CoT hot off the press, pre-close

Uncle Buck nearing a bottom?

Just for giggles I decided the short Unc's primary competitor in the Toilet Paper Sweepstakes; the euro.  Hey, have a great weekend.

Survival 101

I clicked on the name of commenter 'Gunnery' below the Gold - The battle is already won blog post.  His website comes up when you click his name and is a sort of A-Z in survival.  It looks pretty comprehensive.  

Now, I know a lot of 'proper' financial types, especially those who read my stuff over at SeekingAlpha and other bastions of relative convention, will think this is nutty stuff.  But as part of my activation to start a website and later this blog - in an effort to get on top of the massive changes going on in the financial landscape - I also went semi-survivalist; a sort of survivalist lite..

There was a reason a guy who had tuned out the 2nd Amendment debate all his life (and been relatively apolitical - they both suck) found himself trained, licensed and in possession of a 9mm semi-automatic.  There is a reason we have 3 wood stoves (I do a lot of chainsawing and splitting and thoroughly enjoy it along with the warmth these stoves kick off), have a generator (a life saver during the wicked ice storms that knocked out our area for a week a couple Decembers ago), are on well water, etc.

I even started organic gardening, but when I got into a rock band (hey, you can only do so much) that had to go on hold, and would be raising chickens except that I want to stay married (messy birds, on top of the gun would have really pushed the limit there).  In place of these for now, there remains the stored Mountain Home canned goods with 20-something year shelf life and the knowledge that my town had been a small farming and agriculture town with resources remaining, at least in comparison to the average suburb.

There was a time when I really felt removed from the conventional world but as the creeping adjustment of the US moves forward, I find it does not all end in one terrible Armageddon but rather, it just increments lower over time and degrades every step of the way.

I function well in the conventional world, own and operate (sort of) a conventional business, trade and invest in the changes taking place in the macro financial world (gold is not changing folks, the stuff around it is - attempt to revise casino mentality), pay my taxes like a good citizen (making pre-payments this year I actually have to write checks directly to 'The Untited States Treasury' and each time I do so I wonder what Mr. Geithner and congress will use my little portion of their [our] vast treasury of paper for) and worry about what kind of country we are passing along to our children.

Even the conventional herd worries greatly about that last one.  I do not see government as evil but rather as a collection of the dullest and dimmest, myopically conducting business as usual in the footsteps of the progressively dim politicians and policy makers that came before them.  It is the result of the collective hubris of a society that has been on top for so long - using its reserve paper to maintain power - that it does not see that it is on borrowed time.  A good portion of the rest of the world sees this, however.

Take the survivalist theme above for what it is.  Do what you want or don't do anything.  That's your choice.  The blog's theme is investment so at the least, think about getting in line with the global changes now moving forward in creeping adjustment.  The US, much of Europe and the developed world are being pulled down while great swaths of the productive world are in a slow ascension.  Getting in tune with this theme is a major step toward long term financial survival in my opinion.

Doctor Copper's Miners

Here is another way of looking at it; the miners of the good doctor as represented by this fledgling ETF have broken above resistance (now support) off of a bottoming pattern.  Do we stomp our feet until the bearish view comes into play or do we wait for something like this to give a signal?  Copper is usually a good lead on the general bull construct, no?  I will choose to tune out the China hype and watch the chart.

Bear activity is all well and good but...

...those of us just trying to protect positions as opposed to playing short hero might just as well wait for a breakdown confirmation. 

Technically, the pig has done a lot of good work and while I think this is an upward ABC correction before significant downside, there is a target well higher if it breaks above the noted level (red) where it is predictably finding some resistance.

If this is a real failure, then in my opinion there will be plenty of downside both in price and in time with which to get short.  I am personally watching the $RUT small caps and a few other upside/downside leaders for clues.

Bearish?

The chart of long bond fund TLT (along w/ shorter durations of 7-10 and 3-7 years in the lower panels) tell me that this liquidity (or lack thereof) indicator is intact as TLT looks for support and IEF and IEI remain in uptrends.  Add that to the Gold-Silver ratio whipsaw and a certain gold stock to broad market ratio chart we looked at in an email update yesterday and we have drum roll please... no resolution. 

At some point however, I might plan to short the pig again against my gold stock holdings.  The markets can be painful, confounding and downright exasperating.  But you have got to admit they are flat out FUN.  If you do not enjoy this you might consider a more relaxing vocation like say, air traffic controller?  Lion tamer?  Undercover narc?

This is the time I feel best, when things are either falling apart or so friggin' confusing you've got to be borderline mad to make sense of it.

Gold - The battle is already won

This morning's email from gold general Jim Sinclair - under siege yet again from the troops in the "community" - prompts this morning's post.

Mr. Sinclair often writes with a war mentality pitting the gold community against the evil bullion banks - and a good chunk of the rest of the financial world.  Don't get me wrong, I think there is plenty of evil out there (it seems that on Mondays following a meeting or conspiracy of the assembled dignitaries in the G20 my investment accounts take the hit) but apparently a good chunk of the "community" gets its panties all in a bunch every time gold takes the hard hit.

 That is because nearly 10 years into the secular bull market in the rebellion against dishonest monetary systems a casino mentality - so well formed through the previous 20 year secular bull market in paper assets (stock certificates, bonds, derivatives, etc.) - remains intact.  This includes a great number of self-described gold bugs in my opinion.  In other words, the "community" does not tend to believe its own bullshit on balance.  If they did, they would see opportunity or at least sit tight during these phases that have been all too common all the way up since 2001.

There is an opportunity to own value shaping up and I suspect the usual casino players will fail to capitalize while the minority capitalize once again.  Missed the last buying opportunity this space identified in euros?  Well, another opportunity is on the way.  Who will capitalize and who will be immobilized by fear?  Gold in USD is also presenting an opportunity.  In fact, name me a major developed society that is not tramping out its currency for the purpose of manufacturing politically expedient economic growth and I will show you a society of relative value from an investment standpoint.  There are those in ascension and it is no coincidence that those are targets for my investment dollars in the big picture.

For now, gold is a monetary value anchor and in a world of eroding confidence in politicians and policy makers who use official paper and digital money, gold represents value; nothing more, nothing less.  Still, it is always great to exchange confidence paper for value when value goes on sale.  You do not buy gold when everybody loves it.  You understand who you are and if you perceive that your personal situation is in need of this value anchor you buy gold when the public hates it, when the speculators (ultimate casino patrons) are dumping and you-know-who is buying or buying to cover.

The battle was won in 2008 when an uber-opportunity presented, most failed to capitalize (thank you deflation proponents) and then snapped back faster and better than most other assets and asset classes.  Is a drop to 950 (on radar for many months in NFTRH) out of the question?  No, nor is the long term battle line at around 870 for that matter.  Do you think anyone who has understood what is and is not monetary value since 2001 is pained by these numbers?  They are just numbers and they are 150-200% above cost basis in many cases.  And by no means are these downside targets shoe-ins in my opinion.

So whatever you do, sit tight and realize that what is happening now is all part of the game and for some it is a time of opportunity as value goes on sale.  It is really no more complicated than that.

