the consensus among mainstream investors was that real estate was the ultimate capital-growth investment. Of course, we now know that real estate was peaking at that very moment.
There’s still time for you to read what Elliott Wave International sometimes calls “tomorrow’s news today” right now during their FreeWeek (click here). If time is an issue for you, you can even print out the publications before FreeWeek ends and read them at your leisure.
But, in trademark FreeWeek fashion, EWI has released a special offer that’s only available to those willing to act now. It’s an incredible 58% discount off the individual value of their flagship forecasting and analysis service, the Financial Forecast Service.
Friday, June 20, 2008
Where did I hear the theory that 'they' are pumping oil higher only to crash it but good? Was that the Kirby article? It makes sense though. I even ran across some publication that highlighted a large gold fund manager talking about gold to $5000 per oz. The big firms on Wall Street freely talking about $150-$200 oil? I smell a rat boys and girls and that rat may have an outright noxious stench come next week's Fed meeting. This is serious as commodities and inflation expectations have broken down the door and gotten out of the barn. In my opinion everything is on the table. Desperation will do that.
I don't want to scare readers unnecessarily but something is wrong and me bones tell me something is going to be attempted shortly. The Dow is in spitting distance of new bear market lows, inflation remains a huge issue and the Fed is losing credibility.
Edit (4:40) Very interesting end of day activity in some of the gold producing miners I either own or follow. Nah, this couldn't have been the work of shorts could it? Maybe Mr. Sinclair has got a point in his call to action against the shorts. 5 minute charts added for emphasis. Not that they all went up large, but there was some buying pressure end of day in a lot of these things.
In the shorter term bullish sentiment in gold needed to be worked off, no matter how much 'us against them' warfare some prominent gold bugs trumpet. It is interesting to note that even some 7+ years into a relentless bull market in gold (and bear market in DGR) how the mainstream clings to the truths of the previous secular stock bull market (gold bear). Despite short term misgivings by naughty casino patrons who know somewhere deep in their souls something is wrong, they cling to convention just as their training dictates - which is just the way Wall Street likes it. It is a hallmark of a solid bull market with plenty of upside ahead of it that the masses will not acknowledge it until much higher prices prove to them that it is 'okay' to join in. We will no doubt one day be treated to some real good sounding intellectualization about why gold is a bargain at $2000 or $3000 or $5000 per ounce, thus giving us the affirmation lacking since 2002 (in my case). I like it just fine that this affirmation is lacking by the public. Charts and fundamental realities tell a different story.
Thursday, June 19, 2008
Wednesday, June 18, 2008
I actually thought I might try to catch a bounce somewhere in here. I considered putting on a contrarian cap for the US market given the daily expressions of public fear and angst. But this big picture of the SPX, aided by my old friend the Andrews Fork, said "err, Gary... you sure you wanna do that?" Best to just keep cash at decent levels and await opportunities in areas that really matter to you." On the plus side, a rebound toward the broken lower tine of the fork would feel mighty good to relieved bulls. But the risk is just too high here in my opinion to be fooling around with this. Maybe a Hong Kong trade (China has not broken trends) or something like that will present itself but for the moment I am avoiding this mess.
Tuesday, June 17, 2008
I am committed. During this correction I have been adding to my core gold miners with the idea that conditions will again turn in gold's favor. Those conditions would be a resumption of obvious credit and financial problems, a top in oil and commodities (vs. gold at the least), economic contraction again trumping inflation fears (and resulting re-steepening of yield curves) and a short term decline in interest rates but again, let's stress that it is the yield curve that really matters more than whether rates are rising or falling. The CoT data appear to be slowly improving and the public is not buying gold bullion (this is the longest stretch I have ever seen that nobody bought from BullionVault through my website or blog - a good indicator. So yeah, I am still hanging around waiting for the gold stocks to either finish correcting (per parameters shown previously) or prove me wrong, which I think is unlikely.
Anyway, what I am watching now is the broad US market, global markets (China/Asia in particular) and the Dollar. Here are a couple charts showing the S&P in what could be a bear flag and the USD still looking good but forming something of a rising wedge. On the front of the website I put up an SPX chart showing a rebound possibility, but it could have one more down leg before that gets underway. As it looks now the USD's risk vs. reward has become much less favorable in the 74's vs the 71's. Let me rephrase that. The USD's risk/reward has been garbage for years now because it denominates a country that has led the world in losing its way; losing its moral compass, economically and otherwise. But big picture is one thing and short term FOREX is another.
