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February 9, 2007
Cara’s Daytrader Bull Board, Fri., Feb. 9, 2007, 8:56 AM
Increasingly there are movers and shakers who are saying that the stock market is over-priced. I say it will come down when bankers want it to come down. Moreover, central bank rates will come down only after the stock market index levels have a serious pullback. The rest of the talk is just noise.
The G-7 meeting this weekend apparently will focus on regulation of hedge funds. The G-7 meeting is comprised of both the Ministers of Finance (government) and the Heads of the central banks of each of seven major economic powers (no China or Russia, but that’s a different story).
Rather than studying hedge funds, I think the public should be demanding that the G-7 explain the functionality of central banks, which is outside the control of government, and may be operating in direct opposition to the needs of the people.
I couldn’t help think about that this week as I watched General Electric subsidiary CNBC-TV fete the former US central bank head Alan Greenspan. Missing from the celebration, apparently, was GE CEO Jeff Immelt who happened to be a member of the Board of Directors of Greenspan’s Fed, as he is today of Bernanke’s Fed.
In any case, the Fed is basically Goldman Sach’s prime banker and these days, as in the past, a Goldman rep also manages the government Treasury. The public is getting nervous with the connection between state and bankers.
If any of this interests you, you might learn a little by watching several hours of video called The Money Masters. Whether or not this video is materially accurate I cannot say as I watched only 15 minutes or so. I did find it very political, but my overriding understanding is that most of us can filter out the noise and learn facts we ought to know.
We live in a digital age today where access to independent media (like this one) is finally helping people to make up their own minds on the biggest of issues. For instance, I have been saying for years that the financial system and the capital markets system must be reformed from the ground up before we achieve social equity.
Our central banks need to be 100 pct controlled by government. We need to have an independent depository facility for our unencumbered assets, which means that if we, as individuals, have personal sovereignty (by that I mean debt-free), there is no banker that has the right to access our records and use that knowledge to trade against us. When a central bank trading desk trades against us, we the people need to know the full, true and plain disclosure of that trade on the same basis that applies to our trades. We need brokers that are not also dealers that are not also bankers. These conflicts are so basic, so wrong, that the people need to stand up and demand their government makes changes.
Now, these are not political statements. I speak only of basic human rights. The communiqué that will be issued this weekend from the G-7 will, on the other hand, be a political, anti-human rights statement.
Interactive links
Mixed.
Moderately positive.
U.S. Treasury Bond Mar. contract
Stronger this morning.
April Gold is almost 665, following a run-up yesterday. Spot gold is presently close to 660. I think that by April, gold will be trading at 750. I happen to think this will be the melt-up, not only in precious metals, but for common stocks as well. When gold hits 750, central bankers will pull the plug on credit and speculation will severely affect (possibly collapse) all financial markets. I don’t think the 2Q and 3Q of 2007 will be pretty. Central bankers and governments can push prices only so high via credit expansion before the people can no longer adequately service the debt. Cash is king. Gold will be the last asset to peak in this cycle, as it is in most cycles.
Spot silver at 13.82 is closing in on 14. Then 15, 16…17. Maybe 18. This cycle.
Platinum continues to be strong this morning.
Palladium pulled back a couple dollars this morning to 333. As part of the PM complex, I expect prices will move higher.
Production issues in the US are just part of the reason for March Crude Light trading at close to 60.
Aetna (AET) was upgraded to hold from sell at Citigroup.
Black and Decker (BDK) raised its quarterly dividend 11% to 42 cents from 38 cents and it authorized the repurchase of another 3 million shares, leaving about 5.2 million shares authorized for repurchase.
Broadcom (BRCM) late Thursday reported its 4Q profit fell 76 pct from a year ago, hurt by charges related to its stock option review, while sales rose on demand for its communications chips.
Brookfield Properties (BPO) said its 4Qnet profit fell around 55 pct to $21 million, or 8 cents a share, from $47 million, or 20 cents a share a year ago.
Ford (F) was upgraded to buy from hold at Deutsche Bank. DB made the same call on General Motors (GM), saying a positive outcome for negotiations on healthcare could improve the companies' flexibility in restructuring and re-sizing their businesses for profitability.