Liquidity Indicators

Okay, last post for a while - busy.  But this is a picture of high risk for bulls (the weekly dollar, GSR, long bond and 'investment grade' - 'junk' debt ratios have NOT broken down) and bears (they might well do so).  Not an easy market, but certainly an interesting one.

Uranium - U.to breaking out?

I did not think U would just cut the resistance line like butter.  It could still fail here, but this is becoming fairly impressive.  Then again, it's a weekly chart and can still close below.

Last week as several sources got bullish on gold stocks...

...this update went out to NFTRH subscribers along with this chart.  The person who sent me the bullish HUI weekly chart was none other than my friend Otto.  I mention that for obvious reasons with regard to last week's little drama that really wasn't.  This chart is as it was last week when the update was sent out.  It has since of course, degraded with this morning's attempted break down from the bear flag.  Soon however, it will be time to once again become bullish the gold stocks in relation to the broad stock market and perhaps even in nominal terms.

Yes, I am promoting... as much as a guy who is getting whipsawed right along with most everyone else can promote.  :-)  But this gold stock view is working out pretty well.

Good morning,

You do not pay me to tell you what you want to hear.  You pay me to tell what I think, or what I think I see.

So, in response to a bullish looking weekly chart of the HUI sent to me this morning which originated at a popular blog, I have attached a daily chart of the GDX.  I used this instead of HUI because it shows volume and chart gaps, unlike the HUI index.

The daily chart will control what the weekly eventually does.  In other words, it is more sensitive.  The MACD is not good and volume looks more distributive than we would like to see.  As noted in the most recent update:

"Also attached is an updated HUI chart, showing a pretty simple line in the sand there.  Huey is attempting to hold the SMA 200 which, if successful, would set up for a try at the SMA 50 back above the broken short term trend line.  Watch RSI at 50 and MACD for signs of triggering up.  Neither of these indicators looks good right now.  HUI has seen healthy short term rallies the last two times it hit the SMA 200 and may well do so this time.  But the MACD is in worse shape now than the previous examples, so this is a tough call."

Now, that said, I continue to be positioned such that I will welcome either strong upside or downside to around the xxx-xxx area noted as the preferred buy level.  Fortunately, we will know which way this is going soon.  As to the GDX chart, watch to see if the gap fills and the SMA 50 is approached.  If these happen and the miners continue up, the noted resistance (red dotted) line comes into play.  A break above that opens up the opportunity to test the highs, which of course opens up a big time breakout potential.  But that is getting way ahead of ourselves.

We have a bullish weekly chart and we have a daily that has proved nothing yet.  On balance this tells me the current analysis is correct: even if additional downside presents itself, it will not be a repeat of 2008.

Regards,

Gary

Of plans, revisions and refined focus...

This space is unapologetic after having focused so intensely on the gold-silver ratio for so long (the GSR is not dead yet, not by the weekly chart, but this post will make the assumption that it is going to fail - the daily breakdown could be a false move to get everybody off side).  The indicators - especially the ratios - are a sort of forensic 'heads up' on coming macro events.  Nothing is fool proof and when you have a discipline that works, you must follow it to the exclusion of the macro noise or else you are lost.

But since I don't have a crystal ball, I can and often do adjust.  To my way of thinking it is a more mature and realistic way of managing markets, given that I can't control them. 

The activity of the last week has served to compromise the analysis from a short term perspective (deflationists to get one more kick at the can before all that panic policy manifests in rising asset prices into the elections) and it appears that our friends in Congress are getting the lead in to the hope pump nice and early with some nice financial results (of the inflation manufactured by policy makers) to titillate the markets and Bernanke lurking in the background amid whispers of QE2.

Nobody knows what will happen.  Here is one plan illustrated by old friend the Alcoa Aluminum chart.  What do you think of the possibility that AA rebounds to test the neck line breakdown and SMA 200 off of the little inverted H&S that has formed?  It measures to that level and I just love it when charts present confluent data points.

So here is but one little road map for the summer of hope and beyond... As AA does a very normal thing and tests its H&S breakdown, various markets test their April highs - and by the looks for things, many attain marginal new highs - and then?  Well, let's let the analysis unfold as we move forward.  But AA still targets 8 bucks, so we can draw some pretty nasty conclusions off of that, eh?

Alternatively, AA negates the H&S top and we are off to a new inflationary bull cycle.  We will manage the post-election at the appropriate time but ultimately at some point, and considering the ongoing monetary policy (i.e. the policy of using paper & digital money as little more than disposable fuel for economic growth appearances) it will be "inflation all the way"... kids.  At that time, you should know where you want your capital to be in this world because capital is going to be very afraid and it is going to panic into assets of value and regions of relative value.

Uranium

Whee, I am a bull!  When I mentioned the target for LAM.to last Thursday I thought it might at least take a week or two to get there, not a day or two.  Sheesh.

This may well be yet another sector pump but I seem to be holding it and in fact added a favorite US based company from the last cycle.  I just found out today it now has a US listing, which is always a plus.  Very happy to add it back and it will appear in the NFTRH portfolios next weekend.

No chasing the U's now folks unless you are prepared to buy the story and hold.  Buying ops will materialize over the coming months I am sure.

To think it was a week ago today that the dumb chart reader thought he saw something getting a little wiggly (with a big tip of the hat to Monty).  To think...

GSR - losing daily support?

Meanwhile, big daddy (of the indicators) is losing support by daily chart.  The weekly is intact and sporting the bottoming pattern still.  This damned indicator has kept me respecting  the draining liquidity argument to this juncture but if today's (daily) hint transfers to the weekly, then good night d Boys. 

Active posting aside, I am actually really busy today.  So, see you later and remember, these are the markets. All you get is indicators and hints and the time to create a sensible narrative.  Right now, there is plenty of risk to go around, with a heaping helping of it for the deflationists now in my opinion.

Edit (4:17)  Here is an old weekly silver to gold (SLV-GLD proxy) ratio chart.  There is not much room for it to rise before commenter Marketbust is right and this blog's chief opinion giver is decidedly wrong.  Indeed, with my long and cash position sans shorts (for now), I hope he is right. 

Here's an interesting correlation

Let's look at it from the ratio of the iShares 3-7 year treasury fund (shorter end) and the iShares TLT (longer end).  The red box shown on the SPX below is where the market had been failing to get the memo about an impending downturn.

Now, with inflationary stresses threatening the long bond, the shorter funds look relatively bullish.  Not surprisingly the stock market is gaining the bid as are commodities, many of which look pretty bullish for the short term.

If nothing else, IEI-TLT has proven to be an important leading indicator at a very significant time (April, with enough time to get out before the pig tanked).  Do you think it deserves to be on radar? If that is a bottoming pattern on IEI-TLT, you do not want to be a deflationist right now.

