Blog for December 8, 2009 [See POST-CLOSE REPORT]

Gold is having a bad day, and new york hasn't even opened yet. Is three days a trend yet? Nearest support is the 50 dma at about 1100. That's a ways away!

I suspect that's largely due to the buck, which is back up to within spitting distance of 76. If the buck breaks above 76.10 we might be in for some serious excitement today.

Also, it's a gap-down morning, with SPX -11. How many gap opens does this make recently? I guess HB&B wouldn't want you to be able to bail out of your longs with only minor losses. It's enough to make a trader wonder if he shouldn't go home flat at the end of each day. 50 dma for the SPX is 1180.

I posted this this morning, but since it was one of the last two comments on yesterdays thread, I decided to post it today for the benefit of anyone who is interested. Thank you in advance for any comments you may have.

Mackinaw, very good analysis! You must have a quantitative background. However, as opposed to steps 2 and 3 that you mention in your comment, the two frequencies are found at the same time. An obvious weakness of this is that the shorter period curve must complete several cycles in the time that the longer frequency curve completes just one or two cycles. Thus the regularity of the peaks and valleys in my graphs. It seems unrealistic that there would not be some contraction or expansion of the period and amplitude of any given frequency over time. How to incorporate this in the algorithm I use could be a headache.

Thus, I'm inclined to follow your idea of doing a one frequency fit to get the long cycle and do the short cycle frequency fit only for more recent data. That way, the short frequency cycle would have a more up-to-date frequency and period. This would also permit me to add even shorter cycles, effectively producing an n-frequency fit, possibly giving rise to a good trading indicator.

Regarding residuals, the assumption has been that since these are best-fit curves, they accurately find the dominant two cycles in the smoothed data. Any residuals are thus considered to be noise for this analysis.(I hope this also answers Jack Black above.) I agree with you in general about curve fitting being dangerous business, which is why I emphasize in my posts that these results are suggestive only. I also say that one should not project forward more than one or even one-half of the shorter period using this approach (though my graphs show much longer projections, just to emphasize that having an underlying equation allows for prediction of the future.)

I view this as another tool for technical analysis. Many chart patterns such as triangles and head and shoulders can be easily "explained" by adding cycles of different periods and phases. Hence, why not try to uncover these cycles? Rather than waiting to see if a triangle is going to have an upside or a downside breakout, you can make a very good guess ahead of time using extracted cycles. It will be interesting to assess the accuracy of my results for $GOLD, $SPX, and $USD in three to six months.

One of my motivations in doing this work is that technical indicators tend to either lag the data or are at best concurrent with the data. If this curve fitting, which seems to give a hint as to future direction, is consonant with, for example, the MACD and the ADX indicators as they develop after the the last data point used for the fit, that would be a strong argument in its favor.

Hear! Hear! to muniman and cwinsor.

So looking at the buck, here's what I see:

USD at it's 50 dma - and it will open above that today, in all likelihood.
FXA at its 50 dma
FXC at its 50 dma
FXB at its 50 dma
FXY below its 50 dma
FXE below its 50 dma

I'd say the weight of evidence suggests the supertanker is making its turn.

I know this ETF is particularly wicked, but it is showing some startlingly bullish divergences. With the emerging problems in CRE I am tempted to find an entry on this.

It's gapping up on the open, so I may just sit on my hands.

Update: glad I waited on this one. SRS has closed it opening gap and gone negative. Puzzling ... and I also see a RE stock SL Green (SLG) has had a strong open. Go figure.

Update again: went long @8.10 as I see support at 8. Very tight stop and small position. If I'm wrong, I'll know fast and with a small loss.

Brought to you by the good people who gave the world the CDS.

Carbon Capitalists Warming to Climate Market Using Derivatives

Will we get fooled again? At least some, like Sen. Cantwell, aren't buying.

I don't understand - why buy now that the trend in GLD has clearly broken?

One thing I've noticed about the gold/mining sector after a nice run is that the initial pullbacks are sharp and seem to last about 3 days- at least. Then bounces but the trend is still down for at least 2 to 3 weeks. One way to see this is to go to Bigcharts.com and pull up an interactive chart that lets you zoom in on the pullbacks. Haven't been able to capitalize on this in any way- just an observation.

KC

1. This is a long term core holding. I have been peeling off some of it the last few weeks, to where I am below what I wanted for a long term holding. I wish to start layering back in. If it keeps going lower, I will be even happier.
2. Last time RSI7d went to 38.34 it bounced before I could add back in. So decided to nibble here if it drops below 4.
3. My average is under 2., so adding here will not hurt.
As I said, not a recommendation, just what I am doing.

