Investorstoday

Saturday, December 31, 2011

2012 Investment Commentary Update and Happy New Year

First off I would like to wish everyone a happy, healthy, lucky, and joyous New Year.

May the new year be bright and full of joy for you, your friends, and families.

The 2012 Investment Commentary is moving along with the first draft complete coming in at 28 pages covering the macro forces at work all around the world.

The Technical area will be started today, hopefully wrapping up within a couple of days and then onto the long and short ideas.







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, December 30, 2011

Technical Analysis, December 30, 2011 – USD Index




Daily



The US Dollar has broken out of its fall and appears to be finally heading higher after a year of volatility.  Unfortunately, it appears as though a rising triangle has formed on the chart and we are nearing the apex as we approach significant resistance at 81. 

We will have to see how the New Year greets the US Dollar but we may be in for a bumpy start to the New Year if this signal is correct.

 Monthly



Taking a longer look at the US Dollar on the monthly chart we see that a significant support level was created between 70 and 75 from 2008 to 2011 setting the stage for a move higher.  Before this happens I believe we will have a retest of the 50 month moving average as the triangle on the daily chart resolves itself to the downside. 

Longer-term traders should respect the MACD which just turned positive as a buy signal.

Point and figure



This chart is by far my favorite on the US Dollar. 

As you can see the lows were retested successfully and we are heading back towards long-term resistance at the 84 level.  The uptrend is well defined with pullbacks staying within the scope of the uptrend. 

The dollar is making a comeback folks after being left for dead. 

Happy New Year 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.




Thursday, December 29, 2011

Technical Analysis, December 29, 2011 – WTIC/Brent




WTIC Daily chart



Both charts are showing interesting divergences which will be addressed very early in 2012.

Starting with the daily chart of WTIC the price has risen from the $77.5 level back up to $102.5 forming an ascending triangle which should complete itself in the coming week or two. 

The PPO just turned positive which indicates is a bullish signal and the RSI still has room before entering overbought territory. 

However…….

Brent Daily chart


 

Brent is forming a descending triangle albeit a rough one with multiple false breakouts of resistance and support levels.  PPO has turned positive while the RSI is neutral indicating room to run.

Once again we have room for an upside move without becoming overbought.  The question becomes how does this chart resolve given the information from the WTIC chart?

Looking at a combined chart something nteresting becomes apparent.

WTIC/Brent combined chart




For the better part of the last three years both prices have traded lock-in-step with one another until August when WTIC diverged a bit from the Brent price. 

At the beginning of October the WTIC abruptly reversed its slide, bouncing off of resistance and converged with the Brent price. 

Part of me wants to believe that this is an arbitrage play but another part of me wonders if this was a short covering from MF Global’s books as the timing of the rally coincides with the collapse. 

Either way we have two completely divergent technical signals which should diverge sometime late next week.

*** 2012 Global Commentary Update – I expect to complete the Macro and Technical portions within the next 10 days.  The Marco portion is becoming more and more detailed as I come upon information which confirms my thesis for next year.    

The holiday season can be a distraction with parties, family, and the search for gifts which gives governments the cover to release information which may be disconcerting to the 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.




Wednesday, December 28, 2011

Technical Analysis 2, December 28, 2011 – Dow Transports

 Technical Analysis 2 - Dow Transportation Average


Monthly 20 year chart



I am switching it up here with the Dow Transports.  While perusing some charts last night I stumbled upon this interesting chart which just begged to be shared and commented.

We have a triple top in effect going back to 2007 and 2008 with the last selloff taking us back to the 50% Fibonacci retracement.  We have had a nice rally lasting 3 solid months but it appears as though the rally is beginning to run out of steam.

Point and figure



The point and figure chart is just as interesting when the box sizes are adjusted to 150.  The 50% retracement broke the uptrend line in place since 2009 with 5250 providing clear resistance.  The real question for the transports is not breaking through the resistance at 5250 but getting above this triple top formation and moving to new highs. 

Based on the charts I am not feeling very bullish about the transports for 2012.




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, December 28, 2011 (NASDAQ)



NASDAQ

Daily



As we can see from the daily chart the NASDAQ remains inside the triangle and lags the S&P 500 despite very good news concerning iOS and Android activations on Christmas Day.

The technical indicators have a positive slant to them and this pullback should take us back to the 2225 level before turning higher.

Weekly




The weekly chart is much more neutral with the NASDAQ stuck at the 50 week moving average with the RSI at 50 and the PPO at 0. 

Could we be tracing out a rough diamond pattern?

Point and figure




I played with the box size a bit expanding it to 50 in order to strip out some of the volatility and show a longer term chart.