Oh, and I am no longer short anything.  A 3rd straight (but puny) profit is booked in ZSL and pretty healthy losses booked in DXD and SDS.  Them's the breaks.  As a portfolio manager, when you start feeling pressure to buy things to offset your bearish positions, you know something is out of whack.  So I'm left with core holdings, a healthy cash level and a funny feeling gold is going to shake off the nonsense and play some catch up soon.  Really, all gold is doing is hanging around, consolidating the excess and waiting for the other stuff to play a little short term catch up aside form the big picture stuff.

Yield Curve

Rummaging through the chart list we find this old chart with the black box having noted previously that asset prices were not yet following the curve lower.  Well, with the exception of gold and to a lesser extent silver, they certainly did follow the curve once May rolled around.

Now the curve is at a new high and assets make a move to catch up to the inflationary implications.  Long yields are rising relative to short and that means that the system is beginning to sniff inflation now that the long bond has been bought so briskly the last couple months.  All a game of hide the cheese my friends.

Yet another little indicator making me wonder if the deflation argument has gone one and done, at least through the elections?  Not comfortable being short anything having to do with precious metals or commodities at this time.

John Hathaway... always a great read

When I was but a financial puppy, voraciously reading the rational elders like Prechter, like Hoye, like some old gold bugs whose names escape me... there was John Hathaway as well.  I always looked forward to the Tocqueville Gold Fund manager's take on things. 

Go here and download the PDF file entitled The Committee to Save the World (thank you Larry for forwarding).  With the CoT improving and seeing gold getting dunked on the Kitco live chart over there on the right, perhaps we will break down from the bear flag as speculated in NFTRH94.  My question is, who the hell cares?  Today is likely the day I use the available cash in the BullionVault account and turn it into bullion (note:  while I recommend BV, I personally use it for swing trading gold).

Back to Mr. Hathaway, there is one bit I cannot reconcile:

"Former Fed Chairman Greenspan suggests the U.S. may have reached the limits of its borrowing
capacity. If so, how will bigger stimulus packages be financed?"

To this I would say that Greenspan is reacting to the recent (it was only just this past spring) flirtation with an untenable rise in long term interest rates (decline in the long bond) to our 'line in the sand' level of the EMA 100.  Since then, herds of sheep have gotten scared, bought the bond and the US can and will finance itself as long as that implied confidence remains.

How long will it remain intact is very much in question, however.  When inflation fears break out, you will not want to be bullish the USD my friends.  Then again, what's the alternative, the euro?  Don't make me laugh.

Gold is acting as money and it is likely to continue to do so until systems are compelled to change for the better.

We'll let Mr. Hathaway have the last word, which I could not agree with more (think about why people like Mr. Denninger come off as so angry when discussing the heavy, non-interest paying, barbaric, ancient lump of heavy metal that has historically acted as money, especially in times of stress in paper markets):

"The fact that gold has become a popular topic of media conversation does not make it a bubble.
The chirping of naysayers usually comes from assorted wallflowers that have simply missed the
boat. Against a backdrop of wilting confidence in financial assets, gold is under owned by
central banks, institutions, and individuals. One must distinguish between a near term
overbought condition, to which any investment class in a secular bull market can become prone,
versus a full scale mania. We are a long way from silly season when it comes to gold."

Megatons to Megawatts & US Stockpile aside... u3o8 still in play

The Russian weapons initiative and US stockpiles aside, Uranium is a going to be a solid part of the focus going forward on emerging markets and the "global leveling of the playing field" (not my phrase, it was coined by a friend) and the fact that it has been absolutely demolished price wise only makes me more bullish (i Bottom Feeder).

As with the emerging markets, I am looking at a horizon measured in years, not weeks or months.  Think back to all the hype during the pump-o-rama led by the "Original Uranium Bug" and how compelling the story was then.  Well, it is still a good story with a very real reason for the post-bubble crash; the market is being satisfied by US and Russian stockpiles.  Mikey Fulp is interviewed here at The Energy Report and gives a nice review of the situation.  At some point, this former bubble is going to show up in the "value" bin.

Again, I am a dyed in the wool bottom feeder, so I must buy and then have a lot of patience.  Some people think charts are phooey, others depend on them.  Coming out of Armageddon '08 I became quite bullish on copper and oil while the fundy analysts were still quite bearish.  With Uranium, I am dialing the picture out further and realizing that the charts will tell when the right time to buy is.  They tell me now to begin nibbling and patiently add going forward.  We'll let the fundamentals take care of themselves later on.

PS:  Reading Mikey's picks, I am reminded of how I came upon FIS.v; it was through looking at HAT.v for a subscriber if I remember correctly.  Looked into HAT, got the story, looked into FIS and bought the chart.  Again, this warrants a closer look.  As it is, Strathmore (STM.v) is one I have traded for years and now sits in the NFTRH portfolios as one of the few non-gold stock core holdings.  As risky as small resource stocks are, it must be considered a value in relation to when it was priced 10x higher and people couldn't wait to buy it.

NFTRH94 Out Now

The following is excerpted from the email that accompanied the NFTRH94 attachment to subscribers.  One might summarize it as "Hi folks, I really can't tell you much right now but have a good summer".  One might summarize it that way, but one should realize that in order to ultimately win at the big game, there are extended phases when extreme patience must be exercised.  So, it just is what it is for now. 

"You will note that #94 marks the beginning of a new phase, where the analysis begins to look ahead, beyond the deflation impulse scenario that we have followed for so long.  I have stopped well short of revising the analysis because as you will see, there are many contradictory signals in play right now and the 'd Boys' are not out of the picture yet.  Not by a long shot. 

But my personal ultimate big picture view is one that says the deflation argument is needed every so often for policy makers to have the ability to continue on with business as usual, i.e. inflationary monetary policies that are designed to promote growth at all COSTS.  Hence, I must begin to allow for the possibility that we have already had the deflation event, which would be a sort of 'deflation-lite' if that is all there was to it.

You will note that my personal stance remains one of patience with no outbalanced commitment as of yet to one scenario or the other.  I will resist manufacturing conclusions for you and let events help us define each week where we are going.

Regards,

Gary"

The Goons Back Off Gold (CoT)

Da Boyz make a hard pullback on gold shorts this week as the large speculators backed off their frenzied bullishness.  Silver is improving too.  The more I see of this CoT improvement the more I question whether the deflationists will get one more kick at the can pre-election.  Technically, gold is in a small bear flag and one final lurch down would not be at all surprising.  But this picture should inspire confidence in rational people.

Hey, have a good weekend.

Gold in euros looks to have further to correct

NFTRH noted this ratio as way over bought several weeks ago (yes, genius observation, I know).  By my eye, the correction in gold-euro may only be about half done before it finds support.  We went a long way up and a good chunk of the way down since this blog first ID'd the Cup & Handle, pre-bullish explosion.

Rut Roh

Bears take note.  The Russell 2000, a leading market, had been lagging the pig in something of a bearish divergence to the rally.  No longer.

'The Ring is in Control'

Mr. A's morning note to clients is below. Since he mentions the GSR, I thought I would again post the oh so tantalizing chart that is going to get where it is going when it feels like it, not on any individual's time schedule. Here in the deep summer doldrums, this keeps me in a holding pattern (unable to deliver much actionable content), while always keeping an eye on the compelling pattern of a different kind, that of the seemingly bottoming GSR.

