Investorstoday

Wednesday, November 30, 2011

Technical Analysis – XAU and HUI Gold Stock Indices

Gold Bugs Index (HUI)




The HUI has traded in a fairly wide range this year as gold stocks have had a hard time breaking out to the upside. The good news is that we are entering into a seasonally strong period for gold stocks and as you can see from the technical indicators we are oversold.

We should be able to pick up a good 10-15% over the next few months and a number of gold and silver stocks are very attractive at current levels.


Gold & Silver Index (XAU)




The XAU is in a similar situation to the gold stocks with a false breakdown last week which was quickly rectified. Technical indicators are all turning positive and we should see a nice rally starting soon leading into the seasonally strong first quarter.

Gold and silver mining stocks have had a hard time finding their footings this year with inflation from a weak dollar, and difficulties at some large scale projects.

However, this should not deter investors from the sector as it is one of the strongest in terms of revenue, earnings, dividend, and cash flow growth.






Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Reading Material, November 30, 2011 – US/EU FTA and the EFSF

Europe ramps up rescue fund, may turn to IMF

I discussed why the European bond markets are spooked on Monday. This is not going to be a solution to the problem but rather a can of gasoline on a burning fire.

As long as Greece continues to push the envelope and no sovereign crisis is solved the European bond markets will remain spooked.

U.S., EU mull free trade talks, sign secure trade pact

This is a bit odd.

The long-term benefits are obvious as the two largest economies come together to foster increased trade which will lead to increased job opportunities.

However, with the banking systems on life support it may be difficult to achieve.

BofA, Goldman, Citi Credit Ratings Cut by S&P

No surprise here with the credit ratings cuts but the increases for Chinese banks was surprising. Now the major Chinese banks are rated higher than the US banks. That should tell you something as Bank of America is on life support and should be rated much lower by S&P.

Wall Street set for big gains after central banks act

Santa Claus is coming to town as everyone is bullish on the liquidity push by Europe and China into the system. China’s move will be more effective as it immediately targets lending without the six to nine month drag that comes when rates are moved in either direction.

I am still skeptical about Europe as Greece is looking for a 75% write down as opposed to the already agreed to 40 some percent.

But in the meantime I will add to my gold and silver exposure as they are the only safe places in this minefield.






Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Tuesday, November 29, 2011

First Majestic Silver: Significant Value For Investors

First Majestic Silver: Significant Value For Investors

A few months ago First Majestic (AG) pre-announced solid third quarter production numbers but ran into a small manganese problem at La Encantada causing the stock price to tumble precipitously. Looking over the third quarter numbers the stock appears to be significantly undervalued as we bounce off of support levels.

Reading Material Tuesday, November 29, 2011

Kutai Kartanegara Bridge collapses in Indonesia killed at least 3 and 17 injured


Why should you care about a bridge collapse in Indonesia? When 30% of Indonesia’s coal production moves across the Mahakam River.

Indonesia exports more coal than any other country in the world including the US and Canada.

China vice premier sees chronic global recession


Bearish economic forecasts by the Chinese do not inspire confidence in the global economy.
If there is a global recession then China is likely to look internally to patch a faltering real estate market rather than help the EU.

OECD warns of European recession


Growth forecasts for all of the major global economies were ratcheted downwards with the highest growth rates expected to come from the US and Japan at 2%. This does not inspire confidence in the markets.

American Airlines parent seeks Ch. 11 protection


It was only a matter of time before the only major airline not to file bankruptcy after 2001. Since then American has struggled to become profitable.

It is just another canary in the coal mine.

No technical analysis today. Everything jumped up and the end of the week charts will be more important than the day after a jump.

I went looking for some European yield curves for discussion yesterday but could not find any (no Bloomberg access).

Have a good trading day everyone.


Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Monday, November 28, 2011

Technical Analysis, Monday, November 28, 2011 – Nasdaq and VIX commentary

Nasdaq




As you can see from the above chart a LOT of technical damage has been done. However, Friday printed what could be seen as an imperfect gravestone doji indicating a potential turn in the markets. We will have to see what the coming week brings but after reading about large crowds (mostly without pepper spray) and strong sales the market may get what it needs to print a small rally.





