Friday, July 31, 2009
I had bought this months ago on the speculative say-so of my friend Otto. It was so speculative I had not even mentioned it in my newsletter. Last week Otto came out with analysis in his IKN Weekly making the case as to why this little feller is now less speculative. I was planning to mention it (and perhaps chart a pullback buy level) as a holding in tomorrow's NFTRH and then BANG... bottle rocket. Sold. But I want to publicly thank Mr. Rock because without him, this long and wonderful swing trade would never have happened.
Huey has certainly held the lower support level has he not? Now, we did not only depend on a 60 minute chart, the weekly provided the stronger support platform with a moving average I have been watching for many weeks now. It kept NFTRH strong as was appropriate during this week's corrective activity. Now, what comes next? Plenty more tools and measurements to try to gain a leg up on that.
Well, not really. I actually feel like putting out some perspective in service to the idea that patience and an ongoing and revisable game plan work best in trying to make sense of and navigate the markets. That and the idea that the markets ultimately move in beautiful rhythms with the best part being that these rhythms are designed to fool the maximum amount of people to the benefit of the relative few who can keep perspective. It's just the way it is.
NFTRH has been providing a road map every step of the way. The current plan has been in effect since the bottom pattern was established in the spring with an interruption to scope out what could have been a very bullish scenario off of a decline from the recent minor H&S. Not to be. The market has chosen the LESS bullish intermediate scenario and we are back to original targets.
It is a great thing to receive comments that I am wrong from a deflationist on SeekingAlpha after I post something bullish on oil when it is near its lows and forming a beautiful bottom pattern. It is a doubly great thing to be taken to school (using professorial economic language I could barely understand) by a bull who fancies himself a contrarian, at this advanced stage of the rally.
All I know is that NFTRH's original minimum, and favored rally target has still not been reached, although it is very close. The progression illustrated in this messy chart has helped tune out the noise every step of the way and aided in the effort to remain patient.
Thursday, July 30, 2009
I especially find the need for calm in the face of the Seattle Times indicator while the dollar - being micromanaged lower by the entire world that would seek to feel good about its demise - remains above the support level I have seen as critical.
It is actually a good time for me. I am saving money and stress by not trading much and thus not churning commissions. Meanwhile, the inverted H&S that was dreamed up on the weekly gold chart has yet to either express itself or be proved a sucker's play. But its promoters have quieted down, which is not bearish.
Anyway, here is a busy monthly chart showing mixed signals but overall an asset - the asset really in a world where almost everything is someone else's liability - that is going to make a lot of people happy one day. They will be doubly happy because they will have survived some terrible actions along the way, all the while standing firm in their beliefs about what is and what is not money. It is the players and sheep, with no core understanding that it is important to get contrary to the still ongoing racket we call a modern financial system, that will be victimized. The goldbugs will be right one day. They are right now. But many also tend to be strident and angry, and the goal is to get where we are going without embedded anger and long term mental injuries like post-traumatic stress.
Goldbugs use the word 'sheeple' a lot. Don't be a sheeple. Realize that coordinated government actions have solved nothing. Sure, it is possible they can engineer a cyclical bull market that the mainstream financial media can celebrate, but they have fixed nothing, only done more of what has been causing and growing the problem for decades. Except each time the policy is put on stronger and stronger steroids. Anybody see the movie The Wrestler? That poor Randy the Ram kept bulling his way forward until... well, I don't want to give it away for anyone who plans to see it. But our financial system is doing what the Ram did, only in much less lovable fashion.
Okay, I simply wanted to update the big picture chart of gold and what ends up happening? Out comes the tin foil hat and stream of consciousness ensues.
Wednesday, July 29, 2009
This should scare the hell out of the silver and gold bugs. But really, the momentum in the sector is driven by people who really believe the system is going to fall apart in an inflationary explosion any minute now. Problem is that minute has stretched out to 30 years and counting. Most of 'em love to see this kind of hysteria. But it never seems to work out.
It is a sad reality that gold is going to probably make its mega move when many of its currently most ardent promoters are in a defensive mode, scared of deflation and the famous (at this blog anyway) 'most frightening gold chart in the world' makes its reappearance.
This image is of a full page ad in the Seattle Times sent to me by subscriber Peter B, an economist and smart guy on the lookout for contrary indicators. I'd say this fits the bill.
Why does this kind of thing always come about as the dollar noise is at its loudest and risk of reversal at its highest?
Secondly, as you know, I maintain a subscription to stockcharts.com to gain full access to their capabilities (as opposed to cheaping out with their still very worthwhile free tools) as well as one to Decisionpoint.com, which compiles lots of charts and data on sentiment that I find useful. I remain on the lookout for select services that can help me provide the top notch service that is NFTRH's imperative, although I need to guard against information overload as well.
But as a SeekingAlpha contributor I was offered a free 1 year premium subscription to Zach's Investment Research per the blurb below. Now, being a non-mainstream guy I am not sure how this will play out or if there will be any benefit/effect on NFTRH. But as they say, it can't hurt.
According to SeekingAlpha:
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Accounts are good for one year and will be automatically renewed at no charge for active SA contributors.
