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February 1, 2007
Cara's Daytrader Bull Board, Thurs., Feb. 1, 2007, 8:18 AM
Yesterday, the FOMC spin, the hyped Q4 GDP report (+3.5 pct), and the media prominence of Pres. Bush on the NYSE floor and Treasury Secretary Paulson also in the limelight was all it took for the Bulls to pump up stock prices.
Unfortunately, this is all about a debt bubble, and some incredible spending increases in the U.S. aerospace and defense industry that surely must stop at some point.
The Ethanol play has reached a peak I believe, but the gold story is just heating up.
A big piece of news for this Board is that Crystallex has replaced Todd Bruce with Gord Thompson as CEO, and the company says they are close to getting the environmental permit. If the latter is the case, then my friend Todd is leaving for one reason; this company is going to be in play as majors Gold Fields, Barrick, Goldcorp and IAMGOLD will be throwing their acquisitor's hat into the ring. Stay tuned with KRY.
Dow futures are very strong early in the day.
Interactive links
Tomorrow is U.S. Jobs Day. Expect more spin.
This morning there is important econ data out on Personal Income and Spending and the ISM Manufacturing report.
Some big gains were made overnight in Hong Kong, South Korea and Singapore.
The European equity markets are following the U.S. Pied Piper, and ignoring the Rat. It seems everybody loves debt.
U.S. Treasury Bond Mar. contract
Gold is up to $662.20 (+$4.20) at this point. Spot (cash) is presently $656.60. Pretty soon you will be seeing some high profile trend followers out making remarks that they called this gold rally. Not! But at least my readers know the score.
Silver spot is up to $13.61.
Platinum is very strong, approaching $1200.
Here are the Cara 100 End of the Week RSI-7 values prepared by "David" using Welles Wilder smoothing. They are sorted into Monthly-Weekly-Daily order because the Monthly values are the most important to long-term oriented traders as well as very influential on short-term traders.
"David" is now on vacation in Mexico, so "Sergey" has kindly agreed to fill in for the next ten days.
Daily RSI > 70 in Cara 100 (12 of 18) With one click, these charts can be changed to Monthly or Weekly values.
Daily RSI < 30 in Cara 100 (1) With one click, these charts can be changed to Monthly or Weekly values.
GE of all the Cara 100 is still the only one below the Daily RSI-7 30 level, which to me is a bigger indicator of market health than anything said by yesterday's parade of Talking Heads in the media.
Yesterday's portfolio movers from the Cara Watch List:
Here are the top gainers from Monday from the Cara 100.
Interactive charts of the top 12 Watch List gainers (Interactive link)
Here are the top losers from Monday from the Cara 100.
Interactive charts of the top 12 Watch List losers (Interactive link)
I included the Venezuelan goldminers KRY and GRZ in this screen only to keep an eye on them. They moved higher with the precious metals complex. GFI completed a huge financing, which moved the stock up a lot. During these financings, the stocks are pulled down to get the best price for the new buyers. This happens too much; investigators ought to be watching.
Logistics based transports like CHRW and home-builders HOV and TOL did very well yesterday. They usually do when the PM group does well, as it did yesterday.
Interactive charts of the 52-week Intra-Day Highs or Lows in Cara 100
Micron Tech (MU) hit a low of $12.79. Looking good.
CVRD (RIO), which is an aggressive Brazilian-based diverse miner of base metals touched $34.00.
A reader thanked me for Lyondell (LYO), which hit $31.70 during the day. She recalls the positive articles I did at the cycle bottom. I think long-term readers are starting to catch on to the disciple of the Cara approach to trading.
And now that LYO has had an extreme move to the upside, I move out of the stock. At lunch Wed, a Scotiabank man happened to say: "As a banker I believe in reversion to the mean". As a risk-averse trader I do the same. Hopefully LYO moves much higher, but my discipline will not permit me to stick around.
Biomet (BMET) and Bristol Myers Squibb (BMY) also hit 12-month highs. A couple days ago I opined that I liked each company. With the upcoming private equity take-over of BMET, there is not much left in the stock. I'll have to find a replacement for the Cara 100.
