Bill Cara’s Blog for March 3, 2010 [See post-close report]

bill-
i'd be interested in receiving the GS report.
thx so much.

df

Bill,

I too would like to read the report.

Thanks.

BP

CHRW - Government Sachs Initiates Coverage with a Sell. PT = $51

Bill,

I would appreciate a copy of the GS report at sftong2000 [at] hotmail.com

Thanks
Sean

A copy please. Thank you.

RSI 7 day is 12.80. buy limit 12.37.

Do your own homework.

Update: MDVN hit a low in Nov 2008. Adjusting buy limit to 11.74 GTC. Hourly and 15 min charts not showing divergences.

in @ 14.39 2/11

out @ 14.83 today 3/3

in 2/22 @ 14.16

out today @ 15.28.

that's why you're you and I'm me.

It reversed in Nov 2008. My price is 11.74.

I also have a buy limit for VISN @ 4.98.

Remember position size and good entry points are critical. Doesn't matter what the price was yesterday.

ALWAYS do your own homework.

GL.

not really.

Volume is 25X 10 day average so by day's end, everyone who wants out is probably out.

The price movement is 6X the 10 day ATR, ditto.

My price is below the open and LOD so far. If it doesn't execute by day's end, I'll put an order above the 3pm price.

I mentioned that trade yesterday and the market listened. Nice action in FXE and thus PM. I'm looking for FXE to reach closer to 140. I also monitor SLV:GLD like Bill, and while RSI it's flashing a yellow light, PM can skyrocket on dollar weakness (even if momentary).

I guess euro strength today is on the euro shorting backlash in the news.

In addition, statistically, stocks with such a large gap down tend to have a close above the open.

and quite often test the LOD within the next couple days.

jack -

I agree and am holding my SLW and GG here even though GG RSI-7 is at 70 while adding PHYS yesterday. Monitoring The $SILVER:$GOLD RSI-7 closely as taught by Bill. The IMF sale and Russian 'leak' that China was ready to buy suggests to me that Russia wants that IMF motherload of bullion and floated that story out of China to mess with China's deal just as was done by India a few months ago so that India could seal the deal and consequently set a new floor above $1050/oz. I expect Russia will announced its purchase of IMF gold very soon and set the floor higher.

http://truthingold.blogspot.com/2010/03/is-russia-...

Really? Do you have any stats on that? I'm interested in seeing if that's an identifiable trend.

Wow looking at those charts makes my stomach churn...

Yes, a look at those charts should teach everyone that going all-in in a one product biotech company is not such a good idea.

I took a nibble on an opening position today on this at $32.50 (just above the October low of $32.25 which looks like the first major downside support).

I think this US Oil/Nat Gas play is getting way oversold w/ oil over $80/bbl. It seems that they had some cost overruns this Q, but revenues were still quite strong. Its now trading somewhere around 12.5x forward earnings and its a grower. Next logical support lies around the September low of mid $29ish and I'd be looking to add more there. I hate getting long anything in this market, but I do like the energy plays, especially US energy plays, over the next 6-12 months and have traded XOM recently as well. ARD I'll be looking to hold for a while, though, as I have been watching for a while and think it could later on be a nice tuck-in for Dominion Resources or someone else of that ilk.

As always...do some good DD and scale in slowly in this horribly treacherous market. This will be a 3-6 month minimum hold for me, unless it bounces all the way back to $39ish, in which case I'll book the quick scalp.

Added more at $21.10. This is down from $32 back in November. Looks like it's making a nice base in the $21 range.

Gaps larger than -66% of the last two years:

Edit: WHRTD has data error and should not be on the list

Look for the blue box in the righthand column of the home page, which reads:

To download Goldman Sachs’
“Crossing the Rubicon” report,
log in then click here.

Thanks,
Jack

Thanks Bill.

The CoinGuy

Thanks Bill. Incredible research. Much appreciated.

Thank you Bill, much appreciated.

This will be a nice read Bill - thanks!

