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Big picture look at Silver - confluence!

HUI

Gold, Silver and the GSR

No chart, just two eyes

With the lower high on the HUI & XAU, one must consider the possibility that this thing is running out of steam and prepping for lower levels. The gold stocks seem to be drifting in the stock market's wake and I don't like where the stock market is headed... not one bit. So it's back to a modest core of holdings and lots-o-cash. Others braver than this blogger can play hero. While the HUI weekly chart does not look particularly bearish, it does define very strong support at our oft-mentioned 250-270.

Don't Say You Weren't Warned - Again

The analysis illustrates moral hazards developing in the bond market. It is a picture of a high risk environment and begs caution of investors.



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USD

If Uncle Buck fails at support noted, he may very well be headed for the wedge bottom and very long term and major support around 80. This dovetails well with the short term bullish scenario for gold, miners, commods and even possibly the pig as we still expect long term interest rates to moderate in the very short term before moving higher. We shall see. If Buck breaks up and out of the wedge it would be a good thing to have your contingencies in place.

My Frankenstein Monster... FTEK

Ascending triangle noted in this previous post with a target to "37-38". Check. I loved this stock @ 5 and even bought and traded it at 10. Being a hype averse sort I could not possibly have held FTEK after Cramer and Wall St. got a hold of it. The cleaner coal technology is potentially disruptive and the story is GREAT. But a company is a company and a stock is a stock and this stock is way over valued. Now, that never stopped Wall St. from pumping a good story before, but I took a high risk (high reward) position against my monster yesterday at the HOD. A position that is up 15% and could be down God knows what at the drop of a hat. This is my monster; a stock I sat in for months on end @ 5's, telling myself over and over "but the STORY... it's an undiscovered gem Gary. Just hold the POS, you'll be fine." Now it is a darling with pure bullish momo behind it. Please avoid taking a position in this stock unless you do your own research and conclude a position is warranted. This is personal ;-) and I thought it would be interesting for readers to see... either me blowing up (risking what I can afford to lose 100% of and not lose sleep) or getting paid once again by this very fine company.

For reference, I once owned ISRG way back in the single digits. It too is over valued. FTEK will likely stay over valued or one day become even more so. The above is a short term trade. Nothing more.

Edit (9:34) Trade closed out +89% for basically a 15 minute hold, but I am not a day trader ;-) Edit (9:50) Ah, downgrade from Roth Capital. Guess they saw it the way I did - over valued and over pumped. Edit (6/23 @ 6:49) BTW, now that it's over, the trade was the July 35 puts bought @ .85 and sold @ 1.60

Dow & 10 yr

10 yr / 2 yr yield ratio

And what of our friend the pig?

Oh for this opportunity: Long term rates continue their decline short term, Yen stays weak, Dollar heads for wedge bottom, bubble heads crank up their story for a final hurrah and Mr. Dow makes yet another ATH under bearish divergence. Then rates turn back up near targets we showed previously. And then there is this: Bloggers going bullish. These are smart and influential guys. Can the public be far behind? All of the above makes for the 'potential' of a seriously bearish summer.

A quick & mostly unappealing look at some popular gold stocks

CDE - Making a short term bottom?

It is psychologically difficult for me to do with my bearish bias on all markets, but maybe CDE is presenting a good short term trade here to around 4 bucks. The leash on this dog will be very short. As soon as I feel the miners' short term rally is over (I don't yet) or as soon as CDE poops by more than 3%, the trade is over. PS: Upon review, precious metal indices painting some crappy looking candles today. I am sure my friend Claude loves my apprehension. ;-)

Old friend FTEK 'splodes!

And being the bottom feeders we are, we watch from the sideline as our last position was in the 14's (off of 5's) last August. Today's news of a China agreement sounds way more like hype than substance for an already way over-valued stock. Shorts are doubtless covering here and this ascending triangle breakout projects up to around 37-38. Then you know what happens next, right?

OT - 'The Ron Paul Moment'

Why are we behind Ron Paul in 2008? Here is why...

Lone Star
Also included: Stupid Party

$TNX - Just because

Nominal Huey

Short term up trend established, so far so good. HUI chart marked up with some areas to watch.