Anyway, on to the morning note:

Scrappy overnight turnover leaves gold essentially unchanged this morning. The GSR is at 65.70 reflecting the stubborn recognition of inflation impact. My sources (always anonymous) from the Shire say that Uncle Ben was heard pleading to Sir Larry not to allow the Bush tax cuts to expire so as to mitigate the feared unleashing of QE2...Ben knows. Meanwhile in our version of The Ring the option boyz have control for the next 3 sessions and given that option put/call ratios have flattened out since Monday we should not be surprised to see trade close to either side of the Big Round Number ($1200) until next Wednesday when the December contract will take center stage. The technicians are emphatic that prices are still vulnerable from last Friday's pounding so we'd consider current levels shaky until we regain $1220. Open interest for Wednesday was unchanged (and probably will remain so as we roll from AUGs to DECs). Watch the GSR always a good leading indicator.

Uranium - FIS.v

You may recall this one was highlighted as a classic bottom feed buy (and sell too soon) situation. I did what I am comfortable doing; buy bottoms when people hate these things. I have really got to go brush up on the company because technically, this thing is a beast. If the company looks good, I'd like to consider getting some on an appropriate buying opportunity.

That said, I am not going whole hog or anything remotely close to it on the U's. Just keeping a small amount just in case the post bubble crash in U3o8 has bottomed.

DIA - Behind the 'inflate or die' mandate

When looking at a chart like this, you (or at least I) ponder things like what would happen if DIA and its daddy the Dow had lost this important level? I expected the rebound that we are currently on and shorted it again - against long positions... never net short due to the wonders of inflation and uphill battle that the d Boys fight - with the expectation of the rally petering out.

But that is serious support over there on the left. Conversely, if it is broken to the downside, it would be a serious problem for the market. I have targets for the Dow on the downside but viewing something like this adds a whole new component to the existing analysis. And it ain't good. Best for the bulls to hold that line. I can always dump the shorts. Inflate or die Ben.

Uranium - LAM.to

As to the uranium post that started the drama in motion, Uranium Participation (U.to) remains on the break above the fan line and is now at the resistance line drawn on the original chart.

How did I play this personally? I bought LAM.to in the conservative account and added to it in the speculation account. Why? It's chart was okay and looking to bottom, but once again there was Mr. Henderson taking actions which make one think he sees value in his own stock.

So the buys were noted last week in NFTRH. For the same reason I am slowly buying in to the global emerging theme and will hold and add to these outliers as long as my view of the story remains as it is, I will hold some uranium positions no matter what. There is a place for long term thinking among the noise. So, it is possible I will hold Laramide even if it hits and turns down from what I expect to be strong resistance.

Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Jul 14/10	Jul 14/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	50,000	$0.830
Jul 14/10	Jul 13/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	38,500	$0.800
Jul 14/10	Jul 13/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	11,500	$0.770
Jul 14/10	Jul 12/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	62,000	$0.730
Jul 14/10	Jul 09/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	20,000	$0.730
Jul 14/10	Jul 09/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	18,000	$0.740
Jul 14/10	Jul 08/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	26,500	$0.750
Jul 14/10	Jul 07/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	33,500	$0.740
Jul 14/10	Jul 07/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	40,000	$0.750
Jul 14/10	Jul 06/10	Henderson, Marc Charles	Direct Ownership	Common Shares	10 - Acquisition in the public market	4,000	$0.820

Otto Feud - Final Word

The back and forth with pal Otto has apparently disturbed some people, notably a couple of long time subscribers. So, while I was surprised to see he of the many opinions (just like me - it's what bloggers do) slam a TA post I did without even the slightest hint of humor (as well as inventing claims I supposedly made), I realize this is life. Things happen; people say things and write things and life goes on. As an aside, if I had a nickel for all the stupid things I've written here for which I've had at least a twinge of remorse....

The blog is free content. I am a human, not a machine. No matter how deadly serious the newsletter is about getting the markets right - an update on the gold stocks went out this morning and there is not a shred of content in there other than serious analysis of the current technical situation - I am a human, the blog is free and I have always expressed myself here as a human. Not a market analyst.

This is informal, it's my M.O. for the blog because I am going to have fun in life, no matter how difficult things get or how dire the 'serious' analysts present things to be. If it makes people uncomfortable, this post is my attempt to ease that discomfort by way of explanation.

Subscribers should view the blog as a free resource to add color and definition to the analysis in NFTRH. But it can be a silly place to visit as well. That is because it is written by a sometimes silly person. I will never try to represent myself as a buttoned down sophisticate wearing a smoking jacket sitting in his dark wood trimmed study thinking the deep thoughts of the universe. More often than not the guy writing this blog is wearing flip flops and a tee shirt.

Now, perhaps we can get back to what is really important...

PS: There is a girl standing in the picture to the right. She is surrounded by strange characters and she inhabits a strange world. To my way of thinking and in line with my experience, it is much better to see the financial world from a different place. It's all I ever meant for the blog and to a much more refined extent, the newsletter. I happen to believe it necessary for success and that mindset starts with not trying to be like the more buttoned down analysts. I only want the subscribers and blog readers I should have, whoever you are. :-)

Edit (11:43) Not only does Otto clear things up from his end about the recent "blogsnark", whatever that is, he also ID's a typo I had in the title of this post. Now, that's a pally!

Gold This Morning - Dead Man's Hand

A subscriber's note to clients this morning:

If you are reading my irregular ramblings at ~0730 every morning I reckon you have to be a player which leads me into a short observation of Uncle Ben, our Fed Chairman, showing up at the big table in Washington yesterday with a bunch of suckers facing him and yet he folded with the classic Aces over Eights without daring to see the hole card. When the first hand was dealt in our National Casino at 2:00 PM both S&Ps and gold began to cave while USTs soared...revenge of the D-People Part V...But Ben just couldn't contain that glib trash talk in which he and his cronies always get their way and as the game closed he walked away like a man knowing that if he didn't show with a bigger pile of chips next time this regular game at the US Casino would move elsewhere where the chips are harder and the IOUs smaller. This is where we are, the stakes and the values are higher and Ben knows that once he plays the I-card there's no turning back. This is not an overnight event, but in my addled mind the signal was there. So on to the mundane facts...overnight volume is modest, the GSR is 66.70, and open interest for Tuesday was in another 1% at 559,000. I leave you this morning with an observation from trading Zimbabwe regularly during their great inflation...the annual percentage move in the Zim stock exchange index always exceeded the real rate of inflation.

A personal thank you to Otto

Dear Otto, thank you for shitting on me and by extension, a world full of 'charties' with your dismissive fundy analyst stone throwing. Oh wait, wrong post...

What I meant to say is dear Otto, thank you for your communication to subscribers about the recent decline in RIO.v and what it meant opportunity-wise. I thought "Otto is pounding the table and by the way, look at that orderly downward consolidation to Fib levels, I'm buying". Recent buys in the .60's look to have been an opportunity.

RIO.v is held as part of the core in both NFTRH accounts.

Summer doledrum?