Tuesday, July 28, 2009
Well, that is all well and good. But any chart geek taking a look at this - at least any bottom feeder chart geek - is going to get pretty excited over the weekly structure of LEN, which is the first and only chart I pulled up on the sector. This bottom formation looks a lot like the one I followed to ultimate upside expression in NFTRH on my favorite gold mining exploration company, FRG. Yeh, totally different sectors but same charts.
NFTRH will have to think about following this sector and looking at other home builders, along with other interesting sectors as we work our way through the low volume summer dream to decision time - real or Memorex? You know, charts like this tell me 'hey, it could be real'. Stay tuned. Of course the caveat is that the weekly candle still has 4 more sessions to go for a breakout close.
Monday, July 27, 2009
NFTRH43 in the can by noon, it was then time to grab my stuff and get to this party where our band, Dogfist (hey, I didn't name it) made its debut. The wildman on the mic at the right in photo 1 was the host of the party and took a vocal turn on the Animals' We Gotta Get Out of This Place. Fun had by all.
Aside from everything else going on in the markets and in life, we had to cram arrangements to 11 cover songs along with our 7 (and counting) originals to cobble together a set list for this gig.
It was a blast. I think we rock. I also think we need to keep practicing! :-)
Every day there are traders attempting to micromanage a top along with those attempting to ride the momentum higher. A process like this can take an agonizingly long time to play out with every dip in the market bringing a hoped for top by the bears. Upside targets still remain open. That tunes down the noise for now. Patience.
You've seen the movie Groundhog Day, with events repeating over and over in a maddeningly similar pattern? Our policy makers have been schooled in a system that has proved itself to be unsound or worse, disastrous and yet in their densely myopic fashion, these bureaucratic stooges move forward pumping the same old policy as heroin into the [debt] junkie as the first and most privileged abusers, the big banks, laugh all the way to the... bank. That would be our children's piggy banks. We have eaten their future, and it is criminal.
Making matters worse, this is cultural. It is not the fault of Republicans or Democrats. To be sure, their respective policies have corroded the moral underpinnings of a great country that in turn has led much of the rest of the connected world right into the abyss of moral hazard. I read a statement somewhere recently to the effect that as long as the average American has a color TV, they won't make any trouble. The average American has been bred - like cattle - to remain docile and accepting of fate. It took Republicans, Democrats and the average American to get this done; to get us to a stage of moral hazard whereby the only perceived solution is to administer more of the poison that keeps killing us. Well, it takes those three groups in concert with the guidance of the troubadours on Wall Street and financial television.
The preceding paragraphs sound a lot like the articles I used to write in 2004-2007 before Biiwii.com went commercial with its newsletter. NFTRH must tone down its indignation over the inequity and ultimate tragedy of what the macro crooks are doing and remain focused on its theme of getting the intermediate swings right; of surviving and thriving in the wake of wrong headed and immoral policy. The most macro theme is of course that deflation is merely a lever. It is a lever that gets pulled again and again (until the handle breaks off) in service to inflationary policy. The key is in understanding that money is created out of thin air by various methods of mad genius, comes from no productive origins, and flows toward things of real value. But there are a lot of traps along this progression.
Currently, we are dealing with the aftermath of the mother of all deflation scares and are riding hope in what I believe is the 'false dawn', with certain leading indicators improving and policy makers looking more and more in control.
I clearly remember when, in 2003, I had to swallow my gall and admit that the cyclical bear was over. That is where the 'is what it is' theme for the website came from. It couldn't be a bull market, could it? But look at the economy, look at the war on terrorism and its sub-themees of smallpox, nuclear instability, invasion, etc.
No! Look at the little bespectacled man behind the curtain, pulling policy levers like crazy, look at the cozy macro-vendor financing relationship the US and China have cooked up and most importantly, look at the charts! It is a source of satisfaction for me that despite my views that the bull from 2003 was the result of cooked macro books, I was able to outperform the broad market bulls year in, year out, by more than 100% during the cyclical bull market.
Well, there were signals in the charts and they first said 'stop being bearish' and then eventually said, 'yes Gary, the policy is perverted and immoral... keep your financial ethics and beliefs but get the hell out of way, and get LONG or at least trade long'.
Today the S&P 500 is thus far just obediently following our game plan, with a minor hitch along the way that seemingly negated NFTRH's most bullish potential outcome as it failed to decline toward 800 recently in what would have been a potentially solid right side shoulder to a major inverted head & shoulders formation. That thing we have now is not well formed, and it does not pack the power (of negative sentiment) that the pain of an interim, fear stoked decline to 800 would have.
No, this market has places to go and people to see. It is bolstered by more and more analysts turning less cautious to all out bullish. The public should soon follow with the upward thrusting price restoring their confidence. Now again, the dream machine may once again kick in as we suspend financial reality one more time, and if the signals are given, I will have to adjust. NFTRH made its explosive gains in the gold mining stocks off of the historic opportunity presented in October and November of last year. They say you really only need one great trade a year. For me, that was it. Now I trade in patience, and let events play out.
Everybody is taking note of the mighty S&P rally and there is a lot of micromanaging going on about it. All I can tell you is that NFTRH's minimum upside target has not yet been reached, and I am currently a bear due to the untenable risk/reward ratio this market presents. Get that? A bear whose upside targets have not been reached. A bear who was more bullish than many of the newly brave months ago.