HUI - Gold (GLD) Ratio

Digging up an old chart from March. The chart's premise is still valid; Huey-Gold is either Double topping or preparing for an eventual launch of epic proportions. So what's it gonna be boy? If that's a bullish ascending triangle, we could be stuck in it for many months yet before resolution. We believe big picture fundamentals are on gold & Huey's side, but it still says here that the coming few to several months could be volatile, or downright painful before secular trends reassert. With the Dollar this close to major support @ 80, rates either need to rise further or we're off to Bananaville. Also, Johnny Yen is about burnt to a crisp by now. Manage risk.

Stealth rally in crude oil -- New INO movie

Even as daily, weekly & monthly charts turn bullish, not much attention is being paid to crude. This market, along with rising long term interest rates has the potential to do damage to world stock markets. See Adam's analysis in this free trading movie.

USD, Gold & Bond Yields

Biiwii.com
Biiwii.blogspot.com
click to expand chart

A common question of late is "Why, with a rising yield curve and rising long term interest rates - which usually go hand in hand with inflation fears - is gold relatively weak compared to stocks and some commodities?" I believe that secular changes occurred in 2001 (bull market in gold, a bear market in USD, a bear market in bonds and a bear market in stocks when measured in gold as opposed to funny munny) but over the last year we have witnessed a challenge to that idea; a challenge that comes in the form of various assets and markets outperforming the yellow metal. To that I say all things must have their day and I have little doubt that the day will soon return when this adjustment in the fabric of reality has run its course.

But in the meantime, we look for answers as to why gold is not responding as it did in 2001 when short term interest rates tanked vs. long rates and savers were punished mercilessly in favor of asset owners and casino patrons of all stripes. There are many valid theories out there. Can it be any other way in a global market arena with so many moving parts and so many apparent contradictions? I will not draw a conclusion here. I simply want to show a chart of the USD and its relationship to the yield curve and gold.

As in 1995, the current as yet modest upturn in the 10yr/3mo. yield curve is accompanied by weakness in gold which is far different from the secular upturn that occurred in 2001. A common denominator is a desperately weak USD whereas 2001 featured a secular change from the 'strong Dollar policy' illusion. With 10 year rates currently looking as if they will follow 30 year rates into a secular upturn (after current consolidation from 'over bought' plays out) I believe the big picture could not be more bullish for gold. But in the short run, there is the precarious situation of the Dollar, still residing just above mega support. Gold sees this and continues to consolidate its secular gains of the 21st century.

This picture argues for continued caution as the process plays out. The Dollar will not be summarily executed for all to see. At the least this will be a grinding and painful period as gold aligns for the next leg in its secular bull market. I believe the chances are strong that the Dollar will only be devalued from a higher level than it resides at today. It has likely either bottomed or will do so after a final decline to major support as interest rates moderate (read: consolidate in the short term). But to investors in true secular trends, the process is all noise. The advice remains the same; manage short term risk, keep an eye on the biggest of pictures and consider that in the markets all things happen as they 'should' in due time.

Separately, I would like to announce a new service. Biiwii.com's ta On Demand will soon be available for investors and traders. More information to follow.

COT Gold Report - June 15, 2007

Gold Cot Report - Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 125,076 49,180 111,179 133,800 231,805 370,055 392,164 Change from Prior Reporting Period -17,976 13,745 19,358 27,732 -10,659 29,114 22,444 Traders 124 60 52 36 36 191 122 Small Speculators ...



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Dow - Gold ratio revisited

Yen

Despite our public humiliation - just kidding, being wrong comes w/ the territory - and capitulation, the Yen remains front and center. Over sold to an extreme with bullish divergence intact. One of these days this thing is going to turn and burn and in so doing, blow up a lot of complacent speculators.

Chart study - Zoll Medical

Pain for this defibrillator company for the entirety of 2007. Bullish divergence w/ gaps being filled. Uncertainty revolving around biggest competitor Medtronic's competing product and you know how markets take to uncertainty. The bottom feeder in me thinks it's been pretty well factored in by now. This is not a reco, this is simply a chart study.

$TNX

Nice Forex lesson from INO

I could have used this before my ill-fated Yen trade. See our INO.com page or click here for a 17 minute movie.

Monopo or Resorso?

The article draws a correlation between frustrations over immigration reform and the economics of a would-be north American trading block.



