Good morning from Cape Town

Last week felt more like being in Pamplona at the annual “Running with the Bulls”. Stock markets experienced another good week based on the viewpoint that the worst of the credit crisis might be behind us. A further improvement in investor sentiment and increased risk appetite caused market participants to cast aside a mixed bag of economic and corporate data and look across the “economic valley”. Let’s hope investors don’t get gored as happens to some people in Pamplona!

Read all about this in my weekly blog post, highlighting some thought-provoking news items and quotes from market commentators during the past week.

Here is the link to the “Words from the Wise”: http://tinyurl.com/4va5h5

Enjoy the read.

Good morning.

Here are your Cara 100 Ratings Changes:

Upgrade:

YHOO - to Buy @ Needham

Downgrades:

DIS - to Neutral @ Pali Research
GRMN - to Hold @ Needham

How to rule the world after Bush

Picture January 20, 2009, the day George W Bush has to vacate the Oval Office.

The "free trade" elite in the United States, upset by the George W Bush administration's neo-conservative go-it-alone nationalism that disregarded multilateral means of securing influence, wants a "guerrilla assault" to return to the softer empire of corporate globalization. These corporate globalists are now bidding to control the direction of the US's economic policy, and they see the Democrats as their best chance.

http://tinyurl.com/5gpbuh

The monster and the sausages

the missing "link" in deciphering German President Horst Koehler's denouncement of the world financial market as a monster for making "massive leveraged investments with minimal capital". Think of a sausage: the gross parts of a pig are ground into an appetizing package. Just don't blame the sausage-maker,

http://www.atimes.com/atimes/Global_Economy/JE20Dj05.html

Rebate Check

http://markybaby.com/SU_images/rebate.jpg

Good Morning! Bill, it sounds like "Dolce Vita" for real, but don't forget that May is a hurricane prep month. Season starts in a couple of weeks.
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Food price inflation evidenced again in data on Mexican Peso rise. Article from Los Angeles Times says:

“ .. Banks were quoting 10.39 pesos to the dollar today for large transactions, down from 10.45 on Thursday and down from 10.91 pesos at the end of last year. ...”

Hmm, that’s a 4.75% price increase in $Dollars on Mexican vegetables, etc., in the US over the last 5 months due to the Mexican Peso's rise in value overall compared to the action of the $USD for the period. Annualized this will amount to about 11.5% increase for the year if it continues on the same path.
http://tinyurl.com/4k8s57

ps: The title of the article is: “Et tu, peso? Mexican currency nears 5-year high against dollar”.
One of the blog comments made on the article was:“its Appalachian for having already eaten - "I dun had vittles, did yew et tu?"
Posted by: charliec “ 8<) .

Cool. Bill, wow, not only you are getting some nice weather, but also you are being productive. Great idea about the fund.
Ok, I don't have much today except that Dennis Gartman will answer bunch of questions this week, in regards to his positions and also a couple of nice weekly charts defining the resistance for S&P 500, Rob
http://wallastoninvestments.com/

SOL up again. 5%. I am taking some profits today. up 33% in a week and dont want to get too greedy. I'll watch rsi/stoch for my exit.

The market is marching higher but the leaders AAPL and MA are still fading.

I've been long CDE all day long and I'm loving it. This move should have A LOT left in it over the next few days. Which is a good thing, right?

moab:

Right -- AAPL and XLF stalling.

Makes the move higher today suspect in my eyes as the pro traders are exiting the speculative leaders. There might be a pullback by tomorrow.

Guys, there are reasons AAPL is stalling having only to do with their own situation. Don't make more of it than there is.

Maybe the market will start pulling back at 1 PM EST, after lunch-time trading is over for most of the (non-professional) office workers?

Out of SLW at 14.85

Wrote Sep 2.50 covered calls on UXG
Premium is 45 cents for 90 odd days on a $2.15 share. If called away, almost 40 per cent return. Any thoughts on this play?

[Bill Cara note: You might be disappointed if the stock runs back to $5, but truly if you are moderately bearish, and thinking you might buy some calls at lower prices, this is a good income strategy. What I experience by continuously trading a few puts and calls on stocks like this is to learn the trading patterns so that when anomalies occur, I can be ready to take advantage.]

For those who have munis, Supreme Court ruling today in municpal bond case.