US Steel (X) was downgraded to sector performer from sector outperformer at CIBC World Markets, citing valuation: "We believe the valuation differential between U.S. Steel and some of the company's peers has become too wide."
Vodafone (VOD) was downgraded to neutral from outperform by Credit Suisse.
Here are the current Cara 100 RSI-7 values, sorted by highest and lowest Monthly values, prepared by “Sergey”.
Daily RSI > 70 in Cara 100 (12 of 20) With one click, these charts can be changed to Monthly or Weekly values.
The number of Cara 100 stocks that are trading with Daily RSI-7 above 70 (20) is down from two days ago (30), but is still very high.
Daily RSI < 30 in Cara 100 (3) With one click, these charts can be changed to Monthly or Weekly values.
Yesterday’s portfolio movers from the Cara Watch List:
Here are the top gainers from Thursday from the Cara 100.
Interactive charts of the top 12 Watch List gainers (Interactive link)
Here are the top losers from Thursday from the Cara 100.
Interactive charts of the top 12 Watch List losers (Interactive link)
Home-builders Hovnanian and Toll Bros had the biggest losses. There are several readers who think I ought to remove TOL from the Cara 100 on account of the dubious statements made by the CEO. That’s a fair question that will be considered in time (ie, when I’m feeling better).
Interactive charts of 12 of 17 of the 52-week Intra-Day Highs in Cara 100
There were no 12-month lows in the Cara 100 yesterday.
I'm going to take things easy again today.
Posted by Posted by Bill Cara on February 9, 2007 08:56:02 AM | Category: Cara's Bull Board
Discourse
"Our central banks need to be 100 pct controlled by government."
I respectfully don't see how politicians are going to do a better job than a cartel of national banks. I'd expect even more monetary inflation as politicians drop rates at the slightest hint of a recession that threatens their re-election. The market should control interest rates. The market should designate what is money. Not bank cartels backed by the government or the government itself.
Posted by: CashForFlow ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
February 9, 2007 9:24 AM [link]
Hi Bill,
Hope you are filling better … just read an article on economist stie … it’s regarding one of the Cara 100 companies, ERTS.
Can you please comment on this company …
thank you in advance.
Posted by: AZtock at
February 9, 2007 9:30 AM [link]
AZtock, I'll have a look at ERTS for the Week In Review.
CashForFlow, I'd simply like to see the Fed as a regulator of financial services like the SEC is today for capital markets trading. The SEC does not "control" the capital market and neither would a govt regulator for financial services "control" interest rates.
What the public needs via government is access to information, which central bankers are not giving us, and yet they are trading against us.
I have never advocated politicians as being in charge of anything other than making laws and public policy and investigating situations where the private sector is not abiding by the law or accepting of public policy. I believe that politicians should be representatives of all the people, not the banks and other special interest groups. I believe the public has the right to a free market, and by that I mean free of intervention by unknown parties or by parties like central bankers who have presumed the right of secrecy.
As to what designates "money", I am afraid the credit system (ie, government and central banks) are in control. I am part of the group that advocates that the debit system ought to be in control. Holding money (ie, an asset class) should represent holding an unencumbered asset. All claims against assets should be registered, in my view.
Then we would have a free capital market.
Posted by: Bill Cara at
February 9, 2007 9:57 AM [link]
I think CashForFlow makes a fair point re: politicians.
I know many people who work (or have worked) in government organizations. The things they tell me privately about how things really operate are dismaying, even distressing. Worse, there is no real accountability. (The worst among them prefer it that way for obvious reasons.) Dare we add to the mix the ingredient of politicians seeking to maintain their seats via re-election???
Maybe this board could open up a lively discussion of a way to develop a truly independent system.
Bill, I gather your "rest" is work. Still, we all hope you take care of yourself.
Posted by: GemmaStar at
February 9, 2007 10:02 AM [link]
GRZ up 10%. KRY trying to follow with a 6% gain.
Gold keep moving up. All I can say is "Thank you Bill!".
Posted by: JogyP at
February 9, 2007 10:11 AM [link]
Bill and others,
I too was concluding that April would be the blow off month this year. The loosening of margin requirements opens the door for major short selling or (buying) campaigns while holding the opposite option contracts.
