CTA Trading Desk Morning Report

[9:00am ET] Good morning, Geoff here.

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84 Comments

  1. davefairtex(118101 comments)-
    December 30, 2011 at 12:04 pm
  2. 3:00 PM ET Farm Prices
  • davefairtex(118101 comments)-
    December 30, 2011 at 12:05 pm
  • 7 in Buy alert
  • 2 in Distribution Zone
  • 4 in Sell alert
  • Accumulation Zone: Monthly 11, Weekly 6, Daily 2
    Distribution Zone: Monthly 5, Weekly 7, Daily 14

  • Vadym Graifer(118101 comments)-
    December 30, 2011 at 1:33 pm

    … Greece was a sovereign state, no? Read the second line:

    (DE) Germany lawmaker Hans Michelbach said Greece’s privatization plan is not enough – US financial press
    - Said the EU should assume responsibility for the privatizations.
    - Said Greece has to make sure that its partners do not lose patience for good, as European partners are still willing to show solidarity.

    If that’s the language that holds EU together…

  • Bull Hunter(118101 comments)-
    December 30, 2011 at 2:31 pm
  • westcoaster(118101 comments)-
    December 30, 2011 at 2:56 pm

    Recent RSI buy alert Cara 100 stock BRCM. I have been accumulating at these these levels for a swing trade.

    http://seekingalpha.com/article/316538-apple-can-t

  • Mark H(118101 comments)-
    December 30, 2011 at 3:19 pm
  • dberryclan(118101 comments)-
    December 30, 2011 at 3:58 pm

    The one year chart on FXE shows a complete cycle of sorts…time to get long?

  • moragakd(118101 comments)-
    December 30, 2011 at 4:07 pm

    This is a sectors forecast for 2012 by CS–we’ll see where the prices takes us. Happy New Year Cara Community!

    Product Marketing C. Suisse Global Product
    Marketing
    Heat Map 2012 – Analysts’ View of Upside/Downside Potential Across Sectors
    We present Credit Suisse US Equity analysts’ view on 2012 using Heat Maps.
    The Heat Maps are based on the 12 month target price on 808 stocks under our coverage universe with total market capitalization of $10 trillion. We aggregate growth expectations for 11 sectors and 67 industries using market cap weights. On an aggregate basis, our analysts expect the market to be up 19.0% in 2012. Markets will be led higher by materials, energy and financials. Services and consumer staples will be the laggards. At the industry level, the median increase in 2012 is 18.1% (healthcare technology & distribution). Our analysts are optimistic on money center banks, auto & auto parts and oil & gas equipment & services.

  • Mark H(118101 comments)-
    December 30, 2011 at 4:46 pm
  • ballena(118101 comments)-
    December 30, 2011 at 5:29 pm

    February/March puts on dogs as AEM, NG, etc. Stop @HUI>520. No big bet, since I am aware that I could lose a significant portion of what I paid. I do not mind being wrong on this one.

    Chart of HUI simply stinks. Attached GLD/GDX ratio is getting quite interesting.

  • soulek1(118101 comments)-
    December 30, 2011 at 5:59 pm

    I wanted to comment on a few of the mining stocks that I follow and would be interested in anyone else thoughts also on these.

    KGC – CEO Tye Burt seems to be disliked in the mining industry and by company shareholders as he is considered to be more of an empire builder than really focusing on return to shareholders. That said, I think the resources he has assembled are really impressive and the poor performance of the stock over the last 12 months is starting to make this a compelling value. They have approx 2.8M oz of gold production right now and projected to have 4.5-5M oz gold production by 2014-2015 if they can continue to deliver on their plan. This with a stock that has a market cap of around $12B. If miners sell off continues you may even be able to get this in the $8-9 range which would put market cap at around $10B.

    SVM – The fraud allegations and silver slump has driven this one down, but I like how the company has responded professionally and is taking steps to enhance its image. The recent announcement about the 43-101 studies is I think great news. Company has some of the lowest cash costs in the industry thanks to the other byproducts that it sells off. Production of over 5Moz silver annually and could be closer to 10Moz within the next five years if they successfully bring some of their new projects online. Market cap is only about $1B.

