Good morning all. Quiet day today.

ToG: Technically, it looks like the strong upward channel pattern of the 30 yr bond is breaking down. If this last move up fails to reach the top of the channel, and it seems to be rolling over before that happens, that's a strong indicator of weakness and failure of the pattern.

Question: Are the 30 yr bonds the preferred instrument for this trade? 10 yr?

Bill, etc:
Anyone notice the Goldman report last SATURDAY talking about commodity superspike? Hmm..
Regarding the potential massive melt up in Gold in the coming years, i.e. when the public is really clamoring for it.
I think about just buying GLD b/c, if you have the Coins, or Bullion, you will most likely not be able to sell your holdings for days after the subsequent crash and limit downs,
Just a thought. Same for Silver.

Jim Willie has an excellent article on the latest happenings in the markets....here's an excerpt. Worth the read.

"As the USDollar continues to reel, to decline to low levels never seen before, support does not exist. Clearly, some form of central bank intervention is next. However, in order for such extraordinary action to be effective and not futile, monetary policy must be coordinated and cooperative. The major central banks must work together to support the USDollar. They must cut official interest rates in concert with the USFed. That means the Euro Central Bank must agree to an official cut in its rigid interest rate. They might employ an interim rate cut. Even a 25 basis point cut would be significant. They must publicly state that they are defending against a rising euro currency, and that price inflation will be a risk to stomach. The planned goal would be to end the US$ decline. The extra benefit would be seen in the bond market and banking system, from added liquidity and soon housing price stability. Without dispute, the underlying problem is the housing crisis and price declines in collateral.

My attention is squarely focused on the Euro Central Bank, which has the greatest potential to quickly change the awful sentiment plaguing the USDollar. The USFed just cut interest rates again by 75 basis points. The USDollar had moved down in anticipation of this latest cut. The Bank of Canada has cut twice its interest rate. The Bank of England has also cut its official rate, only once, and surely will again. The Bank of Japan is talking about a rate cut. But the Europeans are dominated by the Germans, who want no rate cut at all. The Germans warned of the precise problems seen right now, do not wish to fix a problem with more of the same actions that produced the problem, and resent having to foot the bill during the aftermath of these problems.

The gold price will not stop at the $1000 milestone. The silver price will not stop at the $20 milestone, and will vastly outperform gold. The crude oil price might go below the $100 milestone briefly, but will return and shoot past the century mark. No no no!!! All are heading much higher, because the banking problem is not to be soon fixed, the bond problem is not to be soon fixed, the economy is not to be soon fixed, household distress is not to be soon fixed. Maybe none can be fixed, even as money thrown at the problem accelerates parabolically. The limited power of USFed solutions, and limited arsenal of devices to treat the problem, will ensure that monetary inflation will be the main tool. Still, adding liquidity in rescues, repairs, and bailouts is not seen as the cause of the problem. It still is seen as the immediate solution. SUCH IS THE HERESY THAT HAS DESTROYED THE US BANKING SYSTEM. They operate under an objective to revitalize the housing market, and stop its price decline. They must enable the bank system to become solvent. All that administered inflation means much more gains to gold, silver, and even crude oil. Bigger problems than rising gold, silver, and crude oil come if Consumer Price Inflation starts to grow without bounds. The USTreasury Bond market will suffer heart attacks, the beneficiary being gold, silver, and crude oil!!!"

Full article

http://www.321gold.com/editorials/willie/willie032008.html

MikeNYC- the longer the time to maturity, the greater the effect of interest rates on the yield/price, so i think shorting the 30-year (and/or buying RRPIX @ 1.25x the inverse of the long bond) would be the way to play it...open to comments/criticism->if there's a better way, certainly want to hear about it...

I have seen some speculation rising on “Deflation”, both here and elsewhere, though usually the discussion is not helpful for timing purposes, imo. Usually, the definitions for Inflation/Deflation are based either in “too much/little money being printed” and/or “consumer prices are rising/falling”. Currently, at least according to one often quoted source, the above definitions for “Inflation” still apply. Here is what that source reveals:

Money Supply (the printing presses) is running at about 17% per year.

Prices for the consumer (by pre-Clinton formula) are rising at about 12% per year.

I have also seen some discussions that the situation is “different” now because the money that is being printed is being absorbed by the Banks and thus not available to the general public unless loaned out by the Banks - maybe so - but Consumer Prices, according to the above quoted source have yet to slope downward to any meaningful degree. Certainly, the appearance of “tent cities” in Calif are a scary turn of events (where is my copy of “Grapes of Wrath”)? As always, time will tell.

Link to both Money Supply (estimated) and to CPI (pre-Clinton):
http://tinyurl.com/3bhh8b

Foreign investors veto Fed rescue

Former US Treasury secretary Lawrence Summers says the Fed's shower of liquidity cannot cure a bankruptcy crisis caused by a tidal wave of property defaults.

"It is like fighting a virus with antibiotics," he said.

We can no longer exclude a partial nationalisation of the American banking system, modelled on the Nordic rescue in the early 1990s.

http://tinyurl.com/2vyoh4

The Rise of American Incompetence

We used to be the world's most skillful entrepreneurs and managers. Now we're laughingstocks. What happened?

On a recent 60 Minutes, Icahn complained to Lesley Stahl about the incompetence of American management. "I see our country going off a cliff, and I feel bad about it."

Icahn is moping all the way to the bank. The market's recognition of management failures gives him the opportunities to acquire companies on the cheap.

http://www.slate.com/id/2186547/

Looking for a bullish harami to form in the weekly chart next week in gold:

http://www.investopedia.com/terms/b/bullishharami.asp

One noteable feature of the weekly Gold chart for this week is that we have seen both a peak value and a low. This comes at the Pi Cycle Date of March 22, 2008. On the last Pi Cycle Date, Feb 27, 2007 a very similar move occurred in the gold price.

Some of the characteristics of the correction here are that we have gone to the 50% fibonacci retracement, the 13-week EMA. In this gold run-up since the peak in May of 2007, gold has seen technical peaks and troughs on regular intervals of ~19/20 weeks' time, and we are supposed to have seen a technical low for this week. Technical troughs are noted in green, with the exception of this week:

stockcharts.com:

http://tinyurl.com/ywfpu8

The gold chart is also demonstrating a similar development in the €/$ and the ¥/$ trade, where it ran past its target, only to pull back. I expect the ¥ to continue to go past its recent highs, much like the euro:

¥/$

http://tinyurl.com/2s4jga

€/$

http://tinyurl.com/2o2drj

The $US is at its seasonal peak, so I expect continued declines. Given that short term bond yields are unlikely to improve and that liquidity is not an issue the moves that made the market since at least the beginning of 2006 are still in vigour.

The lightbulb of the future?

Luxim's plasma lightbulb

Silicon Valley's Luxim has developed a lightbulb the size of a Tic Tac that gives off as much light as a streetlight. News.com's Michael Kanellos talks to the company about its technology and its plans to expand into various markets.

http://news.zdnet.com/2422-13568_22-192842.html

Hi Bill,
"Since most people wouldn’t know the difference between a CFD and a STD" Thanks for the belly laugh! Googling CFD as soon as I finish writing this...still laughing out loud. Thanks

I saw a TV program on the history of how credit card companies got the right to charge consumers such high rates across state lines. Most of you may know this already. It was an eye opener for me. Cheers
http://preview.tinyurl.com/29duz7

2nd,
In addition to your point, the potential channel breakdown is more pronounced on the 30 than the 2 yr.

Here's two things I noticed last night:

* There is some pretty large scale put buying on the TLT. See June 89-93 strikes.