So yes, there could be a bull signal up ahead and a corresponding adjustment in my market view. But as was shown in NFTRH43 this week, there is a big picture signal for the S&P that must be triggered for me to even think of abandoning the stance that holds that this is nothing but a suck-in of the (not so) innocents. The signal would be very similar to what happened in 2003 when it was time to deal in market reality. Right now, those declaring 'new bull market' now that it appears safe to do so are kidding themselves.
In short, Hope '09 is doing its job. If however this becomes a legitimate illegitimate (think about it) bull market, it will feel like Groundhog Day in a different way, hearkening back to the early months of 2003.
Sunday, July 26, 2009
Mr. Saxena is now full bullish and talking of a 2-3 year cyclical bull market in stocks already being underway, while advocating investors tune out the bearish 'noise'. He has Asia in a secular bull and commodities headed for a bubble. Now, he could be right but all I can tell you is this: The patient plan NFTRH is operating to has not yet seen even our most modest upside targets hit and the plan always did include formerly bearish or cautious analysts turning bullish.
NFTRH43 uses a monthly chart to tune out the noise and set a very clear parameter as to when we will become bullish. There is a lot of other information packed into #43 as well, including a look at some of the most important 'signposts' or technamentals as I call them, that help to... Beuller? Yes Beuller... tune out the noise. Correct.
Friday, July 24, 2009
I will consider this dood a soul brother because well, he is a chart geek after all and he understands what the crooks are up to. There is a reason I call the stock market a ship of fools, and right now dat boat be loadin' up.
"ICBC, one of China's four biggest commercial banks, has set a ceiling for the bank's annual new lending, a sign that the end of runaway credit is in sight."
Please trading godz, let my favored China ETF take just one more pump up to target against this bearish fundamental signal... please. Oh and while you're at it, let's get one final dump in its inverse ETF.
Edit (11:57) I just noticed that the gentleman in the picture looks kind of like a cow at a feeding trough. Sort of how the plucky American consumer of yesteryear used to look. Just grazing and grazing without a care in the world. 'Mmmm, credit good.'
Response from Mark (they say never to miss a promo opportunity):
Not only do you run a very informative, insightful market analysis news letter, but you also remind me to pay my domain name registration bills (my mail server is in my basement)! What more could anyone ask for? Keep up the great work.
Thanks for the heads up on Friday.
Thursday, July 23, 2009
I think it is funny that I pissed off some bears when I said 'oil, copper and stock market higher' months ago and now there are bulls taking me to school (in one case using terminology my simple brain can barely even understand, let alone process) about why bears like me are missing the boat.
I guess some people can't understand the concept of risk and capital preservation. But then again, they were not there making profits (to preserve) when it was appropriate to be bullish. That said, it appears our pig has designs on higher levels to finish the suck in. At least if 1929/30 is any guide. And with the FDR style policies now in effect, I think it is. I just have no need personally to chase this dream. I'll hold what I hold and preserve what I preserve. But that's just me...
Now that you are relaxed and reassured let your mind drift to Goldman Sachs and the mega banks. This will really calm your soul in the knowledge that Mr. Paulson really did know what was right to you. Maybe Matt Taibbi is over reacting. Goldman is prepping some pretty big bonuses and I have no doubt there will be a few toasts in your honor in the Hamptons this holiday season. You will not be forgotten! In fact, if you survive the ensuing depression rest easy in the idea that something will eventually trickle down. If you don't believe that will happen, go join a union now and get a piece of that action.
So, over here we have the big banks bailed out, churning profit and cheering bonus season. Over there we have huge sums of money earmarked to the unions and in a third direction (we'll just have to call this the Devil's Triangle -- I think a new biiwii-ism just got created) we have an ever growing government. Or does that come under the heading of unions, or do unions come under government? Whatever, we'll call it a Dev-Tri and realize that the special interest group known as free people are stuck in the middle of it.
This theme to be continued as the rich pageant life in of post-crash America moves onward.
Wednesday, July 22, 2009
To be clear, the possible opportunity (for buying) is to the downside targets (after any coming highs) noted in the update and is theoretical, based on the scenario I consider fairly likely for the broad markets. But first, the near term upside target is in play if we break the daily resistance level, again noted in the update.
Blog readers: Understand that the subscribers need to come first. While I believe this will always be a blog that will be helpful and relevant to important macro-market events, their needs must come first, for obvious reasons. The blog will be used on occasion as a sort of bulletin board for their needs. Also understand that, while I am geek enough to want to cover everything here for everybody, I must withhold a significant amount of information, especially in the gold sector forecasting area, which is my primary personal investment focus. Hope you understand.
Monthly signals however, can be slow in coming. I just thought this chart was interesting.
Tuesday, July 21, 2009
I have just had a few days of intensive feedback from current NFTRH subscribers after soliciting same in NFTRH42 and in an email update this morning. While I have to say the nature of the input was very pleasing to me, there were a few issues. Most of the issues center around the following areas.