We have two fulcrum patterns with a third possibly being formed.  Right now the index is stuck inside a trading range with 2200 being resistance and 2400 support. 

Longer term support is showing at the 1950 level which is approaching the fulcrums indicating a potential resolution to the pattern.

The final few trading days of the year should see low volume but when the NASDAQ one should beware of the trading range with the NASDAQ.  The weekly chart looks ready to move in either direction but the key will be breaking out of the range formed by the point and figure chart. 





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, December 27, 2011

Technical Analysis, December 27, 2011




S&P 500






Last Friday in a Holiday gift from Santa the S&P 500 broke above the triangle which has constrained its movement since July.  Now, in this holiday shortened week we wait to see what happens next. 

Is this a false breakout common with triangles or will we pull back to retest resistance before moving higher?

Either sign is valid at this point in time.  Investors would be better off waiting until the market tells us the direction in which it wants to go.

Some have speculated that the period from the beginning of November is a head and shoulders bottom formation but the formation is fairly rough and the volume does not fit the mold as the left shoulder volume is lighter than the right.

If the formation is valid it puts a price target in the range of 2011 highs which may be achievable in the first quarter of this year.

*** The 2012 Investment Forecast is in process as the Holiday projects have successfully come to a close. 

The last paragraph gives an indication of how I feel for the first quarter despite the problems around the world.

This week will be just technical analysis and maybe a commentary or two.  ***






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, December 21, 2011

The Global Recession Draws Closer




Japan Tankan Slidesas Investment in China Drops on Global Slump: Economy


Economic growth continues to show weakness in China where the HSBC PMI printed an initial number of 49, a slight rise from November’s 47.7 but still in contraction territory.  The worrisome part of the print is that with Chinese New Year coming in January restocking orders should be starting now ahead of the shutdown. 

The Japanese Tankan sentiment index fell to a minus 4 as large companies struggle under the weight of a rising Yen and a slowdown in Europe. 

Capital spending is now estimated to rise by only 1.4% versus forecasts of a 2.5% increase indicating many large Japanese manufacturers view the European slowdown and rise in the Yen with trepidation. 

Underscoring the uncertain global outlook investment in China fell by 9.8% from a year ago.


Even more worrisome was the news that inbound containers from the Port of Long Beach dropped 15.6% in November from a year ago.  Much of this was due to the loss of Hyundai/CUT volume and some niche carriers to Los Angeles.  When adjustments are made to exclude CUT’s traffic from the beginning of the year Long Beach’s import volume dropped by 3.3% with export volume down 4.1%.

The drop in imports is worrisome as we should have seen a rise at some point in the past few months unless businesses are far more pessimistic about the future than we realize.

When fourth quarter GDP gets released next year the numbers should contain some interesting surprises for the markets. 






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, December 20, 2011

The Bull Market in Gold is not Over




Gold’s plunge below $1600 per ounce caught many market participants by surprise wondering if the bull market for the yellow metal has ended.  For those that understand the gold market and the fundamentals underlying the 10 year bull run the answer is a resounding no.

The charts may show a lot of technical damage as gold has pulled back to test its 50 week moving average retracing the entire summer run despite the continuing problems in Europe and Washington DC.

Just a few short weeks ago six major global central banks, in a coordinated move, cut swap rates and extended maturities which set off alarm bells around the world.  Market participants quietly wondered if this was the cover for a bailout of a global financial institution. 

The downgrades of seven global banking powerhouses last week in addition to rumors that the Commerzbank in Germany may be the subject of a government bailout did not help soothe the markets.

The dichotomy between the fall in the price of gold and the continuing global banking problems indicate that one or the other will break.

The first quarter for gold is known historically for its strength and 2012 should prove no exception.  The problems in Europe remain unresolved with leaders now hoping for a comprehensive solution to be finalized by the end of March. 

Historically, gold has not moved up in a complete straight line, instead moving in spurts followed by periods of sideways trading lasting more than a year.  Corrections during this period of sideways trading typically range around 20% and with gold now up over $1,500 the corrections become magnified in terms of numerical significance.

As shown by the chart below, the most recent move was the longest of the bull market lasting 21 months and a break is needed in order to consolidate before moving higher. 



The first quarter rally may not take us to new highs but this period of consolidation will set the stage for the next move up.

The first four moves up for gold averaged approximately 50% and the last move almost doubled the price meaning that the next move will likely take us close to the $2,800 level.

Get ready folks, with major money center banks being downgraded and European nations put on watch the stage is being set for fireworks in the coming years. 