    UXG – I have looked closely at the future McEwen Mining because of the interest on the site and the top quality management. One thing that is a potential negative for me and I have not heard discussed here much is the potential after MAI acquisition valuation of the company. UXG has 140M shares outstanding and MAI has 282M shares outstanding. At the exchange price of 1 MAI share for 0.45 shares of UXG, you could be looking at a share count of around 260M shares outstanding. At a current UXG price of $3.30 that gives a projected market cap of $850M. That valuation is too high for me when there is so much blue sky they still need to deliver on. I think I could buy at around $1-2 per share and feel I was getting a really good value. My plan is to wait on this one till the merger goes through and watch how it trades for a while as the new MUX. For me this is one of those stocks where you are betting on the horse and McEwen’s track record and huge insider ownership position are major positives.

    JAG – I have had this one for a while and I welcomed the buy-out announcement when it came. Still it doesn’t look like the board of directors is going to be able to capture anywhere close to the value of the underlying resources and have boxed themselves into a corner. If we could get a buyout anywhere around $10 I would be extremely happy.

  • dberryclan(118101 comments)-
    December 30, 2011 at 6:00 pm

    If I was to summarize the Fed speak of the last three months, I would say they have promised to expand their balance sheets to benefit the banks as needed. If I was to interpret the coordinated actions of the ECB, China’s central bank, and the Fed a few weeks ago, it would be, “We are all willing to coordinate our muscle to provide what the banks need.” Am I missing something here?
    So, The European soveriegn debt problems, the US cities and pension fund time bombs, and other financial risks that loom large, appear to be another set of financial obligations that, if and when they becomes the “story of the season”, could ultimately be addressed (not solved mind you) by the Central Banks of the world, correct? I know these issues are complicated and umemployment is high, a recession is always a potential, but what am I missing? It seems simple, the central banks will fight tooth and nail to inflate, kick the can, and whatever else they can to keep the boats afloat. Can the do it is my question?

  • Les(118101 comments)-
    December 30, 2011 at 6:35 pm

    HSBC MANUFACTURING PMI
    Actual: 48.7 Cons.: Previous: 49.0

    http://www.markiteconomics.com/MarkitFiles/Pages/V

    http://www.fx360.com/calendar/

  • Vadym Graifer(118101 comments)-
    December 30, 2011 at 6:51 pm
  • Les(118101 comments)-
    December 30, 2011 at 8:47 pm
  • NYUGrad(118101 comments)-
    December 30, 2011 at 8:54 pm

    a lot of motion but ended up at similar place.

    Jan 3, 2011

    S&P
    Open 1257.62
    High 1276.17
    Low 1257.62
    Close 1271.89
    Vol 3.6B

    Nasdaq
    Open 2676.65
    High 2704.34
    Low 2691.52
    Close 2691.52
    Vol 1.9B

  • Menock(118101 comments)-
    December 30, 2011 at 9:35 pm

    From Finviz- Futures – Performance _ YTD

    30 yr Bond 18.4%
    Heating Oil 15.5%
    Gold 10.1%
    10 Year Note 8.9%
    Crude Oil 8.3%
    JPY 5.6%
    Nasdaq 100 2.7%
    USD 1.7%
    S & P 500 0.0%
    AUD 0.0%
    CAD -2.5%
    EUR -3.1%
    Russell 2000 -5.4%
    Silver -10.6%
    Platinum -21.3%
    Copper -22.9%
    Nat Gas -32.6%

    And two PM miner ETF’s GDX down 16.46%; GDXJ down 37.12% for the year.