Statements in [ ] represent my effort to distill the varied comments:
- [I like your letter and am trying to learn, but can you please write more clearly?] The way I write can be difficult to understand for some people as it can be fairly technical. Now, the pros and TA geeks tend not to want me to change at all. But there are lots of people who do not fall into those categories and they should be spoken to as well. I agree, but NFTRH also must remain what it is in essence. I will make every effort to make my writing accessible (the blog is representative of my style although the letter tones down some of the silly stuff), but this is a serious letter and there is terminology in play. If you subscribe, do not ever hesitate to contact me for any clarifications you may need.
- [I would like more frequent email updates] There is also the issue of what to provide in email updates during the week, and what their frequency should be. Email updates will come out before or after market hours as events dictate. I feel strongly that the service not get into the areas of buy and sell signals on a daily basis because if I am doing my job (and managing my own portfolios) correctly, this would not be needed, and I will not subject subscribers to daily whipsaws. That said, every effort will be made to keep a finger on the pulse of the macro markets, which is NFTRH's charter.
- [Your stock picks suck!] :-) This is not a stock pick letter. I manage my own portfolios and illustrate each week what I am doing and why. Individual equities are shown as is the all important cash level, which is a reflection of my 'risk management' stance at any given time. But I by no means tell subscribers what to buy. If NFTRH is getting the macro right, chances are we are all going to make money with sound 'stock picks', wherever we may find them. Please do not expect me to be your stock picker or stock signal giver! I can think of nothing less desirable to be. NFTRH currently holds several highly successful positions and has done its fair share of trading/profit taking. I also trade sometimes on a whim and because I enjoy it. There have of course been losers. It happens. I am a trader after all, as is any good portfolio manager. But I do not tout stocks. I amplify what I believe to be the best macro signposts in order to put us in a position to select the right stocks in the right sectors. In short, I show my stock holdings because people originally asked for portfolios. But I reserve the right to trade as frequently or infrequently as I wish without feeling the need to update these moves as they happen (you'll see them updated each week in the letter and in interim email updates as applicable). These are my real funds and I cannot upset the delicate zen of my trading style :-) by feeling the need to explain every micro move. I am not flexible on this.
I am asking subscribers to have a level of sophistication and to understand this is something different. If you want a stock picker or a trading guide, this is not the letter for you. If you want sincere communication from a market watcher who doesn't b/s himself, you might wish to check it out. But please consider the above before subscribing.
Now for the positive. The vast majority of subscribers who noted the above points also say they value the letter for what they do get out of it. Along with the critiques, there were many other satisfied subscribers along the lines of this gentleman. It is no coincidence that he understands the concept of personal responsibility.
'MR' here, one of your Canadian subscribers! In short your letter is just great and provides the best market insight I have seen in many years of trying to make sense of the markets. I recall last year being on holiday and totally consumed in what the market was doing to my portfolio and future... Then I found you and you have given me the ability to make money with peace of mind. I remember you wrote something (and it changed my financial attitude) to the effect that there is a financial war out there and it is up to each of us to take ownership of our finances - more or less and you probably said it much better.
Thank you to everybody who responded and helped NFTRH's quality control department. I will continue to tweak and improve and make NFTRH a letter worthy of you.
Edit (7/22 @ 8:50) Below is the comment to subscribers included in an email update, summarizing the above. Prospective subscribers please review:
"M3 and TMS usually trend in the same direction, but on those occasions when they diverge in a big way -- as they did during 2006-2008 and also during the early 1990s -- we can safely assume that TMS is providing the more correct information about what's happening on the monetary inflation front. The reason is that M3 contains Money Market Funds (MMFs) and Time Deposits (TDs), neither of which are money*.
We are re-visiting this issue now because another big divergence between M3 and TMS is currently brewing, but whereas last year's divergence encompassed rapid M3 growth in parallel with slow TMS growth the latest divergence encompasses the opposite."
Key word: Scare. Now of course, first we will need to work our way through the summer party and some of the targets that have been dialed in (by NFTRH at least) since April or so. Yes, I have had to abandon the bullish view of a short term decline to a major inverted head & shoulders on the SPX (and its ultimate target above 1200) in favor of something more dangerous, a bull party summer blow off.
But there is a good chance that people taking the market higher now care not a whit about M3, TMS or anything other than a good play in which to offload the latest trade. I notice an increasing volume of come-lately contrarians out there now, bullish now that the market has given them permission to take such a daring stance, nearly 300 SPX points higher than when it was appropriate.
The world keeps turning, herds become compelled to look that way (M3) when they should be looking this way (TMS) and the few will profit from this through clarity and patience. It's the way markets work.
Separately, Saville also states the following about Japan's 'bridges to nowhere' policies that the US is now following. As I have been saying, massive spending into non-productive ends will only prolong the problems. Sad but true. Beyond Japan, take a look at our own sad history of the 1930's.
"Rather than attempting to 'solve' its problems by promoting rapid monetary inflation, Japan's Government has relentlessly tried to generate sustainable growth via massive debt-financed spending on public works. This strategy has drained much-needed capital from the private sector and consumed it in non-productive ways, such as in the building of bridges to nowhere. As a consequence, what would probably have been a severe 2-3 year contraction has been transformed into a seemingly endless slump that is now into its 19th year."