If I read the situation correctly, the markets are wearing on many peoples' nerves. You know what? Mine included. This morning's pre-market news compelled me to send out a mailer showing parameters at which NFTRH would be forced to abandon the short term bearish stance. Getting mentally whipsawed is draining, but to navigate the markets you need stamina and maybe a certain kind of mental maladjustment. :-)

As it is, the pig is now getting whacked down from logical resistance once again. What will it do tomorrow, catch the shorts off side again? Damned if I know. It is summer and it is time for balance and of course patience. So I continue to hold short disfavored items against favored longs and keep plenty of cash. Opportunity will come people, now enjoy your summer.

Edit (3:22) Picture of the monetary wizard added... Yesterday I had perhaps too much time on my hands to watch this mess. Today, not much at all. So I just find out now that we go kerplunk on Bernanke and his "outlook remains unusually uncertain" words. One dumb blogger's interpretation? He's talking down the recent bullish stir based on corporate financial performance data that are already in the books, to make sure that the next round of QE goes off without a hitch. Remember, the wizard loses a lot of his power if interest rates rise too far too fast. Ben is not a stupid man, and it seems that deflation is his friend, his lever.

Dunno, the entire thing reads like a muddled attempt to speak out of both sides; things are on track and okay, inflation is not an issue and we look forward to slow, steady job growth. Then why the *$%@ not leave it alone to proceed organically? What's wrong Mr. B?

Gold - Canada Dollar... Still bullish

In fact, is that another little Cup (complete with higher right side rim) and handle?

VIX & More... do yourself a favor and read

I just stumbled upon this analysis. It is a bit dated but it is highly recommended. The writer explains the transition from a trending market to a trendless one in which case osciallators that measure over bought and over sold - in other words, things like RSI and its more sensitive cousins CCI and STO's - will work better than trend indicators like AROON and to a degree, MACD which doubles as a momo indicator. I also like the way he ratios the more speculative $RUT with the mega cap $OEX.

ZSL - 2 in a row

The target is a bit higher, but I have stared down the silver bugs twice in a row now at a profit. This after suffering a 1000 little cuts at their hands previously. With the negativity in the precious metals now I consider it more dangerous to be short here. I like the bearish potential elsewhere for now. Against precious metals core holdings, the silver short is dropped while raising some cash by trimming non-core positions today.

A pretty good TA breakdown of Gold

FWIW, I have potential targets lower in the event the deflation story begins to really get out of hand. But they are not the favored scenario and I think Adam does a good job here of calmly just breaking down the situation.

There is nothing but nothing in the TA which shows gold's imminent demise, beyond a normal correction. People were very bullish but "the reality is... the markets are the markets". Where have I heard that before?

Euro - Alternate target

The expectation has been a 38% retrace of the entire decline to about the visual resistance in the 133 area. Here is an alternate view that has the Euro already topped out based on a 62% retrace of the most severe part of the decline. FWIW, because charts are useful... no matter what certain a-holes say.

Gold-Silver Ratio (GLD-SLV)

The GSR maintains the post-consolidation bottom pattern by weekly chart. AROON trend has turned down (as has the daily) and MACD is waffling, but in positive territory. The support/resistance lines on the RSI should break this thing one way or the other. And if it's up, the deflationists will be pretty happy for a while.

Gold... I have always been here before

"that that was supposed to have frightened you, but somehow you never took to fright" --Roky Erickson, I Have Always Been Here Before

Quickly transitioning from archetypal American rock culture to the subject at hand, we look at the gold market and find all the familiar forces arrayed in their various familiar battle stances, with a few bullish wrinkles this time around.

• Goldbug captains call on their troops to keep a stiff upper lip, even as many quiver uncontrollably and retreat back down Hamburger Hill.
  

• The d Boys (notable Deflation figureheads) are fully out of the woodwork, no longer being ridiculed but rather, being reinforced by throngs of believers coming out of dormancy - not coincidentally with the permission and psychological backing of the US long bond. Just as this blog has been outlining since everybody KNEW that inflation expectations were about to get out of control back in the spring.
  

• Gold - the last bubble in the eyes of the d Boys - takes the hit amid gold bug fear, gold adviser bearishness (Hulbert's HGNSI @ 9.2%) inflation believers on the run and the chart... oh my lord, the CHART of gold is BREAKING DOWN!!

• I am told that a well-known inflation perma-bull (precious metals, oil, gas, water, etc.) has admitted in his podcast that he is short gold stocks. His stance was opposite this in 2008, as was that of the majority of commodity, resource and precious metals (i.e. inflation) bulls. Folks, if you think this is bearish for the gold sector, think again.
  

I have always been here before. Since 2002 (my personal entry point into the secular bull market) we have witnessed this 'wash, rinse, repeat' cycle play out several times. As has been noted repeatedly in the newsletter and blog, the Deflation captains - smart economists that they tend to be, with a tragic and almost comical blind spot - are helpful to the process of protecting one's wealth over the long term with the monetary metal that is no one's liability. After all, would you rather buy on declines that start out as well and good technical corrections and morph into emotion-fueled, savage drops propelled by the herd's perceptions? Or would you rather buy hype-fueled runaway price increases? (A) please, Alex...

You will notice on the right side bar of the blog, there is an ad for BullionVault. It just appeared the other day and do you know why? Because I put it there in response to the declining price of gold. Previously, during gold's widely touted run to new highs there was a simple, static little BV ad for anyone interested. But with gold you buy the declines because it is always good to buy value when it goes on sale. This is usually done against a world full of smart sounding people telling you why you shouldn't. I have a chunk of cash in the BV account waiting to be turned from USD to bullion.



I have not really put a lot of technical analysis in the chart because I want to reserve that for the newsletter, but you get the idea of the story I am trying to tell. There are downside targets, sure. But this is a market people, and markets do what Beuller? Yes, markets go up and down within a secular trend. Meanwhile, despite all the furor there are two supportive moving averages that have not yet been violated.

Oh and to the d Boys, that is not a picture of a bubble... no matter how hard you click your heels, study Great Depression theory and ignore the fact that monetary authorities need you and your linear philosophy in order to kick start a popular mandate for more inflationary policy. In short, Ben Bernanke is playing you, whether intentionally or not. He needs your story because his power goes out the window if inflation expectations break out. This is again denoted by the monthly EMA 100 on the 30 year treasury bond, followed slavishly on the blog.

There will be deflation (reduction or leveling of money supply due to forced and voluntary popular deleveraging from a dangerous, exponentially levered construct) and there will be inflation (policy response with the full mandate of the people; well, a majority of the people who remain steeped in convention). It is the act of inflating against economic contraction that gold reacts to as the system is degraded further with each cycle. Authorities cannot inflate unless there is a dreaded deflation to fight.

As the economy weakens, gold outperforms assets positively correlated to it such as oil, base metals, etc. At this point, the leveraged instruments on the gold price - the gold stocks - enter the picture for patient speculators who see gold (their product) declining less than oil, metals and other miner cost drivers and think "hmmm, this can't be bad for their bottom lines". It is all thanks to the deflation impulse that periodically interrupts the continuum of gold's secular bull market.

