This past week: “The Peoples Bank foreign exchange reserves finished the 1Q07 at $1.2 trillion, which was a gain of +$135.7 billion, including (get this) a gain of +$73.3 billion that nobody can explain.”

Well, we know what it wasn’t. They did not invest in U.S. Treasuries or the yen to earn these returns since both weaken during the first quarter.

This to me means China has changed its foreign exchange policy. As a result they are earning more and improving returns just like any country would want to with a massive surplus. I’m sure the Chinese desk is under pressure for results like anyone else.

How are they improving returns? Although, the majority of recent past investments were Treasuries, I’m surmising they diversify more and look elsewhere. Perhaps they seek a basket of other currencies as the Euro, the Malaysian ringitt, the Indian rupee and the AUS$ had big moves over this time.

You know what could be goosing their returns based on the first quarter? They could be buying gold. (Maybe they read the billcara.com in the first quarter!). They will still invest in Treasuries (don’t want to kill the golden goose for their exports) but they will not purchase as much.

I don’t know this for sure, it’s just my 2 cents worth. It will bear more watching as the months go by. It is more negative for the dollar and should continue to boost PMs. I think the all time low for the dollar is around 79.5-80. It closed at 82.17 Friday. And to think it was just a few years ago the dollar was at 120. A sign of the changing times!

FMT...here we go again. Fremont finds a buyer for $2.9b in subprime loans. Same buyer in talks to buys its residential lending business and assets.

SDS now at its 1 year low.

AMGN back above 60.

2nd: "SDS now at its 1 year low."

... and still, it doesn't appear to be on sale yet.

Look at a weekly chart of the VIX; it is now in no-man's land, searching for a bottom.

SDS trends with VIX, QID trends with VXN.

Qs have nearly filled the gap from the Feb "hiccup" (that's all you can call it at this point), and created a new gap this AM - something to look forward to ;-)

t4k

MarkM: Godspeed, I look forward to hearing from you again soon!

Even the Group of Seven (G7) knows you can move mountains with what you say, or what you omit to say...

t4k: Maybe the highs get taken out and make the "hiccup" callers look good--that would have to be the ultimate fake-out for '07. I like the James DePorre's opening caption this morning: Hand on the Throttle (don't fight the market), Finger on Eject.

For now, Helene Meisler is looking for an overbought peak sometime this week. Also speculates a breakout in gold and a falling USD could provide some excitement while everyone is focused on earnings.

Adding to MU and BMD this morning.

of 2007 ..we exceed the highs and make

alright, i guess feeding my 5 year old while cutting and pasting doesn't work too well

For the past couple of hours my June gold minis have been trading within a buck on either side of spot. Right now they are behind spot.

Usually they run about 5.50-5.60 over.

What does this mean? Is spot lagging or is the future price failing to confirm the spot move?

I have a feeling I'm about to get a lesson, one way or the other.

Mike
NYC

When the market *does* make a real top, VIX & VXN will begin to be supported by longer term MAs on daily and weekly charts. These became resistance this month, so looks like it's bull-city until volatility comes back.

t4k

There's your G-7 answer on gold. Coming back for another buying opportunity?.

Are you guys getting in on the ultra-short sales or waiting? I made a few $ trading the QID but sold into what I preceived would be a rosey reading of last weeks reports. I'm leary of getting in with this tape, yet they are on sale....

Craig,

I think it's OK to start scaling into a short position with the goal of adding to it over the next few weeks. But I would wait to start a trade. There's probably a good reason to be leery right now--it kinda feels like it wants to take off.

With the G7 having just met, and Bill talks above about a rate increase tomorrow, I think there is a strong risk that in the very short term that the USD will gain some strength.

So, tactics wise what would be some ideas for short term plays. Or reasons not to dabble with a bounce in the USD, rather focus on the longer term decline.

I was thinking that with a rate increase Freddie and Fannie would be hurting. Today there was a significant jump in Freddie because, I believe, Freddie found a buyer for 3/4ths of a billion dollars worth of loans. Would Freddie still be hurt if there is a 25bps rise in the treasury yield?

-Quentusrex

Craig,

Bill has been reminding us to keep an eye on the Financials as a tell for what HB&B are up to. Well, this morning XLF is up over 2% on a ton of volume ... be careful out there, indeed.

t4k

Repeat after me: "I will not buy inverse ETFs on the way down."