Kentucky Dep't of Revenue v. Davis, 06-666. By a 7-2 vote, the Court held that Kentucky does not violate the dormant Commerce Clause
when it exempts from its income tax the interest earned on bonds issuedby it or its political subdivisions, but does not exempt the interest
earned on bonds of other states and their political subdivisions.

The Court held that "[i]t follows a fortiori from United Haulers [Ass'n v.
Oneida-Herkimer Solid Waste Management Authority] that Kentucky must prevail. . . . Kentucky's tax exemption favors a traditional government function without any differential treatment favoring local entities over substantially similar out-of-state interests.

This type of law does not discriminate against interstate commerce for purposes of the dormant Commerce Clause" (internal citation and quotation marks omitted).

This case can be found with the following link:

http://www.supremecourtus.gov/opinions/07pdf/06-666.pdf

Buying a UltraShort Russell2000 ProShares (TWM)at
68.4

Buying a UltraShort Russell2000 ProShares (TWM) at
68.4

viso-

Yep. That'll do it.

shark:

When the big boys like the financials (XLF), AAPL, and RIMM are stalling, do you really think the market will take off and leave them behind?

As we know, in the very short time frame, a stock goes up when the number of buyers exceeds the number of sellers (and vice versa).

This sell-off is feeling more aggressive than any of the mini-sell offs over the last couple months

I can already see the "Sell in May and Go Away?" headlines in tomorrow's paper.

moab:

Is the market rolling over or not? Hehe.

I guess Apple did have its issues but they weren't publicly known until today. Mastercard on the other hand is still a tell and just lost 2% in less than an hour and it topped out over seven sessions ago.

moab:

Dow Jones Transportation is the Key, still looking strong.

Transports eh? They have been very strong on the back of the railroads, it is true. And they are outperforming the markets today.

The Russian market was a highlight of the week, with the Russian Trading System Index surging by 8.5% to hit an all-time high or a 6,436% return over the past ~ 10 years.

While the value of the $U.S. dropped 17.75% and the S&P 500 returned 54.37%.

Looks like a change in trend to me as this is a nasty reversal. Follow through is key though.

Classical one day reversal in progress!

robbie fields -

Good find!- actually I think the sept calls have 120 days to run. And I calculate the return as 33% if stock is called away (.45 premium +.35 share price increase on 2.15 of capital = 35%) before commissions. But still that's great. Congrats.

Southern Arc Minerals has been moving around like a yo yo any thoughts here as I am thinking of going for a ride here @ .50

...the head fake over and under sma200 as we predicted this weeked, very nice!

Ralph
http://successfulonlinetrading

Ralph:

It seems that everything that happened has been predicted by you and your site. Were you guys ever wrong ? :)

robbie fields - don't forget the black swan !

Have a plan for what you would do if UXG dropped below $1.70, and you had a net loss.

UXG hasn't been that low yet, and is unlikely. But, "black swan" events (Nassim Taleb's term for highly improbable yet devastating events) do happen ...

Ralph seems to be one of those guys who wants to promote his site. Ignore those infomercials !

Hey Guys and Gals,

Re: AAPL I was just talking to one of my fundy- oriented fund-manager friends who cited a bunch of reasons unique to that company and it's stock for it crapping out here which it seems to be starting to do. I wasn't suggesting the market can go up w/o leadership. Just saying it wasn't going to get it from AAPL.

robbie fields, Jock, RE UXG options..

Yes thanks for bringing that one up, been away for a while but still try to skim some of the daily discourse once in a while.

Jock is right, you always gotta have a plan if things go against you, now some guys just plan on that never happening.

So you're break even point is $1.70, well not really as if you sold the stock you would now be sitting naked on the call options, although they won't be exercised at that price it's unlikely your broker will let you sit naked. So you would have to buy back the calls at say $0.20 ea to close out the total trade position.

Just a few more things to think about.

Quasi

ok back from a nice relaxing weekend,

all the more relaxing when i was about to leave friday morning and gold had popped above $900.

nice to be back, and see the gold charts smiling.

According to Hommel, Perth Mint plays games with unallocated gold. So much for a trustworthy, counter-party free repository.

"If The Perth Mint is storing your metal, they admit that they may have loaned your metal out.

"The $880 million of precious metals deposited by Perth Mint Depository clients (note 17) was used in operations by Gold Corporation as inventory ($381 million - Note 8b) with the balance in the refining operations of AGR Matthey (Note 8a).
http://www.perthmint.com.au//documents/Annual%20Report%202007.pdf
p. 81, bottom:"

One more day in Newport Beach and then back to the grind for me.