Now onto the point and figure chart for the Nasdaq. I adjusted the box size to 25 to cancel out some of the price volatility.

As you can see we have broken through support and are headed back at the very least down to the lows made over the summer. If a rally occurs next week I doubt we print enough boxes up to touch what is now resistance at 2300.

Now onto the VIX…




The daily chart shows the ascending triangle still in effect. Many people are wondering why the VIX did not spike upwards as the market crashed last week.

My answer is that because the VIX is based on option prices the low volume in Chicago and New York did not cause a lot of price volatility as most traders were away for the week.




On the point and figure chart, we did touch support at 32 before rallying back into the ascending triangle last week. The question becomes which way will the triangle break? We had what now appears to be a false breakout at 37 and a false breakdown at 32. The only thing we can do now is to wait for the real breakout.

On a related note, the amount of time the VIX is staying above 30 should be a warning sign for investors. This was one of the reasons I never trusted the October rally. The VIX never collapsed down to levels which would indicate calm.

If a rally happens, investors should look to reduce leverage across their portfolios while moving towards more defensive names in various sectors. Stocks with strong fundamentals and attractive dividend yields can provide a hedge in your portfolios.

Just watch out for value traps.






Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

MF Global Commentary, November 28, 2011

$1.7 Billion Customers' Money Missing From MF Global

Insight: Farm belt rage over MF Global could chill markets

MF’s Missing Money Makes You Wonder about the Auditors: Jonathan Weil

For the final article I took the liberty of changing the title for the sake of accuracy. The original title had Goldman listed and the article is more about the failings of PWC in its role as auditor.

MF Global broke one of the trusted rules in the financial industry. They moved money from segregated accounts to cover trading losses on their house books.

This is not supposed to happen ever, for any reason. The futures industry has been shaken to the core and it will never, ever be the same.

The removal of funds from segregated accounts will now force funds, family offices, large and small investors alike to open a door for due diligence with brokers across the board that never should be opened.

It is unknown what the large custodians knew at this time since MF Global grew through acquisition and it appears as though they never upgraded their back office systems.

So where does that leave the customers whose trust was shattered? At the mercy of the bankruptcy courts who have never seen anything of this magnitude before.







Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Reading Material, November 28, 2011 – European Bond Yields and Commentary

Greek 1 year bond yield – over 300%

Greek 2 year bond yield – 121%

Italian 10 year bond yield – 7.26%

Spain 10 year note yield – 6.699%

France 10 year bond yield – 3.691%

U.S. Stocks Pare Gains Amid Report of Greek Bond Negotiations

Greeks drive hard bargain as creditor talks start

For some reason the Greeks have once again walked off the deep end insisting now that the new paper issued in the debt swap have a value of 25 cents versus the 40 odd cents the banks were seeking.

The Greeks apparently believe that they now have the upper hand since litigation efforts would happen in Greece rather than London.

The error in this line of thought is that unless both sides can come to a mutually amicable agreement Greece will be locked out of the capital markets and it is unlikely the rest of Europe will subsidize them.

China and Russia have already said no to the EFSF on its current terms and there is a very good chance that this gets worse before it gets better although a lull in the news flow could precede a rally in stocks.

Now you know why the Latvian and German debt issuances failed last week. European debt across the board is being revalued on the basis of Greek now wanting a 75% discount.

This is not over by a long shot.

Thanksgiving Day Online Holiday Sales Up 39 Percent; Mobile Shopping On The Rise

For the week ahead I think we will see a small snapback rally on strong Black Friday and pre-Thanksgiving sales. The downside is that this will likely pull sales forward from December into November.





Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Friday, November 25, 2011

Reading Material, November 25, 2011 - Debt, Debt, and More Debt

Moody's warns U.S. not to skimp on deficit cuts

German Auction ‘Disaster’ Stirs Crisis Contagion Concern; Bonds, Euro Fall

Fitch cuts Portugal rating on high debts, worse outlook

Consumer Spending, Durable Orders Signal Slower Growth

The articles today are mishmash but underscore some potential problems coming down the road.