* Some of the option spread trades available on the TLT seem very attractive. Cheap, even. These option spreads have a higher R/R than outright put purchases. But my analysis is in the early phases.

There are a few possible, plausible, option spreads that can be scooped up by the handful for lunch money.

* TLT option spreads seem to have a higher R/R than the similar option spreads on the 30yr futures options. Same caveat as above. I've just started looking at these in detail. And I'm no option rocket scientist, either.

In the spirit of today's post by Bill, it looks like going short the 30 yr CFD would be a powerful position, but I guess that's just not a choice for us here in the US.

http://www.mfngroup.com/specifications.html

.01=5.00? Well now, that's sure saying something.

There's a CFD trading simulator at the ASX, but you have to be an Aussie to use it. CFDs seem like options with no expiry, futures with no delivery dates, all levered up big time. No wonder they are so popular worldwide.

so summers is saying misdirected intervention? if it's obvious to him (and i assume his opinion carries some weight in washington), yet we hear no cries from the senate/house for clarification, then our politicians are a party to the dumbing down of america (or maybe they really are clueless and i shouldn't be insulting the colombian police)...

"dumbing down of america" - George Carlin
http://video.google.com/videoplay?docid=-6877484386386016235

Maher:”New rule, politicians must stop saying “the American people are smarter than that.” No they aren’t! If the Bush era has taught us anything, it’s that voters want a president carved in their own image. Someone who doesn’t like to read or believe anything he’s told and is easily distracted by bright, shiny objects.”

I may have been wrong when I assumed that LED bulbs would take over and dominate. Those little plasma bulbs are slick.

Interesting site: exposes the things that companies try to bury in their routine SEC filings

http://www.footnoted.org

Nice rant today from Genesis:

http://market-ticker.denninger.net/2008/03/fed-will-do-whatever-it-wants-and-raise.html

I see his statements aligning with Bill's maxim that gold is that last to leave the dance floor. Will the music still be playing next week?

The light bulb mentioned has very similar characteristics to a fusion project called Focus Fusion. There is a competing project which is also posted here. A couple of hours of viewing for Easter weekend. These talks were given at the Google Tech Talk Series:

1hr Google Tech Talks Video:

Dr. Eric Lerner's Focus Fusion,

http://video.google.com/videoplay?docid=-1518007279479871760

In the same vein, we have Dr. Robert Bussard's Energy Matter Conversion. Dr. Bussard passed away in 2007.

http://video.google.com/videoplay?docid=1996321846673788606

F6

Thanks Bill!

Breadth for the overall market was not as strong as I was hoping for given the recent rate cut. It feels like the market saying “nice thought but too little too late now.”

This week the broadest buying (on a percentage basis) was in Homebuilders, Real Estate, Retail, Software, Transportation, Financials, Telecom and Pharmaceuticals among others. The broadest selling was in Energy and Oil sectors and Metals and Mining (the severe drop in Gold is notable).

Good Trading…
Ralph
http://successfulonlinetrading.com/blogs

ALOHA !!

If you are tired of the US Peso then perhaps converting to the LindeX dollar would be of value. Currently trading at $264L to $1USD. Volume yesterday was 80.266 million $L traded. The LindeX held steady as the USDX plunged back in Feb!

Take a look at a new virtual currency that's turning out to be not so virtual and it exists right under the FED's nose ...

Link: http://tinyurl.com/yh98f6

USPS: Free Recycling Through the Mail
the U.S. Postal Service announces a vital new service that lets you recycle cell phones, iPods and other electronics -- as well as printer inkjet cartridges -- via mail. For free!

http://tinyurl.com/28omz5

The platnium/gold currency in the game Everquest had a better exchange rate then the peso back when Everquest was the first and only MMORPG on the scene. It wasn't uncommon for high level characters to sell for $3,000 to upwards of $8,000 dollars. Now that there are numerous MMORPGs available you don't see that high of a dollar/game dollar ratio. Back then though you could make some pretty good $$$ by farming/selling things in Everquest. ;-)

ALOHA !!

You can also become a resident at Linden. There are currently 12.9 million residents. A virtual world where you get a second chance if you fail in the real world! HA!!

Or perhaps a cheap way to test real world products in a virtual world model!

Link: http://tinyurl.com/yzl6nv

Happy Good Friday to all.

Interesting ticker item this AM on Bloomberg:
"Goldman, Lehman ratings outlook cut to negative by S&P." "Goldman, Lehman ratings cut to negative on earnings concerns."

"Goldman will reduce capital markets workforce." NY Post.

Again, I'm no expert, but let me ask you....when and why do companies lay off employees?

Kaimu,

Why would i need a virtual world when i already live in the Matrix today! We are all batteries for this govt already. I am waiting for Morpheus to find me and give me the red pill.

In all seriousness i am very depressed as of late. I would like to help stop this madness, ie bring home the troops. Many good ideas such as organize a boycott of the entire system by all Americans by July 4th 2009. I am talking every citizen walking out on their jobs, stop paying taxes, etc, until changes happen. this would def bring the country to a halt and force the hand of govt to change. but i doubt most of the country cares enough to actually commit to doing something about it.

Reality is most have taken the blue pill and prefer to live in ignorance. As one character in the movie said "Ignorance is bliss."

ToG and RRPIX - I was trying to find out but didn't, whether they achieve their 125% leverage via any means that might blow up in some way. From what I hear the long bond is going to go ballistic and I'd like to posiiton for it. Don't want my investment vehicle to fail. We hear a lot about counterparty risk. I don't know what leverage technique RRPIX employs is my only concern. ANyone know?

When SKF takes out it's 52 week high again, I'll burn some of my vacation time and spend a week or so out in the sun on a beach somewhere. ;-)

ALOHA !!

In America and other Western countries the baby boomers were the first generations to complete schooling from kindergarten through college. All other prior generations had a vast majority who had to stop schooling due to war time or depression times. Part of that statist school system was the "peer system", which it is obvious to me has fueled the pervasive US consumerism market where "image" is everything and that image must be maintained at all costs! Well, at this point we are now being governed by the products of that school system where "image is everything"! It would not be irrational to think that George Bush a "former" coke head and alcoholic propped up by his family wealth still suffers from "peer pressure", although he claims it is God that speaks to him ... Is he on Ativan or Prozac or is the Executive Branch excluded from drug testing?

ALOHA !!

NYUGrad ... The Matrix it is for sure!!

I have seen people protesting the War in different ways but recently a protest to stop the IRS from operating by blocking their HQ was the first time the light was switched on! Finally people are seeing the real achilles heel of this vast BIG GOVERNMENT is through its life blood ... money! Now if we can shut down the IRS and the FED at the same time then we have the start of changes that would be long lasting!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

Link to IRS protests: http://tinyurl.com/yrzfpp

I think the mess we are in can be mostly attributed to the increasing moral hazard. It shortens the time horizon of the decisions and sacrifices strategic long term success for the short term benefit. It also synchronizes reckless behaviour of multiple market participants in time scale - they know that if the system failure is widespread the taxpayer bailout is inevitable and
it will be virtually impossible to identify individuals that caused the collapse.
There is a big paradigm shift in the interpretation of success among entrepreneurs and management from building a long term business to "get theirs" and run. The faster the better. This process of shortening of the time horizon and lack of responsibility for one's actions is reaching an apogee now and shows it's ugly head. Not that it didn't happen before but the consequences have been disastrous.
Honestly I don't even like the term "moral hazard" because it sounds like the concept has strictly moral or ethical consequences whereas in reality it defines a fundamental systemic flaw - destruction of a negative feedback loop that market economy is all about. The system goes berserk in the open loop mode and can no longer be qualified as market economy. How can someone rationalize destruction of the cornerstone of market economy in order to postpone the inevitable payoff is beyond me.
This rant doesn't help the trading, I know that, so take it for what it's worth - 1.5c

Top Iraq contractor skirts US taxes offshore

More than 21,000 people working for KBR in Iraq - including about 10,500 Americans - are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands.

http://tinyurl.com/2g5d8b

Niceguy - with everyone here mostly bearish, it is refreshing to hear the opposite side of things.

