Bill Cara's Blog for Aug 19, 2011

Good morning.

DELL - Ticonderoga Initiates with a Sell. Target $9.25

DELL - Upgraded to Buy @ Needham. Target $17

------

"Congress is now appointing a debt committee to deal with the debt. I thought Congress was the debt committee. Aren't they the ones who put us in debt?" -- Jay Leno

NYUGrad yesterday,
"You will see the Fed help bail out EU and European banks."

Apparently he's already been doing that according to the GAO report. He may announce it to dampen the call for increased investigation by Grassley.

As Bill said today,
"I think the world will be impressed how some time after his August 26 speech at Jackson Hole Wyoming we discover that Fed Chairman Bernanke saved us, again. :-)"

My view:
"Benny the Snake" — slippery cuss with a forked tongue.

Grym

Excellent artwork. Is that an american indian belt on President Eisenhower?

Bill,

The saddest thing for me is that there was a time when I would have simply blown off such a charge. These days I can easily accept it as just one more example of lies and deceit in our government. It seems to permeate all levels.

Something to consider from the end of the article:

"Corruption At the Top Leads to Lawlessness By The People"

Grym

but held. if this breaks down it should invite more selling.

(GE) Germany's Economic Minister Roesler said that his party (FDP) will not support a financial transactions tax if it only affects the euro zone and not the 27-country EU - German Press

**Note: Earlier during the week, Germany's Chancellor Merkel reached an agreement with France's President Sarkozy regarding a EU financial transactions tax.

Hi NYUgrad; 1117 on my 5 year/monthly chart needs to hold. Hopefully there will be a big selloff then some calm by lunch. We need to establish a tighter trading range with a slow uptrend for a while. I agree with all the comments about social equity. This crap needs to come to an end. Best luck to all today.
Regards
Earl

20% Drop in Housing to Cause Recession in 2012, Says Gary Shilling

http://finance.yahoo.com/blogs/daily-ticker/20-dro...
(Sorry couldn't get Tiny URL to work)

I have read two of Gary Shillings books and, while not a 100% disciple, his deflationary argument has served me well re: Treasuries the last few years.

Also, what he is talking about jibes with what I have seen here in my neighborhood. In today's paper one of our major RE agencies has an insert advertising 396 houses. According to my RE agent neighbor we have between 3,000 and 4,000 house on the market. (population 150k) There is an ever increasing number of homes for sale near me and now many walk-aways without for sale signs — banks don't want them and try to ignore as long as possible.

Think of the economic implications.

Grym

I think we will see riots here in the U.S. When you spend time in LA i am sure you will observe how bad it is getting here, relative to 2008 or past recessions. California is really a metaphor for Americana.

poverty in California is growing leaps and bounds. Debt worship and poor govt mgmt is everywhere.

Just a few years ago, new neighbors moved in on both sides of my house here in the Seattle area. The prices then were in the 3 to 4 hundred thou area. The one on the left is vacant. They must have spent 35 or 40 thou maybe more on "improvements." Their garbage can was full of WFM boxes and Metropolitan Market boxes. A cleaning co came in twice a month. Both were nurses, also had two children, along with a new toyota and suburban. Ah yes, the good life, a real life style. One day they were just gone. Gosh, wonder what happened, heard they wanted a different house. Nobody lives there now. They probably moved up. Yeah, right. My tax assesment came in 70 thou lower. There are now three other houses vacant on my stetch of street that I view. Thank you Mr. Cara. Nobody was talkin about this shit when you brought it out. About that time I asked a guy I was working with at the time, are you saving your money? He told me I listened to too much news. His house is sitting vacant, last I heard he went to Tenn. or maybe Kentucky. I know a few more like that. Well, when housing picks up maybe these will sell to some new owners, but, there is that employment thing. I think the banks will keep the money, it's safe in there. And I think the SEC and their buddies, the gov't and their buddies will make sure of that.

Bill, not all politicians read newspapers.

Our "not-idicted-for-medicaid-fraud" governor Rick Scott boasts that he reads no newspapers.

Our local t-partys eat that sh*t up.

Thats' Floriduh!

Ciao, Z.

'Help please help save us. your devil children need you father.'

there is a memo by Citi global head equity trader Mike Pringle, selling the need for markets to trade to lows, to test sentiment.

my recommendation is to pull all your money out of C and BAC. Why deal with the headache of getting your money from a FDIC process?

TDBank locator: http://www.tdbank.com/net/absearch/default.aspx

you got to check out the article and not just my headline :)

3500 this qtr. but a new restructuring is being discussed, which can become up to 10k or more. not just tellers. Bankers too.

I am open to not trading today. one of the biggest advantages i have a small player in this market is not having to be on the battle field every second.

With opex and weekend in front of us, i'll only come out for select setups

think of Martin M. and Vulcan

In addition, I posted a chart at the end of yesterdays thread. 1883 is the contract price 61.8 fib extention off the 1980 high from the 2000 low. That has been my target for the past 6yrs. Spot ran to 1877.88 and spot is typically 5$ away from contract price. Close enough for horseshoes.

I'm just not sure how one makes the argument that banks leveraged at 30 x 1, 80 x 1 or more on assets they know darn well are junk is not a prime factor?
When the paper profits contracted and the "wealth" disappeared, all those banks looked to the dirty taxpayer for help. And even if the taxpayer did not want to help the banks, the govts did. And usually at 100 cents on the dollar.
It was essentially the largest transfer of wealth from the many to the few in human history.

Vad,
Although I agree with almost all of this article and it's conclusions on Keynsian economics, There is no data whatsoever to prove Fannie and Freddie caused anything. The vast majority of subprime loans were not made or guaranteed by Fannie and Freddie, they were made by the Countrywides, the Amerisaves, the fly by night pseudo-banks that were never under any government or legal obligation. That those loans were then bundled and repacked as AAA was the crime and the banks and their abandon of decades of mortgage and title law and their lowering or abandonment of credit standards to compete with the Countrywides and pseudo-banks in a race to the bottom they knew they would never be liable for WAS THE CAUSE. In FACT, Fannie and Freddie had loan standards that prevented them from following the banks and pseudo-bankers into the abyss.