MikeNYC

I noticed that GLD is also trading $0.50 to $0.60 below the normal spread with spot gold. I too am curious to know why the extra lag today.

cb

Thank you so much 2nd.

Who was it that pointed out BUCY?

Bless you. Up 6% since then.

Great stock markets! :)
Is it always the same story? Just carry trade, borrowing yen and investing in more speculative positions, with higher rates of interests.
Look at the graph comparing the New Zealand Dollar and Yen ratio, against the SP500:
3 months
http://finance.yahoo.com/q/bc?s=NZDJPY=X&t=3m&l=on&z=m&q=l&c=%5EGSPC
12 months
http://finance.yahoo.com/q/bc?s=NZDJPY=X&t=1y&l=on&z=m&q=l&c=%5EGSPC

The curves are so similar. Is it a pure coincidence? I don't think so.

The drop on gold was right on the daily schedule again, slightly smaller than normal.

For those expecting bad mortgage news, Wells Fargo reports tomorrow, and First Horizon (FHN) on Wednesday.

Quentusrex,

I would also be careful of a short USD position until month-end given that (i) the Euro may encounter some turbulent weakness if the French presidential election provides muddied first round results next weekend (with further uncertainty for the two-week runoff if no clear favorite emerges), and (ii) the market momentum begs for a retest of the carry trade set-up in Feb. (i.e. Yen 121-122).

t4k/2nd_ave,

After flying up in the wind in Jan./Feb. with heavy shorts on indices, I have taken a more cautious step approach to rebuild my bearish stance. I also agree that financials are generally a good tell of impending marketwide weakness (and today is a clear show of strength). Yet, with all the headwinds very well advertised on Financial Entertainment TV over the last month, we may witness some seller fatigue for now. While the mortgage/consumer credit risk may worsen at a varying pace (May resets will provide a huge tell IMO), I don't believe that traders fully appreciate the risk of an "accident" in the syndication of a borderline PE deal. It just takes one bad earnings quarter in the process of selling down the debt and the equity to shock the system. Finally, I sense that the giddiness in reporters' snapshots & experts' comments is slowly returning to the airwaves (remember Feb. 26 TXU deal, DOW rumor, "we are invicible" chants) and that PE is picking up the pace of deals once again (as if time was starting to run out).

JML

Craig I mentioned "BUCY" last week, it is a core holding in my IRA however I would be careful at these levels. How about a dollar bounce here, would like to see Gold consolidate back to the 50 day Bill until then $ 700 will continue to see FCB, IMF selling.

Thanks T4K, rule added to the list.
Looks basically like the falling knife rule.

We can all wait, right?

Anyone ever wonder who would be buyers of short indexes at their top?

That's one reason to think about actually shorting when the time comes.

I Thank you again Rick.
I just tightened my stop on BUCY. Nice gain in a short time after falling about 4%.

Gold is coming back slowly. You all expected it.

Anyone watching WGDF? Making some small progress against the gold current today.

And CCJ is going even higher. Up a dollar today. Where does uranium stop?

MarkM called this the "Rocky Balboa" market; I think it's more like the Harlem Globetrotters, with short sellers & top callers playing the hapless Washington Generals. The Globetrotters display lots of fancy footwork, and they never lose.

http://www.harlemglobetrotters.com/events/
(plays "Sweet Georgia Brown" for you)

Rocky at least had to deal with some adversity...

Craig - the main difference in trading the inverse ETFs is that they generally grind down and shoot up, so you need to be "in" at/around a local bottom. You can short most of them as well, but I don't think you can short the double long variety (I know QLD is not short-able at Schwab)

t4k

Bill mentioned a nice 58' boat....

Anyone here fish? If you were HB&B fishing for traders $ and you wanted them to rise to your bait, wouldn't you have to put financials on your hook today? I mean, they SUCK for how long and TODAY they throw the fish the financials?

To this fish it LOOKS like bait.

Okay, back to work....

im finally profit taking on slw. i will reenter at a lower price.

anyone think its a good idea to enter mu? im sitting on a huge pile of cash looking for ideas.

Jeremy. When I get a pile of cash I just keep buying gold and sit on it.

ive considered that but there is considerable resistance at this price.