Keep up the good words, but keep your finger on that sell button partner!

Money flow is running to treasuries... irx - counterparty had me pull alot of my inverse funds. Not sure how that would play out UBS credit swaps on prospectus. Seems it could be bad news. Any thoughts ON INVERSE FUNDS from some of you guys would be interesting.Think I may park everything next week as have had a decent run. Things are setting up for a crash in my opinion. Total crap that GS downgraded when markets closed

I'm neither bearish, nor bullish, just trying to stay on the right side. Here's a note (rewritten) from my journal for today:

Cowboy was a poster here a couple of years ago. He used several methods for stock selection, but one of them was to look for “Insider Buying”. The thought occurs to me that with so many stocks having dropped off in prices during this recent quarter, or more, perhaps it might be a good time to check to see which group of “Insiders” is thinking that the future looks pretty good for their companies.

There are always several stocks to evaluate when using this method, “insider buying”, but one that caught my eye this morning is Alon USA Energy (ALJ) which is an oil refiner that has been dropping in price since July and November when there was “coincidently” very timely periods of “insider selling”, but for now it is a period of some serious “insider buying”. ALJ caught my eye because I can find no other reason to buy this stock this month. Fundamentals aren’t great, it’s a weak sector, and price charts with TA are not encouraging except for a daily RSI breakout this week.

ALJ belongs to the Oil Refiners sector, which according to some press media stuff, is supposedly suffering due to surplus and soft gasoline prices (???).

I have no position in ALJ, nor do I want one right now, but it will be interesting for me and perhaps some others to see if this stock actually goes up from here for no other obvious reason than perhaps its “Insider Buying”.

If the SPX is truly bottoming, then it seems to me that “Insiders” would be among the first to know, and maybe any positive movement in ALJ might be an indicator that "Insider Buying" is a good stock selection method to pull back out of the box.

Comments for long weekend thought?

Link to “Insider Buys”:
http://tinyurl.com/2jfog3

ALOHA !!

I have been working on an article I will publish entitled "Country Risk Rises In America-A Review Of The Bush FY2009 Budget". I have posted here about the US sovereign credit rating. Here is a portion from my article on that subject that explains why the USA still has AAA at S&P and a Aaa at Moodys:

READ ON:
SOVEREIGN CREDIT RATING

The USA currently holds a Sovereign credit rating listed by Standard & Poor’s at AAA, while Moody’s rates it at Aaa. With major US Banks and brokerages carrying toxic bets that translate to toxic losses and overwhelming debt there can be no doubt that such risks weigh heavy on the US sovereign credit rating. Any movement off the current AAA rating would spell disaster for the US Dollar’s value, which would downgrade US debt and create an environment where higher interest rates would prevail. Of course that would further cripple real estate and credit which will affect GDP and jobs. A little known fact is that corporations operating inside a country with a AA- or BB+ cannot have their credit rating higher than that of the country where they operate. So if Japan has a AA- rating then Toyota can never be above AA-. Imagine the implications for GE and Berkshire Hathaway if they were forced to be downgraded due to a US sovereign rating downgrade. Perhaps that is why we will never see America’s debt be downgraded to junk! I am sure there are some powerful lobbying efforts directed at S&P and Moody’s.

I recommend reading this article, on US Credit Rating to further explain the USA credit rating and the rating agencies that, in my opinion, have failed to uphold their duties.END

Wouldn't insider buying in the energy sector be a reaction to the commodities sell off? They are just stepping in and getting it while it's down?

Moon -

I posted about couterparty risk here yesterday. There is a good discussion thread here:

http://www.tickerforum.org/cgi-ticker/akcs-www?post=35665

The best rebuttal by far to John Mauldin:

http://thoughtsfromthetrenches.blogspot.com/2008/03/reply-to-john-mauldins-outside-box-lets.html

Quote:
If you want to correct an interventionist prone capitalist system then allow it to purge itself and reset the boundaries of its influence based on truth.
George

zenob - Sounds good in theory but I checked five or six of the members of that sector, XOM, VLO, and others, that had no significant "buying" reported during this month.

On the other hand, Holly Corp (HOC) also has significant buying, and I missed that stock on my first look. There might be others.

Thanks.

PS - In my earlier post, I referenced "Coyboy" as an earlier poster on this site, but now that I think about it, I think those posting belonged to "Stockman" who was a cowboy, I think.

Moon:
The last time I checked the inverse fund portfolios consist of swaps. According to Wikipedia
"...a swap is a derivative in which two counterparties agree to exchange one stream of cash flows against another stream. These streams are called the legs of the swap.

The cash flows are calculated over a notional principal amount, which is usually not exchanged between counterparties. Consequently, swaps can be used to create unfunded exposures to an underlying asset, since counterparties can earn the profit or loss from movements in price without having to post the notional amount in cash or collateral."
In other words, these ETFs are very exposed to counterparty failure.

Spot,
You might break them down as "majors" and "minors" and see if it splits that way. That's what the hedgies were doing to the miners. They were shorting one and going long the other so when they unwound their positions one got pummeled and the other not so much.

Placed a new stock on my junior PM watchlist.

RRI.V Riverside Resources

http://ca.finance.yahoo.com/q?s=RRI.V

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

This will probably kill some existing internet providers. Wireless internet connectivity with a 60 mile range.
http://www.techworld.com/news/index.cfm?RSS&NewsID=11774

spot,
RBOB crack spread.

jk484

You wrote:
Maher:”New rule, politicians must stop saying “the American people are smarter than that.” No they aren’t! If the Bush era has taught us anything, it’s that voters want a president carved in their own image....”

I had a great conversation with a guy in an airplane last summer. He said something I´ll always remember: "America finally got the president it deserved."

NYUgrad:
Try not to be depressed about the state of things. Just educate one person at a time as best you can and "stick to your knitting", as Bill says.

If they allow investment to be primarily a roll of the dice against the price, rather than the equity in a stock or a commodity, this doesn't necessarily remove the risk. This risk becomes completely ignored. Though the fundamentals remain essentially unchanged, the prices are completely out of line.

You have zinc-galvanized buckets-of-chopped-herring barf-like levels of risk in owning equity in anything nowadays. If you buy say, a gold mine, do you own the equity? Yes. If you buy an ETF operating on leverage on 2X a chosen index number level, then what is it that you own? Debt, essentially.

Parrying at the price without any connection to the underlying value using 200x leverage (CFDs, forex) is creating a runaway futures market without any relation to the fundamentals and entirely dependent on increasing levels of credit.

The liquidity provided by the Fed and other central banks are fueling this dissociated market, because the credit is going directly into the futures market. Note the decline in short term treasury yields. There has to be a roaring trade in 3mo. Treasury Bond prices CFDs in order that they be driven far below the rates set by the Fed.

agree with kai...the world is nothing more than the collective interactions of people like you and me...we (potentially) have as much influence over the 'state of things' as anyone else-> some people have chosen to exercise this influence (much) more than others...this blog is in fact a great forum for allowing your voice to be heard-> another outpost in the war on disinformation...

reference nice guy's 156p post- good point...you could go broke waiting for DJIA 10,000 or 14,000...why not trade the swings-> by the time the Dow gets to where you think it should be, you may have made enough to no longer care...the point of trading is not to be right-> or should i say, it's to be right to the extent it makes you money, not to be right at the expense of your portfolio...