I personally bought my house in the late 80's with a Fannie Mae loan WITH ONLY MY SIGNATURE and I didn't default and there were no fly by night creeps out there.
So Mr. Carter is about 3/4 right, but it WAS THE BANKERS and their Wall Street co-conspirators who were responsible for their own downfall and it was the Fed and our fraudulent politicians responsible for sticking the people with the bill.

"they would never do that if they didn't have implicit government guarantee to back up those loans and politically motivated push to make them."

Ah, but that isn't the bulk of bad loans. The transfer was through MBS's, CDO's, etc. that were sold to unsuspecting "investors" for their IRA's, 401K's, trading and investment accounts through the banks and their Wall Street buddies.

It was the bundling of those subprime loans and their sale as little pieces without a paper trail that was the vehicle of the crime and the banks facilitated that fraud through their use of bought credit rating agencies, appraisers, their chasing lower credit standards to compete with crooks like Countrywide, etc. Fannie and Freddie, everyones favorite whipping boys, held very low percentages of those loans.

That would be a slow and unsophisticated fraud that would be traceable. That isn't how these people work. They use the Fed model of the master shell game.
They hid it in plain sight, but made it totally untraceable. Now there is a sting. Fannie and Freddie are the fall guys in the frame-up.

Had not considered this until reading a Thomson report on Rubicon (RMX).

Winter weather impact on production. Seems there is a huge drop in production in winter months.

I would have guessed temps were somewhat steady at mining depths, is there another factor thats not apparent?

Ciao, Z.

Not sure what the context was but the cold shouldn't really effect production levels as most gold in the world is mined in warmer climats. Having worked in Red Lake On (Gold) and north of Yellowknife (Diamonds) in frigid temperatures, all I can say is that its just damn cold but production continues as normal with an increased risk of pipes freezing!!

The only effects is when the ground is thawing or freezing and the impact it might have on getting drill rigs in place when doing exploration off lake ice or in swampy(muskeg) areas. It will slow down exploration during seasonal shifts. Winter exploration let's you get to those hard to get places and gives you the options of building ice roads which are cheaper then pushing all seasons roads. No point building permanent roads until you know for sure you've hit good ground.

The effort to shift blame to Fannie and Freddie is a transparent attempt to blame poor minorities for the bulk of this mess. I'm surprised the CRA hasn't been mentioned yet.
Who had all the money? Who made all the money? Who has all the money now?
In other words, cui bono ?

Jimymac,

I am sure I have written far more letters to my representatives than the average person, state and federal. They don't read them. They used to have staff read enough to sort them pro or con and select a form letter response. Now they probably let a computer search for key words and send an auto reply.

Twice I received a form letter on the wrong topic. Subject: Gun Control Reply: "Thank you for your interest in Agriculture HB XXXX — your view is important to me."

With phone messages and email the sheer volume is absolutely prohibitive even for a medium size company. By them mid-1990s I could no longer contact my clients due to all the obstacles to communication.

Tie your message to a rock and bounce it off his head or forgedabodit!

Grym

LOL! Perfectly titled photo.

The difference between Madoff and Greenspan?

Sure Bernie ripped off a few wealthy people. Greenspan ripped off EVERYONE, WORLD WIDE. Bernie was a teeny tiny distraction....a misdirection to draw attention away from the Crime of the Century...perhaps in all of world history.
Goebbels would be proud.

Grym, the other day I told you I believe this guy can be bought. I'm not validating this information but thought I'd share it. http://www.youtube.com/watch?feature=player_embedd...
Earl

Well, since it was me who expressed that opinion and you stated that it's an attempt to "blame poor minorities", not adding "your" is just a formality, isn't it? As for the rest, I think by bunching together "Fannie and Freddie, ... Dem Congressman Barney Frank and Bill Clinton's involvement in repurposing the Community Reinvestment Act" you just made their case.

On this I remove myself from this debate. Back to trading. Hope you do the same.

Who gives a poo who caused what? How the heck are we going to fix these problems?

ALOHA!!

"Corruption At the Top Leads to Lawlessness By The People"

I contend that the corrupting epicenter is the "money" we use today. First off you cannot ignore what Bastiat said back in 1848 ...

“The state is the great fictitious entity by which everyone attempts to live at the expense of everyone else” – Frederic Bastiat, 1848

The amount of Americans alive today who live beyond their means by the use of debt is simply staggering and for Americans to complain that their own government lives beyond its means is pure hypocrisy on a grand scale. I personally know many friends and relatives who have contacted their Congressmen to complain about the unbridled debt circus while at the same time they themselves contemplate either leaving their homes or sucking the equity out by refinancing their own massive indebtedness. Surely some Americans manage their debt better than Congress, but that is not the issue I speak to here. The issue is how pervasive and subliminal debt has been embedded in our way of life here in America. There was a time in America when Americans actually saved up to buy a car or boat or even a house. Now people finance their vacations, their boob jobs, their college, their cars, their boats, essentially they finance their entire life! If that is not debt slavery then I do not what is.

Perhaps the best tool the banks have over us is their ability to "call loans", perhaps they have other suicide pills but their main leverage tool is political in nature. As I have been saying for many years perhaps we need a Constitutional amendment that separates banks from State like church from State. I think it is long overdue as the human condition combined with our current "blank check" monetary policy is clearly a huge failure. Definitely there are some major "anti-trust" issues here between banks and our Treasury. The long train of abuses grows longer by the day!

IMO, the 1980's Savings and Loan scandal was a precursor to what we witnessed over the last few years.
The banks and bankers ran a proof of concept, figured out how to run it a couple of orders of magnitude higher and with less risk to them, legally.
They then pulled out all the stops and to my view have succeeded beyond their greediest imaginations.

IMO, it would be helpful to learn what happened so if the world survives this round we can see the next attempt coming. Because there will be another attempt.

The lenders originating the loans, with 100s of years of banking experience, had the legal responsibility to make sure the promise to pay was valid before creating the money and handing it out. All the rest of the actors in the show (and there were a LOT of them) were just enablers. Without the lender creating the money, none of it would have happened.