The US government was warned a few months ago that failure to produce an agreement could trigger additional downgrades on top of the S&P downgrade last August.

At the time it was laughed off but as a contrarian it became a warning sign that Washington DC and the markets were not taking the downgrade seriously.

Just a few months later, the budget deadline passes without a whimper and now Congress talks about undoing the cuts.

If the cuts are undone and Moody’s and Fitch downgrade US debt I have to speculate what it will take for Washington to sit up and take notice of our fiscal situation.

European debt auctions have become toxic in recent weeks as the markets are not looking fondly upon the slow pace of Greek and Italian reforms.

We have failed auctions in both Latvia and Germany which are spooking the European bond markets along with a ratings cut in Portugal.

The longer this crisis in Europe drags out the worse it becomes. While politicians may fret and negotiate it does not appear to the public or markets that any progress is being made and therein lays the problem.

Businesses cannot plan for the future if governments around the world are dallying when it comes to fixing their fiscal problems.

Businesses have no confidence which filters down to the general public and that causes the general public to retrench.








Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Wednesday, November 23, 2011

Technical Analysis, November 23, 2011

All three charts today are not pretty. I wanted to find something hopeful before the Thanksgiving holiday but it is not in the cards.

Singapore




This looks ugly as the STI sits on a key support level. A drop through here would send us back to the October lows.


Australia




It gets worse as the ASX has just dropped through both the 50 day moving average and a support level. The next stop here will be the October lows.


Japan




This chart may be the worst of the lot with the Nikkei at a key support level. We break the low made earlier this year after the tsunami and the 2008/2009 lows are next.

I wanted to grab some charts from Asia to maybe signal a rally but the scene across the Pacific is ugly.

With news surrounding China’s PMI dipping below 50 it does not make me feel confident that a rally may appear.






Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Reading Material, November 23, 2011

Latvia: another canary croaks

Just another canary in the coalmine; while Latvia is not as big a risk as any of the PIIGS it does spell trouble for the periphery.

The question is when will EU leaders finally move forward?

As for the IMF proposal, I will wait until Friday to cover that one.

As Time Ran Out, Super Committee Watched Football, Hung Around in Bars

Behind the scenes of the meltdown

I said enough with my editorial earlier this week.

It does not look like they were trying that hard at the deadline.

MF Customers Denied Court Committee

Bank of America: Regulators Warn Board to Shape Up, Report Says

Fed to test six big U.S. banks for Euro stress

El-Erian: U.S. Economic Conditions ‘Terrifying’

I truly feel bad for the customers of MF Global. The collapse has sent shockwaves through the system and may just destroy the mid-tier brokerages.

Now onto the final three stories which tie together with the risk in the marketplace today.

First, it appears as though Bank of America has been given a warning from the regulators to get their house in order. This comes on the heels of the Treasury fighting with the FDIC over derivative transfers to the taxpayer’s wallet in the event of a collapse.

Next we have the Federal Reserve breaking out the stress tests. We all know how the first round in the US went along with the recent European tests. The question is if the Federal Reserve does not like what it sees will they dial back the tests or come out with a report asking the banks to raise capital knowing that it will likely tank the markets.

Finally, the last article has comments from PIMCO’s CEO Mohamed A. El-Erian concerning the US economic conditions.

I agree with his assessment of the US economy. The tale being told by the bulls is that the US consumer will lift the economy out of its doldrums with a strong Christmas causing a significant inventory rebuild in the first quarter of next year.

But let’s back up for a moment. With all of the news emanating from Washington and Europe, if you were a business would you be preparing for a huge jump in orders or hunkering down and tightening the belts?

Therein lies the problem.

We are counting on a consumer already in over their heads, depleting savings to spend, and a significant portion of this country under or unemployed to bail out the world economy and get growth growing again.

When you turn on the television and see Congressmen arguing over the deficit panel and stories about how Congress can legally trade off of insider information would you feel confident about the future?

There is enough uncertainty out there to cause the consumer to retrench. Get out early, grab your deals, and then sit back and wait out the last two weeks of the Christmas shopping season. The pre-Black Friday sales worry me because it indicates a retail sector worried over Christmas sales.