2nd_ave,

Possible reason why MU is down today
http://www.digitimes.com/bits_chips/a20070416VL201.html

Assuming DRAM prices keep going down and NAND up:
Which one would bw a better buy here: MU or SNDK?

GLD jumping in the last few mins
http://www.kitco.com/charts/livegold.html

Anyone follow TAH.v? I watched Blood Diamonds and it stirred my interest in Diamond stocks. I like the fact they are partnered with Teck and Tiffany's, but i am hearing they are having troubles with their Jericho mine.

A micro cap i didnt mention because it didnt meet the revenue requirement is running like a freight train Ticker ONT. I believe the move might be over, but i sold at 1.80 range. my cost basis is 0.74. this has no options. Small company that powers adobe video codec for flash and skype video to name a few. I sold at a nice gain but was stuck under $1 for what seems like forever, and the previous ceo was a dud. well i am looking at the ticker kicking myself since i just missed a super run to $2.50. I want to say overbought when looking at rsi but it just keeps going higher.

take a look at the ceo interview on their homepage www.on2.com. technicals here at billcara2
http://tinyurl.com/2o75t9

BUt proceed with caution. My gut says this thing can go back to $1 when you look at their balance sheet.

I followed diamonds stocks a bit a while back and something didn't feel right about it. With the De Beers cartel artificially keeping prices high and gem-quality synthetic diamonds becoming cost competitive (http://www.wired.com/wired/archive/11.09/diamond.html) I don't know that I'd risk any more capital in this space. Just my humble opinion.

On another note, Bill had mentioned Bombardier here before. From my incredibly novice technical analysis, looks like it's been forming a bullish pattern, possibly ready for a breakout? On the other hand, daily/weekly/monthly RSI's are 60, 62 and 70... Any other opinions?

http://www.investertech.com/tkchart/tkchart.asp?stkname=TSE_BBD0B&wt=0&ind=nn

Lastly, on friday BNN guest mentioned Gentry (smallcap natural gas). Checked chart, was bullish on all measures, looking forward to getting on board today, but already popped 15-20% :(

Cheers

The hardest thing for me is to be happy with the profit I take. I used to lose $ trying to get back in. Now I take the profit and remove the symbol from my screens and leave in victory.
Otherwise I screw with my *own* head. Not good.

My mantra: Do not chase.
I'm so-so on living my mantra.

What's up with Glencairn Gold (GGG.TO)? Up 13% in the past two sessions, almost three times daily volume so far today--haven't seen any news. Long GGG from quite a while ago.

Anyone pay much attention to the TSX? Looks to be getting overbought here, EWC even more so. Daily/weekly/monthly RSIs are all over 70. I suppose this has lots to do with $USD weakness, and strength in the energy and metals areas.

I'm toying with the idea of taking a small position in HXD.TO, Horizon beta pro bear plus, basically 2x inverse TSX60 index, launched in January. Seems to be exhibiting full blown symptoms of falling knife syndrome, so perhaps further patience is in order.

Bill,

I laughed out loud when I read this morning that Alinda Capital Partners paid $1.74 Billion for UE Waterheater Income Fund. In 1999 Union Gas spun off the waterheater rental business into Union Energy. Last year I think I found out why. Being concerned about my rising energy costs I decided to replace my UE waterheater with the purchase of a Rinnai hot-water-on-demand unit that hangs on the wall and heats up water as you use it. The contractor told me I was spending so much in part because I was being billed for two rental units, and that this was a problem everywhere. I contacted Union Energy and they confirmed that they showed two heaters and agreed to pay me back for the several years of double-billing. They bounced me back to Union Gas for the pre-1999 billing recovery but I was told that it was Union Energy's problem as they now had all the records. I spoke with a work associate who told me she had a similar double-billing problem. And UE claims to have how many million customers? Now I see they rolled this dog into an Income Trust. We know how much of the IT business involves bundling of third-class properties. So let's hope Alinda has done their due dilligence or they may be facing a rapidly declining customer base and class action lawsuits to boot.

anyone follow moly stocks today with the sprott moly fund ipo? i bought TJS.V (tenajon) late friday on a gamble, so far paying off well.

SNDK is filling the gap. Make of it what you will.