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, December 19, 2011

Technical Analysis, December 19, 2011 – Gold and Silver




Gold



On the weekly chart, gold has suffered some technical damage but not enough to call the end of the bull market.  After pulling back to test the 50 week moving average the price of gold rallied ending the week down but far from out.  The technical indicate the potential for more selling in the final two weeks of the year. 
We are reaching a point on the RSI which indicates we may be entering oversold status with a rally beginning shortly. 
For me to call an end to the bull market in gold the first thing would be an end to the debt problems in Europe and gridlock in the United States and that is not happening anytime soon.
The technical indicators may not be in great shape but we are entering the seasonally strong first quarter for gold and despite the pullback gold has outperformed the major indices on a year to date basis. 

Silver



Silver has taken the brunt of the hit with prices this year pulling back from the $50 level to $28 before rallying back to the $30 level.

While silver is known as the poor man’s gold it has numerous industrial uses explaining its pullback on the uncertainty surrounding the global economy. 

The inability to break above the 50 day moving average led to a pullback and retest of the October lows. 

Technical indicators are oversold and we did have a successful retest of the $28 level.  The $30 level will provide the first level of resistance.

The first quarter is seasonally a very strong period for silver as well which means we should see a rally starting shortly ending the downtrend which has stifled silver’s advance since the beginning of May. 






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.




Downgrades Aplenty






Reality smacked the market in the face last week with Moody’s and Fitch throwing buckets of cold water on the rally.

Moody’s chose to downgrade Belgium by two notches with Fitch warning of potential downgrades in Italy, Spain, France, Belgium, and Ireland. 

In addition to the sovereign notice, Fitch downgraded the long-term ratings of Bank of America, Goldman Sachs, Deustche Bank, Credit Suisse, Barclays, Citicorp, and BNP Paribas. 

Commerzbank wants to transfer a number of bad assets (sovereign loans) to a bad bank owned by the German government.  This comes on the back of a Der Spiegel piece about the potential for a bailout of Commerzbank by the German government.

Credit Agricole SA may be the worst off even though they were not in the group.  Job cuts totaling 2,350 jobs have been announced to go along with no dividend in 2011 and an inability to confirm their 2014 goals.  The French bank will be writing down approximately $3.25 billion in investments when fourth quarter results get announced.

The downgrades and writedowns underscore a critical weakness emanating from Europe which has the potential to send the economy into another recession.

The most frightening part of the downgrades is not who was downgraded but the scope of the downgrades.  Bank of America, Citicorp, and Goldman from the US, Deustche Bank in Germany, Credit Suisse from Switzerland, Barclays in the UK, and BNP Paribas from France.  The affected banks rank among some of the largest in the world showing how interconnected the global banking system has become.

Unfortunately, we do not fully know the size and scope of the banks liabilities and what may happen if a major, interconnected bank may fail.  The true ticking time bombs do not lie on the balance sheets but rather nestled in off-balance sheet structures.

This should serve as a warning for those who may be thinking of allocating capital to financial stocks.  In strong economies ratings for large banks do not get downgraded. 

The same goes for the ratings of sovereign nations.  It is one thing for an isolated and irresponsible government to have their credit rating downgraded but when the whole of Europe is threatened one must sit up and take notice. 

As a sign that the governments have not realized the size or scope of the problem French politicians have decided to take aim at Britain instead of wondering why they are on the chopping block. 

When governments start pointing fingers instead of attempting to fix the problems it is a sign that things will only get worse before they get better.

To make matters worse the ISDA has declared that the Greek default will be a mandatory event therefore it does not qualify as a credit event meaning CDS payouts will not be triggered.  In the rush to stick it to the CDS market to prove that they were smarter the European governments pulled away a major safety net from the markets.

Get ready everyone; there is a rough ride ahead.







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.





European Bond Yields and Commentary, December 19, 2011







French and Spanish 10 year bond yields pulled back from elevated levels last week while Italian and Greek yields moved sideways. 

The inability to solve the debt crisis in Europe was cited by Moody’s and Fitch as reasons for their downgrades and warnings.  For two years now Europe has grappled with a debt crisis moving from Greece to Ireland to Portugal and back to Greece while dragging the banking sector down with them. 

Markets have been waiting since the summer for some sort of comprehensive solution to the problem with various trial balloons being tested but no final agreements.

With a significant amount of debt scheduled to come due next year the clock is ticking down.  Markets do not like uncertainty and the longer the debt crisis drags on the greater the uncertainty that the markets will come to an acceptable conclusion grows. 

Last week Fitch threw up their arms by saying that they do not believe that the Europeans will come to an acceptable outcome.