In short, the signals I see from the business community underlie the general feeling of unease in the markets. GDP growth was knocked down from 2.5% to 2% already and will likely fall further. Sub 2% growth is not going to move unemployment that much.

Will comment on Friday but….

U.S. stock futures extend losses after weak China flash PMI

Anyway, have a Happy Thanksgiving everyone.







Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Tuesday, November 22, 2011

Contagion Risk Begins To Spread From Europe



Investors watching the stock market for the past few weeks have been confused to say the least. The U.S. markets seem disjointed and unable to move higher despite some positive economic reports. The reason for this is linked back to the problems in Europe. Despite the change of governments in both Greece and France risk is creeping into the bond markets.

Reading Material, Tuesday, November 22, 2011

Analysis: Fallout from deficit-reduction panel failure

There was a lot of irony thrown around yesterday by both sides. Republicans are working to undo cuts to defense spending undermining the automatic cuts which will kick in. President Obama also signaled that he veto any attempt to undo the automatic spending cuts.

There must be elections coming up.

Insight: Lessons for U.S. from Canada's "basket case" moment

This is a very good article which people should read. Austerity works if done properly.

We will soon be where Canada was in 1994.

MF Global Shortfall May Double, Exceed $1.2B

This is not a good sign.

Instant view: Third-quarter GDP revised lower

GDP was revised lower which I expected. Look for the final number to come in below 2%.

People are holding out hope for 3% percent growth but remember the speech I posted last week from the New York Fed President where he saw the upside to growth at 2.75%?

Not much to say today, I went short at the start of the day and expect a rally for the rest of the week unless the news flow gets worse.

The technical section has some charts regarding the S&P so I will leave the discussion for there.

Right now we may have a difficult time shifting to year-end rally mode with all the bad news emanating from Europe and Washington.

Retail sales should do well Thanksgiving weekend but there is a good chance that a lot of sales get pulled forward from mid to late December into the beginning of the shopping season.







Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Technical Analysis – November 22, 2011

S&P 500




We pulled back to the 50% retracement from the October rally and have hit the bottom of what appears to be a new trend channel. I believe that we will see a rally for the rest of the week but have no confidence in its strength due to the news flow emanating from Washington and Europe.

In addition, the Hong Kong economy is barely treading water while Europe may already be in recession.





The next chart is a Point and Figure with the S&P breaking down from the triangle formation with an initial target of 1160 which would equate to the 38.2% retracement and the uptrend line on the P&F chart.

A breakdown from there would set us up for a test of the August lows.

Finally, a disturbing chart with regards to the S&P 500, a monthly chart going back 20 years.






First, I would like to call your attention to the MACD rollovers. In the first and fourth rollovers we immediately saw a strong selloff with the fourth leading to the crash in 2008. The second and third were warning signals ahead of the tech bubble collapse in 2000.

Just a few months ago we rolled over again. But that is not the worst part of the chart. Look above to the 50 and 200 month moving averages. We are heading for something that has not happened in more than 20 years, a death cross. If trading volumes pick up, watch out below, 1150 may not be the level to worry about.







Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Monday, November 21, 2011

Reading Material, November 21, 2011

UPDATE 2-Russia c.bank unclear on EFSF, not ready to invest
http://www.reuters.com/article/2011/11/18/russia-efsf-idUSL5E7MI3AU20111118

Hong Kong Dodges Recession as China’s Shoppers Counter Weakness in Exports
http://www.bloomberg.com/news/2011-11-11/hong-kong-dodges-recession-as-china-s-shoppers-counter-weakness-in-exports.html

Europe Growth Holds at 0.2% as Region Braces for Recession
http://www.bloomberg.com/news/2011-11-15/european-growth-fails-to-accelerate-in-third-quarter-as-debt-slows-demand.html

UK: Despite Surprise in 3Q GDP, Oct Manufacturing Data Points to Weak 4Q

http://www.fxstreet.com/fundamental/analysis-reports/fundamental-updates/2011/11/01/02/

So what do we have to look forward to this week?

Well the Russians turned down the Europeans following in the steps of the Chinese.

