CTA Trading Desk Morning Report
[7:00am ET] Good morning.
At this time, the banks in France, Italy and UK are trading sharply higher (from Friday’s close) by an average of about +4%, while Deutsche Bank is down a tad.
The report this morning from Australian-based technical analyst Colin Twiggs reads: (i) US markets show promise of recovery, and (ii) Footsie and Euro Stoxx 50 shows signs of resurgence.
A key tell to start the week will be the 10-year US Treasury yield ($TNX), which is an indication of whether capital is flowing from bonds to equities or vice versa.
Have a good day.
[9:30am ET] Good morning, Geoff here.
Well, it looks like the Santa Claus rally is here. Ok, I don’t really know that, but we should start hearing that from talking heads – I just wonder if those guys were long two weeks ago or if they are jumping on the bandwagon now. The louder that battle cry becomes, the more likely that traders that missed out on the initial pop will be chasing returns and drive the market higher. Those traders usually get caught holding the bag and lets hope that it happens again offering us the opportunity to off load stocks to them at higher prices.
In short, the daily charts of gold, silver and related miners are forming 3 month triangle patterns. The fundamentals are strong for gold and silver and if QE3 is upon us, odds are pretty good that the breakout will be higher.
The US Dollar will either confirm the double top or it won’t. I don’t know which way it will go, but I know that I will be watching it closely.
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
| Symbol | Name | Last Trade | Change | Related Info |
|---|---|---|---|---|
| ^ATX | ATX | 1,869.10 |
 16.10 (0.87%) |
Components, Chart, More |
| ^BFX | BEL-20 | 2,120.12 |
42.97 (2.07%) |
Components, Chart, More |
| ^FCHI | CAC 40 | 3,204.16 |
39.21 (1.24%) |
Components, Chart, More |
| ^GDAXI | DAX | 6,121.21 |
40.53 (0.67%) |
Components, Chart, More |
| ^AEX | AEX General | 303.87 |
3.10 (1.03%) |
Components, Chart, More |
| ^OSEAX | OSE All Share | 437.84 |
3.64 (0.84%) |
Components, Chart, More |
| ^OMXSPI | Stockholm General | 305.07 |
2.08 (0.69%) |
Components, Chart, More |
| ^SSMI | Swiss Market | 5,732.08 |
13.23 (0.23%) |
Components, Chart, More |
| ^FTSE | FTSE 100 | 5,584.06 |
31.77 (0.57%) |
Components, Chart, More |
| FPXAA.PR | PX Index | 888.70 |
0.50 (0.06%) |
Chart, More |
| ESI500000000.MA | IGBM | 872.18 |
14.23 (1.66%) |
Components, Chart, More |
| MICEXINDEXCF.ME | MICEX Index | 1,509.20 |
3.43 (0.23%) |
Chart, More |
| GD.AT | Athex Composite Share Price Index | 696.94 |
6.26 (0.91%) |
Chart, More |
http://finviz.com/futures.ashx
http://finviz.com/fut_chart.ashx?p=m5&t=ES
http://finviz.com/fut_chart.ashx?p=m5&t=ZB
http://finviz.com/fut_chart.ashx?p=m5&t=DX
http://finviz.com/fut_chart.ashx?p=m5&t=GC
http://finviz.com/fut_chart.ashx?p=m5&t=SI
http://finviz.com/fut_chart.ashx?p=m5&t=CL
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad's Catch of the Day
Kaimu's Sound Money
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report
Comments
Econoday Today
RSI Summary as of EOD 2011-12-03
Accumulation Zone: Monthly 6, Weekly 3, Daily 0
Distribution Zone: Monthly 6, Weekly 1, Daily 10
Goldcorp hikes annual dividend by 32%
NEW YORK (MarketWatch) -- Goldcorp Inc. GG +0.04% CA:G -3.72% said Monday it'll increase its annual dividend by 32% to 54 cents a share. The Vancouver-based gold mining company said the increase will be reflected in its monthly dividend, payable to shareholders of record as of Dec. 16. The company said it will continue to review dividend levels in the future.
http://www.marketwatch.com/story/goldcorp-hikes-an...