ETFs- exactly what kaimu has been pointing out...if the counterparty disappears, what do you have-> paper..the party obligated to pay you off no longer exists...

Hi!

Since Gold and USDX is on all our heads:

By accepting all sorts of paper junk as collateral, the FED is taking a lot of risk into its own balance sheet. Most of this new risk is backed by real estate.

How would you feel if you were a shareholder of the FED?

Well, all holders of USD are FED shareholders.

So, you see, the blanket is allways shorter than the problem...

Once the intervention stops, the music will start again for a plummeting USDX and commodities will inevitable reflect that evolution.

Season's greetings to all.

Ron/SilverLakes:

Thanks for your note yesterday. Perhaps we can chat on Skype and swap ideas on whats happening..it allows for conversations without disturbing the rest of the traders on Skype or here. There are a lot of them..from different countries ..trading the NYSE..in the middle of the night..wow.!!

I am starting to like this market..if it wants to go 2-4% in either direction, whether inspired by the PPT or PNT, its leaving clues of impending intra-day changes, and I am all for it! Ill be awake to catch a 12% move in SMN one day or another $6 rise in 2 hours in GS. :)

No idea whether this a bottom or not...labelling the market either way, it impairs my trading during the day.

I am focusing on trading habits..not just P&L..one will take care of the other.. heres some that I hope you dont fall for:

Trading like Maximus Decimus Meridius
(Revenge Trading..there are also times you want to avoid the arena )

Trading like the 2 Bills
(Trading like Bill Gross using a Bill Gates account - large intra-day bets on wild guesses through very well rationalized themes on a longer timeframe )

Trading like Dirty Harry's boss..I am A Legend in my own Mind
( The market is wrong, but i am right even though my daily P&L says otherwise, no worries it will reverse tommorow.)

Trading like a pledge at a Frat Party -Animal House
( Trading/Immobolized while simultaneously hearing..."Oh no please dont take the trade..its too risky! "...,and "GO FOR IT..chickens dont date the prom queen..be the Big Man..double the shares..cost average down , it will bounce)

Trading not to Lose ( Cutting profits off in a trend for fear of losing profits..because I am still trading from remembering how I let my losses run..so cut the profits before I repeat)

Trading like an economist in a volatile market.
( I have done this, funny as heck..market is down..I just read somehwere it shouldnt, let me go research on the web or dig up my newsletter that said it should be an up day, while the market continues to sell off or vice versa)

All kidding aside..I am paying attention to my emotional states, and how one can lead/trigger to the the next awful mindset...takes practice..and this market is offering opportunities left and right ..to practice and profit.

So taking profits no matter what it does. See you on skype if you want. :)

Does any one has information about money flow into or out off RRPIX

2nd, lessmore: The counterparty risk to reverse ETFs -- that is what I was asking re RRPIX. Much talk about RRPIX for the ToGa party, but maybe not so safe in an extreme market move scenario?

EEM, your comments taody re your methodology good as always. I'm trying real hard to learn that mindset. You also mentioned the other day about info you saw on your trade platform. Just curious what setup do you use?

JRPauley..thanks..refresh my mind.what info on what day? yesterday?..the bullish flag on the XLF?

Re: Fed taking on risk

To continue, yes the Fed is taking on risk by accepting insolvent mortgage back securities and offering liquidity to brokerages, and keeping the process going for a little longer.

It leads one to question whether there is intentionality to the process, deciding its better to sacrifice the currency value and credit risk of the federal agency itself.

So its probably insolvent primary brokerages who have access to treasuries that are leading the pack when it comes to appying credit derivatives to treasury prices, and thus having a reprieve from having to withdraw credit.

Why they are so inclined to move into commodities at this stage very late in the game says they have virtually lost control of the futures game in that sector, as its overwhelmed by innumerable traders, sitting at their computer day trading.

It all seems to make sense now when you consider that there is no such trade as CFDs in the US, but is conducted everywhere else.

EEM, you said something about money flows you saw on your trade terminal, and it got me to wondering what all info you rely on for your trading, what ones are the most important to you, that sort of thing. Also you mention frequently stuff about MACD, etc. Just wondering if you use one of the services like Tradestation, or just freebie software from Schwabb, or whatever.

Fran6,

Yep.

JR: I use TS, SChwab and Fidelity, though not all at the same time. :)Schwab has a sector tool that you can set up ( So does TS ).

Dont start with TS is my recommendation, I end up getting fascinated with the platform, which is superior to the other 2, and forgot about trading.:) learning a platform with exotic toys is not learning to trade...gotta walk first

BTW, Bill's WIR has the same information..where do you think I got the idea from?..then found it for real time updates on schwab.. :)

Intraday I just use 3 move aves, RSI(5&45), ADX, TICK and volume.

I use MACD on daily & weekly. Weekly is good for trendlines and S n R. read Bill's material on trend and oscillators.

I am always tracking money flow thru the sectors and country ETFs..whether you use Accumulation Distribution or Trading range changes. You can read it online in the WSJ/Barrons as well.

That Ralph guy also posts his sector and sub sector every week and link to bill's blog..I just use Worden for that.

The rest of the stuff is all market breadth related,$vix,$tnx and a currency chart like the NZD/CHF or USD/JPY they are good for clues and confirmation of trend changes.

Trade 1 stock and 1 setup if you are starting...dont get mesmerized with indicators and clog your charts up. :)

Its not the stock or the stock's indicators that matter as much during intraday trading as it is the markets moods and whether its going thru contraction or expansion.

Follow the footprints in the sand..

EEM, thx. Will check it out. Enjoy your weekend

JRPauley- if you're really worried about counter-party risk, why not short TLT-> then the cash will be sitting in your account...

vinod - “Does anyone have any information about Money Flow into/out of RRPIX?”

Because RRPIX is a mutual fund, most people would respond “No”, but with knowledge of a “reverse proxy” stock anything is possible.

In the chart linked below, I have shown RRPIX against TLT, its reverse proxy stock (meaning that if TLT goes down, then RRPIX goes up - as shown). Thus, one might reasonably assume that if TLT is going up, then Money Flow is in, and if TLT is going down then MF is out. Thus, if MF for RRPIX could be shown, it might easily in some degree be the reverse of the MF as shown for TLT.

Here is the chart link:
http://tinyurl.com/ytcq29

Hope this is helpful.

2nd, Agree. Of course would prefer the leverage of RRPIX, just wondering if the counterparty is a worry or not

niceguy - couldn't disagree more when it comes to gold.

vinod- i see as of 2/29/08 RRPIX had net assets of 162.6m...suppose if we check again at the end of march for direction/size of any change it might tell us something...

First time poster here but periodic reader of your fine discourse board. Just in case some of you are not aware of the situation, there is currently an unprecedented silver shortage occurring across North America. Here is the link: http://tinyurl.com/2hhgz9

Regards - fireworks

EEMTRADER

I learn alot from your today's post

Spot

Thanks for taking time and posting

2nd

I am always thankful to you

I plan to add RRPIX in my 401k when time is right
so I am monitoring it.My 401k is 100% cash

niceguy - I gotcha now...

ESLR

They had couple of open house to recruit people for Job
Advertisement was in local news paper called Lowell Sun
They plan to hire over 300 employees in next 12 month

They are opening up new plan in Deven mass with in next 3 month
And got lots of financial help from Mass. Government to expand at Deven

This might be a stock you want to look at

Tax question

I received a schedule K1 (form 1065) for trades of UNG I made in my IRA account last year. (I was ready to file then this appeared just yesterday).