Sure my pleasure Craig I have a VERY tight stop on my CCJ thinking that now shoulder season has arrived energy will atleast fill the gap some (or is it different this time noting the G7's generals have their gophers juicing bids today on reports like from "C"). Raising loss reserves by roughy 500 million is hardley anything to brag about; aaahhhh the beauty of fractional reserve banking :)

I was looking at GMO as a moly play a few months ago when it was $2.50. I didn't realize moly would be the next bubble. Could have made 150%.

I have a junior miner that has 600+ million pounds of molybdenum - Copper Fox CUU.V, plus 8.6 million of gold and 9 billion pounds of copper. They are about to update their resource estimates any day now. I wonder if people will start chasing it as a moly play when they get some press on the resource estimate.

Some links on moly.

http://www.sprott.com/pdf/Structural%20Change_Denis%20Battrum_March27.pdf

http://en.wikipedia.org/wiki/Molybdenum

http://www.infomine.com/Investment/HistoricalCharts/ShowCharts.asp?c=molybdenum

http://www.stockhouse.ca/blogs.asp?page=viewpost&blogID=629&postID=15679

http://www.sprottmoly.com/Investor_Presentation.pdf

http://www.sprottmoly.com/Prosectus_SEDAR.pdf

http://www.sprottmoly.com/investor.htm

Sedar has more info...

I wonder if this will turn into another Uranium Participation, where Sprott corners the market and blows the price sky high. Moly seems to have stagnated over the last year...

Anyone else have more info?

Me to Jeremy SLW at $ 9.37 was a screaming buy ; that 14 handle for silver gettin folks attention!

Rick, i bought it at an avg cost of $9.48. The RSI just screams overbought and i think there will be a great opportunity to reenter at a considerably lower price.

I'm looking for advice,

I'm not so much an owner and manager of capital as I am a poor guy who has learned to micro-prop-trade pretty well in the last year. Has anyone got any advice about how hard it is/what I might try to do to get an actual job at a real prop-trading firm?

Any advice/stories welcomed.

Chris Hunter

any opinions on the Interactive Brokers IPO - customers have access to the bidding online.

Jeremy interesting perhaps it will take some sort of event (e.g. rate hikes in europe next month) noting Gold just got bitch-slapped at $ 695.

Rick, i believe we are headed for a hard landing very soon. that should do the trick.

Bill from Jeff Saut's note today; perhaps plays like KOG worthy of your micro list consideration via a genre playing higher "mean" energy prices (e.g. solar, bio-fuels, oilsands, fiber materials for turbines, etc...):

"In such an environment, where we can’t decide if the economy is slowing into recession, slowing to a muddle, or reaccelerating (although recent figures have a decided slowing tint), we have tried to focus on themes, and special situations, that make sense to us. Energy is one such theme, for while the U.S. seems to be slowing economically, the rest of the world is not, as demonstrated by China’s roughly 13% increase in crude oil demand. To take advantage of that demand we have recommended most of the Canadian oil sands complex, which had a fairly big rally last week. This is particularly impressive in light of the Canadian Dollar’s recent strength (we remain bullish on the Canadian Dollar). We have also recommended a number of energy names that presented at the Raymond James Institutional Conference in March. Accordingly, ideas like Petrohawk (HK/$14.36/Strong Buy), Kodiak (KOG/$5.14/Strong Buy), 6.7%-yielding NGP Resources (NGPC/$15.85/Outperform), and Helix (HLX/$39.40/Strong Buy) have performed well over the last few months. Yet for non-stock-specific investors, our recommendation of the 5%-yielding Blackrock Global Energy (BGR/$29.83) ETF has been a risk-adjusted way to participate in the energy theme, whose shares broke out to the upside in the charts last week. We have also embraced non-economic-sensitive themes like homeland security using L-1 Identity Solutions (ID/$18.86/Strong Buy), which recently received a large contact. Then too is our non-economic-sensitive “water theme.” While the non-stock-specific investor may want to consider the Water PowerShares (PHO/$19.00), our Canadian-based analysts have been recommending Laperrier & Verreault (GLV.A/$29.44/Outperform) as a way to participate in the water theme. As always, Canadian securities should be checked for Blue Sky laws in this country."

Had to leave for a couple of hours late morning, but sold UXG (7.11) earlier after 65% move since 4/4. Thanks Bill!

Also sold non-IRA HL position after 45% move in 3 months.