Treasurys fall
NEW YORK (MarketWatch) -- Treasury prices fell Monday, pushing yields up, as optimism that key meetings this week will show European leaders making progress towards resolving the region's sovereign debt crisis boosted investors' willingness to buy riskier assets like stocks and the euro and move out of relative safe-havens such as U.S. bonds and the dollar. "Positive momentum is in the air," said George Goncalves, a bond strategist at Nomura Securities. "The focus will remain on the euro zone, especially with little significant economic data and no U.S Treasury auctions." Yields on 10-year notes 10_YEAR +2.06% , which move inversely to prices, rose 4 basis points to 2.08%. The main U.S. economic report of the day will be a reading on the services sector from ISM.
http://www.marketwatch.com/story/treasurys-fall-ho...
Cara 100 Ratings Changes For Monday
Good morning.
10:00 Factory Orders
10:00 ISM Services
------
BNS - Bank of Nova Scotia downgraded to Hold from Buy at Canaccord.
NKE - Downgraded to Hold @ McAdams Wright Ragen based on valuation.
RY - Royal Bank of Canada upgraded to Buy from Hold at Canaccord.
SNDK - SanDisk initiated with a Buy at Nomura. Target $65
------
"Sometimes it is not enough to do our best; we must do what is required."
- Sir Winston Churchill
Michael Lewis: Advice From the 1%: Lever Up, Drop Out
From Bloomberg:
MICHAEL LEWIS' TAKE ON THE OCCUPY PROTESTS
"There's a reason the Lower 99 currently lack leadership: Anyone with the ability to organize large numbers of unsuccessful people has been diverted into Wall Street jobs, mainly in the analyst programs at Morgan Stanley and Goldman Sachs.''
The Greek Lower 99 viewpoint: "Ordinary Greeks seldom harass their rich, for the simple reason that they have no idea where to find them. To a member of the Greek Lower 99 a Greek Upper One is as good as invisible."
http://tinyurl.com/7z6mz9w
(EU) France President
(EU) France President Sarkozy: Complete agreement with Germany has been reached, EU treaty for all 27 member sates should be revised, to disclose details in letter to EU President Van Rompoy
- Would prefer that treaty changes take place at the level of the entire 27 members of the European Union, however treaty change could be limited to the 17 euro zone states.
- Want automatic sanctions on deficits over 3%, to provide a way for a qualified majority to block automatic sanctions.
- Agreed on private sector contributions to future bailouts.
- Seeking a stronger role for the IMF.
- Eurobonds are not a solution for the current crisis.
- German Chancellor Merkel: Essential that the summit meetings this week regain European credibility, structural changes are needed in Europe.
- Constructive fiscal rules are needed in Europe, via treaty revisions, with binding debt limit rules.
- Fiscal discipline cannot be achieved without treaty chages, current treaties do not facilitate hard debt limits. Debt limits must be uniformly defined for the euro zone.
- Euro zone members will move ahead with treaty changes alone, if needed.
- Greece is and will remain an exceptional case.
- Reiterates once again that euro bonds are not a solution for the current crisis.
Energy
I have not seen much comment here on the energy complex of late.
With unrest in MENA I am putting more dollars to work in the oil sands and Bakken.
Also, there have been some interesting developments in LNG, eg GLNG.
PDS also looks good to me.
This blog's wisdom on the topic is welcome.
US & Non US Economic Data
Non US
PURCHASING MANAGER INDEX SERVICES Germany for Nov.
Actual: 50.3 Cons.: 51.4 Previous: 51.4
PURCHASING MANAGER INDEX SERVICES EU for Nov.
Actual: 47.5 Cons.: 47.8 Previous: 46.4
PURCHASING MANAGER INDEX SERVICES UK for Nov.
Actual: 52.1 Cons.: 50.7 Previous: 51.3
RETAIL SALES (MOM) EU for Oct
Actual: 0.4% Cons.: 0.2% Previous: -0.6%
---------------------------
US
ISM NON-MANUFACTURING (Nov)
Actual: 52.0 Cons.: 53.6 Previous: 52.9
FACTORY ORDERS (Oct)
Actual: -0.4% Cons.: -0.2% Previous: -0.1%
http://www.fx360.com/calendar/
Cara 100 Update (Final)
CVX - estimates raised at Oppenheimer through 2012, Oppenheimer said. Changes based on futures prices. Outperform rating.