Not all the loans ended up at Fan & Fred. I think it was around half. The other half, the private half, blew up spectacularly. That's why Countrywide (BAC) is getting sued by some percentage of their bag-holders.

This sort of lender fraud has happened before - many, many times. Long before there was Fan & Fred, bankers created too much money on dubious collateral, and blew a bubble. Picking one of the "supporting cast" of this drama and dropping all the blame on them would only be convincing if a similar supporting actor had been at the scene of all the other bubbles blown by bad lending decisions, which is clearly not the case.

"their boob jobs"

Dangit Kaimu, you had me until boob jobs. What kind of country do you want? LOL!

We have to be #1 at something....

ALOHA!!

"their boob jobs"

Well ... go to Hollywood and see for yourself! Last I recall elected plastic surgery was not covered by Blue Cross!

Trendline from the 1980 low through the 1987 high is support by the looks of it, as it was in 2003 perhaps

"Well ... go to Hollywood and see for yourself!"

LOL! You don't have to convince me! I was born and raised in the SFV and my brother works for the studios.
I went to high school just a few miles from the Motion Picture Hospital in Calabasas.
I'm pretty familiar with Hollywood. Even my dear old mom is in a nursing home in North Hollywood. Not many boob jobs there though....

Like I said, whatever people want to use THEIR credit for as long as they don't pawn it off on me.

An article posted at the Pragmatic Capitlism on Rail Traffic. Goes along with what Bill has been saying about things are not that bad.

http://pragcap.com/rail-traffic-the-economy-is-sta...

Thx. enjoyed it. Glad to hear the teacher's voice.

i concur. 1100 ES has to hold. double bottom confirmation and we might go up to meet declining 50/200.

Massive, global central bank intervention before Monday morn ?

Anyone who bets into this weekend is gambling with no edge.

Earl,

With that much smoke I can't help suspecting some fire in there. At this point I've seen no one I like better than Ron Paul. I don't think he would do any better the Ross Perot.

Grym

I'm looking forward to your next Sound Money Kaimu. I here all the time reasons for this and that and it's way complex. I know I've politically segregated myself from others but at some point we're going to become Americans first or were done for in a matter of time.

Vad, nice chart video; I was able to access it from my iPhone. Thanks

Earl

Just watching, RSI app shows d/w/m 3's as 18.02/8.86/6.1 and dropping. Might
entertain a short term position should gold pullback.

3's = #'s

Very bizarre downtime situation. Fortunately not critical for me.

Just part of the set-up for QE3...

"In terms of price performance, the Q2 earnings season (that ended with Wal-Mart's report on Tuesday) was by far the worst that's been experienced since at least 2000 (when our Earnings Report Database starts). The average one-day change in response to earnings for the 2,150 companies that reported was a pathetic -1.92%. The second worst earnings season came in Q3 2008 when the average stock declined 0.70%, so this season was more than two and a half times as bad as the previous worst earnings season. Sixty-percent of companies that reported went down in response to their reports, and nearly 30% went down more than 5%! That's an astonishing number. Eighty-three companies that reported lost 20%, or a fifth of their value, on the day of their earnings reports."

http://tinyurl.com/3bs4hdh

Grym,

All due respect, I'm your age and I made a difference then and I still doing it now. I went short the U$D and long PM bullion and shares in 2002. As for you checking out. Don't. All the best.

SUCCESS. I resisted the urge to trade. I stared at the charts all day and didnt force anything. Not much to say. quiet day after yest (relative to past few sessions), except HPQ, which made up for 40 of the dow drop.

Seems we are range bound (1100-1200)

As the professor said. we either double bottom and break out on vol, or more trouble ahead.

I wont be in front of my pc until thursday. Nothing will make me happier if i miss a few chop sessions, or we rally up to the 200 day by the time i am back. But i should be back well before jackson hole. Good luck mon-wed folks. remember, anything up to the 50 day and 200 day, is a bounce. i will start counting higher highs and low above the 200 day.

CFTC Commitment of Traders report sees Specs net longs for Copper and Crude Oil at multi-month lows

US Dollar Index: Specs Net: -1,247 v 3,301 prior, COT index 24.6 v 32.4 prior, Open Interest 60,895 v 65,021 prior (4-week low)
- Positioning turns net short for the first time since May 17th

Euro: Specs Net: +6,726 v -8,273 prior, COT index 56.5 v 49.5 prior, Open Interest 87,462 v 106,331 prior (8-month low)
- Positioning turns net long after one week net short; 3-week high

British Pound: Specs Net: -3,096 v 245 prior, COT index 57.0 v 59.5 prior, Open Interest 75,482 v 82,335 prior (3-week low)
- Positioning turns net short for the first time since JUl 19th

Swiss Franc: Specs Net: 9,008 v 4,655 prior, COT index 59.4 v 49.9 prior, Open Interest 17,652 v 24,243 prior (2-year low)
- 2-week high in net longs

Japanese Yen: Specs Net: 47,348 v 42,149 prior, COT index 90.8 v 86.6 prior, Open Interest 70,772 v 64,623 prior (2-week high)
- 2-week high in net longs

Australian Dollar: Specs Net: 29,723 v 29,016 prior, COT index 44.6 v 43.9 prior, Open Interest 52,849 v 52,664 prior (2-week high)
- 2-week high in net longs

Canadian Dollar: Specs Net: 4,121 v 23,704 prior, COT index 27.7 v 49.0 prior, Open Interest 42,185 v 54,040 prior (8-week low)
- 7-week low in net longs

New Zealand Dollar: Specs Net: 18,417 v 20,427 prior, COT index 82.2 v 88.5 prior, Open Interest 20,011 v 22,749 prior (4-month low)
- 7-week low in net longs

Mexican Peso: Specs Net: 22,634 v 41,293 prior, COT index 27.9 v 40.0 prior, Open Interest 58,704 v 72,531 prior (11-month low)
- 11-month low in net longs

S&P 500: Specs Net: -34,974 v -51,007 prior, COT index 25.8 v 14.7 prior, Open Interest 69,408 v 83,057 prior (2-week low)
- 2-week low in net shorts

10-yr T-note: Specs Net: -9,687 v +9,814 prior, COT index 71.2 v 76.5 prior, Open Interest 514,257 v 544,876 prior (3-month low)
- Positioning turns net short after one week net long