    Happy New Year

  • Vadym Graifer(118101 comments)-
    December 30, 2011 at 9:56 pm
  • westcoaster(118101 comments)-
    December 30, 2011 at 10:47 pm

    Happy New Year everyone! There’s been more good content here than any one individual can absorb. We are stronger together!
    To help you enjoy the last hours of the year, here’s an irreverant year in review courtesy of Zerohedge.
    http://www.zerohedge.com/contributed/williambanzai

  • NYUGrad(118101 comments)-
    December 30, 2011 at 11:34 pm

    None look too bullish.

    S&P weekly: http://bit.ly/tEgSeV
    Russell 2000 small cap weekly: http://bit.ly/uMklRg
    Euro weekly: http://bit.ly/tEWmzC

    near term i think there may be some juice in the rock to squeeze on the up side. But you do not want to bite into the rock too hard here.

    Happy new yrs everyone. remember…health is your first wealth.

  • Ilya(118101 comments)-
    December 31, 2011 at 5:36 am

    No, not the day after Christmas when the Lords of the manor and their Ladies boxed up some leftovers from their Christmas feasts together with bits of money and maybe a few unwanted gifts to give to their serving staffs as thanks for working on the most Holy of our Christian holidays.

    This boxing day was a prizefight in 1896 between Bob Fitzsimmons and Peter Maher to decide the heavy weight championship in America. It’s a light hearted tale and has no investment themes but rather perhaps only a lesson about changing social mores over the generations, how they have cycled and how a U.S. congress was ‘bought’ over a hundred years ago. I’m lifting parts of an article from the most recent ‘Texas Farmer’s Electric Co-op’ magazine.’

    America in the late 19th century had reached a point of anguish over society’s violent and lascivious elements, and boxing was at the forefront of the social critics’ agenda, right along with women riding bicycles and the evils of Demon Rum. Most states had outlawed prizefighting but not Texas. If the fight was going to take place, it would be in Texas.

    The trouble began when the promoter, Dan Stuart announced that the fight would take place in Dallas. Gov. Charles Culberson responded to the news by calling a special session of the legistlature that made it illegal to swap punches for money anywhere in the state.

    A group of businessmen from El Paso, who either didn’t know or care about the new law against prizefighting offered Stuart a bonus of $6,000 to stage the fight in their town. Texas Rangers from Ysleta showed up to monitor the situation and enforce the law.

    A group calling themselves the Ministers’ Union of El Paso took its criticisms of prizefighting as inherently brutal all the way to the U.S. congress, which quickly enacted a federal law against any ‘pugilistic’ encounter between man and man or fight between man and bull or any other animal for money or other things of value, or for any championship in any of the territories of the United States. Mexico did the same.

    While the drama played out in El Paso, Judge Roy Bean, the fabled Law West of the Pecos, kept up with the proceedings from Langtry, where he minded his Jersey Lilly saloon and dispensed his own peculiar brand of justice. Bean sent a telegram to Stuart and offered his town as a site if he so desired. Stuart so desired.

    When a Southern Pacific train pulled into Langtry with its cargo of sportswriters, fight fans and gamblers on February 21, 1896, Bean was calmly taking in the scene from the front porch of the Jersey Lilly. He had constructed a ring on a sandbar at the bottom of Rio Grande Canyon, just across the river in the state of Coahuila, Mexico. It was physically inaccessable from Mexico and legally removed from U.S. juristiction. Bat Masterson, that aging lawman was the master of cermonies.

    ‘Ruby’ Bob Fitzsimmons knocked out Maher at 2 minutes in the first round.

    There was a whole lot of money spent and a great deal of activity used on both sides for and against this 2 odd minute athletic spectacle. Using current BLS norms, it was probably greatly additive to the then GDP as a measure of ‘activity.’

  • Les(118101 comments)-
    December 31, 2011 at 7:48 am
  • Les(118101 comments)-
    December 31, 2011 at 10:42 am
  • Grym(118101 comments)-
    December 31, 2011 at 3:21 pm
  • NYUGrad(118101 comments)-
    December 31, 2011 at 8:36 pm

    I knew that headline would get some attention. I just got back from my usual brunch spot and the NY Times has a piece on the “Golden cross.”