Monday, July 20, 2009
SPX 1200 may now be overly optimistic, now that greed has won the day short term and invalidated the inverted H&S. But this is a bear market and when the day comes that the public cannot take it anymore, and jumps back in while the media are on full recovery tout, just be cautious is all I'm saying. It's noisy out there. Oh, and do yourselves a favor and watch the gold-silver ratio. Da mahkits is dancin' to a beat.
It is advisable to tune out hyperbole (bullish and bearish), look at convention with distrust (and really, has conventional thought not been the undoing of the vast herds of followers, including most financial professionals?) and to have your own plan, subject to ongoing revision through rational thought. At this point, my personal plan holds that a bear market rally is beginning as the markets grind out a bottom. The rough target for the S&P500 is in the 1200 area. The plan holds that the gold miners have begun a new bull market; one that may eventually make heads spin. But be aware, the plan also holds a contingency that if our broad market ‘next leg down’ is as severe as I suspect it could be, some serious profit taking may come into play in the gold miners as well. After the recent panic, we know all too well what can happen in emotionally charged markets despite fundamentals. Markets are now functioning ‘normally’ and the major media, always a day late and a dollar short, continue to beat the dead economic horse. The new US administration will continue a rich history of inflationary policy that has been the product of the most myopic academic minds on the planet; a Keynesian nirvana, which is actually the worst nightmare of honest economists, the likes of whom come from the Austrian school of von Mises and Rothbard.
Still, one thing I do note is that the double inverse etf's have not resumed their tendencies toward disproportionate declines vs. their happy long counterparts. Something to keep an eye on.
"Smaller job losses, rising stock prices and stabilization in homebuilding and manufacturing are evidence that government efforts to stem the financial crisis and lower borrowing costs may pay off." says Bloomberg (full article).
Still, it cannot be argued that some tepid improvement has been registered. Now, I was not originally sure if the recovery in sentiment would coincide with actual improvement in economic fundamentals when I coined 'Hope 09', but now we know that to some degree, the vast inflation panicked into the system, force fed by crooked (or maybe just stupid) policy makers to bail out corporate criminals, is having some short term effect, at least.
But let me ask you, what is going to happen if/when this two-pronged welfare program (golden parachutes for corporate criminals not named Bernie Madoff and vast infrastructure 'make work' aimed at the unions) falls flat of its own bloated, non-productive weight? Hmmm? What, more printing? More inflation? Is it that simple?
You know, many people have been managing the price of gold lately, but if these creeps are able to engineer a real end to the recession, gold is likely to under perform things like oil and the materials of infrastructure, not to mention other bubble areas in waiting like alternative energy. Oh, but let them fail and watch gold's assault on resistance and watch the gold mining sector's bottom lines gain in leaps and bounds.
The activity in interest rates recently tells us that policy makers no longer have full freedom and mandate to inflate against the dreaded deflationary beast (aka the lever of inflationary policy). If this mess starts rolling over into a new round of agony, they will be inflating and devaluing in the light of day the next time and the dollar will be front and center.
Oh but wait, maybe Mr. Bernanke can cook up a plan to manage that dynamic:
“Bernanke needs to explain that the Fed has the tools to do the job and that it intends to use them forcefully when it has to,” said Lyle Gramley, senior economic adviser with New York-based Soleil Securities Corp. and a former central bank governor. “That would help hold down inflation expectations and give the Fed the opportunity to stay easier for longer.”--Bloomberg (full article).
Maybe this is how they will do it... click the heels of their pretty ruby slippers and maybe they can have it both ways. This had better be a real recovery. But it is overwhelmingly likely that it is not. It is a false dawn. Beware of strangers (financial services industry that got it wrong last time) bearing gifts (little bon mots about the end of the 'recession').
Here is the 'tell' on this racket: With the improvement in corporate 'earnings' and the 'hope' for an economic recovery that is based in anything real, should not the dollar be benefiting as pressure is put on treasury yields to the upside? No, the story remains the same here in Biiwii land; we are attempting to pump life into the corpse of what was, a bloated, greedy system that will no longer function effectively or sensibly and the US dollar remains the barometer in this effort. 78 has long term significance. Let's watch the drama unfold.
Sunday, July 19, 2009
You see the inverted H&S out there along with Merv Burak and Gary Biiwii's negation of same. You see Gary's symmetrical triangle and/or ascending triangle which are bullish, but caution downside potential on the way to a very bullish outcome. One thing I will say is that the more times something pounds a resistance area, the more likely it is to give way. Adam shows the resistance line and as I said, does a good job of laying out parameters, especially on the weekly time frame, which happens to be the time frame I do not like the looks of.
Check it out. It's just a video. It won't bite. You don't have to buy or sign up for anything.
The previous post provides a hint at why I wanted to do this now that we are nearly 10 months in. The letter keeps improving in my opinion and in that of several of the subscribers who have responded to #42's request for feedback. But... not to sound too corporate here, quality and improvement are a continuous thing and one thing I will never do is sit back on my duff and think I have got it knocked and am on easy street.