Sinclair

Well, daddy gold bug is on message and I cannot say I disagree w/ much of it. Direct from my email inbox. Here is the part that I took note of, before he careened into definitions of what is and is not hyperinflation.

Dear Comrades In Golden Arms,

If gold market participants were all tank drivers their machine would have but one gear - reverse. The smallest book in the world is the book of confirmed gold price visionaries.

Someone says deflation and the long gold positions hit the fan. Gold banks make their short covers even though the fuel in Bernanke's Helicopter Money Drop is founded in the dreaded use of the "D" word.

U bullish?

As in u3o8...

U.to, a good sentiment indicator on the uranium sector (due to its NAV swings on uranium it holds) has broken another fan line (thanks to subscriber Monty for the heads up). So U bullish? Me bullish... but then I do not need upward price action to make my bottom feeding self bullish. What I need is a chart like this (the daily is actually in an uptrend) and a lot of patience. The 'U' story is along the lines of the emerging markets story; long term and with regard to a changing world.

Emerging Markets

I get emails from someone named Monty Guild that focus on a global perspective, I read things from people like Puru Saxena who have perspective on the emerging markets. Today, a nice buttoned down piece is presented here from Frank Holmes, laying out the case for emerging markets. It focuses on the relative productivity (less reliance on debt) of these markets. Check it out (5th item down the list).

Now, with the d Boys assuming the mantle in the media, timing is the issue. NFTRH has a subscriber - who I have interacted with many times, and even met in person - who makes his bones by getting boots on the ground in some of the more remote outposts. And when I say boots on the ground, I mean with foreign leaders... not to mention at least one US president that I know of. When I tucked away a little bit of an African investment for the kids college accounts, it was with a long term horizon and after running it by this gentleman.

So, while we get hysterical near term about the linear aspects of the deflation argument - and all those emotions that come with it - why not at least entertain the idea that the world is not ending, just perhaps changing? No need to rush, but secondary to NFTRH's gold stock opportunities are those of the emerging economic world.

What would alter the bearish view?

Only one thing would alter the bearish view that the MACD bullish divergence and sentiment play have already expressed fully to the upside. That would be the SPX surmounting and holding above the red resistance line, which would likely change the trend. Until such time, the lower high remains a decidedly not good omen.

NFTRH93 Out Now

...actually, it came out yesterday but with the amazing weather this weekend the minute I got 'Rabbit' #93 mailed out to subscribers I got the heck out of this chair, went for a run and then spent the rest of the day with the family.

As the screenshot shows, 93 started off with a look at the sentiment picture as the broad markets did exactly what they were 'supposed' to do and and declined from the resistance noted in NFTRH and later, here on the blog. There is a bearish price objective for the Dow in which I have a pretty good level of confidence.

The next segment talks about the "Macro Pivot" period we are in and gold and the gold stocks' prospects within said pivot. Gold miners vs. the SPX is analyzed with regard to miners' leadership to both the downside and upside during periods of deterioration of the sector's fundamentals and periods of enhancement of same. A theme running through NFTRH93 is the role the deflation argument - and its proponents - play in the evolving investment case in this unique sector.

The technical situation for the nominal gold price and the gold miners is covered. I am a gold and gold stock bull - no question. But there are downside targets NFTRH terms "opportunity", especially in the miners.

We wrap up with a quick look at several oh so important indicators that have generally kept us on the right side all along; things like the still-bullish treasury long bonds, leading market to lagging market ratios, investment grade debt vs. junk debt, money supply, USD, euro... and then finally, a closing paragraph about the d Boys and now - thanks to a blog commenter for the term - i Boys. Your blogger/newsletter writer is an id Boy by the way, in case you have not yet gathered as much.

NFTRH93 out now, and it is a good one.

Chinese Treasury Dump Brings Holdings to 1 Year Low -- Zero Hedge

Go here and read the Zero Hedge piece Chinese Treasury Dump Brings Holdings to 1 Year Low if you have not already seen it: http://www.biiwii.com/analysis

If England is allowing us to monetize our debt under some kind of covert agreement, it is probably not much different than the tools that the US would use to directly monetize its own debt, given the cozy relationship with our friends in the UK.

What is next, the seemingly way out there prospect of Congress directing individuals to hold these treasury instruments in their IRA's? You hold an IRA, you are in bed with the government as they extend to you tax benefits in exchange for your compliance and adherence to convention.

A couple years ago we put an addition on our house. How'd we fund it? A loan? Ha ha ha... regular after tax brokerage savings? Are you kidding me, I worked hard for that 'money' and paid my taxes on it. It's mine. No, I liquidated funds from the IRA's and paid the penalty and taxes up front.

I have not contributed squat to the IRA's since my financial awakening. After a financial adviser lost us 60% of our IRA's in 2000/2001 and I yanked them away to learn portfolio management on the job, they are up about 240% - adjusted for withdrawals and what not. This is the NFTRH "Speculative" (as opposed to "capital preservation") portfolio.

The main point is that I do not regard IRA's as serious investment accounts (although they are mighty convenient vehicles up until liquidation) and have been on alert for years as to stirrings in Washington about policy that may target these massive repositories in waiting should the inflators become yet more desperate for treasury buyers. England is a lurch in that direction if what Zero Hedge speculates is at all near target.

Either way, this is inflationary. The confidence in the long bond is not what the chart says it is.

Uncle Buck

Will he stay down, enabling monetary authorities to sit back and relax or will he finish the downward consolidation and turn upwards, putting major pressure on the inflators? I'll take 'b' for all the marbles, Alex?

Silver Ultra Short (ZSL)

I never buy this thing with undue confidence. But for correlation with the major gold stocks ($GDM, $HUI, etc.) you can't beat silver. So I never short silver nominally; just as a hedge. Add in the bullish bottoming structure of the gold-silver ratio and you theoretically have a good risk vs. reward in being bearish silver vs. gold stocks. The chart shows a couple targets which, if/when achieved, I will probably dump out and add to shorts elsewhere (currently on Dow, SPX and real estate).

Alcoa (AA)

Back in the investment world where the charts do not care about anything other than what is the probability going forward, we find Alcoa turning back down from the SMA 50 and still in the grips of its H&S topping pattern and $8 target. Jumping back into real world mode, I am a customer of this company and we use tons of aluminum, literally. Real world, the aluminum mills are buzzing along. So it's back to the old question, "real or Memorex?" for the intermediate term?

Boots on the Ground

I tried, I really did... I tried to move on to just one vocation; financial markets (newsletter, blog, website and managing personal and extended family portfolios). The year 2009 came close to making me want to just punt the whole 'boots on the ground' aspect that occupies my other life, which takes the form of small business owner or more accurately, small AMERICAN manufacturing business owner. You know, the general vocation that supposedly no longer exists according to many financial pundits?