Monday, June 16, 2008
Sunday, June 15, 2008
Surging Oil and Food Prices Threaten the World Economy, Finance Ministers WarnBy MARTIN FACKLER
OSAKA, Japan — The global economy faces a one-two punch from slowing growth and soaring fuel and food prices, finance ministers from the world’s richest nations warned Saturday, though they stopped short of offering concrete solutions.
Finance ministers from the Group of 8 industrialized nations wrapped up a two-day meeting in Japan that was dominated by talk of rising petroleum prices, which have set off street protests across the world. In a statement, the ministers said higher prices of oil and other commodities threatened the world economy at a time when it was still reeling from the collapse of the housing market in the United States.
Blah blah blah...
The ministers urged oil-rich nations to increase production to help reverse a trend that has pushed up oil prices to nearly $140 a barrel, a record. The ministers also warned that the rising cost of oil and other commodities could spur broader increases of prices and wages.
Let's make the producing countries pay and remember to continue scapegoating those greedy oil CEOs and 'speculators'.
The specter of fighting inflation as the ministers try to revive their flagging economies would “make our policy choices more complicated,” the statement said. The combination of inflation and low growth, known as stagflation, is difficult to escape because steps to spur economic activity, like lowering interest rates, can also lead to price increases.
Please Mr. Market, give us a break here. We can't inflate as usual because the last round of inflationary panic policy has not err, been digested so well by the commodity complex.
“For a long time, the world economy enjoyed a combination of robust growth and low inflation, but it now faces headwinds,” the statement said. “Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide.”
Chickens home to roost as they say. Monetary chickens... they're all over our doorsteps! How do we get rid of these damned chickens!?
The Group of 8 nations — Britain, Canada, France, Germany, Italy, Japan, Russia and the United States — are many of the world’s largest consumers of oil. But most have little say over production, and over drivers of oil prices like rising demand from China and India.
...and increasingly diluted paper.
The ministers also failed to find common ground on whether to take action to curb speculation in oil futures markets, which some have blamed for exacerbating price increases. While Italy called for measures like making futures trading more expensive, this was resisted by the United States and Britain, where big futures markets operate.
G8 as politburo? When in doubt, obfuscate and regulate!
“It is sometimes difficult to distinguish between an airline that may hedge its fuel price, which is perfectly sensible planning, and someone who is speculating or even gambling on the price of oil,” said Alistair Darling, Britain’s chancellor of the Exchequer.
It's a free market. Of course the airline has a right to hedge just as the spec has a right to make or lose money. Hands off commie.
The American Treasury secretary, Henry M. Paulson Jr., attributed higher oil prices to changes in supply and demand and a failure by oil-rich nations to build enough wells and refineries.
Zzzzzzz... always a handy excuse that will never go anything like this: Greenspan flooded the system with credit to end the cyclical bear market in 2002. That credit found its way into assets of all kinds, first and foremost housing. That game is over and oil is one of the latest. Funny munny traversing the globe in search of a story.
“At its heart, this run-up in price reflects long-term trends in global supply and demand and strong economic growth coinciding with a period of minimal investment in oil production,” Mr. Paulson told reporters. “This is not something that lends itself to short-term solutions.”
Unlike your healthy long term monetary policies, eh?
As a compromise, the ministers asked the International Monetary Fund to look into what was driving the recent surge in oil prices. The ministers also called for aid to help developing nations in Africa and elsewhere deal with higher prices of commodities, particularly food ingredients.
Look in da mirror boyz.
The ministers met to help work out the agenda for next month’s summit meeting of Group of 8 heads of state in northern Japan. Speaking to reporters after the meeting, they said they also discussed steps to soothe financial markets and help developing nations fight global warming.
The global warming craze will seem like child's play if these creeps lose control of the financial system. Stick to screwing up what you know how to screw up.
One item not discussed, despite wide expectations that it would be, was currencies, and particularly the possibility of intervention to prop up the slumping United States dollar. Japan’s finance minister, Fukushiro Nukaga, the host of the meeting, said currencies were discussed only on the sidelines.
Ha ha ha... he he he... dat's a good one boyz! :-)
At a news conference, Mr. Paulson brushed aside questions about intervention.
“A strong dollar is in our nation’s interest,” he said, adding that solid fundamentals in the American economy would eventually help the United States currency recover.
Okay, you're killin' me here.