"making homes energy-efficient" I read somewhere today that this is a 'cash for caulkers' program.

Couldn't resist!

Number2son,

"it is showing some startlingly bullish divergences"

I'm still seeing the price and the 10, 20,30,50 etc moving averages
declining, as well as distribution with increasing volume (with the exception of 12/03).

What I am missing that you are seeing?

On the hourly and daily chart, the MACD hist and RSI show bullish divergences. But you're right, the MAs still show trend down. Hence, my tight stop. ;)

I'll post charts later today when I have some free time.

Update: I've attached the charts that show the divergences I noticed.

"I don't understand - why buy now that the trend in GLD has clearly broken?"

Many of my Junior Miners short term trends are still okay and the stock prices are up today (MFN, NAK, KBX, UXG). But again they have been lagging gold and silver. I am on the fence if I should sell and take some profit or just write some covered calls.

I am a little concerned that oil stocks are not holding up very well. I am wondering if this is a prelude for PM stocks.

RBY - I hold some also that I bought around 3. I sold 75% of it around 4.35. I am keeping my eye on it also for a new entry point.

NYUGrad,

"Nothing obama or the govt will do or say, can reverse the course of job losses today."

My favorite would be for them to do as Eienhower did — go play golf :-)

I have tried to interest each presidential candidate and those running for office here in Illinois in a mass transportation system similar to Ike's Interstate Highway System since the "Peace Dividend" when the Soviet socialist experiment collapsed.

Have had no response other than my local yokel telling me they were "already spending on infrastructure projects".

I expect Obama's to also be a series of minor such patchwork projects. Had the TARP money been spent on a coordinated across the country passenger rail system people could already be working on it and even the coffee shops would be doing better.

Instead of "Too big to fail" we see this as "Too big to attempt."

Note: I have previously posted both my outline and the drawings which the candidates received.

(I'm going out and start up my snow shovel for the first time this year...Ho, ho, ho! ;)

added more FEED at $4.81 and got back in SEED at 11.28. China is en fuego today...at least the stocks I follow.

I know of UUP. Any other ways to play a strengthening dollar?

YCS

FD:long @18.65

http://bit.ly/8bq6Lp

at basic material equities... I firmly believe the ' jobs program ' outlined by Pres. Obama this am. will become a much larger focus as the months drag on... This will be a Federal driven initative, and thinking the allocation will be north of $ 100 Billion....

Martin Armstrong says historically GOLD is valuable because it's an easily movable asset (along with coins, collectibles, etc.) and thus in high demand when confidence in government drops. It is a store of wealth that travels well... opposed to RE that will get taxed and possible seized with no notice...

So, I would suspect GOLD will continue, among other reasons, because distrust in the govt is rising...

Add Banks, gold, usd and that is my compass for now.

After being burned in the 1970s I would tread lightly with the environmental stuff. Big oil is still a major player.

David Ogilvy a pioneer of market research found that people who were asked if they would like to see a movie about the life of Abraham Lincoln were enthusiastic. The movie staring Fredrick March was not a big box office success.

We tend to think we "should" on many things, but when our money votes the result can be different.

The government may be pushing this and Al Gore can sell his ideas, but I think I'll just watch this time. (Maybe just wait for the movie :-)

Or i guess the online version of mtv, but wait, the online version of mtv is mtv.com no?

Well i am in this space, and there is a lot of hoopla about this joint venture between Universal, Google/Youtube, EMI and Sony (as well as something called the Abu Dhabi Media Company).

Will it sink or swim? In my honest opinion, its all about who has the exclusive content rights and who will have the most eyeballs going to the videos.

Here is CNET's take: http://tinyurl.com/yfvfyx3

I drew a channel going back to June and the bottom of the channel is around $13.50. That could possibly be an entry point unless the upward channel is broken to the downside. Then $11.86 would retest the October low or we could go lower to $9.67 to retest the September low. Watch out belowwwwwwwwwwwww!

Got stopped out of MRO (Marathon) today. Long term capital loss. Nearing stop on COP. If I reload on oil it will be crude producers such as OXY. No more refiners or natural gas unless foreign companies, BP or STO maybe.