Given the worsening macroeconomic conditions in the US, short selling seems more likely. At this point the auto makers and tire manufacturers are looking overbought and ripe for a teardown.
The first week of April could be interesting. This CBOE release about the Margin changes is here....
http://www.cboe.com/AboutCBOE/ShowDocument.aspx?DIR=ACNews&FILE=20061213.doc
Posted by: cb at
February 9, 2007 10:15 AM [link]
GRZ up 10%. KRY trying to follow with a 6% gain.
Gold keep moving up. All I can say is "Thank you Bill!".
Posted by: JogyP at
February 9, 2007 10:16 AM [link]
Hi Bill,
Nice drill results on WGI. Stock is still flat it must need a bit more?
Tom
Posted by: golden7 at
February 9, 2007 10:24 AM [link]
To all,
The Moveable Type blog publishing system is buckling under the load of all the files I have in the database. We are looking at ways of helping the system to rebuild files in 5 to 10 seconds rather than 4 to 6 minutes. The slowness is causing some of you to re-enter comments, thinking that the system didn't pick them up the first time. Even in my case I did not save a comment twice today, but the system showed it twice. All I can say is that these blog publishing systems have their limits and I have been pushing the envelope.
Also, I have a commitment to remove some broker-dealer files I had uploaded in 2006, but (in addition to being in bed for most of January) the system is making it near impossible for me to remove a file. Each time I do, I have a 6 to 10 minute system rebuild task. I could spend the next couple months full-time manually removing some old files and I'm not about to do that. I'll look into a way that programming can do that work much more efficiently.
Posted by: Bill Cara at
February 9, 2007 10:25 AM [link]
Western Goldfields (WGI) is indeed underpriced relative to fundamentals. I visited the company this week -- they are a blog away from my publisher. I told them I think they need to do a better job of IR and the place to start is in California, where they ought to be lining up mine tours for fund managers, retail investors and media. The mine is just 120 miles east of san Diego. The company has an ideal working relationship with Los Angeles County, which needs their fill to cover disposed waste. This WGI is a building story. In Canada, one of the top-rated hedge fund managers, Hugh Cleland (Jr), is a proponent. I know Hugh's father well, and dined with both his parents in Nassau a couple years ago. His mother is also very much involved with capital markets. Hugh senior is a world-class securities regulator and capital markets consultant to countries like Bahamas. Obviously his parents have made quite an impression on Jr because he has become one of the best fund managers in the country. This is a nice story.
Posted by: Bill Cara at
February 9, 2007 10:37 AM [link]
venezuela buying the national electricity company, not stealing it, got KRY off the dime today
Posted by: deacon31 at
February 9, 2007 10:37 AM [link]
ALOHA !!
Well said Bill ... Central Banks are the reason the rich get richer and the middle class disappears, however they could not have accomplished anything without the willing partnership of politiicans.
Whats missing from Central Banks and our government?
- Accountability
- Transparency
- Honesty
The two basic Common Laws handed down by the US Constitution and our Founding Fathers are this:
- Do all that you say you will do.
- Do not intervene in the property and rights of others.
These are simple laws yet if you look around the World you will see these laws being violated by governments on a daily if not hourly basis! You will also notice that the areas of the World that least follow these two laws are the areas of the World with the highest levels of discord and chaos. The US and UK presence in the Middle East comes to mind ... Over 100 years of Western invasions and imperial rule have been thrust upon these mostly Muslim people. Walk a mile with that ...
Bill makes a very important point to say that every Presidential election in America's modern history has lacked a true "people's" choice but instead have been cluttered with politicians loyal to the elite leaders of the Central Banks. Both Republican and Democrats ... Hence we find people like Hank Paulson in our money! The CEO of Goldman Sachs and now the CEO of the US dollar!
If we undid the oppressive rule of government and central banks there would be little need for stock market "gambling" and little need to have two wage earners per family.
A little historical perspective for you ... In 1940 the average person in America paid an annual income tax of $4. In 1950 the average annual income tax bill rose to $66 !!! That is a rise of 1650%. The bill to taxpayers rose because of the cost to execute WW2. What will be our tax bill to execute the War On Terror?