VALE - estimates, target reduced at Morgan Stanley. Shares of VALE now seen reaching $27, according to Morgan Stanley. Estimates also cut, given higher expected capital spending. Equal-weight rating.
Energy
Long MRO, PBR, COSWF, XEC; action seems constructive (famous last words), valuations attractive
Re: Energy
c3wands,
I am not an expert in this field. I hold a long position on CLR. EOG seems very attractive to me and if CLR:EOG price ratio goes a little bit higher, I will sell CLR and buy EOG. The main reason for holding to CLR up to now is their CEO who seems to be a very good wealth creator. However with CLR close to resistance level, and similar P/E ratios, EOG offers a much more attractive PEG.As well a better candidate to be acquired. The way it's going today, I may change my position this week. CHK was my favorite but their debt made me worried, and I sold my position.
Mansis
Re: Energy
c3wands -
"PDS also looks good to me."
Why?
All clear top and bottom
Back at work already. Just a bit surprised to be told I have a hiatus hernia, not that I ever feel anything. BP = 122/76. Pretty good! Next gastro/colonoscopy not for five years, and I highly recommend them to all.
Regular schedule this afternoon.
CS views on US jobs market
• Labor market indicators are headed in the right direction. Payroll jobs have been growing at a 143K average clip over the past three months. Revisions were upward for the fourth month in the last five. The unemployment rate fell 0.4 percentage points in November, to a new cycle low of 8.6%. About half the decline was due to labor force shrinkage; the other half was due to employment gains. Hours and income are expanding, if slowly. Overall, the November jobs report delivered welcome (if hardly euphoric) news.
• The problem is not the growth rate in jobs per se. The problem is that the current trajectory in the wake of the Great Recession is inadequate to fill the missing jobs over any acceptable horizon. Payrolls are up 2.462mn from the February 2010 low, but are down 6.288mn from the prior cyclical peak of January 2008. At the current pace of payroll gains, it would take more than 3½ years (mid-2015) to get even.
• Significant chunks of the labor market which typically provide a cyclical tailwind are structurally impaired, and seem unlikely to deliver much job growth anytime soon.
Re: Energy
Hi C3Wand - Nice action in the shale oils with a focus on the Bakken. Seeing +4% gains today in NOG, TPLM and PBN. I had entered NOG a bit early and am just now moving to gains. The common theme is abundant leased acreage, and as the technology is improving lower costs to complete and stimulate across the board. Some have suggested the way to play this one might be the completion contractors, i.e. HAL, SLB et.al. Providing the greens are kept at bay game changing domestic production could be a god send for North America. Happy Trading
Bill - Great news on a favorable doctor's visit.
Re: All clear top and bottom
Bill, pleased to know that all is well! Can't keep a good man (woman) down.
Gold Price vs U.S. Treasury
Ed Yardeni Chart: Gold Price vs US Treasuries & Agency Debt held by Central Banks.
http://3.bp.blogspot.com/-VM5CjufN-vs/Ttw5SRPr4VI/...
Party poopers
(EU) S&P warns Germany and other AAA rated members of euro zone will be put on ratings watch negative later today - FT
Re: Energy
I bought TPLM back in October for LT..really like the prospects. I bought some NOG dec $30 calls back Oct as an earnings play..which didn't turn out, but still holding it hoping for a pop...like them both
Re: Energy
Own FST and LPR for exploration plays and RDS-A mainly for the dividend.
Symmetrical triangle in Gold will be fake-out
“…if the break occurs after prices have worked their way well out into the apex of a Triangle; a high volume crach then frequently — we might even say usually — develops into a two or three day ‘shake-out’ which quickly reverses itself and is followed by a genuine move in the up direction.”
http://peterlbrandt.com/symmetrical-triangle-in-go...
Watching silver and gold play out here I am mindful of the above post. I've marked in some potential support zones on the following GLD and SLV chart. I have a long term commitment to silver so my only interest is in where I buy the next dip. FWIW
BTW, I see the there's a new silver bullion coin being released to commemorate the CFTC: http://peterlbrandt.com/wp-content/uploads/2011/12...
