Bill Cara’s Blog for Aug 30, 2012

CTA Trading Desk Morning Report

[7:00am ET] Good morning.

Thanks Les for pointing us to the Matt Taibbi article in Rolling Stone on Mitt Romney.

http://www.rollingstone.com/politics/news/greed-and-debt-the-true-story-…

From my wider lens I think that, for the most part, Taibbi is an expert in rehashing the words of others. He’s less a journalist than a story-teller. He’s less a story-teller than a spin-master.

As a writer, Taibbi overwhelms the senses with embellishments. Many people, I suspect, find his art entertaining. I do not, but then again I’m not looking for entertainment when I read about business and capital markets.

Regarding his piece on Mitt Romney, the matter of Bain Capital’s use of debt to effect corporate turnarounds, that Taibbi harps on, is way over-done. Debt is simply a tool when equity is not available. Not all restructurings are successful, which is a fact. Good people subsequently lose their jobs in many of these situations, unfortunately.

But missing in Taibbi’s story about Romney and private equity firms like Bain Capital is that when companies in bad shape are restored to good health, equity becomes available, and in the hands of good managers new equity is used to replace unnecessary debt.

So, to make his point, Taibbi tells half the story. He does it because he has an agenda.

To draw an analogy, to understand a corporation you need to be aware of both the balance sheet (a snap-shot of financial condition at a point in time) and the income statement (the picture of how the profits and losses happened over time). The whole story, not half of one, is needed for a proper assessment.

In Romney’s case, my view is that he is a person who does whatever it takes to succeed. He has goals and objectives. He has been a winner, not for his words, but because of his actions.

In the last election I wanted Obama to win because I wanted change. Soon after I was complaining that Obama was “talking us to death” and that the country was not going to get change. This time I want Romney to win because he is, as I say, action oriented. He understands business, and knows how to assemble the resources needed to win. The White House, we know, is a business.

At this point, it’s not a matter of wanting change, but needing change, and I believe Romney, of the two candidates, is the one who will make it happen. I intend to watch his speech tonight, and to how the GOP spin-masters present it afterwards.

Then it’s back to work tomorrow morning!


Good morning, Geoff here.

The market has been a snoozer as we wait for the global central bankers to speak so I don’t have a lot to say this morning.

However, do you know the phrase; “the trend is your friend”?

You want to be long when the market is trending up.

There are a few ways to see if the market is in an uptrend including: price, moving averages, ADX, Aroon and RSI. Here are a few examples:

ggimage01_083012.png

ggimage02_083012.png

ggimage03_083012.png

ggimage04_083012.png

As you can see, these signals are still pointing to the market in an uptrend. However, the market looks to be losing that momentum and is at a turning point that is looking for a catalyst. Jackson Hole could be that catalyst, but I think we may need to wait until the German vote comes in. If you need a list of catalysts with dates, I posted some in yesterday’s notes.

Have a great trading day!


Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.

Symbol Name Last Trade Change Related Info
^ATX ATX 2,015.57 6:43AM EDT Down 7.43 (0.37%) Components, Chart, More
^BFX BEL-20 2,351.00 Aug 29 0.00 (0.00%) Components, Chart, More
^FCHI CAC 40 3,396.43 7:00AM EDT Down 17.46 (0.51%) Components, Chart, More
^GDAXI DAX 6,956.74 6:45AM EDT Down 53.83 (0.77%) Components, Chart, More
AEX.AS AEX General 329.39 6:45AM EDT Down 0.76 (0.23%) Components, Chart, More
^OSEAX OSE All Share 482.78 6:45AM EDT Down 3.56 (0.73%) Components, Chart, More
^OMXSPI Stockholm General 319.81 6:30AM EDT Down 2.34 (0.73%) Components, Chart, More
^SSMI Swiss Market 6,399.56 6:30AM EDT Down 22.40 (0.35%) Components, Chart, More
^FTSE FTSE 100 5,733.22 6:45AM EDT Down 10.31 (0.18%) Components, Chart, More
FPXAA.PR PX Index 937.90 6:59AM EDT Down 0.40 (0.04%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,433.35 6:31AM EDT Down 6.86 (0.48%) Chart, More
GD.AT Athex Composite Share Price Index 636.99 6:30AM EDT Down 3.85 (0.60%) Chart, More

http://finviz.com/futures.ashx

http://finviz.com/fut_chart.ashx?p=m5&t=ES

http://finviz.com/fut_chart.ashx?p=m5&t=ZB

http://finviz.com/fut_chart.ashx?p=m5&t=DX

http://finviz.com/fut_chart.ashx?p=m5&t=GC

http://finviz.com/fut_chart.ashx?p=m5&t=SI

http://finviz.com/fut_chart.ashx?p=m5&t=CL

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.