Very interesting comparisons of the current World Benchmarks vs 2010E ROC. China's under representation is screaming for a currency adjustment!

Absolutely stunned to see not a single CA bank in the financials list. Then again, it fits with my feeling that while they are great banks, they are facing more and more stiff competition in their own market.

Read an article on Seeking Alpha that suggested the Sprott ETF has a tax issue that is likely to cause trouble. It actually mentions a number of issues, but most of them seem minor. The tax issue involves redemption. Namely, when there is a redemption (conversion of units into actual bullion) by one of the holders of this fund, this article alleges that ALL unit holders will have to pay a pro-rata share of taxes on the redemption, even though they didn't sell anything. Will this actually happen? Who knows. Probably, if gold goes up a great deal.

The offending paragraph (supposedly from the prospectus):

"If any holder redeems his, her or its units for physical gold bullion (regardless of whether the holder requesting redemption is a U.S. Holder or an Electing Holder), the Trust will be treated as if it sold physical gold bullion for its fair market value in order to redeem the holder’s units. As a result, any Electing Holder will be required to currently include in income his, her or its pro rata share of the Trust’s gain from such deemed disposition (taxable to a Non-Corporate Electing Holder at a maximum rate of 28% under current law if the Trust has held the physical gold bullion for more than one year) even though the deemed disposition by the Trust is not attributable to any action on the Electing Holder’s part."

http://seekingalpha.com/article/191523-sprott-phys...

I just hope ' they ' don't get to him first ( ala Jack Ruby )... I most certainly hope he does talk, and your pain will ease....

ALOHA !!

HYWELL JONES
Amen to that Bill ...

as the drug had not passed the all FDA standards to date... there are, however, some others that have been approved, are seeking expanded labels, both in the US and abroad, and are forming good jump points... not thinking DNDN or HGSI, although I believe DNDN will be taken out by early summer..

It's getting interesting around p.100-110. On first whip through, a couple of ideas are emerging: 1) "buy-and-hold" is an idea under pressure and, perhaps more interesting, 2) "mean reversion" is a legitimate strategy. Specifically,

Mean reversion opportunities are available when the returns that companies generate are not reflected in the asset multiples that they receive, and catalysts exist for multiples to revert to the levels of companies with similar returns.

Another clear argument for the efficacy of trading systems, like Bill's RSIs? Maybe we also need to start paying attention to movements of relative RSIs within GICS Sectors? I can remember doing something like this with google's sceeners, looking at multiple stocks within an industry group. Certain leaders barreled out of the March 9 low, paused to let the group catch up and then led them up on the next leg...

GS believes the market consistently discounts this tendency for returns to revert to the mean and places a heavy, favourable bias on those leaders who, over a 3+ year period, are able to avoid this fade, as likely to outperform over the longer term - i.e. sustainably.

GS "Crossing the Rubicon" report now available
Submitted by Jack (41 comments) on Wed, 03/03/2010 - 15:40 #58459

Look for the blue box in the righthand column of the home page, which reads:

To download Goldman Sachs’
“Crossing the Rubicon” report,
log in then click here.

remember,

if oil was in fact in the process of being in short supply we would know about it from the very insiders within the industry who would see the writing on the wall.

instead what are we actually seeing:

1. nat gas over supply, prices at lows

2. most commodities only partially higher over the past few years after the spikes of 2007/2008

3. the alleged food and oil shortages that have been predicted since the 70's embargo have failed to materialize. starvation in 3rd world nations is not due to high food prices but geo-political problems. if a bag of rice is $5 in america then it is that much cheaper in india where millions earn less than that per week. there would be hundreds of millions starving to death in most of asia if these prices were the norm.

they arent.

4. gold is different because its money. crude oil is like sex: easily exchanged for money but a nice butt is still a but, dont mistake it for cash.