Friday, June 13, 2008
For this entry, I am going to keep the charts to a minimum. Just a look at the US Dollar's daily progress because so much of the goings on in global markets revolve around talking up Uncle Buck to quiet the din of a suddenly inflation sensitive American public. Here is the Dollar in a well defined uptrend channel. The channel top will present some resistance which may be good for a trip back down to the channel bottom before another try at the stiff lateral resistance and 200 day moving average. That will not be easily surmounted. But in the meantime the Dollar Heads for Biggest Weekly Gain in Three Years Before G8.
Speaking of the dear old global consumer of last resort, it appears that Americans may be spooked about inflation but that apparently did not inspire them to invest in something tangible and timeless with the government's rebate [alt: bribe, restitution, band aid on an open wound inflicted by a monetary chainsaw] checks sent out in May. No, the public went out and did what they always do; they bought an LCD television to watch the NBA finals with. Wall Street cheered the much higher than expected retail numbers this week without much talk of the reason behind it.
Meanwhile, I continue to hold my gold stocks while being savaged daily. As you know, I saw this correction coming, took risk management action (it never seems like enough though) and have set parameters whereby this correction 'should' end if all is healthy and well. I believe that a short term top in the Dollar will coincide with a rebound in the gold stocks and curiously, the broad stock market as well. Very recently the gold sector and the stock market have been declining together and I expect them to rise together. The question will then become "which is real and which is Memorex?" as the Trannies sport a reverse symmetrical triangle topping pattern and decide whether they will rebuff Dow theorists who began getting excited perhaps a bit prematurely. As for the gold sector, it will be 'Memorex' if one can believe that Paulson and Bernanke are for real as inflation fighting, strong Dollar advocates. Can one believe that? In one's dreams I suppose.
Oil continues to be a bothersome wild card that is really messing up the play in the gold miners as contraction vehicles. But as my friend Otto says, gold is just more of a value for long term thinkers when measured in oil. We really needed Paulson put some lipstick on the Dollar and we really need oil to decline. Meanwhile, yield curves are resetting from panic highs. They did the same thing in 2002 before heading higher. Right now the $TNX-$IRX ratio is between a 38% and 50% Fibonacci retrace. I expect the yield curve to head higher when the Jawbones get a handle on inflation expectations. We should be rooting for the Jawbones in the short term, not against them.
There is much more to come and as they say, "when the going gets tough, the tough get going". It is time to get going with analysis that lands us on the right side of the markets no matter what may lay ahead and I am again getting interested in the Asian and other global markets and select US stocks/sectors. But for now I am going to get going (sloppy word play, I know) and bid you a great weekend. The weather is amazing in the Northeastern US lately.
Thursday, June 12, 2008
For HUI the 70 day ema and several other data points show the parameters. The H&S if it is an H&S top, measures to a ridiculous 240. But if somehow we get the kick save of the century by panicked monetary authorities it will not be so ridiculous. Before such an event becomes possible however Huey would have to violate a ton of support as noted on chart.
USD? Well here is its weekly progress. "Ho-hum, so the world hates me" says Uncle Buck on the way to its first real resistance area.
Wednesday, June 11, 2008
Suddenly, global officialdom is concerned about inflation. After creating the genie through so much bad policy - our US helicopter pilot right up there - central banks are trying to jawbone it back into the bottle. Trichet did so last week and the Dollar tanked vs. the Euro. On this side of the Atlantic, da boyz at da Treas and the Fed did the same. Chinese markets are rolling over because of the Politburo's increased vigilance against inflation. People think these clowns set policy but they are simply reacting to public and market angst about the results of all their previous inflationary policy - and the expectations of same going forward.
The US Fed for example cannot do its job as agent of inflation if everyone is screaming about the declining Dollar while paying up for vital resources like oil... like FOOD. I really believe Bernanke is an academic who actually believes his own b/s and thinks he can play good cop and bad cop alternatively as the situation demands. In Q1 he was required to yank the throttle full force and flood the system with new credit while sweeping all those toxic and deadly vehicles - the likes of which Wall Street had enriched itself with - under the Fed's rug to be repaid by the public at a later date. This was inflation - happening right before your eyes - that will be manifest in one way or another down the road. Credit was being created as needed for banks that by all rights should have died miserable deaths right then and there. Instead they play a game they cannot lose as the Fed, with the public still asleep at the switch, did its thing. The two major candidates for president are clueless about economics. The congress is clueless about economics. The public is clueless. We sit back and watch an academic orchestrate a real time experiment in Ponzi economics and hope he's got it under control. Yep, this is healthy.