Can you imagine how much better your life would be if your taxes were reduced by 50%? To accomplish that we would have to also reduce the size of government. Tell me which Presidential candidate will truly ever accomplish that? In reality it is the opposite ... Look at the details of the Bush FY 2008 Budget and you will see your income taxes will rise 57% by the year 2012 and your employment taxes will rise by 36% in the same time period. How much will corporate tax rise by 2012? 4% ... Who serves your interests in Washington, DC? N-O-B-O-D-Y !!!
Political decisions made in Washington DC effect the financial decisions of every person on Earth now ... Politics is Wall Street !!!
Posted by: kaimu at
February 9, 2007 10:48 AM [link]
bolivia nationalizing a mine hurting PAAS, which operates there
AU the so africans have just been poor and are staying down (HMY GFI GOLD) they have electricity problems and the workers have hiv, a big mess in so africa
Posted by: deacon31 at
February 9, 2007 10:59 AM [link]
Leisa,
Watch your stops, I am heading out to get an early Lunch :P
Posted by: NYUgrad at
February 9, 2007 11:07 AM [link]
Hi All,
In terms of stocks I have breadth in Silver stocks even stronger than Gold in the longer term breadth averages (i.e. 20,30,50 day emas). However, Gold stocks so far today are clearly outpacing Silver stocks in breadth, if this keeps up for a few days I suspect Gold stocks longer term breadth averages will paralell those of Silver. Lookin' good!
Hope you can rest up a bit this weekend Bill, best wishes for your recovery.
Good Weekend All,
Ralph
http://blog.successfulonlinetrading.com/
Credibility Behind the Crystallex, Gold Reserve Move
.....check this url for the article with the above headline
http://www.antandsons.com/2007/02/credibility-behind-crystallex-gold.html
Posted by: quail at
February 9, 2007 11:35 AM [link]
Bill thank you for the comments on WGI.
Tom
Posted by: golden7 at
February 9, 2007 12:01 PM [link]
gold futs +10 on a friday , what could be finer!!
crude oil 60.50 very nice breaking of the downtrend line thus far, precious ignores the dollar and follows
GFI off the dime today, breaking away from the other lagging so africans
also in calif. is CAU, which is a fairly undiscovered uranium play along with their gold
Posted by: deacon31 at
February 9, 2007 1:44 PM [link]
NYUGrad---I just got back from lunch and it seems that the market was none too happy with my absence, though KRY continues to do well. It is managing to hold onto its gains. In the past, it hit the ceiling and rather quickly retreated.
Posted by: Leisa at
February 9, 2007 1:53 PM [link]
Deacon31 -- what happened to CAU in Sept/Oct 2004?
thx!
Posted by: siguy at
February 9, 2007 1:56 PM [link]
Story from the Washington Post http://www.washingtonpost.com/wp-dyn/content/article/2007/02/08/AR2007020802261.html
Desribes the purchase of the electrical utiity as "It's not a ridiculous number, even if it's not an entirely fair number," he said, adding that Chávez wants "to be able to expropriate private property and then say he operates by the norms of markets and respects private property."
Posted by: bb at
February 9, 2007 2:08 PM [link]
RE: Gold
Inverted h&s neckline is definitely in play, putting Bill's $750 target in it's sights.
$660 61.8% retracement bettered. A couple of closes above this, even if flat, will continue to squeeze the gold shorts.
Gold is overbought (yet not critically so), but many signs are bullish.
continue to remain long, but plan is to take some gains off table into strength, whether soon or at $750, only the tape knows.
Posted by: g034 at
February 9, 2007 2:21 PM [link]
hi siguy, dunno on CAU in 2004, but i do know 3 straight +25% or better runs since mid-october 2006, as 'uranium' crept into their headlines
some impt p.m. stocks the tape got bad already today, off -1% or worse include SSRI RGLD SIL PAAS BVN AU AEM
crude oil dove from 66.50 to close at 59.75
Posted by: deacon31 at
February 9, 2007 3:58 PM [link]
Does anyone know why Aurelian has been on a steady decline since late January? I've read an analyst report indicating that the new results are in line with expectations and the FDN site still has a lot of potential so what gives? Is it all political uncertainty with regards to Correa? Thanks in advance.