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USD

Yen :-(

Edit (3:55) Etf from the land of the sinking currency ejected. 1.7% loss booked and global bond fund that has fallen to premium neutral and holds Yen along with other Asian currencies added. At least if this declines further we'll get the monthly dividend. The Yen could explode tomorrow but we were wrong wrong wrong on it.

This from a reader who has been a bearish thorn in my side ;-)

Hello Gary,

I'm sending my Gold barometer update with data tentatively

projected to the end of the year. As you can see the barometer

has improved considerably in the past month and should improve

more rapidly after August. According to my metrics, Gold should conclude the current decline in a few days and start a run up to last year high. The trigger

could be this Friday's release of the CPI.

Gold bugs like XXXXX XXXXX have turned bearish on Gold this week,

a great signal for contrarians like me. Last time XXXXX turned bearish,

Gold went up $70, and when he turned super-bearish on the Dow early this year at the 12,000 bottom, that index went up 1700 points!. Have a good day. Claude

$TNX w/ $USD correlation

Daily views of Gold & Silver

Edit (2:02) The parade of prominent and respected analysts going bearish on gold is getting more populated. It is a veritable corps of trumpeters, drummers & baton twirlers marching forward all the way to POG $510/oz. The notoriously schizoid precious metals market is going to give us an opportunity. The question is will it be now @ 640 or later at some disgustingly lower number? Not knowing the answer in advance, we hold the core in full until/unless we lose some near term supports like HUI 320 & Gold 640. I like the reversal today and I like the pomp & circumstance surrounding bond yields right at major resistance.

Back to the future

Due to the instigation of a friend who is a market professional, I have got that "to do a newsletter or not to do a newsletter" issue banging around in my head again. There is lots I'd make clear about what the service will or will not be - basically what happens here and at the Biiwii Letter, only amplified with more consistent detail - but for now this is just a feeler. I have not finalized a subscription rate, but if we move forward, it would be something reasonable. Edit (7:51) So far the % is around where I expected; 30% positive vs. 70% freebie looks about right. But... a reader made a great alternative suggestion that I am going to mull over. So, consider the newsletter idea - which I publicly agonize over :-) about once a year - kaput once again ( for the moment at least while I look into this other idea). The reason I agonize over it is that I can think of plenty of reasons not to do it while at the same time I don't feel I should put in the work I want to put in for free. Anyway, thank you to those who've responded, especially you 30%! --end edit.
A poll (please continue to vote if you don't mind):

$TYX - 30 year rates

OT - Big Game Hunting w/ INO.com

For those following it or interested, check here for INO's results in the futures markets:
http://www.biiwii.com/ino.htm

30 min. Dow & Huey

Edit (6/11 @ 3:49) Dow fibbed 50% today and HUI got up to the 38% fib.

Not for nothin' but...

I have for the most part quit focusing on my holdings here as it is up to the reader to take in ideas from many sources and then make his or her decisions. But given precarious markets of the moment, here is a quick snapshot of what is considered here as a "cautious" stance for the managed portfolios:

Cash (money market & reserve) 46%
SHY (s/t US Treasury bond fund) 11% -- added some today
RYSBX (leveraged strong dollar fund) 5% -- taking profits, likely today
FXY (Yen etf) 11% -- added some today
Gold miners (core) 17% -- add when appropriate (we keep in mind 250-270 potential on HUI)
Oil & Gas trusts (for dividends) 6%
Japan stock market (EWJ etf) 4%

Notice USD cash vehicles are currently 62% and Yen cash adds another 11%. I have given back some gains off the highs but will absolutely NOT give back most of the gains of '07. Each week brings more twittling and tweaking as events dictate but this game is about survival and being ready to capitalize. Patience is needed along with allocation you can sleep with. I can sleep with the above.

Now back to our regularly scheduled TA Blog.

Edit (2:10) RYSBX being closed out. Added to a couple miners on sale. Ya never picks da bottom, but ya buyz when dey's sellin' cheap.

USD

TNX monthly & daily charts

This is the exact condition upon which I am a gold & gold miner bull; Long rates in a bull market (bonds in a bear) and pressure on the Fed to cut the discount rate. Well, gold miners have spent more time running with the global growth bull than against it over the last few years so it follows that many holders are in gold stocks for the "wrong" reasons. So fundamentally we stick to our discipline and hold the core while curling up in a ball, sucking thumb and hoping (awful, awful word in investing/trading) for the best as global gyrations play out. This is why it is repeated often here... "cash is a position and risk management is job 1". Here is the bond market situation viewed through 10 year treasury yields on a monthly & daily basis.

