Bill Cara's Blog for Oct 24, 2011

ALOHA!!

Once again Silver Lake Resources(SLR:ASX)closes at a new high $2.98AUD, closer to the one year target of $3.29AUD, on larger than average volume at near 8% for the day. I am still interested in hearing the Cu assays at Hollainder. If the Cu assays are anything great then I suspect the share price will move up on it before the news is released. Obviously "someone's someone" will know in advance!

Yes, I saw Christ Start's presentation on KRM(ASX). Good one!! At 2PM Hawaii time I am tuned into the ASX and do research on any company news release etc. I saw the KRM news release come in on the ASX but it got delayed by about 30 minutes. First time I had ever seen that happen where it was listed, but there was an ASX error window saying the content was delayed. Odd that one ...

Both SLR and KRM were ASX stock picks of mine at the Whistler Conference.

FD: I Own both companies.

http://www.hussman.net/wmc/wmc111024.htm

On a similarly outrageous note, Bloomberg reported last week that " Bank of America , hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits... The Federal Reserve and the Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by the counterparties. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC is objecting. The bank doesn't believe regulatory approval is needed." Well, other than that it goes against Section 23A of the Federal Reserve Act , but then, the Fed can make an exemption whether the FDIC likes it or not . And that's what we've come to - government of the banks, by the banks, and for the banks (because banks are people too) .

The Bloomberg report continued, "Bank of America's holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA [the FDIC insured entity], according to the data, which represent the notional values of the trades. That compares with JPMorgan's deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm's $79 trillion of notional derivatives."

The real problem, in my view, is that the transfer is clearly driven by the intent to get around capital adequacy regulations, and runs precisely opposite to the right way to create a good bank and a bad bank . It saddles the good bank - the taxpayer insured one - with the questionable liabilities, while "giving relief" to the holding company. This is really preposterous.

http://bloom.bg/qJbAuU

Financial companies, represented by the IIF, proposed a loss of 40 per cent on their Greek holdings, but the EU is calling for investors to take a hit of as much as 60 per cent. A person with knowledge of the discussions said that a 50 per cent compromise may be possible. This is the reason why Greek banks are suffering today. Greece is in a death spiral.

ABT - target raised at UBS to $60. See company split as value creating. Maintain Buy rating.

SLB - estimates, target cut at Credit Suisse. SLB estimates were reduced through 2013. Business recovery is proving to be more gradual. Outperform rating and new $99 price target.

SLB - Schlumberger estimates, target lowered at UBS. Shares of SLB now seen reaching $95. Estimates also lowered on near term North American pressure pumping concerns. Buy rating.

I feel stocks will go up but the first direction will be down.
Dollar and TLT are going up so far.

Edit: I was clearly wrong!

My sincere thanks to Bill and the team here. The research and analysis presented here over the past several months has saved me a bundle.

I made a substantial investment in SVM on September 9th - literally minutes before one the &%#$ anonymous reports hit the wire. I was down 25% by the time my trade settled! - My timing sometimes leaves something to be desired :)

I was tempted to give up and accept the loss - and I might have except for the bullish comments here.

Now I am in the green!

Thanks again, everyone!

I wonder if all the dirty shorts had covered prior to today?

http://business.financialpost.com/2011/10/24/silve...

UBS analysts Chris Lichtenheldt is one of the 5 that are analysts shown on the SilverCorp web site.

SVM dramatic move. New buying and short covering. Volume in the first hour around the total daily volume for the last 20 days. Many on the site were convinced that there wasn't any fraud. Obviously we were in a bit of a minority. It will be interesting to see how all this is digested in the next couple of days. Remember earnings are reported pre-open 11/9. Ex-dividend tomorrow fwiw. A dividend increase announcement would be a treat.

p.s. Don't miss the picture on the link of all that Silver ore.
Ore from Silvercorp's Ying mine in Henan, China.

This morning and yesterday’s posts by Brandt on AAPL are as clean and clearly formulated as the iphone interface itself!