The broad stock markets appear to be picking their direction by invalidating the minor H&S top in the SPX, and while there is still some debate about whether the bullish intermediate term is out the window, the short term certainly looks bullish. I am seeing a lot of analysis now swinging to longer term bullish but of course dear readers, that is what a good suck-in rally would want. People are going to be thinking about how in 2003 the sure thing bear market became anything but. A lot of work needs to be done going forward to remain on the right side of this, but the first step in clearing the picture was taken last week.
Commodities? Yup, oil and copper are looked at. Precious metals? Why, of course. A Wrap Up and Portfolio Notes finish out #42.
Friday, July 17, 2009
Yeh, he is crazy. Just like me. Just like all the crazies out there that nobody wanted to listen to when things appeared okay, conventional or dare I say, normal. We have come a long way indeed. One of the real crazies, Peter Schiff, is exploring a run against Chris Dodd for a Connecticut US Senate seat. A disciple of Austrian economics in the US Senate? Another (Dr. Paul) in Congress? What's this country coming to?! :-) I talked to Schiff on the phone once and I will tell you I got an ear full in just 2 minutes. That guy can TALK... and argue. The time is now for a new debate. But as often happens, I digress.
Here is the mail from Steve. I asked him if I could use it to promote my newsletter and he gave a big thumbs up. This is the kind of thing that makes me proud because this is a guy with integrity who is on his own journey toward truth. You know, the financial markets work better for you when you don't bullshit yourself. So yeh, the truth works and that is what NFTRH seeks to flesh out, week after week after week.
I had to give up Russell a while back and it's been very hard on the every day level. Fortunately there is relief in that you are on the scene, or that I have discovered the depth of your blog. I want more of it. I think you could do as well as Russell frankly. You really talk right to people like he does his previous generation.
The beginnings of NFTRH put you on a one of a kind ground. Russell may have had more attention in his early call that got him notoriety, but yours is coming. I see you replacing his daily service, 'cause that wise old bird won't be on it forever. The daily is what I need to shed these vestigal sheep brain cells! :-) I wonder if a daily would be more appealing than the weekly and make you in a league of your own. [I will consider it or at least consider increasing the volume of email updates although at this time I do not want to become a trading robot for subscribers]
There's probably others, but I don't know of them. You already have both! People have got to learn about you, that's all there is to it. How many subscribers has Russell? 10,000 or more? at $350 or so a year... No wonder he has a bought and paid for palace on the coast in So. CA.
Like hearing the good news on the band. There is nothing that feels as good. I play with great players here, truly world class, but there is no togetherness, no sense of common growth or whatever that magic thing is. Looks like you got it good. I am striving for that place again.
Thank you Steve.
Now, a sym-tri is... Beuller? A continuation pattern, right. A reverse sym-tri is a... REVERSAL pattern. Comes after a rise, the reversal is down. Comes after a decline, da opposite. Let's see how these babies develop.
- 60% probability that the market declines short term (to 800 +/-), scaring out a lot of chickens before forming the major right side shoulder of an interted H&S bottom with very bullish intermediate term implications. The plan was to be short selected areas to guard against bullish precious metals (mostly gold) positions, and then cover as SPX neared 800. Sounded like a plan but...
- There was the pesky 40% potential for the bulls to put their greed on full display, blow out the shorts and party on, led by Paulson's Plunderers (NYSE: PP). The inverted H&S scenario is now negated and this market is now in the realm of traders and pros who know what they are doing and can be nimble.
NFTRH goes back to its original targets for the S&P 500 and for Hope '09, but first there is strong resistance right here that the market needs to overcome. I believe it will eventually do so and that the summer will ultimately prove mostly bullish. With the impulsiveness of the bull fest this week, while a decline from immediate resistance is likely, eventual upside is implied.
This all brings back into play the potential for the classic Fall agony. Potential mind you... but if we had gotten a strong decline here and now into a right side shoulder, things would have looked really good through the end of the year.
Alas, it is not meant to be. It is what it is. We'll deal with it. On the plus side, as a newsletter writer, this week was great for me. Finally, directions are being chosen and mapped out. This is the official end of the summer doldrums, at least for me.
Thursday, July 16, 2009
Now we have a world full of players hopping aboard the sunny story. After the index failed to hit the 200 in May, NFTRH stated that perhaps it would do so at a lower level at a later date.
Bingo. This is one big asterisk out of the way in the path to the end of the rally and with it, hope in '09.
But does any of it really matter? I don't think so when you consider that the stock price of these Satanists is flying in the face of you (assuming you are not from the dark side) and anyone else not on the inside of the deal with the devil that sprung GS' rally.
Sure, we are going to bite our lip and make money by understanding what is happening here and in 1000 other gyrations going on in the financial markets, global economy and global fiat monetary system. We are going to bite our lip and make money and/or preserve capital. We are also going to have our minds as open as possible with regard to what is and is not money, what is and is not the basic essence of our society. In short, we are going to move forward given the cards they deal but on our own terms as long as we are free people.
But these cards, dealt by Hank Paulson, George Bush and now Mr. Obama, Timmy Geithner and Lyin' Larry Summers are being flung from the bottom of the deck. Since I began writing about this mess in 2004, I have had a tone about 'the people' being to blame as much as the actual mega wealthy evil-doers. That is because the public felt it more important to watch its new plasma TV with which to root on multi-millionaires (in my case the Pats, Red Sox and Rangers - hey, even overly sober bloggers need an escapist avenue too... no plasma TV however) or keep up with every mean but funny critique by the British guy on American Idol.