The downgrades here (CEO by Goldman Sachs and CCL and RCL by Lehman) are re-ratings from Buy to Neutral. I see a lot of losses on the board for big cap Chinese stocks, so be careful there. And, as Crude Oil moves into the high 50's, the cruiseship companies like CCL (a Cara 100) and RCL run into cost issues. Apparently Lehman has other thinking in mind.
JP Morgan upped CHRW from Neutral to Overweight.
I expect some mindless analyst to upgrade DELL today just because the CEO was fired.
Here is the Crystallex news release. The background of Mr. Thompson says all you need to know.
For Immediate Release February 1, 2007
GORDON THOMPSON APPOINTED PRESIDENT AND CEO OF CRYSTALLEX
TORONTO, ONTARIO, February 1, 2007 " Crystallex International Corporation (TSX: KRY) (Amex: KRY) announced today effective February 1st, 2007 Mr. Gordon Thompson, has been appointed President, CEO and Director of Crystallex International Corporation. Mr. Thompson, who was a director of Crystallex from 2000 to 2002, has more than 30 years experience in the financial services sector including significant expertise in raising debt and equity in Canadian and US Capital Markets including Project Finance.
More recently, Mr. Thompson served as Senior Vice President Corporate Development of NCE Resources Group/Sentry Select Capital Corp. He participated in the growth of the Oil and Gas assets from C$450 million in 2001 to over C$4 billion in 2006. In addition Mr. Thompson served as President of Strategic Energy Fund a private and public investment fund. While there, he oversaw the growth of that fund from $20 million to C$280 million over the last 4 years.
Mr. Thompson replaces Mr. Todd Bruce as President, CEO and Director of Crystallex. Appropriate compensation has been provided to Mr. Bruce in accordance with his employment agreement. Mr. Bruce has agreed to make himself available to the Company as a consultant as required. Mr. Bruce commented, "I continue to have every confidence that the final environmental permit for Las Cristinas will be secured by the Company and that Venezuela will provide the mining industry with a competitive, attractive jurisdiction."
Mr. Fung, Chairman of the Crystallex Board of Directors stated, "The Company continues to work closely with Venezuelan authorities with a view to obtaining final permitting for the Las Cristinas gold mine." Following a recent visit to Venezuela, Mr. Fung confirmed, "Crystallex is not aware of any impediments to granting the permit. We have an excellent working relationship with the Government of Venezuela and now that the Presidential Elections have been completed and Ministers acquaint and reacquaint themselves with their portfolios, Crystallex expects they will proceed quickly with the issuance of the permit."
About Crystallex
Crystallex International Corporation is a Canadian based gold producer with significant operations and exploration properties in Venezuela. The Company's principal asset is the Las Cristinas property in Bolivar State that is currently under development and which is expected to commence commercial gold production in 2009 at an initial annualized rate of some 300,000 ounces at the initial planned production rate of 20,000 tonnes of ore per day. Other key assets include the Tomi Mine, certain Lo Increible properties and the Revemin Mill. Crystallex shares trade on the TSX (symbol: KRY) and AMEX (symbol: KRY) Exchanges.
For Further Information:Investor Relations Contact: Richard Marshall, VP at (800) 738-1577
Visit us on the Internet: http://www.crystallex.com or Email us at: info@crystallex.com
Posted by Posted by Bill Cara on February 1, 2007 08:18:24 AM | Category: Cara's Bull Board
Discourse
http://www.cnn.com/2007/WORLD/americas/01/31/chavez.venezuela.ap/index.html
It is official now. The legislature in Venezuela has given Chavez dictatorial powers for 18 months. Initial plans are to seize oil and gas properties. Unstated, of course, is that he can seize the assets of any profitable industry to maintain his power. Chavez sees himself as "Robin Hood" taking from faceless shareholders and giving to the poor masses of Caracas who then vote to keep him in power and maintain his dictatorial powers. My concern is that at the precise moment that KRY becomes profitable, Chavez will "go for the gold" and nationalize your company. In the meantime, he will humor investors and allow you to spend your time and money in bringing KRY to the point of profitability and then seize it from you. (The investment equivalent of "coitus interruptus".) Unfortunately, promises from Chavez that shareholders will be reimbursed are as false as the promises from our government that the invasion of Iraq was essential for our national security.