Does anyone know if I need to enter this information in the Tax return or not.
TIA.

GS and LEH downgrade has to affect Monday's open, to the downside.

Jogy,

I received the same K-1 for UNG...if it is in your IRA account you do not account for it on your tax return.

JogyP,
there's an issue with holding partnerships in an IRA, but I can't remember what it is. I've got a feeling that if you have more than $1000 of sheltered income there's some risk of invalidating the IRA. This is horribly vague, but with a bit of luck someone who actually knows what I'm babbling about will tell us precisely what the rules are.

Gary North - The Fed is deflating
http://www.lewrockwell.com/north/north615.html
What do you think of this analysis?
I believed in deflation, but because of recession and not due to central banks. I find the article very interesting.
"Precious metals' prices do not normally rise in a deflation. When they do, it's because they are in a bubble. Deflation will pop the bubble.
I have repeatedly warned my readers that the Federal Reserve was deflating.
We now see the effects of deflation: a CPI of 0% and a falling gold market. Housing is falling. This has not happened since the Great Depression.
In the Great Depression, T-bill rates fell below 1%.
Of course the FED will inflate. But it is not inflating now.
There is another factor: the bullion banks. They have borrowed gold from the central banks for an annual interest payment of 1% per annum. They have used the money from the sale of this borrowed gold to buy bonds. Rising gold prices threaten them with bankruptcy."

ALOHA !!

Okay ... so CPI is zero ... That makes perfect sense as I wander through my day paying ever higher prices for everything I touch. Do I need to make up a list of all the basics that have gone up since last month? This CPI is based on who's data? Please tell me its not the same CPI our government and Bernanke uses!

Also ask Mr. North how there can be a World War and deflation at the same time? That has never happened ever in the history of mankind! I just finished studying US Budget surpluses and deficits since 1789 and I guarantee you I saw no signs of budget surpluses during the Civil War, WW1, WW2, Korea or Vietnam!
Based on the Bush FY2009 Budget we will not see anything but BIG SPENDING until 2012! Last I looked SPENDING means more money supply! Last I looked we were spending $1.78bil USD in Iraq every five days!

North only uses M1 which is M0+checking. So he leaves out all time deposits, savings, institutional and non-institutional money market funds, and short-term repurchase agreements. If you are going to measure true money supply wouldn't you include as much money as possible. When you measure your total net worth do you do so by only counting the cash in your pocket and whats in your checking account? Thats M1! I don't I measure my net worth by counting all of M1 plus my savings, my money market funds and stock portfolio (something easily converted to cash). Its more complex than that when central banks are involved but you get the picture.

Bullion banks swap gold and sell it and then wait it out in bonds expecting to drive the POG down so that at a later date they can hopefully buy it back at a lower price before their swap agreement expires. The bullion banks are more threatened not by gold swaps but by their own derivatives exposure. The gold market is very tiny and Warren Buffet could corner it and Oprah could corner the silver market, so I doubt the bullion banks plan to get rich off swapping gold! Besides it'd be very easy for the bullion banks to get the FED to paper over PM markets than derivatives. What's the FED up to in bailouts ... $400bil? How much of that was ear-marked for the potential "gold swap" bankruptcies? Exactly ... None! However, gold does have a time-tested market, but what time-tested market exists for toxic derivatives? We saw the market Bear Stearns had! That worked well ... If only US Banks had just gold swaps to worry about! You can see all the attention the World reknown "Gold Swap" implosion is getting on CNBC ...

Besides Mr. North points out that this "deflation" of his is only a temporary short term phenomenon and he suggests you hold a core gold coin position long term. How long will his deflation last? He did not say other than don't buy gold in 2008!

I use M3B plus credit. Go to these charts and try to find deflation ... Scroll through them all, since there are 18 charts related to money supply and credit both US and global. Look for the chart "M3 + Credit(Total Money)" ...

Link: http://tinyurl.com/m7bs7

If the US FED and even the global CBs would just allow all these banks to collapse without any bailouts and if global governments would stop going to war and if socialism were not rampant in the USA and globally then I might believe in long term deflation. Liquidity is the modern word for plain old "debt". Debt has to be created by expanding money supply. If debt does not expand then how can economies and stock markets grow in a debt based consumer driven economy? Why would the US government and FED want no growth? They know that a depression would end their stranglehold on us. Having no debt is anti-American! They will inflate just like they have been doing for the past 80 years until it all collapses into a Depression!

Gold, silver, oil and hard assets prevailed during the Great Depression because they are real wealth. Paper holders were the ones jumping out of windows back then!! Its a matter of "confidence" and "safety" ... Ask all the Bear Stearns employees right now which they would rather have had in their retirment accounts ... BSC or gold? BSC or XOM? All the paper banks shares have lost 50% or more of their value over the past year. If Wall Street lowers expectations any more even our President will finally get his chance to look successful!!

That's my take ...

Some interesting historical facts about Gold Sovereigns I read from Cruzis coins site.

During World War II, Gold Sovereigns came to be regarded as the only measure of value in occupied Europe.
Gold Sovereigns were used and hoarded by the occupiers and the occupied countries citizens.
They were used long after the war in countries such as Greece ,rents in Athens were calculated in Sovereigns into the 50s.
Allied airmen carried them in WW2 in case they were shot down, they were instantly recognised and accepted anywhere in Europe.
And as Kaimu has said before airmen still carry them for the same reasons today.
I am still buying them ,have quite a few now in my sock draw:)

A correction in the gold price usually takes a couple of weeks' time to accomplish, heading for the 34-week EMA. In the daily charts, that would be equivalent to heading for the 200-day MA. A major cyclical correction takes the price to the 89-week EMA on the weekly chart.

Posted some of my charts in larger format to flickr:

http://www.flickr.com/photos/11747277@N07/

Our indicator whether we are seeing a change in trend will probably be the ¥/$ chart.

The dollar chart is just getting past a seasonal peak:

http://www.flickr.com/photos/11747277@N07/2351356402/

Fran6,

Further on Gold TA:

- Considering the strength of the pullback in PoG, I am using the full swing from AUG 16 to erect the fibonacci retracement lines.

Therefore, in my opinion:

- No support before 850, which we may see early next week.

- First traders buying at that level hoping that this is just a light correction. I would wait for clear signals of a bottom to form, as prices will be geitting there too fast to immediately reverse.

If this level breaks down, which is actualy quite likely given the strength of the movement, then:

- Support is to be found at 770 / 750, thereby compleing a full 61,8% fibonaccu retracement of he entire upswing.

For the record, I would like to say here hat I EXPECT hat PoG will retrace to these levels.

If, as and when PoG reaches that level, and some consolidation occurs, then it will be a screaming buy.

For the time being, there is absolutely nothing in the charts suggesting that the time to buy has come.

Cheers!

Toonie sale on Bear Stearns memorabilia at eBay

http://tinyurl.com/2kd9ob

A Bear is for life, not just for a short term investment….

Be the first to get your paws on classic Bear Stearns memorabilia

This prestigious bear joins a long list of deceased bears, including Hofmeister Bear (beer), Paddington Bear, Super Ted and the infamous Hermies Bearback.

We are practically giving the Bears away at a cost of $2 per item – get in quick, as when they are gone, they are gone!

First Bear comes free with a New York Skyscraper worth $1b*

Do not delay – bail a Bear out today!

NB: Money upfront only – no “loansies” – we’ve already got into enough trouble with that.