Vix: Specs Net: -831 v -343 prior, COT index 80.9 v 82.7 prior, Open Interest 53,021 v 49,945 prior (2-week high)
- 2-week high in net shorts

Gold: Specs Net: 200,086 v 203,573 prior, COT index 47.1 v 48.3 prior, Open Interest 327,822 v 315,203 prior (2-week high)
- 5-week low in net longs

Silver: Specs Net: 21,928 v 18,388 prior, COT index 21.9 v 12.5 prior, Open Interest 43,466 v 45,814 prior (5-week low)
- 2-week high in net longs

Copper: Specs Net: 5,894 v 10,861 prior, COT index 56.0 v 64.3 prior, Open Interest 49,242 v 57,889 prior (7-week low)
- 13-month low in net longs

Crude Oil: Specs Net: 131,234 v 135,718 prior, COT index 56.1 v 57.4 prior, Open Interest 515,108 v 514,800 prior (14-week high)
- 10-month low in net longs

Natural Gas: Specs Net: -190,173 v -189,428 prior, COT index 47.8 v 48.3 prior, Open Interest 499,035 v 491,338 prior (9-week high)
- 12-week high in net shorts

Wheat: Specs Net: -32,493 v -39,525 prior, COT index 27.1 v 20.3 prior, Open Interest 194,729 v 194,439 prior (6-week high)
- 4-week low in net shorts Corn: Specs

Net: 373,367 v 361,375 prior, COT index 74.9 v 72.5 prior, Open Interest 570,605 v 542,967 prior (8-week high) -
8-week high in net longs

http://www.zerohedge.com/news/chavez-pulls-venezue...

Forgive my ignorance please but that sounds like a bad ass market downside bet. Wonder if it's a copy cat sucker play.
Earl

Thanks baz

http://www.youtube.com/watch?v=IMvuoGji3yU

seems the police and public policy pushed the poorer black community of London over the edge. Some questions to be answered. As one black youth articulates quite intelligently to Boris Johnson, London's Lord Mayor, hundreds of millions being spent in Libya could be put to good use in the UK. The author shows up the cost of the 'mindless thuggery' compared to Libya, Northern Rock and large cap company tax avoidance with the help of politicians. Good stuff.

Still doesn't excuse the muggings of visitors and 5 deaths that occurred during said violence. I couldn't help but compare - and perhaps its not appropriate - what happened to the UK to the altruism of Japanese citizens following the quake.

http://www.good.is/post/people-are-awesome-japanes...

...elsewhere, the 60 million+ Euros spent inviting the pope to Spain attracted the indignity of many unhappy and unemployed youth. Apparently Spanish priests were critical of the venture too.

Strangely, the pope had corporate sponsorship from the likes of Coca Cola. I wonder how that little PR stunt will work out for them?

http://www.reuters.com/video/2011/08/19/pope-visit...

Much change is happening. I am in admiration of those like Armstrong and Bill who study cycles. To see the wheel 'turning' helps make sense of what must be shocking, even scary, to many people, not only in the markets but in life too.

Thanks for the link baz22 , good explanation about the under performance of gold stocks .

And possible bottom targets.

http://tinyurl.com/3d9thuo

Looks like the $17million put spread buyer [above #92681] maybe using the same map.

Dave,

Something to consider as "different this time" is the speed and volume increase in trading due to computers. Could be a much faster 10% return. Could last a shorter time. Could bring more surprise rule changes without warning.

I got "lucky" in 1987 when all my stops were clicking me out, but was on the road (no phone) and wished I could stop them. Next day I was relieved to be out of the market with my gains. I re-entered in a week and closed the year even higher.

I sold everything 9-10-2001 (5 RRs) and bought back 30% cheaper. This time my "fear of the Fed" caused me to sell what I didn't get stopped out of 8-5-11 AM with my gains and missed the S&P downgrade effect.

Mostly lucky, but convinced me of the value in hard stops. Like Louise Yamada said last week, "Better to be outside wishing you were in, than inside wishing you were out."

I'm still over 80% cash and less sure about re-entering because with 90% on someone else's auto pilot trading the extreme volatility is just too much for me.

I can end the year with my two main goals intact: 1. Not to lose principal. 2. Gain more per year that I must spend.

Not too bad in such a crazy time when the government is doing its best to screw all us little people ;-)

A One-Finger salute to Congress, Bernanke and the White House!

MAHIA!

Grym

P.S. I'm sure I'll diddle a bit more with some ETFs with tight stops though.

Hi Dean, forget the smoke, here's more fire. I guess it took him a while to join the race so he could get all his croney crook ducks in a row, remember the Texas corridor issue? Stealing people's land for a NAFTA free trade American job killing effort, 6 lane highway? And then there is more...

August 15, 2011
Perry's Problematic Pals
(Rick Perry must not be the Republican nominee. Rick Perry must not be President. Have we not had enough of this systemic sedition?) http://www.americanthinker.com/2011/08/perrys_problematic_pals.html 

I don't care if Ron Paul splits the ticket, he's the only one making sense at the moment.
Regards
Earl

ALOHA!!

At the 2009 CTA Conference in Nassau I proposed buying the ASX junior gold miners because I felt it was way undervalued to the TSX junior gold miners. Junior gold miners meaning production less than 100,000 Au ounces per year.

My top pick was Silver Lakes Res(SLR:ASX) and I did present data on the company as well as pointing out the top management came from WMC which was bought out by BHP. You want to follow management, especially extremely successful management teams and that WMC management now sits at SLR.

I presented at that conference with Chris Start, metallurgist extraordinaire, who used to work for Newmonts newest gold mine at Boddington, West Australia. He is now CEO of Kingsrose Mining(KRM:ASX), which I have been accumulating shares.

Still Chris mentioned what I call a "Pure Aussie Gold" (PAG) named Ramelius. A PAG is a company with all its gold mining based within the borders of Australia. These PAGs are doing extremely well now that the AUD POG has rocketed past the previous high of $1610AUD.

Here we see SLR and RMS, both gold producers mining less that 100,000 Au ounces with growing production and some very high grades outperforming GLD handily.