Re: Party poopers
(EU) All 17 EMU nations may be put on Credit Watch Negative by S&P - US Financial Press
Right... why waste time and paper for individual downgrades
Re: Symmetrical triangle in Gold will be fake-out
I never tracked this pattern but it sounds intuitively right to me. I do know from experience that ascending triangle is likely to fail the breakout if extends too far into apex (ditto for descending triangle's breakdown). So with symmetrical one failure should look exactly like described - fakeout and reversal.
Major Buyers Finding It's Hard To Get Physical Gold
I had the great pleasure this week to speak with Mark Cutifani, CEO of $16B AngloGold Ashanti. What I thought was the most fascinating of Mark’s comments during the interview, was his observations of major gold buyers emerging from the Middle East & Asia.
“People are coming directly to us,” for large gold purchases he said. “People who want tonnes of physical gold, people with serious financial muscle…because they’re finding it’s very difficult to secure the volume of gold they want… That’s something we’ve noticed over the last 18 months, and it’s been increasing in the last 6 months. I think people are finding its hard to get physical gold.”
http://www.youtube.com/watch?v=QU9twnicHbw
What a contrast from Marc Faber's observations in the last couple of weeks touring Taiwanese and Korean investors:
Many people think that gold is in a bubble. That is not my impression. Last week I was in Taiwan and later I was in South Korea. I gave a two conference presentations, and I asked the audience, "How many of you own gold?" In Taiwan I think there was one participant that owned some gold and in Korea in a room with maybe one thousand people, not a single person owned gold.
http://marcfaberblog.blogspot.com/2011/12/many-peo...
Puts the fake out breakdown from the asymmetric triangle posted above in perspective.
Rye Patch Gold CVE-RPM
Hi All - Apparently a bit of a snafu by Coeur d'Alene Mines who is alleged to have failed to pay the mandatory claim maintenance fee payment to the BLM rendering some 541 unpatented mining claims conclusively forfeited and void on September 1, 2011 - all located in the Rochester/Spring Valley deposit(s) area. The mineralized lands with the forfeited mining claims became open to entry and the location of new mining claims by any third party. Rye Patch identified the open ground and located unpatented mining claims during October and November 2011. Rye Patch completed the monumentation of its mining claims in November 2011. Rye Patch informed the senior management of Coeur d'Alene Mines of the location of the mining claims on November 28, 2011. Anyone holding this one (up 66% today)? Not sure of the veracity of Rye's claims, but it would appear they might have merit. Happy Trading
Beijing Rethinking Electric Cars
Beijing may shift resources to hybrids due to difficulty in electric technology and better cost-effectiveness. Figures show electric cars' carbon dioxide emissions would exceed autos on fossil fuel,and thinking that subsidy for natural gas vehicles may yield more environmentally friendly results than electric cars.
http://topics.scmp.com/news/china-business-watch/a...
Re: Energy
I like the shale plays in North America and drillers this winter. I have owned PTEN for years and owned PDS a very long time ago. Chart looks OK esp. the weekly and the earnings are coming in as expected.
I will add aggressively on weakness.
Italian Welfare Minister and Monti
Italian Welfare Minister Elsa Fornero broke down in tears as she announced an end to inflation indexing on all but the lowest pension bands, a move that will mean an effective income cut for many pensioners.
http://www.youtube.com/watch?feature=player_embedd...
G10 Debt Distribution
Interesting chart:
http://4.bp.blogspot.com/-RRsG51XlGts/Tt0ymYvWqfI/...
*(EU) S&P CONFIRMS FRANCE AND
*(EU) S&P CONFIRMS FRANCE AND GERMANY AAA RATING PLACED ON WATCH NEGATIVE; as speculated
- Placed its long-term sovereign ratings on 15 members of the European Economic and Monetary Union (EMU or eurozone) on CreditWatch with negative implications.