*Skyscraper is subject to availability

http://tinyurl.com/2rvmbz

thanks all you guys for your comments on ultras and counterparty risk. Still have a few and am going to exit. Nice guys comments about the bearishness.... I see it on boards like these but this board is a higher level then what joe6pak reads. Only recently have I seen bearishness. Kudlow and all the talking screwballs were bullish up until recently. so the bearishness is not excessive from what I see the average investor being spoon fed. I certainly have not seen capitulation. Seen some fear but not got to sell at any price.... I know how real estate is doing and how the consumer is doing and this is not over. Major contraction is continuing and will shock people at the depth of it. Upcoming earnings /guidance will prove we are going lower. All of course in my humble opinion.

Lelik, why do you say CPI is zero?? Are you only looking at the last month to month numbers and not at the yearly inflation? How about the real non-core yearly CPI?

BTW, I just came back from the groceries at the supermarket. Every time I am more and more shocked. The prices for chicken, cheese, milk, and a lot of other items is absurd. Ice-cream is the same price, but all the ice-cream makers chopped the container size by 17.5% in tandem.

This makes me think twice about what I buy. I can only imagine others.

Thank-you, macromatics.

I will look at those numbers as well.

If this was a cyclical correction in the price of gold, then we would see levels below $800. In that case, we would be seeing a cyclical correction. A correction to the 200-day MA would be substantial enough to cause a lengthy consolidation. If we correct below $900, then I am obviously wrong and have to rethink my commitment to the gold sector.

I think the essential is to respect the seasonality on this down leg. Give the price of gold 7 full trading days. For silver afficionados, we saw a move in a very simliar vein from +$14 to ~$11 all in one week last year, yet went on to new highs. The oil price is making the same moves as well as currency bets against the dollar.

I do not anticipate that this is a cyclical correction of any sort, nor do I believe that the 'bubble has burst.' I don't think this is exactly like the correction we saw in May, 2006 where we observe a prologned consolidation taking up to a year to finally breakout.

But this correction is enough to wave a warning flag to holders of large cap gold miners and precious metals ETFs, that they are not immune to a large price swing.

Insider Buying

Insiders buy what they see as value. Over time they do (on average) outperform but be careful of expecting immediate gratification.

Recently stocks tend to pop quickly on the news of insider buying only to see those gains evaporate. (see CHK) This pattern changes over time, in a more bullish market trend the insider activity tends to have greater follow through in stock price.

Of energy sector stocks with insider buying over the past 30 days the delta from THEIR purchase price is -4.63%. Note that traders 'buying on the news' are often paying above the insiders buy.

So, if you believe this is the 'smart money' you would generally be better off taking your time, research the company and when it falls back into YOUR acumulation zone then step up.

Interesting buying in materials group last 90 days- ALJ, CHK, HLX, ALY, BW, HERO, NR, CBT, GMO.

Size also matters- of the stocks rated most highly for insider activity by insiderscore currently the large caps have a delta from purchase of +1.4% vs small caps at +2.98%.

Ladies?

Recently Bill had mentioned WMT as a stock which could shine in the economic direction we are heading.

Wonder if there are other ideas out there which would gain in market share as the population in the 'squeezed' category becomes a growth market?

Pawn shops? Odd lot retailers? Generic food packaging? Generic/cheaper pharma, cosmetics? Mobile homes make a come back? Grocers get more traffic as eating out suffers? Auto parts stores as people keep older vehicles? There have to be winners capturing business from the losers.

I'm thinking this is a question for the ladies- which make most of the shopping decisions, right? If YOU had to get more budget oriented where culd you cut back or trade down to save money?

Any ideas?

Interesting take by Hulbert on fed rates:
http://tinyurl.com/39kyqk

Gold and Insider Buying remarks/charts excellent today. I, for one, will spend some time thinking it through on both issues.

I do not agree that there is NO support here for Gold. Here is my simple wkly chart that DOES show some support for Gold here although I would not be surprised to see some further drop next week, but I expect to see a rebound upward, maybe to the BBand before a further zing down to extreme lows.

Here's my chart:
http://tinyurl.com/34ff28

More on the S&P downgrade of GS, LEH, investment banks.....

"The Fed has also set up a new lending program which Lehman, Goldman and others are tapping as a source of financing as credit markets continue to reel. See related story.
"The favorable effect of the Federal Reserve's unprecedented support for the U.S. broker-dealers mitigates liquidity concerns by instilling confidence in the capital markets," said S&P credit analyst Scott Sprinzen in a statement.
"Nevertheless, we believe that negative rating outlooks are broadly appropriate for the independent securities firms, reflecting the potential for a more substantial decline in profitability from capital market activities," he added.
S&P on Friday also revised its outlook on the U.S. brokerage industry to negative, saying despite "relatively good" earnings from the group this week, it has become more worried about the general profit outlook for broker/dealers as a result of "increased unpredictability of business trends."
The firm said its ratings factor in a 20% to 30% fall in revenue for the industry as a whole, and there is the risk that revenue could fall even further."
http://tinyurl.com/32gg55

Does anyone know what happened to Thomson's I-Watch? I read somewhere it had been incorporated into a stock charting program/website, but the writer didn't remember which one.

Gold: A quick look at the GLD chart yesterday after go34's post shows support at several levels, most coinciding with those nice triangle/flag patterns we saw on the way up.

Right now we are smack dab in the middle of the last triangle and if you look back you will notice the first breakout ( center of the largest triangle) is just above the 200 DMA just about where Bill and go34 think it could go.

Each triangle also roughly matches go34's averaging in points.....and also represent quite a bit if support/resistance that lead to the previous breakouts.

Just my observations.....

I thought markets were always a trading environment.....:>)

Good webcast by Don Coxe this week.
http://tinyurl.com/247ywb

Explains his view about what happened with Bear this last week.Also has views on commodities drop this week, i.e. levered players selling

john uk,
The most valuable commodity in Europe during the second world war was not gold; it was what gold could buy. Safe passage and food. Chocolate was worth its weight in gold so was coffee. The US airmen in the know, also carried chocolate and coffee. Many became rich after the war because they traded chocolate and coffee for gold. With 1 gold sovereign in Greece during occupation you could buy 1 kilo of beans. True wealth in times of devastating war is food. Gold is devalued. Life is priceless. Gold is devalued but priceless. You could probably also buy a Van Gogh for 1 gold sovereign or a kilo of beans, but you cannot eat a Van Gogh. I suppose a case could even made that the US dollar can actually be backed by food. Why would they need gold? America is the biggest food producer by far after all. The time may soon come when America demands an ounce of gold for a few kilos of beans from other countries. China are you listening? Weird thoughts on a weird day. Cheers

reminds me of inmates using cigarettes as currency...let me know when they decide to back the USD with coffee...

Re: GOLD


"The bull run from last August is over. This correction could last months, possibly more than a year. Compare the aftermath of the last blowoff top, in May 2006."


http://tinyurl.com/yu68v7


Good trading and good luck!

just posted the transcript of Don Coxe's weekly webcast.

critical points:

- still long commodities, out of banks
- oil at $200 can hurt economic growth but gold at $1400 would not.
- period of weakness to continue to build commodity position as the bank story is far from over.

http://jglobal.blogspot.com/

FT reported that The Federal Reserve and The Bank of England were talking to each other about using public funds to bail out GSE's. Then both organizations denied this report.

Here are the individual links.

http://tinyurl.com/ynpgew
http://tinyurl.com/yu6yav

I am at a loss of words.

I have found the solution!
http://tinyurl.com/2hwbb6

Let local banks print money and give it away. for every dollar i withdraw just match it!

If they are printing usd to bail out the rich, I want my piece too!

I am going to go buy a $500,000 car next week and if the dealer asks how i am going to pay for it i will simply slide over Ben Bernanke's business card.

niceguy - at first I thought that you were new to this site and that we should give you a chance. Now I think you sound a lot like our "old friend" activedollars who no longer posts here.