LINK: http://tinyurl.com/3z3bnw3

The timing of the 2009 CTA Conference in Nassau could not have been better, back in April 2009. At that time you could have picked up SLR for $0.40AUD or back then $0.26USD. Right now SLR sells for $2.52AUD($2.65USD). I was buying SLR back in Nov 2008 for $0.16AUD($0.10USD), that's a 2,650% gain as of Friday, which translates to a 82%+ monthly "buy and hold" gain.

For Ramelius(RMS:ASX) the gain is not as astounding as during the 2009 CTA Conference you could buy shares at $0.65AUD($0.42USD). This past Friday RMS closed at $1.61AUD($1.69USD) for a 260% gain over the same time period or an 8.1% monthly "buy and hold" gain. Combined though the monthly "buy and hold" gain exceeds 90%. My investment strategy of choice(necessity) has been gold based "buy and hold"! I have always stressed these have been monetary trades not precious metal.

Meanwhile back at the GLD ... During the 2009 CTA Conference GLD was at $90USD. On Friday it closed up at $179.95USD. That is about a 200% gain over the same 32 month time period, which equates to a 6.25% "buy and hold" gain. Yet on USD terms when you cash out of your GLD you are now holding money that has depreciated by some 40% against an AUD from 2009. Truly on USD terms you made a 6.25% monthly gain but on a AUD term you lost another 1.25% per month, so in reality your USD "buy and hold" netted 5% not 6.25%.

That means a trip to Australia now cost 40% more if you hold a USD, which makes Americans really scarce in terms of potential property investors in the Australian real estate market. Now in 1998 when I was in Western Australia with serious intent to buy major real estate the story was 180! Back then I was looking at buying a 330,000(no typo) acre cattle ranch with 1.5 mile coastline near the Ningaloo Reef and a five bed/2bath house with pool for $980,000USD. I had secured a loan pre-approval from WestPac for $400,000AUD, but I could not get my Las Vegas network off their butts in time to make the deal. Not to mention the FRB(Foreign Review Board) stuff. Instead my Las Vegas crew were busy buying up Las Vegas housing developments, which they still own to this day at a huge loss. Today that same cattle ranch would be worth somewhere around $30milAUD or so. Hard to say as I have lost touch, moved on! Shoulda-woulda-coulda!! That was a deal of a lifetime and I missed it by "that much"! I ended up in Hawaii on 9 acres for one fifth the cost. Life goes on!

So during the market crash since August 1st, while many stocks, especially bank ones, crashed and burned SLR is up 15% and RMS is up 12%, which is close to GLDs performance since August 1st. Still GLD cannot compare to to holding PAG since 2009.

There is always a "great trade" somewhere in the World; it boils down to timing and capital!

nice write up. Here's hoping prices drop to something akin to 2008. Not likely though.

Corner Stone,

From the same link:
"In early July, the Wall Street Journal, citing a new poll, reported that 94% of millionaires were afraid of "violence in the streets". This, it turns out, was a reasonable fear."

Our house has been burglarized as was my office building years ago. The most recent, more disturbing lawlessness here lately is "hot burglaries" where they break in knowing people are home and force them to reveal any valuables. The big difference in the USA is we have not been disarmed... yet.

If this were to happen at our house I am two seconds from a loaded weapon and will not hesitate to shoot.

I am to some degree sympathetic as to the injustices which incubate some of these acts. I too am angry about how our country has been allowed to deteriorate. I am fed up with the elitist activities in D.C. and the plundering of jobs, benefits and home values. But when my home is the target that doesn't matter.

I'm sure any of the juries (four) which I served with would be sympathetic to the homeowner under attack. Two years ago we got a guy life for child molestation. Last year my wife served on a first degree murder case and put that one away.

Grym

I know that it's not an apple vs an apple, but does anyone have some insight as to why SVM is not doing so well vs SLW and others? Info would be much appreciated.

http://tinyurl.com/3vdl799

Les, I might be missing something but to me this chart is still very bearish.

http://stockcharts.com/h-sc/ui?s=XLY:XLP&p=W&b=5&g...

George on SVM, from a technical perspective I look for SVM to dip below 7.74 again which will be putting in what looks to be the head of an inverse head and shoulders. This will be the low before it starts to make its move up. Even the weekly shows a bullish divergence on my indicators. So in my eyes based on my charts this stock seems to be getting ready to make a move upwards.

Ooooooo YEAH, I like this! I thank you for posting your question because I am considering this as a possible trade now. Great upside potential. I will look at possible targets on this next drop down for a good entry point. Let me know if you plan to add to it and I can give you a heads up on my entry targets.

Since the lower high was placed, next stop looks like near 500-600. It will take some time to get there though. Ouch!

Do you think we'll bounce off 1050 - maybe about time for QE3? Arn't the QE's (and who knows what they will throw at this) going to streatch this out for a while?
regards,
Earl

Earl, Friday we started what I have labeled as v of 5 of 1 wave down. Meaning the last wave down is about to be completed before we enter a multi month rally up. This final wave v down will have 5 sub wave to it. In my SPX Road Map you saw what I am looking for as targets. Also what is not on that chart are two Bradley Turn Dates Aug 20 & Aug 30. So with the final wave down in motion, along with the coming Bradley Turn Dates and "Benny" speaking Friday I am looking for the bottom to be in place sometime this week.

The only thing I can think of is the market stalls out at 1095 or 1065 area before Friday. Then Benny's speech on Friday's disappoints and the market finishes down the following week around 1010-1025 area before turning up again.

My 2 cents.

Grym - "Something to consider as "different this time" is the speed and volume increase in trading due to computers..."

Thats a good point. Injecting computer trading programs (so-called AI) into a complex system like the market almost certainly has unintended consequences that are not immediately obvious. I should know this already. :)

"Les, I might be missing something but to me this chart is still very bearish."

sure GW, but XLY:XLP must be put into context of the broader market.

Have the bankers been buying up while the rest of us have been selling? I have my list of super stocks to help me gauge this.

Do the indexes DB early in the week and bounce again? XLY:XLP is another piece to add the puzzle and if it's "risk on", then ideally we want to see discretionary outpace staples. That is one indicator I watch at a potential market turning point.