Biiwii.com has a page that auto-feeds content from LewRockwell.com and the DailyPaul.com and this morning I stopped in to check out the Daily Paul feed. One item was this audio of Glenn Beck interviewing Patrick Byrne and Ron Paul. Think what you will of Glenn Beck (I actually don't think much about him because I am not often tuned in with the major media) but what I have heard of his show has been more sober than the usual cartoons I flip through on CNN, MSNBC and FOX.
The theme is Goldman, the Fed, Wall Street's control of our government and the idea that we are headed for unimaginable inflation and perhaps a new currency down the road. Ron Paul soldiers on with his message and more and more people wake up every day.
What more do people need to wake up than the 'play' that has been put on them by the powerful entities that crashed their economy, lost their jobs or put them in peril, got them stuck in traffic every half mile (don't know about you but here in my state they are putting my tax dollars to work on every highway and an increasing number of side roads); the 'play' that sees Goldman Sachs, poster boy for the beneficiaries of Paulson's supposed panic, flying right in their faces?
What are we going to have, ever-strengthening financial behemoths and ever strengthening unions? Mmmm, now that's a society that sounds like a lot of fun. Thus ends another hybrid TA/stream of consciousness piece.
Have a good day.
Wednesday, July 15, 2009
What the market is celebrating is a global economy, led by the United States, willing to eat its seed corn to keep the illusion of growth and prosperity alive. In short, we are celebrating denial. The true measure of our celebration should be honestly defined as our ability to devalue the currency.
Tell me, with these great results and economic indicators, why is Uncle Buck not rising? Why?
Why? Because inflation is baked into this cake as far as the eye can see. A while back, with long term interest rates threatening a secular break to the upside I showed a compelling chart, the underlying message of which was that policy makers needed a bout of deflation fear to reload their inflationary guns. If this is all we are going to get for a deflation impulse - and surely you know that is far from a given - then it is look out below for the dollar and Bananaville here we come.
Oh, by the way, I have covered the shorts (at a manageable loss - you don't fight these guys as a hero) and just enjoy the proceedings as a gold stock bull for now. It looks like 'C' leg here we come. A time to short once again may yet present itself.
"Anecdotally, I see a gold sector that has quieted down considerably. That is good. Things now seem to be in the realm of chartists micromanaging the decline, looking for trend lines and projecting downside targets, support, etc. With each passing week, we hear less and less about the vaunted Inverted Head & Shoulders pattern that was imagined in gold in response to immense inflationary policy by our friends in government. These are all bullish proceedings, but you must have patience and keep in mind that, as galling as it will feel to inflation believers, there is downside potential prior to the real bullish price objectives, the next of which is 1300."
I spoke too soon. The pattern is gaining some attention this week. But this time, the attention includes some of the negating kind, for the reasons I illustrated two months ago; drum roll please... no prior downtrend. This from an NFTRH subscriber:
Head and shoulder patterns are trend reversal patterns and therefore for a reverse head and shoulder to be present (suggesting an upside break) you would have had to have had a bear market move leading into the pattern. For a normal head and shoulder the lead in trend would have been a bull market trend. In neither of these cases do we have a bear market leading into the formation of the pattern and therefore we DO NOT have a reverse head and shoulder pattern.'
The full article can be found here. Regards, Bruce"
I have given up trying to figure out why the gold price is so intensively micromanaged by people who would claim it is the only real money on earth. If it is real money, then it is not just another FOREX play to be paired off with other plays and charted into oblivion. As I have always written, and as was taught to me by a real gold guru, 'gold is not about price... gold is about value.'
Obviously Mr. Burak is looking at it from a technical perspective and is telling it like he sees it. I have not read his material in several years but from what I recall, he is not afraid to put forth his unbiased technical view, whether right or wrong. That is what TA is all about. It must stand separate from fundamental views. Insofar as one needs to manage the price of gold for trading and working a world full of 'plays' out there, then this is the way to go about it. With deeply held beliefs firmly in check while TA and sentiment analysis guide the way.
Well, it has been a while so I guess I will do a little micromanagement of the gold price myself. Actually, nothing has changed whatsoever, but this can serve as a review. Here we see the weekly chart of gold. Months ago I published this post negating the inverted H&S but showing another bullish potential, an ascending triangle with its ultimately bullish objective of 1300. This level has been our target in NFTRH all along, but... and in this case the 'but' is crucial to players and casino patrons far and wide... the lower uptrend line needs another successful bump for the pattern to be actualized. Failing that, I have noted a support level at or just below 700 that should be bought like mad by anyone who needs exposure but loves a bargain. Then again, when you are talking about value in a monetary world gone mad, I would think that the need for exposure surmounts the desire to get a steal.
A somewhat uneven symmetrical triangle has been added to the mix, but there is really no functional difference between the two patterns. They both need a test of the lower line and they both ultimately target the 1300 area. Bullish objectives could still be many months out. The weekly MACD is not pretty and implies room to drop to the lower uptrend line.