First you will try to discredit Don Coxe, next you will try to discredit Bill.

As a long standing community member, I'd like you to answer the following questions - Who are you and what is your agenda?

This blog is not a yahoo board. This community is about helping each other. If you'd like to contribute in that way, then I would suggest that you do so. If you have another agenda, which I am pretty sure you do, then please get lost.

This is the second time that I am calling you out. There are enough of us here with the experience to see through a bullshitter, so choose your futures comments wisely.

We are waiting for your response.

niceguy is a planted shill who will morph into another id once enough people being to question his tactics. this has happened before and will continue, due dilligence will sort these things out.

ALOHA !!

More perspective from past economists. Nothing new under the Sun!

GoldMoney
Paper vs. Metal
By James Turk

March 22, 2008

A week ago one barrel of crude oil cost 3.422 goldgrams. Today a barrel of crude oil costs 3.445 goldgrams. So the price of crude oil in terms of gold hardly changed, but in terms of dollars, their prices fluctuated wildly. The dollar price of crude oil dropped 6.7% this past week, while gold dropped 7.3%.

There were similar results the previous week. The dollar price changes for crude oil and gold were increases of 3.4% and 2.7% respectively, while the gold price of crude oil increased a mere 0.7%.

Prices fluctuate because of the interaction between supply and demand, which is basic economics. But what is clear from a comparison of the above price changes is that this fundamental principle of supply and demand is distorted and therefore difficult to assess when the dollar - and for that matter, other national currencies - are used to measure prices.

National currencies do not provide an accurate, consistent measure of buying power. In the words of Charles Holt Carroll penned in 1857:

"What we fancy to be a rise in value of our products is merely an alteration of the name in money that we exchange them by; they are not altered thereby, in their exchange value, with regard to each other."

Here's another quote to demonstrate that this insight is not new. It is from An Enquiry into the Paper Credit of Great Britain, a wonderful book written in 1802 by Henry Thornton, an economist and governor of the Bank of England:

"We assume that the currency which is in all our hands is fixed, and that the price of bullion moves; whereas in truth, it is the currency of each nation that moves, and it is bullion which is the more fixed."

We are today wrestling with the same monetary problems that Britain faced in the early 1800's. These are the predictable problems that arise from fiat currency, which is money backed by nothing but government promises. Fiat currencies today are losing purchasing power, repeating what happened to the pound in Thornton's day. Although the pound was nominally defined as a weight of gold, the redemption of pounds into gold had been suspended at the time Thornton wrote because the Bank of England did not possess enough gold to meet its monetary commitments. Consequently, gold had disappeared from circulation within Britain because it was worth more than the depreciated British currency, proving accurate the dictum of another great British economist, Sir Thomas Gresham, that bad money drives out good. In their daily transactions people used pounds, instead of the good money - gold.

So what would you rather own? The volatile dollar, backed by nothing by hollow government promises, or gold and silver, which have proven themselves to be invaluable for centuries because they preserve purchasing power?END

Aren't commodities the last to go in an economic turn? I think that the commodities falling will help the overall market a great deal by taking some of the strain off of food and energy. Though much is made of the commodity super cycle, and I'm not discounting that, means that a natural decline will take place. Though speculation coupled with obscene leverage may make the decline unnaturally precipitous!

MP3 short discussion on Bear Stearn's long gold position and short dollar:

http://www.kereport.com/WeekendSpecial/WS032208-1.mp3

[BILL CARA NOTE: MY SYSTEM PICKED UP SPYBOT IN THIS LINK !! PLEASE BE AWARE THAT SOME OF THESE LINKS ARE PLANTING SPYWARE ON YOUR COMPUTER; I CAN'T STOP IT BUT YOU SHOULD KNOW I DON'T CONDONE SPYWARE.]

leisa- how far ahead do you think stock prices discount the news?

recall driving to irvine a year ago with the mortgage brokers (LEND, FMT) beginning to topple, and you were in the midst of your series on 'Hedge Funds and Systemic Risk.' shorting the sector would have paid off well over the next year, as larger lenders and homebuilders were sold off... now there are even a few headlines about pension plans looking to pick up a few mortgage-related securities (http://tinyurl.com/2ola4z)...is it too early to begin buying?

can't help comparing 2008 to 1973, with rising oil prices prompting sales of fuel-efficient vehicles, a war-weary nation, and the prospect of new faces in washington...one key difference, of course, is that rather than being in school, boomers are now at prime earnings capacity, which may shorten the recession...

reference your blog post from yesterday (http://tinyurl.com/27o3o8)- the state theatre in ann arbor went on to screen 'harold and maude' every weekend for who-knows-how-many years (it was probably still running when i left in 1990)...haven't seen the nicole kidman film, but you might enjoy reading patricia bosworth's biography of diane arbus->read it on a flight to HK in 1984 and couldn't put it down...

Bob Moriarty, who i have to give credit made some decent calls the past few months timing gold, (though he was calling for a correction for a few weeks before it happened and has labled it the best call ever in gold... bit of a stretch) either way im curious why he has turned hyper bullish and calling for a jump in gold shares short term.

-------------------------

Buy with both hands

Bob Moriarty
Mar 24, 2008

When you are searching for information about investing, you are going to run into two totally contrary forms of information. There are those I call the "Cheerleaders" who specialize in telling you want you want to hear. We all know who they are. They are quite popular because they indulge all your fantasies. Whatever you want to hear, they tell you:

Gold and silver are going to go up every single day. There is no such thing as a correction. If the price of gold or silver goes down, even for a day, it's because of some mysterious group they never really identify or prove exist. There's a cabal and it controls everything in your life. You can't make a bad investment decision, if your stocks go down, it's because "THEY" made them go down.

I call them "Cheerleaders" for a simple reason; they stand on the sidelines and howl at the moon. They aren't players, just cheerleaders. They specialize in figuring out what you want to hear because that's what they are going to feed back to you.

Then there are those who tell you not what you want to hear but what you need to know. There are far fewer of these guys. They aren't nearly as popular as those who tell you what you want to hear but they are the ones who will help you make money. I think of it as the difference between signal and noise on a radio transmitter. You need to hear the signal, that's the important part. You need to learn to ignore the noise.

One of the ways I figure out which is which is to ask myself, when silver and gold finally hit a major top, is this guy going to tell me to sell or is he going to be braying "Buy" at the top of his voice? I was a commodities broker for a very short time in 1984 and I saw the files of literally hundreds of people who had made fortunes in late 1979 and in early 1980 only to lose every penny because they wouldn't take profits. They were listening to the cheerleaders and ignoring the players.

I spent ten days trying to warn people of an upcoming violent correction. It wasn't popular because it was so contrary to what people think. That's how and why I made it. When you can't buy a silver bar because the demand is so high, you are at a top. When do you expect to run out of silver bars? At a bottom?

We have had our violent correction. The number of gold contracts and silver contracts were at record highs. Before this correction ends, I expect to see those numbers cut, perhaps in half. Most of the damage has been done to gold and silver but another month or so of correction would be about right.

That said, another technical indicator that I put a lot of value in is also at an extreme of emotion. I use a chart of the XAU over gold as a pure measure of psychology. Investors can either invest in gold or in gold shares. This index shows the ratio between them. When people are very bullish on gold the number is high, when people are very bearish on gold shares, the number is low. It tends to show turning points for both gold and shares but it isn't perfect. It didn't predict last week's carnage but bullish consensus and the number of contracts outstanding did.