VIX, TLT, GDX:$gold, SLW:$silver - it's a big bag of charts that I watch to gauge conditions - one swallow does not make a summer. Nor does one chart make a market. But a bullish divergence is exactly that and requires price confirmation. But this you know already.

It is a weekly chart as well, so it ain't gonna turn on a dime. But if the market begins to stabilise this week, with a DB or a lower low to rinse out the stops, then it could begin to turn.

Unfortunately Brunswick Corp (BC), representative of discretionary buying in the Cara 100, ain't looking so hot here.

Thanks for the additional details GW, I've been looking at 5/10/15/30 year SPX charts, the basics of price, volume, 200/150 DMA and on these there are clear H&S signals and on all of them shows support in the 1000 to 1050 area. Those long term charts don't hint to me of moving up since long term supports are broken, although I realize the recent gap down needs to be filled. I'll be very attentive to see how the next weeks work out, it could do like 2008 when gaps down were not filled.
Thank you again
Earl

http://www.marketwatch.com/story/crazy-idea-micros...

http://www.conference-board.org/pdf_free/press/Pre...

suggests economic activity should expand moderately near term.

From Conference-board.org - fact of the week:

"1.91 births. W. Bradford Wilcox of the University of Virginia estimates that was the number of births per 1000 women in 2010, down from 2.13 in 2007. Job and income losses in an economic downturn typically lead to fewer younger and/or jobless women becoming pregnant.

This recession was steeper and longer than most and many experts think it may usher a demographic change as large as the Great Depression’s. Records show that almost 20 percent of the 100,000 women born in 1910 remained childless at the age of 50. And many more had just one child. The 2010 census showed that 18.8 percent of women 40–44 years of age were childless. In the words of Yogi Berra, “Déjà vu all over again?”"

http://tinyurl.com/3bcogah

Cara style analysis with some multiple time frame charts.

conviction close below 200 day moving avg or $310 = signal buyers have given up for now and sellers are everywhere.

http://bit.ly/of31L8

Hi Kaimu; you wrote "If those supply sources dry up then GLD ceases to function as an equivalent to gold in the hand or gold stocks in the 401k!"

Would that make GLD a riskier asset then GTU or CEF? Or are you saying miners can dig out assets while any of the ETF's must depend on a supply hence they are or could be a little more at risk?

Thanks, Earl

I like SVM a lot. Thanks for discussing it. 50% haircut from Spring highs. Sweeeet. Bullish divergence in the weekly time frame to boot.

Some equity/ETF breakout examples in silver/PM, in addition to the futures, based on friday's daily bar:

AEM,AGQ,SIVR,SLV,WITE

Not a recommendation to do anything at all. Just interesting. Would like to see some counter-trend action in gold before committing more to that trade. I'm also looking for the Swissy to re-assert it's trend this week. Should be some great trading coming up. As for QE3...everybody is on one side of that boat, so I'm on the other.

McEwen gives a great roundup of MAI/UXG, $200 ag & $5k au, and other worthwhile bits for us;

http://www.mineweb.com/mineweb/view/mineweb/en/pag...

Off to WIR,
pulse

I think spot is up nicely. In speaking with some pals of mine and also listening to CNBC last week, one would think that it's due for an immediate pullback. I'm sure it will but from what level? They are probably calling the action from Thursday night til now a double top. Lol.

http://www.kitco.com/charts/livegold.html

http://english.aljazeera.net/news/africa/2011/08/2...

Euphoric Libyan rebels have moved into the centre of the capital, Tripoli, as Muammar Gaddafi's defenders melted away and thousands of jubilant civilians rushed out of their homes to cheer the long convoys of pickup trucks packed with fighters shooting in the air.

The investment landscape has been altered dramatically in recent weeks, with sharp market declines and heightened volatility rendering an environment unrecognizable from what existed only a short while ago, when a smooth V-shaped recovery seemed like a fait accompli.

Crowded positions in all "risk" asset classes have been subject to disorderly unwinds magnified by leverage, as the extent of Europe's woes became increasingly undeniable. Regulators on both sides of the Atlantic have bewildered investors in their attempts to get things under control, only exacerbating the problem. And geopolitical tensions have resurfaced on the Korean peninsula, pushing already nervous investors further towards the edge of their seats.

Nearly forgotten amidst all of the hysteria were successive pieces of encouraging US economic data, and a first quarter earnings season characterized by significantly stronger than expected results, factors which added credibility to arguments that a sustainable US recovery is indeed underway. But, heading into June, fear and panic are now driving asset prices, a much more powerful force than fundamentals.

Central Banks: Crisis, revisited

Policy decisions from central banks in all of the key developed markets are due throughout the month of June. Australia's RBA is first out of the gate on June 1st, followed hours later by the Bank of Canada. The RBA has already hiked its Cash Target rate six times since its tightening cycle began in 2009, while back in April the Bank of Canada removed its earlier pledge to keep interest rates at 0.25% until July.

Both economies are heavily dependent on commodity exports and recent price declines in those markets suggest neither authority will be taking any further steps towards removing accommodation in June. The European Central Bank and Bank of England policy announcements are slated for June 10th, followed by the Bank of Japan on June 16th, and the intervention-prone Swiss National Bank, on June 17th . Last but definitely not least, the FOMC rounds out monetary policy for the month with its rate decision on June 23rd.

In its most recent minutes from the April 28th meeting, the FOMC offered an upbeat assessment of the US economy, with its 2010 growth forecast revised upwards to a range of 3.2-3.7% (from a previous 2.8-3.5% range) and unemployment projected at between 9.1-9.5% (from a previous 9.5-9.7% range). But the minutes were from a meeting held prior to Europe taking a serious turn for the worse.

The degree to which conditions have changed is perhaps best exemplified by the committee's observation that "business investment was expected to be supported by improved conditions in financial markets." Since then, asset prices have declined sharply, while disturbing signs of stress have reemerged in short term money markets, a chilling reminder of the fragility of global capital markets.