Posted by: leewar at
February 9, 2007 4:04 PM [link]
ooops on crude the 66.50 i meant a 60.50, so many 66's in GLD today!!!
on Aurelian, yes it's the dictator in Ecuador that is the problem... the gold stocks that are running best now are doing business in canada, usa, mexico...IAG is another one that can't go due to it's unfavorable country
Posted by: deacon31 at
February 9, 2007 4:15 PM [link]
deacon,
I'm a neewbie here, but thought I could contribute to this short discussion on CAU. CAU lobbied hard in Montana in 2004 to pass a new resolution against a bill (#137) the state passed a year or two earlier having to do with a mine (I believe it was Seven-Up Pete or something along those lines) they wanted to open, but for many reasons, including pollution, they were unable to. Anyhow, they lost the election in 2004 to have that ruling reversed and the stock was pounded (I was long CAU at the time). They have brought it to state and Supreme Courts since then to no avail. Thus, the stock languishes at or below $1 US these days.
Posted by: ricej11 at
February 9, 2007 4:38 PM [link]
Is it just me, or has anyone noticed that the miners have not followed this rally as they have in the past two years, SLW among them?
EJ
Posted by: EJStockman at
February 9, 2007 5:40 PM [link]
hi ricej11 and EJ!
looks like in percentage gain terms SLW has done about as well as any silver stock off of 9.50 in mid-jan., and i think Bill mentioned it at that time
CAU the 2004 stuff is dead and gone, i'm in the ball park saying it's just done three +25% runs up since last october( buying it here in the 0.70's and selling it as it approaches 1.00)
http://stockcharts.com/h-sc/ui?s=cau&p=D&yr=0&mn=6&dy=0&id=p47296180452
Posted by: deacon31 at
February 9, 2007 6:09 PM [link]
should say SLW doing about as well as majors SSRI PAAS HL AEM since the january low
CDE SIL doing much worse than the above due to bolivia
endeavor silver has listed on amex and went on a +20% run this week alone!
http://finance.yahoo.com/q/bc?s=EXK&t=5d
Posted by: deacon31 at
February 9, 2007 6:25 PM [link]
deacon,
your comment regards Correa is unfounded to date, but the public perception "yes it's the dictator in Ecuador that is the problem" is causing weakness that is being used by the MM to get there way with SP.
Brian
Posted by: skylane at
February 9, 2007 10:39 PM [link]
EJ-
Do a ratio study at stckcharts.com to see how miners versus the metal is faring. g034 has commented on the tameness of last year's rally. My belief is that if credit problems exacerbate and the market sells off, beta will get tossed first. Gold not as much. Then, when things get really dicey the miners will take off. I've posted a couple of historical look-see's on this before.
Good luck all.
Posted by: MarkM at
February 10, 2007 8:41 AM [link]
A good tool to compare relative performace can be found here. I used as an example some of the stocks mentioned here on this blog for comparison.
http://finance.yahoo.com/charts#chart1:symbol=gld;range=1y;compare=kry+aem+grz+nak+auy+slw;indicator=volume;charttype=candlestick;crosshair=on;logscale=on;source=undefined
Posted by: RonK at
February 10, 2007 10:48 AM [link]
Bill, Western Goldfields (WGI.TO) has moved above is 50 day avg(6 mo,/daily chrt). I believe this was based on a news related event.
Do you expect it to move up from here or pull back into the 1.90's again?
The chart looks like it's trying to make a bottom with low slow stoch, rsi 7 @50.
tkx, Dab(newbie)
Posted by: dabonenose at
February 10, 2007 10:54 AM [link]
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TGIF commodity day!
lme lowers margin for copper etc and the red kite fund is out of immediate danger
NEM AU MRO PAAS SSRI RIO PCU on the list, one way to play them is buy above yest. high
crude took a run for 60.50 overnite(now 59.87) gold and silver following crude and challenging highs back to last july..
top premkt volume: LI MNTA BRCM ALU MA SIMG F...upgrades TXN GM QCOM UAUA...
NIKK up +211 and europe up about +1/2%(dax futs +30) as the G7 meeting opens
Posted by: deacon31![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
February 9, 2007 9:17 AM [link]