GLD

Obviously GLD never penetrated even the first obstacle per previous post from May 31. Stance is now very cautious... stated the master of the obvious. ;-)

Gold-Oil & Gold-Industrial Metals

This blog is about trading and following stocks and markets. Therefore we focus on gold STOCKS vs. the metal. In other words, the format assumes the reader is a trader and has already attended to putting his or her house in order by addressing debt, physical metals and asset allocation. Gold stocks are NOT gold, but they sure are fun to follow and trade. There are times to be all in gold stocks and there are times to be weary. A lot depends on how the gold miners' product is doing vs. the gold miners' cost inputs, such as oil and also whether the global economy is in a strong growth mode as evidenced by strong industrial metals such as copper, nickel, etc. That is why we follow charts like Gold-Oil and Gold-GYX. Both remain bullish for relative gold to a bottom feeder like me. Therefore I must remain bullish on gold miners' profit growth prospects going forward.

The following charts present a picture of gold having bottomed - a potential inverted head & shoulders vs. oil and double bottom vs. GYX - but that is the best we can say at this point. If these patterns remain valid and gold makes a strong relative move up vs. oil and GYX, you will know that gold producers are receiving a positive jolt to their bottom lines and we can expect that famous leverage to the price of gold to kick in once again. But first things first, let's watch and see how the bottoming process plays out.

Click chart to expand



Note previous post showing HUI support in the 330 to 333 range. This area was hit yesterday. I considered it a buying opportunity and added a bit to favorite positions. If that support zone is lost however, it is right back to a very cautious stance.

http://www.biiwii.com
http://www.biiwii.blogspot.com

Disclosure: Long miners such as MRB, GRS, MFN, GFI, GG, CPY.v & CGK.v. Long Yen via FXY. Long USD via RYSBX, SHY & plenty of cash. Also long PVX & PWI in the energy patch.

TNX

Bond herd

For old time's sake... Bond herd getting that glassy look in their eyes again. Disorientation soon to follow and finally, shearing. We no longer hate bonds as much as a few months ago, but are in no hurry to buy either. Maybe a few treasuries as portfolio diversifiers (and income) after most sheep have jumped out of the trees somewhere over 5% on the 10 year?

FRUS

Per previous post down the page a bit, FRUS aka NSU was filled @ 2.23 on a pullback to test the break out. Now, this is by no means a recommendation of any kind because a) I don't do that and b) as mentioned, this stock has risk built in in spades. A good chart case study though. It will be kept on a short leash to limit loss. Edit (6/7 @ 12:43) Short leash yanked and trade closed out for a manageable loss of 3% as it was just that, a trade. Not a core holding.

Yen

It's critical to get political! (OT)

My virtual friend Steve Dore is rockin' out on this mp3 (compliments of Michael Nystrom's DailyPaul.com) called It's Critical to Get Political. Steve's MySpace is here. These guys are tirelessly working for the promotion of a presidential candidate who actually believes in the US Constitution and has the record to prove it. Next to Dr. Paul, the major would-be's like Mitt, Rudy & John sound like cartoons, at least to these ears. BTW, Biiwii.com's political/Paul page is here. Have a nice weekend.

FRUS

I have been trying to buy this thing all morning to no avail. This is what nickel diming will sometimes get you. But having a core of miners (plus some added successfully yesterday) in tow tends to increase one's patience. It may be counter-intuitive to post what is believed to be a bullish chart on a very public blog while trying to establish a position, but here it is anyway. BTW, NSU is not one for the faint of heart as it comes with political risk (Eritrea) free of charge.

SLV & GLD

Well, you mess with the silver bull you get the horns I guess. Gold along for the ride as well.

HUI

2 new INO Movies

For anyone interested, 2 new movies have been posted here: http://www.biiwii.com/ino.htm
These MarketClub movies are sometimes quite educational in their own right regardless of whether or not people join MC.

$666 and Rising

In light of yesterday's (5/31/07) strong rally, Adrian Ash discusses the merits of gold versus global currencies that are in a "competition" toward devaluation/debasement. In his usual clear, concise manner he connects the dots as to how this relates to a slowing economy, systemic inflation and Fed policy.



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