So pissed off was I last year at some of the things that went on; a long-time medical oxygen customer cuts us off at the knees to buy inferior quality in china at $.40 on the Dollar (breathe easy my aged friends, I am sure the contamination in the valve will be minimal), major pharmaceutical customer delays production for the better part of a year due to supply chain issues, major diversified medical/instrumentation valve customer (div. of global company Parker Hannifin) goes on a death spiral resulting in implosion of our business with them by 70% in a year.

Due to our niche in health care, we have been largely impervious to standard recessions. I set about orienting the company that way on purpose many years ago after experiencing the volatility of the semiconductor and telecom sectors. No thanks!

But the global meltdown that resulted from the unwinding of levered up credit and derivatives was indeed virulent and it meant to unwind everything. Hence the 'all or nothing' heroics of our policy makers. Given the choice between delay and obfuscate and 'nothing', what do you think politicians are going to do every time? Hint, 'nothing' really sucks as lynch mobs would not be good for politics as usual.

So inflate it is... China has not yet sold treasury bonds down to and through our decades old 'line in the sand' of the monthly EMA 100, and they may not do so because their policy makers may fear lynch mobs of their own - at least until their growing internal consumer engine is ready to go prime time, leaving the debt addled west as an after thought.

The deflationists will likely get cast aside once again when asset prices respond to the massive inflation that occurred out of 2008 and the one that may be being promoted right now in light of recent deflation talk coming out of high places. It is certainly possible that this is the start of an inflation-fueled rebound. Several indications in my work say "not so fast", Prechter and friends get to hold court for a while longer yet just to make sure the optimal amount of players are on the wrong side of the equation.

But my 'boots on the ground' observation is contrary this idea. For now, I go with the technical indications as the anecdotal evidence I see every day is lagging stuff. TA and ratio analysis looks ahead. Declining prices that deflationists obsess upon, would take one more turn before the lever is pulled on the next inflation. We shall see if the analysis is correct.

We will drag our legacy debt, hidden derivative vehicles and papered over Ponzi schemes forward in an irresistible flood of QE, treasury bond sales, money printing and other shuffling of deck chairs as long as we can. One day, when China and other creditors are ready, and if the long bond breaks down hard, deflation believers will be left without a seat, silver will outperform gold and the outward grab for resources will be on. Incidentally, in this scenario our 'gold mining above all' else stance goes kaput. Right now, we are playing a macro 'pivot point', so to speak. That is something I am going to try to make more clear in NFTRH shortly.

If the long bond breaks down, it will signal an obvious loss of confidence in the USD and it will signal amplified inflation hysterics. We with our boots on the ground in the US manufacturing economy may even begin to talk of being one of the few sectors likely to thrive, although the rise in material and energy costs will likely more than offset the globally competitive status that would be enabled by a tanking dollar. This would be the resource (commodity) grab as materials and goods would get bulled up while the instruments of the last bull market like debt vehicles engineered and capitalized upon by very smart people who never worked an honest day in their life, would be all but vaporized.

Alternatively, business as usual remains the play, China does not dump the bond and policy makers are free to use the implied confidence of the masses (as Lyin' Larry cajoles on cue and as needed) to continue inflating at will against the long term downward slope in interest rates. Deflationists claim there "is no inflation" due to this downward slope, but again, they focus on prices (the price of the bond is whatever our trading partners say it is) and what really happens along this continuum is inflation as needed, always... until the bond rebels into a breakdown toward hyperinflation.

Either way, the D Boys are going to lose and lose again, until the system ends. It is just that they can be very useful as they are the lever to be pulled for people who know that inflation is ongoing as long as the system (and confidence) remains intact. Despite the Tea Party movement, the gold ads on Fox, and other signs of discontent the herd is a big, dumb, lagging entity and they are generally not ready to abandon convention bred into them over decades of perceived prosperity.

Now, this stream of consciousness morning note has spun out on a sharp turn and evolved into a screed of some sort. I wanted to simply state that business is now good. Parker is strong, they are global and an upswing is in progress (although significantly, they are calling it a "jobless" recovery in which their remaining employees would work err, harder and more productively). I get this straight out of a meeting yesterday. Other 'real' economy indicators are strong here where I stand with boots on the ground. Even pricing power - something I have never really experienced in all my years - is part of the mix.

Technical indicators tell me that the party may be abbreviated before the real inflationary upsurge in emerging markets, raw materials, many asset prices and quite possibly US manufacturing gets underway one day. There was a time last year when I considered that the newsletter might need to be my go-to vocation sooner than expected. Now, I can do it just for love and passion - and because I need to do the work anyway to be an effective portfolio manager.

The positive boots on the ground reading is good because it will keep the pressure off me to try to be more like the majority of the crowded newsletter field (with some notable exceptions in whom I have highest regard) in touting the letter's wares more aggressively or devolving into a trading captain or crystal ball reading guru. It is what it is and if the newsletter's current stance that risk is increasing once again in the markets is incorrect, it can adjust and look into the parameters that led it to its conclusions.

In so far as I participate in the real, productive economy, there are no re-do's. So actually, I hope the boots on the ground view is correct and Prechter's gone one and done into the sunset once again. One guy, opposing views... bifurcate (tri, quad, etc..) remember? Prepare for favored scenarios but be ready to adjust during interim events along the inflationary continuum.

More protection

I added some direct protection for my precious metals holdings in the form of ZSL. So, we have Dow, SPX and silver short... for now. Usually I stare in the crazy eyes of the silver bugs and I not only blink, I get sent running with tail between legs. Last time it was da bugz dat blinked. This time? We'll see.

Maybe that is a bear flag? RSI needs to hold resistance.

Which is right, BDI or SPX?

Place your bets ladies and gentlemen. The BDI does not seem to think much aluminum, copper, and iron is due to be shipped imminently. Meanwhile, many stock markets continue to catch a bid. Could Prechter have come and gone so quickly? BDI doesn't think so. We have been watching this breakdown for a few weeks in the newsletter and it sure is persistent.

Qualifier: I am a global growth believer (due to the wonders of inflation and its power to redistribute). But we are talking time frames here.

INTC - The fix is not in...

It is tempting to conjure images of powerful manipulators in conspiratorial concert, aimed at keeping the market rising. Alcoa projects global growth, Intel projects global growth... bears were suckered I tell you! The H&S broke down! How could that be reversed with such a strong winning streak?

Because this is the markets and while the manip surely goes on, there is no denying the fact that sentiment got all screwed up to the downside. The rally had to happen to correct this. I would have been more bearish at the end of Q2 if the dumb money had remained stubbornly bullish despite terrible market action and associated trend changes in the daily and weekly time frames. Instead, mania is the norm; both to the fear extreme and the hopeful one. Can you imagine how many people are out there buying and selling based on these emotions? What do you think is the mindset of someone who sold in May or June, only to see the wonder rally and "global growth" theme regenerating right before their eyes?

I hold the Dow and SPX bear positions still - again, not anywhere near net short - with the S&P barely tickling the 1100-1130 target zone. AA and INTC's reports, when you tune out the noise, could serve to announce "it's as good as it gets!", allowing the scared money to buy back in to some degree. But we got the projected rebound in sentiment already, in the first half of June. Dumb money does not have to climb too far from this point to become a positive factor for the bears once again. This is a diminishing returns type of situation, just like the prices of the stock indexes.