This is going to be a really weird prediction. Last week I nailed the biggest and fastest gold and silver correction in history. It was the best call anyone has made for 28 years on gold. This week I'm going to predict gold shares are going to explode upwards starting immediately. ESPECIALLY the juniors.

Now that's a switch. But here's the logic behind it. If you look at the XAU over gold, it shows a low in the ratio in May of 2005 and another last August. From May of 2005 until the next high in Feb of 2006, the XAU climbed from about 78 to 155. From the low in August of last year to November, the XAU rocketed from 125 to 190.

The juniors didn't participate in the rally since August. Many are the same price they were in August. Some are lower. Jim Sinclair and John Embry believe that hedge funds have shorted the juniors. I don't totally buy that. If there was some giant short position, it should show up. And while short positions in many juniors have gone up, they aren't much above 1%, which is nothing for a NYSE stock. So I'll just say that I'm not totally convinced. But if they are right, those same shorts now are going to have to cover. Gold could easily correct for another couple of months and the gold shares and especially juniors could rocket.

The lowest the XAU over gold ratio has been in three years is .183. I think that's the lowest for five years but I can't prove it with my software. On Thursday of last week, the ratio dropped to .183 and closed at .187. Thursday of last week should have marked the single best day to be buying gold shares in the last five years. There is nothing saying the ratio can't go lower but if it does, it just means it's building up more pressure when it does explode.

gold- if you have to be trading it right now, why not pair DZZ with GDX?

niceguy - you have yet to provide any value at all here. If that does not change, my crystal ball is telling me that you will be asked by the community to leave...again. Why continue to waste our time?

2nd_ave--regarding stock market discounting. To me these problems were so apparent (and you were one of the stalwarts with me as I dived into that paper!), and the market ignored it. From my observations over the last year, I have no faith in the market's predictive/discounting powers! It appears to me that the market hangs onto "stories"--stories about the liquidity boom, global growth boom, hyper inflation, deflation...insert story dujour here!....until the evidential matter is so compelling that it capitulates. Remember those MTG puts that I had? Well, I closed them for a gain because the #!#$%^& analysts said (and I listened) that there were no worries. I made a nice gain. BUT....(crying over spilt milk here!) I gave up 10's of thousands of dollars. I had Sept 07 $60 puts that I bought in the Spring. I pay NO mind to analysts anymore either. HOwever, their research reports are invaluable in being able to learn the landscape of particular sectors and sector players.

I've learned the hard way not to be too anticipatory. Your observation about the amount of time for this to unwind is spot on--and a useful lesson for folks to heed. I know that I have!

I'll look for the DA biography (I would not recommend the film that I saw!). There are so many artists that I'm not familiar with. PBS had a biopic on Ansell Adams (The American Experience) this week. Really well done.

Some of Bill's readers may be interested in a weekly sector spreadsheet that I prepare. You can find it here: http://www.box.net/shared/8m93db8cg0

Note that I do not see any information on who downloads this, so do not be worried about your privacy. I prepare this weekly and put it in a sidebar on my blog site for ease of access. You can get to my blog by clicking on my name. I think that you will find it very comprehensive and informative--no analysis, but sector information in a table format.

If you are not interested in sectors, then you'll want to pass. Personally, I think that sector performance is pretty key (and Bill certainly helped highlight that for me).

This is an excel file. You can download an excel viewer which will allow you to view and print the file.

Re: Spybot

Sorry about the link with the discussion on Bear Stearns positions in Gold and Dollar containing a spybot. Time to buy some really good internet security for the iMac.

dr cosa, thank you for posting Bill Moriarty's take.

Since everyone is so short-term bearish on the gold price, then I am changing my outook for next week from a bullish harami to form, to a long-tailed doji.

:O

Re: Quote from Mineweb:

Rush back to gold by Eastern jewellery markets suggests price may have bottomed.

"There is still no doubt that the majority of specialist gold market observers are looking for a return to higher prices over the next few weeks as gold price fundamentals remain exceedingly strong as Central Banks and institutions battle to counter the effects of the ever continuing global financial crisis. Much will likely depend on institutional liquidity, but the big climb back into the market from the jewellery sector should ensure that demand remains strong, at least at current prices, and the downside risk is thus more limited."

http://tinyurl.com/26x3aq

Centerra Gold CEO sells 60% of holdings, but says shares undervalued

http://www.nationalpost.com/story.html?id=392010

I'm not seeing any actual spyware associated with that MP3 link that Fransix posted. If it is giving you issues, don't just left click it, right click the link and select "save as" and see if it works ok then. I downloaded it and played it without any problems. However I did manage to generate an error message by trying to open it in my browser. I don't think it's a spyware issue, I think it's just the browser tripping over itself trying to figure out how to play the mp3.

Here's CG.TO fully indexed along with the silver/gold ratio, and the gold price:

http://tinyurl.com/yr396y

FED ENGINEERED COMMODITY COLLAPSE

An interesting article by Alex Wallenwein

http://www.safehaven.com/article-9754.htm

RE"gold- if you have to be trading it right now, why not pair DZZ with GDX? "

Posted by: 2nd_ave at March 23, 2008 12:18 PM

Because one may very well be closer to an end, and the other closer to the beginning..

$TYX 6 mths ago

Dr. Cosa's timely post may have beat Hussmans weekly report

hmmm it dropped some of my post..that should read compared to 6 mths ago,$TYX lower; CPI higher and currently ISM less than 50.

EEMTRADER,

The other day you told me to look at a certain range on my charts to get a better view of what XLF/SKF is doing. I can't remember what range that was, was it 5minute/10 day?

Right now I'm only using 6 month charts and my intradays.

"Can markets discount? Markets are people. People cannot see into the future."

niceguy- wouldn't say 'discounting' is synonymous with 'seeing into the future'...i believe (at least to some extent) the toppling of stocks is due to unloading of positions by those with more information->by the time it becomes front page news, they are of course finished selling and may in fact be buyers into capitulation...no magical thinking here...

Zenob..you stud you..you have the best temperament i have met on the web! You help make a tense trading session fun !

On thursday...the breakout above 26.10 can be seen easier on the 30 min chart with about 30 days of data..

you might want to transpose those support and resistance lines to a lower time frame so you can see it better and respond quicker when using those 2x inverse ETFs.

XLF is up against a gap..so either it jumps over that on monday..or it falls back down..now what level of support to watch if XLF holds or fall apart ( place to add SKF )

Zenob: Sorry I use 3 min chart once in a trade and sometimes drop to 1 min chart when tradng GS/FXI during a 'Long Live GS' surge.

I can see the pullbacks better on a one min chart and separate between a breakdown of trend versus a pullback to a move ave for a slingshot move over resistance..as XLF did on thursday..either way ..with time running out..it was a good heads up to close the Long trade..

EEMt- i was thinking if XAU:gold is at a low, and how it reverts back to the mean is unknown, then why not play the the probabilities for an increase in the numerator or decrease in the denominator? which do you think may be near an end, and which near a beginning?

03/20/2008 YOU BOUGHT
SKF PROSHARES TR ULTRA SHORT FINLS PROSHARES
Margin Shares: +100.000 Price: $107.25 Amount: -$10,733.00
Comm: $8.00
Settlement Date: 03/26/2008
03/20/2008 YOU BOUGHT
SNDK SANDISK CORP
Margin Shares: +300.000 Price: $19.9499 Amount: -$5,992.97
Comm: $8.00
Settlement Date: 03/26/2008
03/20/2008 YOU BOUGHT
SRS PROSHARES TR ULTRA SHORT REAL ESTATE PR
Cash Shares: +100.000 Price: $101.25 Amount: -$10,133.00
Comm: $8.00
Settlement Date: 03/26/2008

I hope my trade will workout o.k on monday