    Well that prompted me to look at the charts myself. them touting a golden cross is pretty irresponsible without having talked about the recent death cross as well and only painting the picture of one side of the equation.

    In the past 20 yrs, on the SPX, when the death cross could not regain footing above the 200 day moving avg, there has been 100% incidence of drop in prices for a few months. as well as a 100% incidence of rising prices once the 50 can quickly regain footing above the 200 day.

    I have annotated on the chart the number of times the death cross recovered for a sustained period of rallying prices.

    One characteristic that is synonmous of the current death cross to the past two that started a bear market, was the 200 day moving avg was declining. If you look at the ones where it recovered, each had a rising 200 day ma. So if the markets were to recover for Q1, we would have to have a new event; a death cross that recovers with a golden cross, despite a falling 200 ma.

    http://bit.ly/w06TJU

    prices will soon tell us which direction to vote with our money.

    EDIT: the 1994-95 was the outlier. we would need another 1995. The key is to be ready for both scenarios. Not to convince yourself which will happen prior to it happening.

  • MoKat(118101 comments)-
    December 31, 2011 at 9:35 pm

    While Ben ‘Swapper’ Bernanke has been busy swapping old US bonds for new and swapping dollars for Euro with the ECB, the EU was busy trying to figure out how to skirt the law that prohibited them from printing money for member states.

    The loophole is then found or created and ECB provides $600B Euros to private banks at one percent for 3 years. The banks could buy short term sovereign paper yielding over 7% or whatever to earn a juicy return The goal was to lower short term rates on PIIGS debt. Apparently the banks were willing to cooperate.

    The result was short term Italian rates dropped precipitously, the Italian 6mo from 6% to 3% and the 2yr fell to 4.85% from 7.8%. However the Italian 10yr did not participate and remained at 6.97%. The injection only affected short term rates.

    This is an example of how rising rates and excess debt can cause an immediate crisis. Like if US rates doubled to 7% for borrowings, the annual interest cost would be heading towards a trillion dollars. It would be the largest item in the total budget. One wonders will we have ZIRP forever, as higher rates would inflict serious damage and perhaps cause economic collapse.

    Euro Banks now have liquidity to rollover existing obligations coming due shortly. And existing bondholders of short term debt recouped some of their losses. Can successfully kicked down the road. Mission accomplished. Crisis adverted for now. Many more may lie ahead. Monetary creation will put upward pressure on inflation in the Eurozone. Greece may come back into the forefront in the spring of 2012.

    The condition of US debt may come back into temporary focus and push the dollar lower. There will be new haggling over increasing the US debt ceiling. It’s a tough call here… A stronger Euro and a weaker dollar would be favored by China and the US. The Germans could be OK with it too? Or will the Euro falter and drop to the 1.20 area in a contagion of selling?

    The political environment in the US is about to intensify…. the term ‘helter skelter’ comes to mind. This will be the ugliest dirtiest political battles in memory. I am guessing America will become more divided than ever, as the election evolves. Divide and conquer still works. … we shall see.

    It appears 2012 will be an eventful year ….. wishing all Caraista’s good health and fortune

  • NYUGrad(118101 comments)-
    January 1, 2012 at 2:04 am

    … who have contributed here. Cheers to a great 2012!

    As Bill usually likes to list the well wishes in many languages, i will start it off in my native tongue

    “saehae bog manh-i bad-euseyo”
    ?? ? ?? ????

  • Les(118101 comments)-
    January 1, 2012 at 12:14 pm

    Appear to be setting themselves up. Bearish divergences in $USD heading into January could set GDX:$GOLD for a break out from this descending triangle as the miners once again lead the metal. POG looks like it’ll stabilise and the big picture silver:gold chart suggests the potential for risk on for the first time since the silver sell off in April.

    I would suggest that primary importance is the understanding that Central Banks are expanding their balance sheets again. This is something I’d like to be more in tune with in future.

    As always we shall see.