As always, the release of the May Employment Situation report on June 4th could be a game changer, with the potential to affect thinking not only at the Fed but also across the entire market. If initial jobless claims numbers are anything to go by (and there has been considerable debate over the waning correlation between jobless claims and nonfarm payroll numbers) the Fed won't have to worry about upward pressure on prices stemming from job growth, either. With these factors in mind, and in the complete absence of inflation, it's safe to assume the Fed has more than enough breathing space to avoid dealing with the "extended period" phrase, or the timing of asset sales in June.

The last ECB policy decision was a massive disappointment, with an accompanying press conference bordering on the farcical. As the market's worst contagion fears quickly became reality, ECB president Trichet failed to provide the reassurance traders had been longing for, with no new measures announced, and questions on sovereign debt largely sidestepped.

Just a few days later "Le TARP"- the massive €750B joint EU/ECB/IMF bailout was announced. Despite public utterances to the contrary, the main aim of the package was never to strengthen the Euro. Rather, the chief intention of EU Finance Ministers was to drive down government bond yields in the Euro-zone periphery, enabling member states to refinance their existing debts at reasonable levels and avoid default, thus halting contagion from Greece into the likes of Spain and Italy.

Nonetheless, the architects of the bailout would surely not have expected the "shock and awe" to wear off so quickly. And while some weakness in the Euro (as a result of currency debasement) was to be expected, the sharp declines in the single currency undoubtedly sent serious jitters through the continental policymaking elite.

With the sovereign debt situation still far from stabilized, rumors of a rate cut from the ECB are rife, while some analysts are not excluding other less conventional measures (such as 'unsterilized' quantitative easing). Given the ECB's history of reticence, this would be a remarkable change of course. But desperate times call for desperate measures, and with currency intervention rumors thrown into the mix, investors can, at the very least, expect a more constructive press conference from Trichet this time around.

In the UK, policymakers at the Bank of England have a red hot April CPI reading of 3.7% to contend with, well above the official 2% inflation target. This poses an interesting challenge for the BoE. Inflation has been persistently higher than expected in the UK over the past year, while growth in the same period has been sluggish at best. The relationship between GDP and inflation appears to be changing in the UK, leading to fears that it could be the first economy to experience the dreaded "stagflation."

The BoE will likely find itself further constrained in its ability to tighten policy to stave off inflation, with the new coalition government set to drastically remove fiscal accommodation. The market will receive its first glimpse at just how serious the new coalition government is when it comes to austerity on 6/22 when the new Chancellor Osborne will disseminate an emergency budget plan.

Equities at the Crossroads

Stocks swooned with each leg down in the Euro in May, with the major US indices falling over 10% from their recent highs set in April and entering official correction territory, and the Dow closing below 10,000 for the first time since February. After an incredible 70% run from the March 2009 lows this was in many ways to be expected.

But the way in which markets capitulated - including the largest intraday points decline in the history of the Dow on "Flash Crash" Thursday, shocked Wall Street and Main Street alike. In May, mutual funds experienced their largest outflows since October 2008, when the credit crisis was at its nadir and many of the world's largest financial institutions were on the brink of collapse.

But fear wasn't the only factor behind the selloff - some analysts estimate that, on average, S&P500 components derive as much as 25% of their revenues from Europe, and that recent events could easily translate into a 5% decline in normalized earnings. Traders will therefore be on high alert for revised guidance during the June "warning season" should the situation in Europe worsen further.

In their efforts to get both public finances and financial markets under control, governments represent another risk for stocks in June. Traders and lobbyists will be focused on Washington with the congressional reconciliation process for the financial regulatory reform bill underway. Chairman of the conference, Rep. Barney Frank (D-MA) is on record as stating that he does not anticipate the process taking longer than a month.

The consequences for the financial sector will almost certainly be far reaching, particularly if anything along the lines of the Volcker rule, or the amendment proposed by Senator Lincoln (who was also named to the reconciliation committee) which would require banks to spin off swap desks, makes it into the final bill.

In mid-May, Germany exemplified how government interference can upset the apple cart. Its haphazard initiative to unilaterally ban naked CDS positions, and short selling of bank stocks and government bonds backfired spectacularly, only creating more turmoil in the market.

And it's worth remembering that the financial sector is not the only industry currently at the mercy of government policy: Australia's proposed 40% mining super profits tax was the catalyst for weakness in the base materials sector (one of the cyclical leaders in the post credit crisis equity rally). Fears are now building that, in the new age of austerity, other, more fiscally challenged countries may choose to follow suit, with new tax measures of their own.

In the absence of earnings reports many traders will be looking to the charts for inspiration in June. The consequences of another leg down could be crucial not only for the market but for the broader economy, with the dangers of a negative feedback loop emerging as consumers become less willing to spend in the face of shrinking 401Ks.

In the S&P500, bear market territory at around 970 is still some distance away, with the 2010 lows at 1056 and the psychological 1000 mark key obstacles to any further slump. To the upside, traders will be looking for the index to move back above its 200 day moving average before having conviction that any rebound is sustainable.

Currencies: Subterranean Euro Blues

The Euro has been at the epicenter of trading in recent weeks, and not only in currencies; its gyrations have permeated through virtually every asset class, with many correlation accounts using the single currency as their barometer of risk. Focus on the Euro is likely to persist throughout June as European governments usher in an "age of austerity" to meet the requirements of the Maastricht treaty (which permits deficits no higher than 3% of GDP, and national debt at no more than 60% of GDP).

The question on currency traders' minds is whether the six month downtrend from the 1.52 highs in EUR/USD has already baked in the bad news that is almost certain to follow as the effects of governments' belt tightening begin to be felt. At the time of writing, the pair is trading below a key pivot point (and October 2008 low) at 1.2330, a weekly close below which would open up the technical reality of a further move to parity.

If EUR/USD can manage to move above 1.2330 and consolidate in a 1.2400-1.3100 range (the latter being key resistance, and a former eight year up trend line) the potential for ECB or even coordinated central bank currency intervention (last seen in the Euro back in 2002) would likely be reduced. Of course, markets do not always adhere to such orderly scenarios.