- CreditWatch placements are prompted by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole
- CreditWatch review of eurozone sovereign ratings will focus on three of the five key factors that form the core of our sovereign ratings methodology: the "political," "external," and "monetary" scores we assign to the governments in the Eurozone
- Cites continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis and, longer term, how to ensure greater economic, financial, and fiscal convergence among eurozone members
- Forecasts 40% chance of EU recession
- Believe that ratings could be lowered by up to one notch for Austria, Belgium, Finland, Germany, Netherlands, and Luxembourg, and by up to two notches for the other governments (including France, Italy, Spain, Portugal)
America's New Energy Boom
From The GrowthStockWire http://www.growthstockwire.com/2905/These-Small-Ca...
These Small Caps Are at the Heart of the New American Energy Boom
By Larsen Kusick, analyst, Phase 1 Investor
Monday, December 5, 2011
If you need any confirmation that North America is experiencing a renaissance in oil and gas production, today's essay is for you...
...
At the World Shale Gas Conference & Exhibition in Houston recently, Chesapeake Energy CEO Aubrey McClendon said, "The U.S., now the No. 3 producer, could reclaim the title of No. 1 oil producer in the world."
History Rhymes?
"JIM LEHRER, PBS, October, 2008: World stock markets staged a comeback today. They did so as key governments moved to support troubled banks. On Wall Street, the Dow Jones industrial average scored its largest point gain ever, soaring 936 points to close above 9,387. The Nasdaq was up more than 194 points to close at 1,844. Overseas, stock indexes rose 8 percent in Britain, 11 percent in France and Germany. Markets across Asia also shot higher, including a gain of 10 percent in Hong Kong.
"News of European efforts to end the banking and credit crisis helped ignite the rally. On Sunday, nations that use the euro agreed on coordinated steps. Today, Britain was first to act. It was followed by Germany, France, Spain, Portugal, Austria, and the Netherlands."
normxyz: we still had some 5 months to go before the final bottom was in.
KGC
Hi All - Could be a good entry on this one now, with this little piece of business under the belt. Happy Trading
http://www.nasdaq.com/aspx/stock-market-news-story...
Energy
A look at China's latest 5 year plan.. Major initatives by 2015, and important milestones by 2020.. Timing is everything, but the non-fossil companies I would focus on are TSL, YGE and LDK, among others. http://www.cleanenergyfuture.gov.au/chinas-action-...
Re: KGC
I just hope Kinross is better at spreadsheets than I am. Looks to me that Ecuador negotiated a precedent setting deal - probably has other governments drooling. I would not want to play poker with Correa. That said, Fruta del Norte must be even better than originally disclosed. I have an instinctive feeling that Tye Burt is a serious deal maker but it hasn't shown up in the KGC share price lately.
FD long KGC, originally as a result of Aurelian takeover.
Charlie Chaplin, Final Speech of The Great Dictator
http://www.youtube.com/watch?feature=player_embedd...!
Some things never change. Neither does hope.
Re: Symmetrical triangle in Gold will be fake-out
Thanks Vad, always something new to learn. There are a number of triangles that have formed recently, notably VIX and SPY. I thought I'd go back and take a look at them.
There's a 4 day drop in VIX from a triangle to 200 MA support - is it a fakeout? What's the bounce good for? Will Geoff get the spike he sought recently? See attached.
Inversely, SPY rolling over at 200MA resistance, after initially dropping out of a much anticipated symmetrical triangle a couple of weeks ago for six day drop and bear trap. What's next?
UUP just won't give up this support. Some sort of trigger has yet to play out, positive or negative. It remains in risk on territory.
$TNX - just refuses to cross back above the weekly 8MA risk on indicator. Market needs a little kicker here to get money flowing out of bonds and back into equities.
http://www.madhedgefundtrader.com/there-is-a-metho...
Potential for a EoY Euro Short Squeeze
I noted from the MHFT that futures contracts are really stacked against the Euro, which suggests the opportunity for a short squeeze.
Low and behold, a look at FXE reveals the same technical structure as JPM et al. A double bounce, with slight bullish divergence. The more shorts that pile on, the greater the likelihood that the trade turns against them, but its not in the bag yet as Uncle Buck retains support this morning.
But a perfchart glance reveals how banking has bounced back in the last week. JPM outperforming SPY yesterday by a comfortable margin:
http://stockcharts.com/freecharts/perf.html?%5bSEC...