Meanwhile, yesterday the markets fell for the bad cop routine. The bond market has told Bernanke that he must act tough, so he did. The question of course is whether he is prepared to follow through. With the world's air supply polluted with trillions of financial toxins and the outward signs of inflation forcing policy makers to go all bad cop on our ass(ets), this should be interesting indeed. Just one domino is all it takes for confidence to be lost in an environment where jawbones and possibly policy, are tightening. Yes, interesting times.
Tuesday, June 10, 2008
Having intimate knowledge of ISRG (a former customer in my day job) and upon seeing the CRDC chart while rummaging around the internet, I wanted to use it as a chart study. I first saw it this morning before the market open and noticed it sneaking out of the down trend. Sneaky sneaky CRDC. Frustratingly, it is now exploding higher as often happens when enough traders see this event. So I will have to sit on my hands, do some more reading and if I like the company think about a pullback point.
But for now, I think this is a classic example of a grinding consolidation down to strong support with bullish divergence in the indicators. A good chart study indeed. Edit (1:02) ARRRGGGHHH! CRDC up over 20% today and would make a nice counter play to the humiliated gold stocks if only I owned it. Edit (4:35) CRDC ends with a one day gain of 35% after sneaking out of the downtrend. I am doubly bummed out because if I had at least had a couple hours to look into it I would have likely bought. Now I won't touch it. But I sure do wish I had my trading cap on this morning. Would have made the bludgeoning of my core holdings (compliments of Benny's jawbone) easier to take. Momma told me there'd be days like this. I suspect a fair amount of you good readers have had a day or two like this yourselves. ;-) Great chart study though. Pissa.
Sunday, June 8, 2008
1) MACD is coiling for a move (one way or the other), ROC has bullish divergence and the thing has the look of a grinding bullish consolidation. In other words, one can be poised for a bullish break out above the noted downtrend line or
2) We will get another in a line of buying opportunities that this market has been generous enough to present. This would be signaled by an RSI near 30 and if bullish divergence in the indicators were to persist, so much the better. The beauty of corrections, especially in this sector, is that they tend to drain the spirits of the majority at the precise time that they should be getting bullish.
I remain ready for either of these scenarios; a break of the downtrend line to the upside - which would be a big time positive signal - or continued correction, which is becoming less and less likely as the broad market poops itself led by a Banking Index on life support and the Trannies (and all those Dow theory bulls) megaphone. Caveat: There are still some casino patrons carrying on in a bullish manner, notably in the small caps. But even there the RUT & SML action has the look of bearish rising wedges.
Saturday, June 7, 2008
Thursday, June 5, 2008
Unfortunately, if that potential comes to fruition, it will make me very wrong on my entire investment stance as it will mean gold stocks have entered a cyclical bear market. Now, these kinds of fears are hallmarks of bull markets. The plan here is to remain aboard as long as the weekly chart remains intact and view a pullback to that lateral support zone as an opportunity. A lot will depend on the lower panel indicators. If in conjunction with a sharp decline into support, the indicators reset to buying-op over sold levels... well, we know the drill by heart. Then it will be time to hopefully wave goodbye to the hangers-on and proceed with the bull market. Again, it's either that or I am totally wrong in my entire orientation. We will find out soon.
Wednesday, June 4, 2008
But for now here is a nominal monthly chart of gold. No ratios, no comparisons to anything. Just gold and its progress - in USD terms - bleeding off the excesses of the January spike above 1000. Really, when you think about it, gold at 800? What is wrong with that? I'll tell you what is right with it... what is right with it is that we are getting all those lower panel indicators reset from severely over bought to areas that have provided support throughout this secular bull market. What is also right with it is that we are getting into an area of confluence with the 18 month ema (which has provided support for the entire bull), the green dotted trend line and the 62% retrace level. There is a lot right about this chart and I will tell you, despite the cries of foul by gold bugs against the evil "cabal" there was a lot wrong with the blown off and over bought chart back in January. I feel much better now.
There will come a day when this bull market ends. But for now and the foreseeable future, this blog will continue to be a big picture perma bull on gold and gold stocks. This is not a gold blog and biiwii.com is not a gold website. It's just that this is in my view the most solid bull market on the planet currently so it is the one that gets the most of my attention.
Tuesday, June 3, 2008
Gold is different. Gold/commodity complex, gold/base metals... they have bottomed and now crude joins the party. Interestingly gold/silver is still just hanging around which is neutral to bullish for the precious metals sector. But it should be noted that gold/silver looks bullish (bearish for just about everything and possibly bearish in the short term for the PM miners as well). The time is at hand. I hope you have carved out a game plan.