5. when oil prices spike people drive less, demand goes down. life goes on. it happened a few years ago and we are not even close to previous highs, and oil companies technically look like crap imho, im not seeing the kind of inside buying youd like if their business had such bright futures.

remember, if oil prices rise people might compensate by siimply driving a bit less, saving a bit more money from other expenses and buy cars that a bit less expensive. the talk of the suburbs dying out because of high gas prices are so far gone and nothing short of nonsense. they are selling electric scooters in Toronto for $600. they go 40km an hour and costs pennies to charge by plugging in. does anyone really think the technology on these wont get better in 10 years that it will cost $400 and go 70km an hour, making it driveable on all city roads other than highways, meaning millions could do away with cars completely at a fraction of the price....

6. quite simply, if oil was in fact facing a shortage in the next 5 years the stocks would begin to rise. they arent. face it. yes war in the mid east, we hear that quite a bit, please remember anyone who says these things are so lacking in geo-political knowledge its laughable. we must remember the mideast doesnt account for the lion's share of oil any longer, and nat gas/coal/oil sands and nuclear are much bigger than they were 30 years ago.

a war in teh mid east would cause an emotional panic spike like in 2008, thats not how i play my investments.

7. theres no war with iran looming, get off it, people have been blabbing about this for years, iranians dont want to bomb anyone, its talk. there is no war in pakistan either, just an unstable border region by pashtuns who simply want to retain their autonomous regions, not take over a nation.

8. dont talk about the chinese doing anything. we know now that their data is not trustworthy, nor are unconfirmed statments or allegations from their people without official confirmaiton. yes they are buying gold, lets get over it, the IMF is selling gold the goldbugs claim they never had.

yeah GATA im looking at you, it must be nice to have your cake and eat it too, gold goes up because asian people are buying it but somehow gold when up when you never heard bleep about asian in 2000-2004. and why did the miners collapse at the same time if they are the only real measure of mining wealth? where are your inside sources GATA? why do you bemoan the secrecy and lack of transparency in central banking circles but fail to ever identify your alleged sources who claim to belong to an inner sanctum of gold.

remove the mask GATA...

9. im not convinced yet of this move in gold, im not liking the lack of volume in the shares. i know i was wrong last week but f%$k it. im not convinced, i want to see a large volume spike in all shares. right now its dicey.

10. for the love of god: what is wrong with TRE... years..... years... wasted while the NG's and HMY's jumped... jim sinclair i am your humble student but for the love of jobe... WTF cant your flag ship do anything.... $4 at $1100 gold.... really? i mean really??

11. ignore everything i just said. PDAC fever is building in toronto!!!!!

The theme: "Population growth and economic development are resulting in increasing pressure on the environment and climate. We are approaching a tipping point at which the issue’s importance to business performance and investors will escalate. The equity market is only just beginning to reflect the magnitude of change that lies ahead."

If we ignore the trading aspects of this - the likely shenanigans they play with early internal releases of additions and subtractions from the SUSTAIN list - I find it fascinating that at least some subset of "the smartest guys in the room" have bought into "we're running out of resources, and this will impact business as usual."

And with that theoretical basis, they're trying to figure out which companies are likely to survive and/or prosper in the upcoming period of - let's call it escalating pressure.

I thought it would be interesting to track the changes in the document over time, to see how their thinking has changed since this was first released. Here's the same document from 2007. One interesting difference (out of many) I note is, the current document has a chart from ASPO. It also seems to talk a lot more about resource depletion.

http://www.unglobalcompact.org/docs/summit2007/gs_...

I hear you Kaimu. But let's not forget taxes! I built a 3200 sq ft house in a Dallas suburb in 1974 and my cost at that time was $23 a sq ft. My property tax was 1.2% of appraised value or back then $883 dollars per year.

Today the house is appraised at $340,000 and the property tax assessment is 2.2% of appraisal which equals $7,480 a year. Inflation or rather the depreciation of our paper assignants caused the value to increase but the taxing entities increased their 'take' by a real 83% on the nominal phantom gain.

My point is that we are getting very close to wealth taxes. Rather than exchange controls, I think we may be in for a perverted interest exchange tax on capital gains and dividends from foreign transactions.