Time is drawing short and the markets are getting tired of hoping there will be an acceptable outcome.






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, December 16, 2011

Why the UK was Right




The world has been watching as the EU attempts to parcel together a solution for the problems facing the PIGS.  Unfortunately, the slow pace has caused business to grind to a halt in the EU as the delays hamper efforts for business to plan for the future. 

The weak banking sector and tight lending environment combines to restrict the flow of capital creating a negative economic spiral.

Industrial production in the Eurozone dropped by 0.1% in October somewhat stabilizing after a huge drop in September.  When combined with a third quarter GDP of just 0.2% it opens the door to speculation that the Eurozone has fallen into a recession. 

In Greece, negotiations continue on a debt restructuring to help alleviate economic pressure but the IMF is not convinced that the Greeks are moving along fast enough. 

By now we have all heard the stories about non-compliance with regard to taxes and the Greek government’s efforts to spur tax collection but spending and entitlement reforms remain elusive. 

The first nine months of 2012 will prove challenging for the Greeks as their debt refinancing schedules become more challenging.

Germany is beginning to show signs of cracking as the general-secretary of Angela Merkel’s pro-business partner, the FDP party,stepped down in a dispute over support for Merkel’s plan to bail out weak Eurozone members.

The problems do not stop there.  Germany’s second largest bank, Commerzbank, maybe on the verge of a bailout by the German government.  Weighed down by the sovereign bond exposure at Eurohypo, Germany may be forced to press the nationalization button or increase its stake, already at 25% from the first bailout.

With industrial production and economic growth slowing to a crawl as major banks and sovereign nations crumble one has to wonder if the EU will find the wherewithal to fix their internal problems.  No matter what happens, the UK is right to take a step back until their EU neighbors across the channel decide on a course of action.






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, December 15, 2011

Central Bank Purchases Of Gold Signal A Possible ETF Shortage


Central Bank Purchases Of Gold Signal A Possible ETF Shortage


According to a recent report by the World Gold Council, central bank purchases of gold soared in the third quarter to 148.4 metric tons, effectively putting a floor underneath prices.
To put this number into perspective, the 148.4 metric tons would convert to 5.234 million ounces of gold.






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.



Yamana Gold: A Miner That Stands Out


Yamana Gold: A Miner That Stands Out




2011 has proven to be a difficult year for gold miners. From production delays to weather playing havoc with construction plans to inflation and sovereign risk, gold mining stocks have had a difficult time gaining the attention of investors. Yamana Gold (AUY) stands out from the rest as they continue to deliver on guidance, mine openings, and exploration.








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.



Endeavour Silver: Focused On Growth


Endeavour Silver: Focused On Growth


Endeavour Silver (EXK) has spent the better part of 2011 executing growth plans and expanding their footprint from Mexico to Chile, a safe and secure mining jurisdiction in South America.






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.



Tech Industry Commentary, December 15, 2011 (Facebook, Google, and Intel)





Rumors of Facebook pushing back its IPO are nothing new.  The current climate in the equity markets is not hospitable for an IPO the size of Facebook.  Rumored revenues put a steep valuation on Facebook if it expects to garner an $80-100 billion dollar valuation.

While Facebook has a significant user base its efforts to monetize the base through search to date have been less than successful.  Aside from the feed problems (overreliance on game posts) search has been disappointing with Facebook groups and websites outside of Facebook difficult to find. 

Waiting another year until the equity markets turn higher and some work under the hood would be the best strategy for Facebook at the moment.



This news could not come at a worse time for Intel as they are struggling to gain a foothold in the smartphone and tablet space.  PC sales are showing little to no growth and the recent chip loss to Qualcomm in the iPhone 4S does not bode well for their future in the smartphone/tablet space.  Servers and PC’s will continue to be cash cows but they do not have the growth profiles of tablets or smartphones.


Google's Motorola Mobility takeover delayed




The European Commission has asked for additional information from Google regarding their takeover of Motorola Mobility. 

Google needs the patents of Motorola Mobility to help defend Android against lawsuits from Microsoft, Apple, and others.  The handset business is a nice bonus with Microsoft in bed with Nokia and Apple combining iOS and the iPhone. 

Google can tweak coming versions of Android with Motorola Mobility creating Google centric phones similar to HTC adding a Facebook button to their phone.

The delay should be nothing more than a minor irritation for Google.

**On December 26th the blog will be moving to a new domain, http://www.atruecontrarian.com so please update your bookmarks and feeds.  

The blog should point there but be prepared just in case.**

***I will be traveling the next two days so some posts may be delayed.  There might not be a technical analysis on Friday, it will depend on timing and some other factors.***




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.