With uncertainty in all corners of the globe and US growth prospects looking stronger, at least on a relative basis, some see the dollar returning to a pattern seen in the early 1980's and late 1990's, when the US currency steadily appreciated, in many cases alongside rising equities as global capital chased out returns. A stronger dollar could have a variety of macroeconomic implications - lowering energy prices and putting further downward pressure on inflation, but also harming US competitiveness in export markets and delaying the global rebalancing process.

Commodities: Here Comes the Story of the Hurricane

With reports of panic buying emanating from the Austrian Mint, spot gold registered new all time nominal highs at $1,240/oz in the middle of May. It's not difficult to see why: rather than instill a sense of confidence in the Euro currency, the massive "Le TARP" bailout served only to augment existing uneasiness among investors over government profligacy.

While the ECB has been at pains to point out that its bond purchases are to be sterilized by term deposits, the very notion of "money printing" proved particularly unpalatable for Germans and Austrians, whose economic psyche is founded on the memories of hyperinflation in the 1920's. The ECB had been the last major central bank to hold out against quantitative easing but once it crossed the Rubicon into government bond purchases, the Euro was subject to all the existential questions other fiat currencies had faced last year, at the worst possible time.

The surge in prices of precious metals sparked a debate among talking heads as to whether Gold was the only reliable store of value and the true reserve currency. Ultimately, the greenback proved irresistible to investors in the flight to quality, or perhaps more accurately, the flight to liquidity. Dollar strength prompted not only a pullback in precious metals (including gold) but energy prices as well.

Despite successive bullish readings in DOE and EIA inventories, crude plummeted below $70/bbl mid May, an area which seems to be a current pivot point. The Libyan oil minister noted that OPEC leaders would only call an emergency meeting if prices were to reach $60/bbl. A number of other cross currents could affect energy markets dramatically in June. The BP oil spill in the Gulf of Mexico isn't expected to be contained until August, which should keep oil in the headlines, and if nothing else, prolong debate on offshore drilling.

Meanwhile, Hurricane season officially begins in June, with the Colorado State University forecasting a "very active" season and NOAA predicting it could be one of the most active storm seasons ever. Finally, Iran remains another wild card for oil prices as a new round of sanctions is subject to negotiation on the UN Security council.

Fixed Income: a Shelter from the Storm?

Yields in US Treasury and German Bund markets have fallen sharply in recent weeks, as investors sought to drastically de-risk their portfolios. The yield on the 10 year Bund set new all time lows at 2.60% while the 10 year note traded all the way down to test sub 3.10% yields, as the flight to both safety and liquidity took hold. The absence of inflation further underpinned the bid into core government bond markets.

But there is a growing belief amongst investors (championed by PIMCO's Mohammed El-Erian) that while there are few forces putting upward pressure on prices in the short term, inflation may be the path of least resistance for governments in the long term, in the journey back to respectable public finances. This is particularly so in the case of the US, where Washington seems unlikely and unable to plug the fiscal gap by reigning in entitlement spending and/or raising taxes.

Meanwhile, some worrying signs of credit stress have reappeared in money markets. With uncertainty over relative exposures to European sovereigns, counterparty risk reared its ugly head again, as banks became less willing to lend to each other. 3-month USD Libor is back above 0.50%, with the TED Spread approaching 40 basis points - levels not seen since July 2009.

The stress could be further compounded by financial regulation. As the implicit government guarantee built into the credit ratings of "too big to fail" institutions is wound back, ratings agencies have hinted that downgrades for some of the market's biggest issuers are eminently plausible, potentially putting further pressure on spreads.

Conclusion: A New Morning

Recent market developments have thrown up a fresh set of challenges and opportunities for investors and the global economy. Given that Europe is China's largest export market, the weaker Euro has drastically reduced chances for Yuan appreciation. On the other hand, the negatives of a stronger dollar - reduced competiveness for the US exporters and slower global rebalancing, are arguably outweighed by the positives - reduced energy prices and lower mortgage rates, both of which could prolong the nascent recovery.

Sentiment will be crucial in June. It seems markets are ignoring good news whilst showing heightened sensitivity to anything negative. And with no resolution in sight for the European crisis, it seems there will be no shortage of bad headlines for markets to digest in the weeks ahead.

As always, grounds for optimism can be found and bargain hunters will see historically low valuations and rising dividend yields in low beta, high quality names as increasingly attractive. The debate between bulls and bears will continue to rage, but undeniably the investing environment has changed, perhaps irrevocably. In the words of Bob Dylan: "you better start swimmin' or you'll sink like a stone, for the times they are a-changin' "

CALENDAR OF KEY EVENTS

1st: RBA Rate Decision, BoC Rate Decision
4th: US Employment Situation Reports
10th: BoE, ECB Rate Decisions, Chinese Trade Balance
15th: BoJ Rate Decision
17th: SNB Rate Decision
22nd: UK emergency summer Budget
23rd: FOMC Rate Decision

https://www.tradethenews.com/

Bill,

I'm pretty sure your description of the Great Depression history of market swings is repeating. The "attitudinization" effect is human nature and at least as volatile as the markets. But some major changes have occurred since the 1930s, never to be erased.

We're all aware of the many safety nets installed since then which are moderating the data. There are others which crept in and are less apparent to most citizens. Technology which makes Cara Community possible also makes manipulation easier and less apparent — mouse click money traveling at light speed undetected, international cooperation without use of formal ambassadors, corporate deals with what others may see as our biggest economic threats.

We were pretty much a closed system in the '30s, to have foreign operations was a rarity and national loyalty was considered a given. Not so now. Much, perhaps most, of what affects an American citizen's pocket book is controlled by international corporations rather than those they've elected. Agencies such as the Fed and SEC have taken on lives of their own — unrestricted by Congressional oversight committees.

Laws, regulations, and unions designed to protect US workers and consumers now tie the hands of our domestic companies and make it ever more likely they will move to less restricted counties. (Boeing says they will be 30% external in a couple of years.)

While this may be advantageous for a savvy trader, it is tragic for lower and middle class Americans simply trying to get by on wages and an anchor dragging down the US economy overall.

These are basic, systemic changes to the U.S. economic health and prognosis, which I believe are unlikely to reverse or even be seriously addressed by any presidential candidate and are largely being ignored by leading economists.

I can't help making a continuing comparison with the decline of the British Empire a century ago.

Grym