Ahem. Need to renounce citizenship and bathe my toes in Bahama sands?

Dr. Cosa. you are using short term pricing data in an attempt to prove that a long term problem isn't actually a problem. Zoom back to the monthly charts. I say oil prices going from $10 to $80 over 10 years is an indication that Things Are Not Well in the oil patch. Peak Oil is noticeable in "demographic time", but not in "day trader time."

Current market prices are sometimes poor predictors of future conditions. Witness: stock market prices in 2007 predicting economic activity during 2009. Stock market prices in 1929 predicting economic activity in 1932. History happens in a nice linear fashion, until it hits a discontinuity. Ask Archduke Franz Ferdinand about that one.

Demand destruction from our little economic difficulty last year was about 5%. "Driving a little less" - unless it happens every year - won't "fix" a peak oil situation. Our current infrastructure can't be rapidly replaced. Those SUVs have a 10 year lifespan, and the suburbs have a 50 year lifespan.

The correlation of energy to GDP is very clear. Less energy in, less GDP out.

The number of industry insiders (Oil E&P CEOs) who have stated, quite clearly, that we will never grow production above 90 mbpd is significant. Not all of them, but many. I can go dig them up if you like. If population grows exponentially, but oil production stops growing at 90mbpd, what do you think will happen?

Discoveries are not keeping pace with production. If new oil is so plentiful, why are we drilling 100 miles off the coast of Brazil, in ultra-deepwater through a mile of salt dome?

The marginal cost of the last barrel to be produced is trending higher. What's SU's cost: $60/barrel? Saudi's cost used to be $2/barrel.

As a result, the average return on invested energy is trending lower. Having a decent energy return on energy invested drives civilization complexity. We're going to spend more effort, for less energy going forward.

Electricity won't replace gas anytime soon in transport. I actually HAVE an electric scooter. 8 mile range, 25 mph, 250 recharges on the battery; replacement cost $150. It's $1200. Its fun, but it has real troubles if you try and ride it in the rain. Does it rain where you live? I encourage you to get one and see for yourself. And the electric motor is most definitely not as reliable as my gas powered motorcycle. And I have a sturdy one.

The Li-ion version costs $2500 - 25 mile range, 600+ charges. "Its all about the battery." And high density batteries are not cheap. Ask the cell phone industry - they've had 10 years and a whole lot of motivation to make batteries better. They're better, sure, but they're also terrifically expensive. Powering a phone is a LOT less difficult than powering transport. Phone CPUs get faster every year, but people - they don't get lighter.

Battery technology is all about chemistry. Some people confuse electric power with electronics, and that industry's astonishing innovations there. Chemical innovations do not follow Moore's Law. Only electronics do.

Consider: CPU speeds double every 18 months. How about auto gas mileage? If gas mileage doubled every 10 years, we'd have cars today that get 10,000 miles per gallon. We don't. There are only so many BTUs in an energy source - be it a battery, or gasoline.

Can you make a Peak Oil trade today? No. The trade is all about demographics and resources, which are very long term in nature. However, it's something to keep in mind, just in case the Archduke manages to get himself shot in the next few years.

Illini,

As many know, I'm about as cynical as anyone about government, Wall St. and the future of our economy — Paul Farrell's writing rings true to me, but...

I have been reading him for years and he nearly always leaves me feeling worse without any alternative action plan.

His last "where to" I can remember was sort of "a little child shall lead you" approach with a diversified ETF approach. (A fifth gGrader's portfolio)

Now he says... "Sell all your stocks, ETFs, bonds and funds. Get out of commodities and gold. Sell."

Great! And then what? Sit on your cash while it continues to evaporate due to dollar denigration?

I saw my business evaporate due to "globalization" and the disappearance of US manufacturing until my last year before Soc. Sec. eligibility I did 11% of my 40-year average and we began tapping our investments.

He's making his living with advice that goes nowhere. Stupidly, I gave it away free to my "representatives" and they figured you get what you pay for.