  1. Good morning. 08:30 Jobless Claims (374K) 08:30 Personal... [#112769]
    By: Bull Hunter (3552 comments) Go to top ↑

    Good morning.

    08:30 Jobless Claims (374K)
    08:30 Personal Income/Spending (0.3%/0.4%)
    08:30 PCE Prices – Core (0.0%)

    ——

    AET – Aetna coverage assumed with a Neutral at Credit Suisse. Target $43

    JOY – numbers lowered at Jefferies. Shares of JOY now seen reaching $50. Estimates also lowered on poor revenue outlook. Hold rating.

    ——

    “Popularity should be no scale for the election of politicians. If it would depend on popularity, Donald Duck and The Muppets would take seats in senate.” ~ Orson Welles

    • ... [#112798]
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  2. I noticed that almost all the pre-market traders among gold... [#112770]
    By: Bill Cara (4105 comments) Go to top ↑

    I noticed that almost all the pre-market traders among gold and silver miners and explorers were in the green, albeit not by much. They opened that way as well. This is another sign of support.

  3. ... [#112771]
    By: Grym (5469 comments) Go to top ↑
    • They are ALL bought and paid for, Grym. I've read it many... [#112775]
      By: Ynot (236 comments) Go to top ↑

      They are ALL bought and paid for, Grym.
      I’ve read it many times on this website as well as many others.

      “Listen, I’m a politician, which means I’m a cheat and a liar.”
      Jeffrey Pelt, “The Hunt for Red October”

      • Ynot, "Listen, I'm a politician, which means I'm a cheat... [#112786]
        By: Grym (5469 comments) Go to top ↑

        Ynot,

        “Listen, I’m a politician, which means I’m a cheat and a liar.”
        Jeffrey Pelt, “The Hunt for Red October”

        A bit of truth along with a great musical score ;-)

  4. http://finance.yahoo.com/q/it?s=CYTR+Insider+Trans... [#112772]
    By: baz22 (2875 comments) Go to top ↑
  5. take away the vowels and he gets even better: ReiNCe... [#112773]
    By: jock (1011 comments) Go to top ↑

    take away the vowels and he gets even better:

    ReiNCe PRieBuS

    RNC PR BS !!!

    (no reason to “flame me”…. the other party, IMO, is an obamanation.)

  6. ... [#112774]
    By: Dr. Strangelove (2004 comments) Go to top ↑
  7. Silver got really overbought early this week IMO... [#112776]
    By: bsi87 (1171 comments) Go to top ↑

    Silver got really overbought early this week IMO, approaching 7 day RSI of 90, at which point I closed my long. The Fed can’t do much IMO between now and the election, otherwise, it risks bias accusations.

    In any case, there are several gaps on the daily chart yet to be filled and the 50 day EMA is 24.70 for USLV. The midpoint on the gap up is 24.94 which is where I am placing a buy limit order GTC. May adjust as/if USLV approaches that area.

    FWIW. Do your own homework. Long AEM. No silver position.

    • The precious metals always get clobbered the day before The... [#112778]
      By: Dr. Strangelove (2004 comments) Go to top ↑

      The precious metals always get clobbered the day before The Bernank speaks. Technical analysis should incorporate manipulation to have meaning.

      In terms of Fed action, the Republican front runner indicated that The Bernank is out if he’s elected giving new meaning to QE to get the incumbent re-elected. Moreover, the Bernank will act in coordination with the ECB which is about to panic. Jackson Hole starts today as Greece/Spain/Italy set up for default and the German high court will vote on the legitimacy of ECB sovereign control mid Sept.

      http://ca.finance.yahoo.com/news/everything-know-s

      Just my opinion, of course.

      • JMO that silver has gotten ahead of itself on the daily... [#112781]
        By: bsi87 (1171 comments) Go to top ↑

        JMO that silver has gotten ahead of itself on the daily charts in the past week and half. Rather buy it on a pullback that appears to be shaping up.

  8. hit RSI 7 day of 90 on Aug 20, went a bit higher the next... [#112777]
    By: bsi87 (1171 comments) Go to top ↑

    hit RSI 7 day of 90 on Aug 20, went a bit higher the next day and had a bearish engulfing candlestick. It gapped down at the open. Have a PSQ buy limit @ 24.88 good for the day to open a position.

    FWIW. Do your own homework. No position, long or short, in qqq.