Now, having had the 'gold is not about price, gold is about value' mantra hammered home to me several years ago when I was but a fledgling gold market player, I have truly found this simple concept invaluable in managing my tack with regard to the various market plays. That is because even though gold may (emphasis on may because there will likely come a day when the metal surprises everybody and tells we TA geeks to go jump in lake) decline in the near term, its ratios to the various assets of hope and positive correlation are what count (or should count) for gold stock traders and for macro market forecasters.
I am bullish on gold. I am certainly not telling readers to be bearish on it. I am simply asking you to be aware of the potentials for its price, both to the upside and the downside and of the timeframes that are likely. It is a good bet that when gold finally does launch for real, it will do so without some of its most would-be ardent believers aboard. It will launch amid fear and agony. That's the way this market works.
Tuesday, July 14, 2009
Still, I will have to think about aborting the shorts if things go past the limits that are nearing, like the one shown on the daily chart here.
If the market decides that 'C' leg up is the short term option of choice, GS will probably head toward 165. I just thought I would post this thing in celebration of its status as Wall Street beacon of hope.
Edit (2:40) Leave it to Jim Kunstler to use the crooks at Goldman as a starting point for another of his far-reaching sociopolitical riffs: Wobble Time
NFTRH has been operating in a somewhat frustrating mode whereby the broad market has very different potential outcomes for the near and intermediate term (while the long term remains a bear market). It is ironic that the most bullish short term is not what is best for the bulls in the intermediate term, and visa versa.
Here is the chart. Daily down trends are intact, therefore the intermediate bullish inverted H&S scenario is intact, but weekly uptrend keeps a 'C' leg flame out in play. Short term, is the fix in?
Goldman Sachs will post the largest profit since a record set in 2007 when it reports second-quarter earnings today, according to analysts’ estimates compiled by Bloomberg.
Monday, July 13, 2009
Will it be a one day wonder or something more? I don't know. But the state of the various market technicals say hold short against long gold positions. So, if this mess drops as expected and takes gold miners lower, at least they have investment merit and the shorts will come back to life.
Failing that, if the market turns and burns higher here, mentally stopping out my short positions, it may invalidate what I have been following as a very bullish intermediate term potential as most recently discussed in #41. This is counter intuitive I know. But this is the markets.
To subscribers: Today's activity will probably be a good lead in to an email status update tomorrow morning.
Edit (2:51) Here is the operative clip from NFTRH41:
The GSR [gold-silver ratio] has chosen its path and broken to the upside of the wedge we have been watching. This signals bearish tidings for the hopeful trade in stocks and commodities. If the GSR hits some turbulence at the SMA 200, markets could get a brief reprieve from recent bearishness. This would include gold and silver stocks of course.
Again, if stocks remain on a higher course short term, a very bullish intermediate pattern will be all but invalidated. A drop to the low 800's by the SPX would be best for the bulls. The problem is nobody bothered to tell the bulls what is best for them beyond their short term impulses.
Edit (5:07) Adding the chart of the gold-silver ratio (GSR), the likes of which showed up in this weekend's newsletter along with gold's ratio to oil, industrial metals and S&P 500. This adds a visual to the above in showing that indicators can become 'over bought' as well. Was it a logical point for a reaction with stressed MACD & RSI as the ratio hit its SMA 200? Well obviously, yeh.
Meanwhile, we prepare to adjust if the market demands adjustment and unfortunately for the bulls, that adjustment will likely mean removing our intermediate term bullish scenario. At this point however, no adjustment. Just aggravation. :-( Ah what the heck, turn that frown upside down! :-) Thus ends today's micromanagement exercise. I am going to go spend some quiet time with my wife while kiddos are at soccer camp.
NEW YORK (Reuters) – Stocks rose on Monday, sending the up 1 percent, as bank shares advanced following an upgrade of Goldman Sachs Group (.N). and bullish comments from an influential analyst.
Well, I will think about believing when the neck line and moving average cluster are surmounted in conjunction with RSI resistance being taken out and the bearish MACD signal being negated.
Until then, sorry Mr. Dow. No can do.
I am just telling the truth. I tend to get a lot of things right in the markets and usually net out very nicely in my trading and investments. But this is a weakness.
All that said, I continue to hold several short positions including the ultrashort real estate etf, SRS shown here. They are back testing the breakout this morning but I don't buy it. Thus far my shorts (China, real estate, financials, euro and oil which has been closed out) have been an easier hold than normal I guess for two main reasons; 1) They are just acting normal, which I can deal with chart wise and 2) My macro research points toward events in line with a short term bearish stance.
Anyway, here's the chart showing the back test.
Saturday, July 11, 2009
To be sure there are very different possibilities on the horizon and not having a crystal ball, all I can do is analyze and adjust as needed. Thus far, things are going to plan and I have not had to make many adjustments at all.
My commitment is that NFTRH subscribers will be ready for whatever lay ahead. I feel I have done a good job of continuing with that commitment today in NFTRH41.
NFTRH41 out now.
Have a great weekend!
Friday, July 10, 2009
Here is SRS, the ultra short real estate ETF acting nicely inverse to the IYR chart shown yesterday and trying to confirm a breakout.