Classic chart patterns also have their appeal. Brandt’s charts have NO indicators. Price and volume indicate all he needs!

http://peterlbrandt.com/

Jock

PS: With SO much focus on Steve Jobs, it’s worth a few minutes on his co-founder, Wozniak.

http://www.charlierose.com/view/clip/11931

Woz is SUCH a delightful guy, that Charlie Rose didn’t even interrupt him, or talk over him. I think WOZ was to JOBS as McCartney was to Lennon!

PPS: If you aren’t all “jobs-ed-out” and haven’t heard Jobs in his own well-chosen words at the 2005 Stanford Commencement, there is a truly inspiring 15 minutes in store. The clips played on TV don’t do it justice:

http://www.youtube.com/watch?v=UF8uR6Z6KLc

Jobs WAS a giant, but I think WOZ deserves a lot of credit for Apple, which he hasn’t received (or sought).

PPPS: Finally, did you know there was a THIRD co-founder of Apple, who sold his interest just weeks after investing:

http://www.businessweek.com/news/2011-10-07/wayne-...

Wayne is the anti-Paul-Allen, the accidental NON-billionaire! LOL

I suggest you visit the UXG website for weekly updates of their photo gallery on El Gallo progress. Great photos. As you may be aware, UXG is only about 9 months from it's Phase 1 production starting with gold. This initial production phase should be able to fund the future development of the silver phase which is scheduled to be in production in 2014. This implies that mine development will be self funded starting with the 50,000 ounces of initial gold production. Good job Rob McEwen!
The developmental work in Nevada toward mine development has not been recently updated but El Gallo is more important at this time.
The Minera Andes deal is to be completed before yearend. This should be another cash cow that will fund developmental work in Argentina. Some very important property down there adjacent to other mining areas. Could it be a bonanza? Who knows! But with Rob McEwen's brains and money behind it, anything is possible!
Today UXG is up 5% at $4.18

IWM is testing its 50% retrace at $73.45 (of its fall from 86.81 to 60.09)
SPY is testing its 61.8% retrace at $125.81 (of its fall from 137.18 to 107.43)

Should be interesting to see where we go from here. Shorts are getting bamboozled today. TZA getting slaughtered. A push above the retrace levels above would likely cause some substantial forced covering. I wouldn't be surprised to see a jump above these retrace levels followed by a pullback later in the week to test newly established support at the IWM 38.3% retrace (IWM 70.30) and SPY 50% retrace (SPY $122.31).

After standing on the sidelines for most of the year until mid-August, I have been generally sticking in the small caps, adding on dips and lightening on rips around a core long position.

or just the road trip up?

thx

NYUGrad,

aside of a road trip and Whistler village, I posted a few shots in http://caracommunity.com/content/bill-caras-blog-o.... The rest is going to be combined in a slideshow, as it was done for both Bahamas events.

Withdrawn

Why isn't HL getting any love.

From my understanding they have very little debt. A lot of cash and the cost of silver production is a negative silver cash cost of $3.03 per ounce due to their production gold and other basic metals.

http://amzn.to/uEmiC4

Just ordered the kindle version. should be an interesting read and good source for inspiration.

22% now. damn that is ugly.

the problem here is lack of device play in my opinion. Amazon has content plus Kindle Fire. Apple has content plus devices. Google has youtube and android devices.

without the DVDs shipping out, the digital consumption space is crowded. The DVD disc is going to vanish sooner than later.

EDIT:

that is one troubling chart. Hope no one here bought at $300.
http://bit.ly/tbqrSe

For those who dont want to buy book, the author was on 60 min last night previewing it.

pt 1 http://bit.ly/rX7kkL
pt 2 http://bit.ly/w59cbR

A pretty darn quick 61.8 retrace in my books, although 1270ish looks like a certain target.

caveat; who knows..........

You are most welcome. Quite proud of how we handled this play - entry point, partials and stop trails all were done in a very disciplined fashion, literally by the book, no emotions, no opinions, pure chart following.

well Jim Cramer was recommending we buy at $135 on September 26 in front of cameras, so maybe he will position himself on the bid side tomorrow? or maybe not.