Rumor has it to circumvent EU rules the EU will go through the IMF. Not going to get into the details but when you attempt to circumvent its own laws to pursue a bailout that is not a good sign.

Hong Kong might have dodged a recession but 0.1% could very easily be revised lower in the coming months and a negative 0.4% drop in GDP during the June quarter would indicate a technical recession.

Chinese shoppers offset a drop in exports which is showing up in container offloads in Long Beach, Los Angeles, and Oakland as uncertainty surrounding Europe and Washington DC has unnerved businesses.

EU 3rd quarter GDP came in at 0.2% and the UK painted a 0.5% gain, although UK PMI dropped below 50 in October.

If we are not already in a recession we are teetering on edge. Hong Kong is growing at 0.1% and the EU at 0.2% during the third quarter. We are counting on the US consumer already hit with high under and unemployment, low personal income growth, and inflation to bail out the global economy.

The idea of that happening does not inspire confidence from me.

As for the deficit panel, you can read this editorial.

As of this morning, I am short the market and raising cash.







Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Technical Analysis, November 21, 2011

Gold





Gold is hanging around an important support level at $1715. If we can bounce off of support here and begin to trend higher it would a signal that gold is uncoupling from the problems in the broader market. The likely scenario is that we head lower with the market retesting the trendline at which point we will be oversold (according to the RSI) and a rally starts.

If we are to rally and decouple the impetus for the rally will come from Europe, not the US.


Silver





Silver’s chart looks just plain ugly and a similar formation to copper. I am not going to call a bottom but $30 looks like an initial target. A lot will depend on how bad silver gets caught up with the broad market.


WTIC/Natural Gas




I have this feeling someone is unwinding a huge long Natural Gas/short WTIC trade. This could be related to MF Global’s trades being unwound.

Stay away from both until this gets unwound.








Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Sunday, November 20, 2011

The False Dichotomy of the Deficit Panel

As the deficit committee rumbles headlong into the November 23rd deadline, they appear to be growing even farther apart, determined to hit the wall with as much force as possible cackling with laughter and dead set on destroying any hope of resolution.

The Republicans appear set on letting the deadline expire rather than accept any form of tax increases. The irony of this situation is that the automatic cuts will hit defense spending hard and likely spur a backlash from Democrats in the form of letting the Bush tax cuts expire next year.

The Democrats, unwilling to allow reforms or cuts to entitlement programs face the irony of having those cuts made for them which will likely push the US into a recession.

In fiscal year 2010 the US Government spent $3.456 trillion dollars and took in $2.162 trillion in tax receipts for a combined total of $5.618 trillion dollars.

The supercommittee was charged in August with finding $1.2 trillion in combined cuts over a 10 year period, just $120 billion dollars a year.

One needs to ask if this country has become so polarized and jaded by ideological principles that we do not have the ability to agree on making cuts totaling 2.3% of fiscal spending and tax receipts.

We look over the Atlantic to Europe and the problems facing the EU and the PIIGS seeing the EU as unable to agree on how to fix the significant problems facing Italy and Greece instead allowing the problems to become systemic and spread to the core EU countries.

Unfortunately, when we turn back to our own country it is like looking in a mirror.

The truly sad part of all this is that it shows a complete lack of leadership in Washington DC from the President to Congress. Now I wait to see how both parties try and wiggle their way out of very public promises by pointing fingers at one another telling their constituents that they fought long and hard to protect them while vilifying the other side.

But look on the bright side, Congress has made pizza a vegetable. Nice to know our priorities are in order.

I wonder how many members of Congress are short the market right now?

Friday, November 18, 2011

Reading Material Friday, November 18, 2011

Securing the Recovery and Building for the Future

Full Text: Moody’s takes rating actions on 12 German Landesbanken

N.Y. Fed Asks Primary Dealers for More Margin on Some Mortgage Securities

Container Traffic into Long Beach Harbor

The four articles today relate to a similar subject, uncertainty.