I will let the work dictate going forward, much of it unfortunately cannot be published here. But there are a lot of savvy readers out there, and they'll know the drill. There is no need to read into the market our own particular agenda. For me, the global growth story is real and the deflationists are like straw men standing against an oncoming inferno. As some commenters have noted, they will burn the money - or whatever those digital entries are they keep typing in - in an effort to keep asset prices and appearances aloft. The only question is how long will the deflationists be right in the interim?

A subscriber questions my ability to be bearish Alcoa ($8 H&S target) and yet be bullish on emerging Asia, for example. The answer is simple; it's all in time frames. There will likely come a time when I am bullish on AA. $8 is not the end of the world, it's just an interim target. It is helpful to bifurcate (or tri, quad, etc...) your view of the markets. Looking at it in one linear fashion, with one linear philosophy is not gonna cut it.

SPX chart updated

We are into the rough target zone. Here is last week's SPX chart updated.






















Edit (4:22) "Intel Reports Best Quarter Ever"... I am happy about that believe me, because it is not going to do me nor many other people much good if CAPEX drops off. But now we will see the nature of the market and its current rally. If the pig exceeds and holds above the red box in the chart, the liquidity indicators go back to the hell they came from, maybe we will call the correction over. If if if...

On a bearish note, INTC has had a funny habit of issuing good news within days of significant market tops, including the biggie in April. See graph below compliments of SentimenTrader.com.

AuEX Ventures (XAU.to)

This baby is part of the core holds in NFTRH. It shares 49% of Long Canyon (w/ FRG) and while it has been a very up and down stock, has maintained a nice uptrend all the while. The stock shot up in early June on good Long Canyon drilling and NFTRH noted that the area around the gap and the SMA 200 would present a subsequent buying opportunity. While I would like to have seen the gap filled, it appears a big gorilla came along and gobbled up 100k shares before it could fill.

Jul 09/10	Jul 09/10	Tognetti, John	Direct Ownership	Common Shares	10 - Acquisition in the public market	100,000	$3.250
Jul 09/10	Jul 08/10	Tognetti, John	Direct Ownership	Common Shares	10 - Acquisition in the public market	4,800	$3.280

IKN Weekly had a lot of interesting things to say about the above purchase last weekend and Otto also had this nugget, which I think should be required reading for all interested in the sector, using a potential land rights glitch w/ FRG & XAU's Long Canyon as an example.

"In fact, looking over what little this author knows about the case via the newspaper report, it

would seem that FRG had no obligation to file a legal report to shareholders because up to that point (1q10) it wasn’t directly involved with the court case, but all the same this might have turned out to be a very big negative for Long Canyon (and our back pockets) if the settlement hadn’t been reached in timely fashion.

The point I’d like to make here is not directly at FRG, or XAU.to, nor is it long Canyon. It’s the

fact that we’re investing in a risky sector and all types of negativity can come out of left-field at any given moment. We seemed to have missed a bullet here, but the lesson to be incorporated is that there are no “sure things” in junior mining. The second thing to note is that disclosure rules are so lax, especially under Canadian regulations, that companies just don’t have to tell us about these things, they’re under no legal obligation. Now in the case of FRG that might be a little different as it also trades in the US markets and reports under SEC rules, but FRG is just one of thousands out there. It’s a risky business, this junior mining game. Best not to forget that."

Alcoa says "Memorex"

So tell me, do you think AA has much more upside left after helping pump the markets today? I suppose a return to test the neck line breakdown would attend a return to the highs for broad markets, but Alcoa is bearish and probably going to the H&S target of 8 bucks sooner or later. Where does that put the market?

RSI is at a resistance level and this will be instructive as the price deals with the SMA 50.

As stated, I will not marry the bear positions and am very net long (mostly gold, with some silver, uranium and emerging market) but I am not thinking of dropping these positions yet. In fact, it may be time to see what else is bloating up for possible short sale. Any suggestions?

Real or... ?

This remains a hopeful blip in response to some very bearish stuff that went on in May and June until these indicators say differently. The USD, gold-silver ratio and ratio of investment grade bonds to junk (lower panels) are not broken and until they are and the market exceeds logical targets for a normal rebound, bulls reading more into this than bear rally are making a mistake. That is because the indicators below, if they remain constructive for further upside, will denote the draining of liquidity and speculative impulses from the markets.

Rick's Man Chuck

Rick Ackerman's pal Chuck is bullish. He too heard the "death cross" chants blaring far and wide, saw sentiment in the dumper, saw Robert Prechter and other D Boys broadcast far and wide and figured the fear was not sustainable. Now, at the dawn of -- yawn -- another earnings season, Chuck is bullish on stocks.

And you know what? Chuck could be right. There are no absolutes in the markets. Leading promoters of inflationary and deflationary Armageddons are leaving out an awful lot of nuance and mitigating, often contradictory analysis. So Chuck is bullish... Rick is bearish... the question is, over what time frames and what is in force over the intermediate to long term?

The 30 year bond continues along as it has for decades and thus, policy continues along as it has for decades (with the supplement of steroids which keep up appearances for the aging Keynesian financial construct). Keep a big picture view at all times; it is the only way not to get lost within this macro silliness. Keep your compass well tuned (can a compass be tuned? I guess calibrated would be a better word).

Chuck is bullish on gold and the gold stocks, noting a huge inverted H&S on the miner indexes (here we go again, if anything it is a huge Cup as there was no prior down trend - same diff though; bullish with the same measured upside target). Great, except that I do not want to hear a gold adviser talking about gold, gold stocks and broad market going up all at the same time because that would NOT be the favored scenario for gold stock investors who want to make an absolute killing.

No, the gold stock upside blow off would be born of fear and desperation elsewhere. Gold has higher to go before common sense is enforced upon myopic policy makers as it simply provides a barometric pressure reading on the system. Then one day, when we have our financial coming to Jesus, I suppose gold will settle back down and go dormant until once again needed.

Gold stocks would be the real bubble, starting one day in the not too distant future, by my work. This is predicated on the D Boys asserting their dominance at least one more time, the gold-silver ratio breaking out and the treasury bond pulling in all manner of sheeple (to use a well worn gold bug term).

Alternately, if the silver bugs and inflation captains are correct and gold declines in silver terms, copper attains new highs and the powerful next leg up in the broad markets ignites from today's 'dumb money' fear readings, gold mining is done as the go-to sector. We will then look to a world full of other possibilities.

Do I make myself somewhat clear or am I riddling? Sometimes I honestly don't know.

Edit (a few minutes later): I forgot to note, NFTRH92 is out now. It feels as though it knows what it is talking about and is in a 'things are making sense' zone. Guess I'll add the Alice in Wonderland graphic to the post and let you know that I have a lot of confidence right now in my personal stance within the markets. That is the case even if Chuck is right and I end up dropping the Dow and S&P short positions currently held against a healthy collection of gold stocks. #92 also introduced an initial dipping of the toe into a global emerging - or is it a frontier - market under the theme that the world is not ending, just changing.