Anyone buying gold here at 1130? When China wakes up tomorrow and sees the sell off, they might well buy the dips, right? :)

Grym,

As a devotee of green since the late 70's I and many closet greenies are just coming out. Why? Social equity and responsibility is more obvious to a target audience who can Google your deeds good and bad. That is precisely why the TBL: "People Profit and Planet" will finally have it's say. Profit is 1/3rd of this equation, equal with social and environmental values. Equanimity on a global scale. I'm hopeful a reaction against the SBL (single bottom line) of profit motive greed will finally get dumped.

Peace brother.

Loannetter,

You may be right and I have no antipathy toward a cleaner planet, but I doubt I have enough time left to see the profit portion of your formula.

Yeah, I know I am cynical, but Obama seems to think if he says something it has already come to be so. I think the talk is influencing the anticipation far more than it will the flow of money (tax dollars excepted).

The administration thinks printing dollars can do everything it wants. I am a believer in greed trumping dreams. The evidence is all around us.

Sorry.

I noticed that U$D reached 70 on RSI(7) and went well above the SMA50 (daily charts). First since april 2009. Don't you all think that it's time for a rest? The dollar may have some more potential, but it feels like it has been too quick a jump without some consolidation.
FD: back to 100% cash.

today at Fleck, from John Hathaway, founder of ' Tocqueville Gold Fund '... discussing gold from $ 300.00 till today ( They were dead on the money all the way up )... Government influences, etc.. Four Stages of the gold bull: The beginning... The end of the beginning... The beginning of the end... The end....** guess it will show up at MSN Money in a week or so, as I cannot publish the premium site... ( thinks this is the beginning of the end stage, but will probably not take a Decade like the first two stages have ),,,

You can find it here.

http://www.zerohedge.com/article/contrarians-dilemma-must-read-tocquevilles-john-hathaway?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+zerohedge/feed+(zero+hedge+-+on+a+long+enough+timeline,+the+survival+rate+for+everyone+drops+to+zero)

or try attachment

http://bit.ly/7IcJjO

Am i reading this correct? They estimated 4.8%??? but had to revise down to 1.3%? This seems too glaring of an error from 'preliminary figures'. Japan is still the 2nd largest economy no? Trading overnight could get rocky.

Excerpt:
"Gross domestic product rose at an annual 1.3 percent pace, slower than the 4.8 percent reported in preliminary figures last month, the Cabinet Office said today in Tokyo. The median estimate of 17 economists surveyed was for 2.8 percent growth."

Jack,

I'd be willing to take the other side of that bet, at least for the short-term. I think this $USD rebound can persist for the very reason that you state, namely: "back to 100% cash". With the market topping, many nervous investors will have the same prudent reaction as yourself, selling to lock in gains thereby creating a demand for $USD as a safe-haven play. I see the cross back above 50 MA as bullish for $USD after so many months of decline.

Just IMHO.

Hi loanletter.

Thanks for sharing that TED video. Her anectode about the wasp nest reminded of me of when I was a kid: staring in awe at a fallen beehive and wondering what the heck was guiding these mindless creatures to assemble this intricate structure which incubated their young.

Cheers.

Macinaw, I often find inspiration in nature. Creatures making things of beauty and function are great lessons in themselves. I have hope we humans will find our real purpose or at least learn to give more than we take.

Unless I hear that Obama is collecting his Peace Prize by Fedex this Thursday I'm going to be 100% cash on Wed night. Negative geo-political events of the worst kind are never good for those who are unprepared for negative market reactions.

What companies? Aside from Oil and Gas companies that have a decided interest in trying to debunk overwhelming scientific evidence, that is?

Thanks Bill for your assistance in getting this figured out.

Just wanted to let the others know, if you sign up for an account you are required to click on a link that is emailed to you in order to activate it. You may need to log out and back in after activating before you see the EV/EBITDA screener.

I get it. Goldman = Bad. Associate Goldman with global warming science to thus discredit the science.

Do you actually have an argument? Or is "banker baiting" the best you can do?

Oh, nevermind ... this is the sort of nonsense that never ends well for those who come here to actually learn something.

Nice article Les. The debt issue really is playing out in the international arena in much the same way it did with homeowners. Namely, subprime countries that can't service their debt are going to default first since they will be the first to be denied refinancing, and then gradually default will move up the food chain to the prime borrowers. Will the ECB be the lender of last resort to the subprime countries? If so, for how long?