The first is from a speech by New York Fed President William C. Dudley. The takeaways are these two quotes, “However as we look toward 2012 the U.S. economy continues to face several obstacles to a robust economy. Accordingly, I expect growth of about 2.75 percent for 2012, not much higher. We also continue to face significant downside risks, mostly related to the stress in the eurozone.”

The bolded part does not inspire much confidence from me.

Here is the second, “What we have learned, I think, is that the power of these economic forces is even stronger than we had previously understood. And, in such circumstances, although a stimulative monetary policy is essential for recovery, it may not be sufficient.”

Wow.

The second article is from Credit Writedowns and is the text of the release from Moody’s credit review of a number of German public-sector banks.

The third article relates to the Federal Reserve raising collateral requirements on certain mortgage securities. This is an odd move to say the least especially given the strain facing the financial markets.

The final article relates to container traffic coming in through Long Beach, CA. A significant portion of Asian goods pass through the Long Beach terminal and the statistics are very relevant to orders from businesses and expected end user demand.
As I mentioned a few weeks ago we should have seen a jump in September but in reality container traffic peaked in July and has been falling ever since. The reality of the situation is that businesses have been scaling back their orders due to uncertainty in Washington DC and Europe.

In this type of situation the potential for a recession is very great.

Some may say that retail sales show strong improvement but reality is with a 16% U-6 the growth may be hard to find.

If businesses are cutting back on new orders due to the economic uncertainty surrounding Washington DC and Europe that means hiring will be weak which means that a continued high U-6 and more slow growth.

Still waiting for the markets to price in the reality of what may come from the deficit panel next week.

In other words, watch out below.

Technical charts for November 18, 2011

Let’s look at the VIX real quick in daily and P&F form.




The daily chart shows an ascending triangle which is a bearish sign for the markets if we get a breakout to the upside.




The P&F chart shows a clear uptrend with rising support even though we have not broken out to the upside. A breakout would mean the downtrend is finished and we are likely to spike up to the highs made earlier this year. The chart is very bullish and not a good sign for the market.

In terms of the market, today is options expiration for November and next week is Thanksgiving week so look for a lot of volatility. Positions will be rolled forward causing extra volatility and next week will likely see lighter than normal volume due to the holiday. This could very well mean extra volatility and large price swings.

That said, unless something major happens in the next week a year-end rally may not be in the cards.





Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Thursday, November 17, 2011

Eldorado Gold: The Latest Dividend Stock Linked To Gold Price - Seeking Alpha

Reading Material, Thursday, November 17, 2011

ECB steps in to curb bond rout

France, Germany clash over ECB role in stemming crisis

Back to basics for investors facing euro breakup risks

U.S. Banks Face Europe Contagion Risk: Fitch

Weil: UniCredit Bombshell Shouldn’t Be the Last One

It appears as though the problems in Europe are not getting any better; in fact you can safely say that they appear to be getting worse despite the recent changes in Greece and Italy.

This gets very interesting when you look at the charts below. Something here has to break and it will likely break soon.

Yesterday’s afternoon selloff took a lot of market participants by surprise but if you look at the market technicals, we are still within the triangle. Being that this is options expiration week watch the next two days very closely.

There will be a resolution soon but it appears, similar to how Congress is approaching the deficit panel deadline, that the market is dragging this out as long as possible.

First important chart of the day is a comparison between the S&P, Nasdaq 100, French CAC Index, and German DAX.




You can see that the S&P and Nasdaq underperformed late last year and have been more volatile as the year went on.

Since we bottomed in October, the CAC and DAX have severely lagged for good reason but in the face of all the poor data regarding Europe, high unemployment in the US, and bank failures could this be a warning sign?

The next two charts are of Bank of America (BAC) and Citicorp ( C ) which tie directly back to the broader US market. We have slid back below $6 dollars a share and appear to be heading lower. Bank of America and Citicorp appear be more canaries in the coalmine.









Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Wednesday, November 16, 2011

Reading Material, Wednesday November 16, 2011

MF Global trustee moves to return $520 million in client cash

CFTC commissioner views MF Global darkly

Eurozone Sovereigns - all eyes on the Ratings Agencies, watch those tails go


The situation with MF Global gets more interesting by the day. The wire room should hold all the answers.