On 10/19/2006, Bill Cara wrote:
"Hecla Mining under the microscope, Thurs., Oct. 19, 2006, 3:26 PM
Hecla Mining (NYSE: HL, US$6.00) Price Target: US$9.50

These shares have a solid base of support at $5.00. As silver prices improve in the next year, I expect the shares to set an all-time high of at least $9.50."

Great prognostication Bill!
(ed. note: HL high today 9.87, closed 9.80. I try to please!)

Getting my MZZ toe in the water bitten. Down 5.7%. Glad it wasn't a foot in the water. Will eject if it reaches @ 8%.

any interesting news on junior miners?

GLE -

taking out the B-point. 18MM weekly vol at teh pivot. looking good.

GLE -

taking out the B-point. 1.8MM weekly vol at teh pivot. looking good.

Seamus--I was a little ahead of you--I extinguished my MZZ pain. There will be time enough for it.

Guessing you mean Glencairn Gold by GLE - down 10% after close. Ouch!

Water crisis looms worldwide

http://www.latimes.com/business/la-ft-water16apr16,1,2158034.story?coll=la-headlines-business&ctrack=1&cset=true

For consideration if interested:

WTR
AWR
CTWS
AMN
SWWC
CWT
CWCO
PHO is an ETF

Energy is important for our lifestyles but water is necessary for our lives. An important topic to be aware of IMHO.

Hi Bill

I am new to the site. My nomination to the microcap / mining stocks is PLM. Home page:

http://www.polymetmining.com/s/Home.asp

It has base metal and palladium resources in the ground in North America and is due to begin production in '08. I have not seen the stock mentioned during my brief review of past postings. I hope this is the kind of information you are seeking.

Great group and site!!!

BRC

Interative Brokers IPO(IBKR) roadshow video and propectus. ( link via trader mikes site)

http://www.retailroadshow.com/roadshows.asp

Andrew

JogyP,

Rather than give you my opinion on MU vs SNDK, offering you an opinion from Cody Willard, who was mulling opening a long position in SNDK last Friday: http://tinyurl.com/2vq3rj

Note that he was also net long MU as of Friday. And the range on MU today was certainly within Bill's Accumulation Zone. That's enough for me to be building a position, although I'm aware Bill is holding off in anticipation of a broad market sell-off. You can, however, lower your cost basis by selling options against your holdings.

JB - Have you read of the recent success in producing laboratory diamonds? (WSJ recently had a feature story on this.) Lab diamonds are said to be flawless, and have been produced up to 1/2 carat. 1 carat is said to be in the offing. They are cheaper to produce than mined diamongs. Won't this undermine the pricing of mined diamonds?

Jock,

Thanks for the response. Yes, I would think that would put pressure on mined diamond markets. And with the De Beers cartel artificially keeping prices high I would agree with proud papa and stay away from diamonds.

"A federal judge in San Francisco has dismissed most of a shareholder derivative lawsuit against Cnet Networks regarding backdated stock-option grants, according to The Recorder."

"Late last week, reported the legal publication, Judge William Alsup of U.S. District Court for the Northern District of California ruled that it is not sufficient for the plaintiffs to state simply that since backdating occurred, a fraud has also occurred."

http://www.cfo.com/article.cfm/9028174/c_9024377?f=home_todayinfinance

trade4keeps - QID is the inverse of QLD - you can "short" QLD by going long QID.....

re: diamonds -
http://www.wired.com/wired/archive/11.09/diamond_pr.html

re: water
not that it will happen anytime soon, but i am not so sure water will always be a problem if these guys get it perfected:

http://www.airwatercorp.com/
http://www.aquasciences.com/

TS3D, couple more that are my faves in this space: PICO, MWA

I got stopped out of PICO on the first swoosh day. MWA is a tremendous Graham-style value that has gotten killed with the housing stocks, though it is not nearly as levered as many others.

SmartMoney guy was on FET talking about TTEK, WTS.

re diamonds: http://www.wired.com/wired/archive/11.09/diamond.html

an interesting read.

also for water:

http://www.aquasciences.com/
http://www.airwatercorp.com/

if this gets perfected, watch out. serious distech.

Telestar3rd and ZackAttack,

Thanks for your listings of companies involved in water.

I, too, am interested in the water issue. Here's an ADR that has done very well for me: VE.

It's in four major business lines, one of them water-related, and all four are important.

Again, thanks for your listings.