"..Will markets react to this tomorrow?."

So far it's been, Buy the Dip.

Tomorrow may be , "sell the News".

*(GR) FITCH: GREECE DEFAULT IS INEVITABLE

Heh... You think?

has a good post today on his paid subscriber service. His take on PM is the same as Bill, others on this board and myself. Fleck takes issue with Jim Stack, in his most recent newsletter that gold is "a tad bubblish."
I agree with Fleck, the only bubble I see is the bubble composed of global fiat currencies.
Fleck "It is the money printing and consequent erosion of the value of paper currencies that is behind the rise in the gold price."

Here, I'm just preaching to the choir.
J
FD: long PMI, SVM, UXG

Pretty good stuff in 2 minutes 23 seconds about Capitalism and the Free Enterprise System from 3 decades ago.

http://www.youtube.com/watch?v=V5xkXHnhIUU

Ron Paul wrote a piece about the TSA doing random highway stops in Tennessee in the name of 'security.' I don't always agree with the man but I do so admire his verve.

Occupy 'wherever' has the wrong venues. 'They' ought to be camped out in front of the Supreme Court. If you lose civil liberties, protests will eventually be limited to 50 people for Homeland Security purposes. We wouldn't want suicide bomber attacks on targets of opportunity......would we! Be safe. Go home!

I think it was William Buckley who once compared National Socialism and Communism and found very few differences. The one overriding similarity was the reliance on police state methods to 'protect' the law abiding against the 'reactionaries.'

To spook the skunks from their dens, make it personal. The Occupies need to camp out in front of the homes and businesses of the Robber Barrons (did I really use that term???) and their enablers at the Federal, State and local levels.

I cannot see how we the people can pump out and patch our sinking ship of state piecemeal with constitutional amendments, voting registrations or wishful thinking when almost half of the publik is in one manner or another on the dole, coveting increasing amounts of depreciating paper money to pay their next months utilities and enough grub to feed their families.

If someone can harness the energy of the Elite Occupiers and direct them to gathering signitures in their respective states to demand a Constitutional Convention, then there's the hope and solution. Be warned that the mere mention of a constitutional convention will draw the ire of every vested interest and unleash billions of dollars for the benefit of the spinmeister lobbiests (motto) 'Judas was a piker!'

If you get a misdeal, ask for a new deck! Occam's razor in its simplist form?

Price leads the indicators and not the other way around, but when a bearish divergence in $XEU doesn't play out I ask myself what does the market want by stretching the trend?

JNK looks like one clue. The 10 min time frame looks like relentless pressure on shorts, maybe a short stop run? Look at JNK in the weekly time frame - see attached. Straight back to pre-August highs on decreasing volume. A Minyanville analyst has a very thorough and interesting take on market indicators, including JNK - it's worth a read:

http://www.minyanville.com/businessmarkets/article...

Note what the author has to say about the $ using an Elliot wave count.

DJIA seeks 12k, yet has run up against 40MA resistance. see attached. I've gone and reduced the huge list of charts that frankly is information overload and reduced it to a handful of weekly charts in order to capture the yearly highs and lows that have characterised the trend since the crash of '08.

My question to myself is, did we just witness a 2010 type bottom, or the first stage of a 2009 drop? Perhaps the Euro/Yen cross (or lack of) is a tell? see attached and the above link.

Intraday it is difficult to deny the leadership among key stocks - SINA, SOHU, PCLN, GMCR, CMG, LULU. As the link above suggests, $TNX is likely to head higher suggesting higher yields - bullish for equities.

The one chart I continue to monitor is GDX:$GOLD in the weekly time frame. Do we break out of this descending triangle to the upside suggesting inflows to the PM mining sector? That would be positive for PM prices.

I'm looking at weekly charts because I'm not making decisions on a daily basis anymore. Pure buy and hold at this point. That could change to include equities in a cash account and would be influenced by new lows for equities, which is arguably going to be influenced by resolution or lack of in Greece. I await further clues to perceive likely outcomes.$VIX ROC will be one such clue. see attached.