The bond market seems to have caught onto the problems facing other European countries, namely France whose economy is slipping into recession while Greece and Italy teeter on the verge of collapse.

Europe is why I cannot be bullish at this time. The contagion effect will be more than enough to drag the US into a recession. How? Lower demand for US exports will put pressure on US businesses leading to more uncertainty which means no expansion and meager employment growth.

Technical charts

The first two charts, the S&P and Nasdaq 100, show an interesting divergence. The Nasdaq 100 has broken through the 200 day moving average and using it as support but the S&P 500 has had a difficult time breaking through turning the 200 day moving average into a strong resistance level.






One of these has to break and it underscores the problems in the market. Should we be moving higher despite all the problems in Europe and the US?

The next charts are from the CAC Index in France which is bouncing off significant support at the 50 day moving average. A breakdown would lead us back to the support level at 2700.





The point and figure chart underlies the problems as we are at a significant support level for the French market.








Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Tuesday, November 15, 2011

Barrick Gold: The Large Cap Miner With Small Cap Management - Seeking Alpha



Once you peel back the layers of Barrick, you find a large, multinational gold mining company with a strong eye on cost management, forward-thinking management, and excellent project pipeline. It's not what you would expect from a large cap miner.

Reading Material and Commentary, November 15, 2011

ISM Index vs. Q3 GDP: Something Amiss (Guest Post) (EconMatters)

Deficit Panel Members Seeking to Avoid Blame

Deficit Panel Still Talking as Others Focus on Spending Bills

WRAPUP 2-U.S. deficit panel could delay on taxes

Lossmaking UniCredit seeks $10.3 billion, axes 6,150 jobs

UniCredit was recently named to the systemically important institution list and expects to significantly dilute shareholders in the upcoming offering. Not a good sign.

But more importantly, in less than 10 days the deficit panel will publish its recommendations on reducing the trillion dollar budget deficits in the US. There was some hope a few weeks ago but it seems as though the parties have once again dug in their heels and set themselves up along partisan lines.

Let’s hope this does not end like the battle over the debt limit.

Oh, as an aside, we have yet to pass a budget for the 2012 fiscal year.

Onto the charts before I go off on a rant.

First up is Copper, a bellwether for the economy. A strong global economy will see rising copper prices and vice versa but as we can see from the chart the spot price for copper has been heading lower and the bounce in October looks to have petered out. The spot price is heading lower hugging the 50 day moving average and the down sloping trend line.


If the market is to head higher we need to see a higher copper price as well.

Next up is the Dow Jones Industrial Average.




On the daily chart we can see the Dow in a clear up channel with resistance at 12,200 and support at 11,850 and the point and figure chart confirms the uptrend. Both can be bullish formation but with the negative newsflow emanating from Europe and the deficit panel we may have problems pushing higher.







Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Monday, November 14, 2011

The Week Ahead, November 14, 2011

Greek 1 Year bond yields – 249% and heading higher

Greek 2 Year bond yields – 108.9% and heading higher

Italian 10 Year Bond yields – 6.45% and stabilizing

AAII Sentiment Survey – Bulls @ 44.7% and Bears @ 24.6%, spread 20.1%

Greece is shut out of the financial markets as everyone appears to be dumping their debt. Even if the new government calms everything down for now their repayment schedule over the next 9 months only gets more difficult.

The AAII Sentiment Survey shows that the Bull/Bear spread has passed a milestone signaling the general public buying into the rally.

Since the S&P, gold, and silver charts were posted on Friday tonight will be just the Nasdaq 100 which is making an interesting divergence on the technical and point and figure charts.



First the daily chart, you can see from the green lines that the NDX is a couple of percentage points below a significant resistance zone for this year while the RSI and MACD indicators are trending lower.

However, the 50 day moving average is getting ready to cross over the 200 day which would be a bullish sign, although when the 50 day crossed the 200 day back in August there was a quick selloff then a rally.






The point and figure charts show both a triple top and triple bottom on a larger scale chart. If we get a breakout here the market will charge higher but there is a lot of space below.