McHugh is calling for the beginning of 3 of 3 EW down, that was delayed by the Bernake stunt with BS. Gold and HUI bottomed.

I'm loaded "for bear" with gold miners and holding DXD, QID, TWM, SKF, and SRS as the primay trend plays in this bear market rally.

I attended Dave Morgan's sessions at the Money Show, and he gave me an autographed book. Plan to open the PM IRA we discussed at the evening session, to hold some bullion coins in a vault in NYC.

Also got some interesting energy plays and other ideas I'll post later after collating notes. From Gue, favorite nat gas stock is XTO. Nat Gas expected to outperform oil and diverge, maintaining it's uptrend channel. Oil projected to continue tne run as global output stuck at 85 Mbbl/day (peak oil) and demand at 87. Puplava projects 145, others 150ish. It'll run till demand folds back. We're at $3.91/gal 87 here in OC, with Diesel at $4.79. It's been 100F and the nat gas peakers are running OT.

Might be of interest to followers of FSLR -

CEO Michael Ahearn sold a cool 250,000 shares of FSLR last week for appx $80m - still holds 3,073,839 shares - thats a pretty solid chunk considering he has been selling in bits and pieces since this IPOed

SEC filings:

http://tinyurl.com/5efbp2

His total holdings are down to 3,073,839 on (5/16/08) from 6,097,043 shares on 11/16/06.

Re: Silver ETF Unloads

Well, here it is, a silver ETF based in London has been offloading silver since January, about 85 tons worth:

http://www.resourceinvestor.com/pebble.asp?relid=42901

ALOHA !!

Here's the part that Hommell leaves out ...

AGR MAtthey and Gold COrp and the Perth Mint are all one! Go to the link provided below and see the flow chart from the same FY 2007 Perth Mint Annual Report.

Link: http://tinyurl.com/6ggdlx

Mr. Hommel continually assaults the PERTH MINT for nefarious and murky data, so that makes me wonder who he works for?

If you go to any other of the PERTH MINT competotors(?)like GoldMoney or Kitco you will not find an annual report for due diligence. At GoldMoney your gold is held in a vault owned by ViaMat and the only source for gold at GoldMoney is Kitco. Kitco buys a lot of its gold from the PERTH MINT, so in essence GoldMoney depends on the PERTH MINT. In my due diligence of both Kitco and ViaMat I could not find annual reports on either one(at least not on their websites).

So according to Hommell gold from PERTH MINT unallocated has been distributed to AG Mstthey. If the PERTH MINT an GOLD CORP owns AG Matthey how can you say it has been loaned. Can you really loan something to yourself? If I move 100 ounces from my sock drawer to my pants drawer does that mean it mean I no longer own 100 ounces?

What happens to GoldMoney gold if ViaMat fails or Kitco runs out of gold in the midst of filling gold orders for GoldMoney? Where is GoldMoney FY 2007 financials? Where is ViaMat FY 2007? Where is Kitco FY 2007? Wow ... talk about transparency issues!!! How can anyone actually perform due diligence on those companies without financials? Or do they get a pass because of some sort of celebrity status?

Hommell operates on rumors and half truths. To prove my point all he has to do is advertise his PERTH MINT issues in an Australian newspaper ...

I have always wondered why these guys attack the PERTH MINT which is the only government sponsored entity I know of that promotes gold and does not print fiat notes! The State government of Western Australia is the most mining and gold friendly government entity on Earth!

There is a well known saying about "biting the hand that feeds you"!

ALOHA !!

As an addendum to my PERTH MINT post above ...

I hold about 10% in unallocated and the rest is allocated. I get phone calls from the PERTH MINT asking if I want to buy spare 1000 oz silver bars and kilo gold bars. Once you own substantial allocated it seems to qualify you as a preferred customer.

I suppose that's what happens when you don't bite the hand that feed you!

http://tinyurl.com/5yp7oq

Tuesday overview with attention to Cara 100

bloomberg this morning says Goldmans' European team made a presentation yesterday to investors showing that mining stocks may pull back in the short term as they have moved too far too fast relative to gold.

but...bloomberg posted a chart of gold vs. the European materials index, which did show outperformance relative to gold the past 3 months.

a 90 chart of gold vs. gold mining shares tells a very different story. shame on bloomberg's sloppy use of charts.