One of the constants I have observed in my reading of history is that central bankers and politicians say "we will not default" in the strongest possible terms, right up to the point where they default. It happened during the 30s, and its starting to happen again. It took England until September of 1931 to default - England was the biggest prime borrower of that time. On that same timeline, we have about 8 months before it happens here.

Could I have a second helping of gold?

I try to NEVER get between Ahab and his Whale. I am reluctant to argue politics, religion and now 'global warming.' But being bombarded with sensless drivel about Man's destruction of the world's enviroment it just plain silly.

Buy a 2009 'The Old Farmer's Almanac' and read the four or so pages about global cooling. Very sucinct and QED.

By the way, Maggie Thatcher began funding global warming studies as a way to break the coal mining unions in GB in the late 70's. It is a matter of 'If you fund it, we will tell you whatever you want.' Reminds me of accounting firms and the FASB. Oh, I forgot the rating agencies.

Three accountants are interviewing for a job. You must know the punchline. "Whatever you want it to be"

To paraphrase Carvel "drag a hundred million dollar bill through a scientific trailer court" and you have red herringed the whores.

Hang in there people.... these guys are on the run.

The sheer audacity of proclaiming carbon dioxide as harmful to humanity is a stunning revelation of their desparation. For those of you who dont know, carbon dioxide is the flip side of oxygen with respect to life on this planet. There is no way on this green earth they would get away with proclaiming oxygen as being unhealthy for humanity... heads is ok, but somehow the tail side of the coin is evil.... makes no sense whatsoever. We exhale carbon dioxide. It is critical for maintenance of our systems, both energetically and chemically. I pump into my incubators... human cell cultures cannot survive without this gas. Nor can our own bodies. They are attempting to demonize something so fundamental to our existence that we would not exist without it. With respect to carbon, we are carbon-based entities. Carbon is the single-most important atom to all life as we currently define life. What these people are saying, and attempting to do, is to gain political control of the very essence of our existence. And dont think for an instance this subtle aspect of their efforts has escaped them. Those behind this effort would prefer for the vast majority of humanity to dissappear off of this planet. The easiest way to do this is to gain legal and financial control of the very things that define life on this planet. Insidious. Criminal. Ludicrous. Where does this path stop? Shall we tax athletes for exhaling more carbon dioxide than the rest of us? Shall we tax the very molecules that we consume to sustain our bodies because those molecules contain carbon or will be broken down by our bodies into carbon dioxide? Sheer, utter, madness.

The arguments upon which this movement seeks to justify its actions are untruths and half-truths. They cannot tolerate objective scientific scrutiny because their premise will not stand on its own merits. So they obfuscate, aldulterate, and obliterate any semblance of fact. When all else fails, they prevaricate and manipulate through a very tightly controlled propaganda machine honed over decades to maximize emotional impact for controlling public perceptions. Have you not seen this machinery in action full tilt during this financial crisis? How anyone can doubt such a possibility having just witnessed the debacle of ignorance and self-serving gyration that is and was expert economic consensus... well it is beyond me.

Rest assured that this move by the EPA to proclaim carbon dioxide as hazardous to humanity is purely and legal and political move to undermine and subvert our democratic processes. You must not accept guilt for your very existence. You must not condemn something so fundamental to that existence as to be essential to it. Insidious manipulation.

But the very, very worst part of this charade is that they are blaming humanity for its deplorable state on this planet. They have systematically repressed and withheld critical tools for our cultural and technological evolution... revolutionary technologies that can and will change the way that humanity perceives itself and its future...technologies that would negate the necessity for archaic combustion as energy source... and then withholding these technologies that would transform us, we are blamed for existing without them as we do.

This is crap. This is going to stop. Mark those words. This is NOT our heritage.

There is a true cesspool to be cleaned up on this planet. But it has nothing to do with carbon dioxide, or carbon emmissions. The cesspool consists of those who we have empowered to lead us and who have wantonly abused that trust for personal gain, agrandizement, and ideological perversion. The elite are shaking in their booties right now. The movement that is Coppenhagen has been in development for decades. And it is not going as devised and choreographed. Despite all of their best and most brilliant resources for the manipulation of populist thought, the manipulators are losing ground...losing followers... losing the battle for the promotion of their twisted perceptions of reality. People are waking up and those in control are growing panicky and are acting out in greater and greater measures of desparation. That makes me happy.

The fight right now has everything to do with self-evaluation, personal education, and self-growth. We are fully capable of winning that fight one important mind at a time. Keep it up. Ask the hard questions. Demand the difficult answers. Accept mistakes with humility and without condemnation. Do not accept guilt or blame or condemnation for the very air you breath.