Posted by: RDR ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
February 1, 2007 9:02 AM [link]
As a novice, i recently graduated from beginner, i can tell you that i wouldnt have had the patience or the cajones to stick it through this rough ride with KRY without your guidance Bill, i along with countless others im sure will be very glad very shortly, thanks for all you do.
Posted by: tgifbipo at
February 1, 2007 9:04 AM [link]
KRY
Pardon what may be my naivete, but when I read the news release "bio" on Gordon Thompson, it suggests to me that he's the guy you want leading the company when you're anticipating a need to raise capital, (to weather further permit delays or more optimistically, to fund going operational once the permit is received), as opposed to the guy who would broker a merger or sale of the company. Am I off the mark here?
Disclosure: long KRY and other miners
Posted by: manx928 at
February 1, 2007 9:14 AM [link]
oilers report!
reported: XOM RDS.A MRO VLO APA, crude oil has been up 2% or better the last 2 sessions each, and forecast for temps in the 'teens' for 10 days...
52wk highs: PCU RIO SSRI PAAS...
volume gappers GOOG DELL GILD BHP...
coiled spring ICE, 9:01 ET Int'l Securities Exchange reports monthly volume for January 2007; record Average Daily Volume of 2.8 mln contracts... upgrades GS LEH UPS
spot gold 660, 655 was the 'breakout over last summer highs'
silver pacing gold up +.25
Posted by: deacon31 at
February 1, 2007 9:15 AM [link]
With all the back and forth between Chavez and the US, here is an interesting article for your reading pleasure.
Posted by: puddy at
February 1, 2007 10:11 AM [link]
manx928,
Crystallex had no shortage of financial people on the Board. Mr. Fung and associates are quite capable of raising the needed capital.
My point is that Todd Bruce is an outstanding miner, equal to the task of developing Las Cristinas, but the company wanted a financial man as CEO because the movers and shakers in this company see it now as a financial play (not that they haven't always), not as a long-term operating mining situation.
Gord Thompson has zero credibility as a miner, and Crystallex holds rights to a world-class ore body. Thompson is there to meet with prospective buyers.
Nothing's changed here. Fung added nothing new about the environmental permit. The company has the cash and the access to cash to get through the next phase. With the permit, there will be a buyer. The share price will move up by a factor of three to five. Thompson and Fung will take the credit. KRY holders will be happy. Without the permit, there is no story here.
End of story.
Posted by: Bill Cara at
February 1, 2007 10:35 AM [link]
KRY
Mr. Cara's back in form and on top of the Crystallex situation. Welcome back.
Posted by: NT at
February 1, 2007 11:50 AM [link]
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Bill has done an outstanding job pointing out on many occasions that often times it is far easier for larger companies in the metals and mining sector to acquire than it is to develop. The old buy vs build. Over the past several days there have been snippets of information which in their totality would indicate that this trend is going to continue. Facilitating this trend importantly is the development and sophistication of the global capital markets. Now companies all over the world now can access the capital markets with a fair degree of ease. The impact of this important trend is to bring new players - some of whom will develop global scale - into the marketplace. My guess is that this development will further increase the pressure on certain asset prices worldwide. In other words assets will become strategic in nature if only because boards of directors will convince themselves that they cannot allow them to fall into the hands of competitors. It is a critical dynamic.
For example yesterday brought some interesting news out of both Russia and China in the metals and commodities sectors. Polymetal of Russia announced that it would seek a global listing providing this behemoth with acquisition currency for the future. Further Shenua Energy of China announced that it was going to use its financial flexibility to go on the acquisition trail globally to expand beyond simply coal into other metals. These are just two examples of an important trend. The engines continue to rev up globally.
The capital markets are facilitating the entrance for new players in the metals and mining arena all of whom want to achieve scale and who will no doubt compete vigorously with the existing majors for scarce strategic assets. This will likely be a good thing for a portfolio of "junior" playerss.
We are fortunate to have Bill help guide us in this unique time.
Cheers.
Posted by: Noodle![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
February 1, 2007 8:44 AM [link]