The NDX has led the market this year and this will be the index to watch for a breakout. Because there are some divergent signals it will be important to break out early in the week. The longer this plays out the more likely we are to head lower.

As for still waiting for my short opportunity; still waiting but if we get a breakout higher and it is confirmed I will turn bullish. Right now there are stocks on my long and short radar screens.




Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Friday, November 11, 2011

Wrapup for the Week Ending November 11, 2011

This week was a lot of fun from a macro perspective. We have a new government in Greece, Italy wanders, and the world frets that the Europeans are not acting quick enough.

The markets moved up, tanked, and then tried to claw back their losses. For the week the S&P 500 finished slightly higher and gold remains well bid. Silver is having difficulties climbing above the 50 day/week moving average which may be a bad sign next week.

More tech stuff today as I have been busy working on my 3rd Q mining articles which should come out like a flood next week.

No new articles but some quick technical analysis to wrap up the week.







The technical, MACD, and RSI signals look bearish to me and right now I would have to say that the market will need to break resistance levels early next week on strong volume. We could be playing the year-end rally but one has to watch out for funds front running the rally as well.

Early thoughts are for a selloff next week but see what the weekend news flow has in store.

Have a great weekend everyone.



Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Friday Commentary – November 11, 2011

U-3 And U-6 Unemployment Rate Long-Term Reference Charts As Of November 4 2011

Macroblog link (October 7, 2011 entry)

US poverty at new high: 16 percent, or 49.1M

Jobs being created are low paying and part-time jobs.

While some may say that everything is getting better because jobs growth is being revised upwards to 100,000 per month one needs to take into account the quality of jobs being created.

The jobs being created are not the type of jobs that will get the housing market moving again nor will we see a major move in retail sales, which makes up a significant portion of the GDP.

As you can see from the Macroblog link, the jobs being created are merely replacing the members of the workforce who have either died or retired from the workforce. That can be seen by reviewing the U-6 and U-3 rates.

We are just switching chairs.

We need to see job growth pick up in a major way if we expect to get out of ZIRP because the longer we stay at zero and the lower bond yields go the greater the risk of a Japan style deflation where the US cannot afford to

Gold is singing like the canary in the coalmine. The sharp rise in Euros is telling more and more about what is happening in Europe than a continually rising stock market. My only worry concerning gold are the stories popping up now talking about $2,500 gold so we might be getting ahead of ourselves here.

Earlier this week I mentioned some mining companies whose earnings were solid; add Silver Wheaton, Silvercorp, and First Majestic to the list.

For those wondering about my longs let me put something together over the weekend and expect a number of articles on individual gold mining companies next week.

Exclusive: French, Germans explore idea of core euro zone


I guess the cat is out of the bag now. The fun part will be watching the small countries whom are fitting in under the guidelines fight for a spot in the core.

Gold charts with some support levels. Watch the euro price; that will hold the key.






Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Wednesday, November 9, 2011

Wednesday post close Commentary, November 9, 2011

Let’s start with the S&P 500. We broke higher earlier this week which broke the left shoulder which negated the head and shoulders top but today’s action means that the newsflow which I have been posting is finally being discounted by the market.




It is not easy but the next two days will tell us a lot about where we are headed. We have some support below here so let’s see what happens over the next two days. A break lower would mean a move down to the 1105 area.

Ah timing.

So now onwards to gold and silver which means the charts I posted this morning.





Now for the first two charts, note the spike up in the euro gold price? Despite the spike up in the USD significant buying from European investors is putting a floor under the price of gold.

For those looking to short gold watch how the euro price reacts overnight before the New York fund managers and traders hit their desks. Support for me is at the $1700 area.



Silver got knocked hard which typically happens on a selloff as it has a much higher beta. Support for silver will be in the $32 area.

In both cases mining stocks will get hit and get hit hard. Hate to say it but that will be the buying opportunity I am looking for.

My mining articles will be up next week with a review of earnings. I am watching the stocks I mentioned this morning along with a number of other miners including First Majestic and Silver Wheaton.

Personally, I am either going to be looking for a short opportunity or sitting back in cash and loading up on mining stocks ahead of their seasonal strength.

Patience is key.



Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.