In my opinion, we are all doing just fine. As long as we continue to do our part by encouraging open discourse and legitimate curiousity over emotional ploy and propaganda, these guys do not have a prayer of succeeding. There are many, many warm hearted people on the inside of all of this working in conjunction with us to overcome this idiocy. Can you doubt that given the timely "release" of hacked climategate files? As we grow more bold in our insistence for truth, these insiders are emboldened to continue undermining these controllers.

Best wishes and happy trading to all.

Please, no more global warming flame wars. Whoever started this thread, I ask you please to restrain yourself in the future. I'm really not interested in reading yet another debate on this subject here. Sometimes I wish we had a voting system so we could see how many people here feel the same way I do.

"How many people here want to see MORE global warming debate on our 'capital markets and social equity' blog?" I bet the answer is close to zero.

Yesterday at the close I decided to pick up some oil and natgas - oil's daily RSI is 26, and so are the oil and natgas stocks I like - APA and CHK. APA seems to be undergoing some accumulation (high volume, small price movement), and CHK may have found support on its 200 dma. It's all a bunch of maybes, but I like also oil's relatively modest descent vs. gold's dramatic decline. I'm not quite brave enough to buy crude right now, but I'm close.

Estimated holding period - maybe a week or two, maybe a month.

Modest positions. I notice in these markets, a sector seems to get the dump for several months, only to receive some impressive steady pumping for a few months. Witness what happened to IYR over the past few months, and compare that with XLE. IYR was pumped, XLE was dumped. Perhaps it is going to be XLE's time in the sun soon.

ditto. please take global warming elsewhere.

"Mr Kashkari admitted that he plucked “a number out of the air” when deciding with Mr Paulson how much funding to request from Congress for the Tarp."

A telling memoir of the financial crisis by neo-mountain man Neel Kashkari, soon to be maven of what he hath wrought at bond insiders firm Pimco. Where did the $700 Billion Paulson Plan come from? Neel simply made it up.

http://business.timesonline.co.uk/tol/business/eco...

Thanks to Jesse's for airing the above two articles.

http://jessescrossroadscafe.blogspot.com/

I agree 100% with Volcker. The banks, who WE are backstopping, had no business whatsoever playing riverboat gamblers with all those derivatives. Riverboat gambling should be a hedge fund activity, not a banking activity, and to go a step further, is so dangerous that they should not even be lent money by banks to do so.

TerryC - I've noticed that GW debates tend to bring out an astonishing amount of passion on both sides. What ends up happening is a flurry of articles which get progressively more - enthusiastic - leading to a thread that I have no real interest in following. Often, the same points are made each time the debate takes place.

So while I can agree in principle about what you say, as a practical matter, I'm guessing this will end up generating a lot more heat than light. Again, again, and again. With a lot of passion.

Well, Bill will have the last word, I'm just one guy with one opinion and you have every right to ignore my request. :)

Another radio talk show trained scientist voices his "opinion".

This is crap.

Indeed it is.

Terry, that's a perfect example of a fallacy of false cause.

N2S,

without slightest intention to get into GW debate, may I ask you not to get personal in your replies?

Having different opinion from yours does not make anyone inferior to you. No one deserves to be insulted for expressing their opinion. No one has monopoly on truth. No one is designated as judge of intellectual capabilities of other posters. Expressing anger about different opinions does not add credibility to yours.

Keep it about the subject and not about the poster please.

As regards the often overheated warming issue:

Let me just say we need to consider Bill's often repeated statement about "Risk Management is Issue N0.1.

Both sides on GW have the potential for economic gain (or other ulterior motives). If we invest (trading may benefit from the emotional) we need to consider which side of the issue has the greater clout.

While it may be noble to desire what is good for the planet or what is less costly to society, the reality is power wins in most cases.

When I was younger and more hopeful I bought into alternative energy, voted for Presidential candidate, John B. Anderson (proposed a $0.50/gal. tax to fund energy research) and when new to computers took the advice of Peter Lynch and bought stock in tech products I used and found to be excellent. Anderson lost the election and I lost money.

The costlier the lesson, the more long lasting.

Mtn ... just wanted to apologize for my earlier comment. I was lazy in reading it at first and jumped to a wrong conclusion. Mea culpa.

Indeed, you make several good points.

As far the GW debate goes, I will refrain from any further comment for the benefit of both myself and everyone else.

bought some more GS at $162.3.