  • Bear E(118101 comments)-
    January 1, 2012 at 4:06 pm

    UXG closed 2010 at 8.07
    UXG closed 2011 at 3.36
    loss of 4.71 per share in 2011 = 58% loss while
    gold was up 10% in 2011.
    UXG under performed gold

    UXG chart still looks really ugly to me. Bear E

  • BOB 47(118101 comments)-
    January 1, 2012 at 6:30 pm

    Cheers to all . And thank you to all who contribute , your thoughts are much appreciated .

  • Les(118101 comments)-
    January 1, 2012 at 7:15 pm

    I’m skipping town for a couple of days break. There are some PMI manufacturing numbers being released in Europe tomorrow and Wednesday. If anyone should think to post them, much obliged.

    The calender has a tendency to auto update, so for you yanks who get up when the day is almost over for the rest of us, you might need to use the filter at the top of page in order to retrieve data released in morning European trading.

    cheers.

    http://www.fx360.com/calendar/

  • jack black(118101 comments)-
    January 1, 2012 at 8:11 pm

    I have been talking about contrarian signals for PM and miners for weeks.
    I came across this website that sums it all. Great reading and great chartporn.
    One caveat, the author doesn’t rule out a crash.

    http://www.resourceinvestor.com/News/2011/12/Pages

  • NYUGrad(118101 comments)-
    January 1, 2012 at 9:06 pm

    Not a bullish indicator
    AAPL: 25%
    MCD: 30% (and paid a dividend)

    http://bit.ly/tgtJeU

  • Bill Cara(118101 comments)-
    January 1, 2012 at 10:52 pm

    The WIR will be delayed a day because, well, one thing led to another. After being bed-ridden for several days, eating dried toast, the result was a tooth crown was pulled out by the toast, which in turn led to an abscessed gum because I was too weak or busy to get to a dentist. I slept for most of the day!

  • 4ever(118101 comments)-
    January 1, 2012 at 11:26 pm

    The story title & cartoon/picture appear pessimistic. Six different economists present their views. Might be worth a glance if the Cowboys-Giants game gets boring tonight…

    http://tiny.cc/m79ft

  • NYUGrad(118101 comments)-
    January 2, 2012 at 1:02 am

    Just in time for New Years day

    http://on.wsj.com/sVh2Gv
    Europe at the Brink – A WSJ Documentary 12/30/2011 8:58:55 PM
    In this documentary, Wall Street Journal editors and reporters examine the origins of Europe’s debt crisis and why it spread with such ferocity to engulf much of the continent and threaten the entire world.

    Sounds like a hollywood drama preview. “Aliens invade”

  • NYUGrad(118101 comments)-
    January 2, 2012 at 1:29 am

    Forget what the chart is of. just look at the prices and the levels. its telling me it wants to go higher.

    http://bit.ly/rqYZrp

    If 81.44 is taken out, path of least resistance is 83+

  • MoKat(118101 comments)-
    January 2, 2012 at 2:00 am

    With wages nearly flat over the last years, workers aren’t sharing in any of the large profits by multinationals.
    Let’s destroy some more of the middle class… this time in Canada.

    Caterpillar Inc. said Sunday it had locked union workers out of a train locomotive plant in London, Ontario, in a sign that the world’s largest maker of construction and mining equipment is prepared to get tough with workers despite a big recovery in earnings over the past two years.

    Caterpillar said in a statement that workers would be barred from the Electro-Motive Canada plant until “a ratified contract is in place” for the workers, represented by the Canadian Auto Workers union. The most recent contract expired at the end of 2011, and the two sides have been unable to come to terms.

    Caterpillar’s Electro-Motive Canada plant was acquired in 2010 as part of the $820 million purchase of Electro-Motive Diesel Inc., based in LaGrange, Ill.

    Union officials said Caterpillar’s latest proposal would halve wages and reduce benefits. Tim Carrie, president of the union’s local branch, said the cut would mean hourly pay of $16.50 for most workers, down from $34.

  • Vadym Graifer(118101 comments)-
    January 2, 2012 at 2:03 am
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