Euro short squeeze for Christmas anyone? Call me a cynic but its a solid way to get the EoY results up. But it remains a news driven market, so a trigger from Europe might be required impetus to get the ball rolling. Something to watch.
Dodd-Frank Rules
Another roadblock to a strong recovery....from IBD
"The new regulatory regime, however, is a boon for lawyers and government workers.
A Government Accountability Office study this summer concluded that implementing Dodd-Frank rules would require 2,850 additional federal employees just through fiscal 2012 (which ends Sept. 30) — at a cost to taxpayers of $1.3 billion."
http://news.investors.com/Article/593669/201112051...
Germany considers Nationalization of Commerzbank
http://www.spiegel.de/international/business/0,151...
Not quite there yet, but the option is on the table. Fresh equity offerings appear unacceptable to investors, freeing up additional capital by allowing some €3B of bonds and loans to mature (in Commerzbank's example) without renewal is a deflationary disaster.
Euro banks appear to be taking apart loan packages and reassembling them according to risk classes, selling them to hedge funds and US banks as "regulatory capital relief trades" - Oy... we've been there before.
The buck will stop with taxpayers if things don't improve shortly. I can only speculate that Merkel would cease her objections to ECB printing before calling upon German parliament to accept the dumping of Commerzbank's bad assets on the German taxpayers book. The capital has to come from somewhere.
KGC-KILL GOLD CONTRACTS
ALOHA!!
To do business in Ecuador you need to do profit sharing, windfall profit, advance royalties, NSR royalty, VAT, community infrastructure and GPEB with a minimum of 52%. Sign me up! Hey, I have unlimited CAPEX and time to spare!
How long ago did KGC buy the Fruita Del Norte project?
Exploitation and investment protection agreements. Who is "exploiting" who?
"An obligation to maintain the government's share of project economic
benefits(GPEB) at a minimum of 52%."
Then this section ...
"If new Ecuadorian laws are passed that adversely impact the fiscal and
economic parameters of the exploitation agreement, the right of Kinross
to seek amendments to the fiscal parameters of the exploitation
agreement to preserve the original economic equilibrium and/or seek any
remedies, pursuant to customary dispute resolution mechanisms;"
More confidence building language(above) to stimulate what exactly? Kinross pretty much admits there are no long term "agreements" to be had in Ecuador. In fact this news release admits there is no definitive deal, but there is a "non-binding" deal.
From Kinross's own news release ...
"As previously disclosed, the Company is experiencing industry-wide escalation on FDN project costs, and both capital and operating costs for the project are expected to be approximately 25-30% higher than estimates included in the project pre-feasibility study."
More approximate FDN cost increases on top of the yet disclosed ones coming from the PFS!
Holding Kinross compared to other alternatives in the gold sector ...
LINK: http://tinyurl.com/6n382w6
The chart above compares a five year buy and hold strategy for one TSXV junior explorer, one ASX S&P 200 gold miner and GLD. Guess what? They all made gains, but I would prefer not to have held Kinross during that period.
Now look at Kinross compared to other more popular HB&B products outside the gold sector over that same five year period ...
LINK: http://tinyurl.com/7x5cr7m
Re: Energy - PBN.TO - From Yesterday
Hi Luggie - I used to be a holder of PBN, suffering through a drop of over 50% with the same optimism as Devon Shire's prolific article's in Seeking Alpha -eg.
http://tiny.cc/ge1u0
Also new THAI technology of Petrobank (PBG.TO), the parent company, is intriguing.
Maybe I am too lazy, but I do try to come up with ideas from articles from "experts" such as these. So belatedly I did a more thorough study of their financial statements and finally grudginly agreed with Sacha.
http://tiny.cc/47rtj
that Petrobakken, although profitable, is more likely to run out of cash as their convertible debentures put option comes due in Feb 2013. So there is a valid reason why their current price is so low.
Sure they will likely do very well if the price of oil keeps rising strongly in the near term, but why take the risk when there are numerous other less risky opportunities? (eg. ERF, CEV)
Being a strong believer in peak oil, I do expect oil prices to go up long term, but am not so sure about the next year or two.
With the cash I bought KIV.V, which has gone up 40% since. You mentioned it a few months ago & so I checked it out.