  9. MUX looks like the time is right for accumulation. The... [#112780]
    By: papadynamite (446 comments) Go to top ↑

    MUX looks like the time is right for accumulation. The price is showing some weakness along with most of the other miners. Intermediate and long term it looks fine. Having been in cash, I have started accumulating today a sizeable number of shares under $3.76 and averaging lower if it comes to past.
    I have been gone most of the summer. I had jury duty on a murder case and hope that is my final jury duty. Enough is enough!!
    I will be attending the Cara Conference. My first trip to Toronto. Looking forward to seeing Rob McEwen again.
    Incidently, Rubicon, for which I have no position, is on a hold until management decides how to move forward. That decision will occur in Q4. I don’t foresee any buyout offer in the near term. No need to hold and wait.
    I am very favorable to the prospects of First Majestic Minerals (AG). Current weakness is giving me an itchy finger to jump in. Likewise New Gold and Endeavor Silver have peaked my curiosity.
    Good luck.

    • Papa, re-conference, glad to hear you and Kaimu are coming... [#112789]
      By: westcoaster (1130 comments) Go to top ↑

      Papa, re-conference, glad to hear you and Kaimu are coming. I’m also in as it’s time to make the pilgrimmage to mining mecca from Vancouver, mining Medina, and see a few relatives to boot. Looking forward, and yes today might be a good day to add back to MUX what I sold a little higher. Re Rubicon, I’ve heard they have the cash on board to go into production on their own. That decision probably won’t boost the stock

      • westcoaster, The main speakers this year will be me, Vad... [#112796]
        By: Bill Cara (4105 comments) Go to top ↑

        westcoaster,

        The main speakers this year will be me, Vad and Geoff. Stephen kaimu Wellman will be here by video skype from Hawaii, and I have invited (also via video skype) Deron Wagner from Thailand and Chris Start from Australia or Indonesia, where they happen to be.

        kaimu will be at next year’s conference in person, but had to send his regrets this year because he couldn’t take the time off.

        I will have other speakers from the Toronto scene live as well.

        Also, many of the attendees from the past are already booked!

        • The fact that so many of the past attendees elect to come... [#112797]
          By: Vadym Graifer (4341 comments) Go to top ↑

          The fact that so many of the past attendees elect to come again is indicative of the value delivered… challenging too – I mean, gotta come up with new jokes every time, what’s up with that…

  10. I respect your decision Bill. If Romney can leverage for... [#112782]
    By: Les (7233 comments) Go to top ↑

    I respect your decision Bill. If Romney can leverage for the US what he leveraged for himself, then perhaps its worth letting him have a go. We shall see.

    • I am not sure I understand this angle... You can't expect... [#112783]
      By: Vadym Graifer (4341 comments) Go to top ↑

      I am not sure I understand this angle… You can’t expect from anyone in this position to be able to accomplish as much as President with all the restraints on the power coming with territory as in private company where his influence is a lot bigger and much more immediate.

      Frame it as a choice between a functioner pushing for more government influence vs. an entrepreneur pushing for more private business solutions, and I will agree with such angle, whatever your personal answer is.

      • hehehe thinking in the context of all that must be... [#112785]
        By: Les (7233 comments) Go to top ↑

        hehehe thinking in the context of all that must be accomplished to put corporation USA back on its feet Vad. Trade, currencies, cleaning up the tax code etc.

        I read that he muscled his creditors to get what he wanted back at Bain Capital. Can he bring that strength of character to the White House?

        http://www.spiegel.de/international/world/paul-rya

        Elsewhere, catching bits and scraps of info on Ryan. Clearly the liberal German press are not impressed. Another Ayn Rand disciple. Weren’t they all intellectually extirpated with Greenspan? ;)

        • All, I'm not a party person. I wanted Bill Clinton in for... [#112788]
          By: Bill Cara (4105 comments) Go to top ↑

          All,

          I’m not a party person. I wanted Bill Clinton in for the change I thought he’d bring and he did. Then I wanted George Bush in because he was a businessman, and not Al Gore, the professional politician. Then I wanted Obama simply because I liked his skills at oratory and thought he could lead people back to focusing on America instead of America’s role in the world. My hopes were soon dashed and I became every bit as cynical of politics as many of you. Now I’m back to wanting change. When things got rough, Obama was a failure. When they get rougher, where is he going to be? Capital market prices and economic strength come largely from confidence, and I lost mine in Obama a long time ago. That’s not to say if Romney does win, which is a pretty big “if”, that I won’t soon be telling you I regretted my choice. We’ll have an idea when we get to see his team. If he does win, and it’s the same old players around him then it’s going to be a tough four years.

          • ... [#112792]
            By: Doug2 (14 comments) Go to top ↑
          • Everyone has an opinion and puts their logic out there ... [#112807]
            By: ea32da32 (2362 comments) Go to top ↑

            Everyone has an opinion and puts their logic out there – thanks Doug2; Taibbi does certain things good as you pointed out – he’s found a niche to earn a living and points out many wrongs that do exist. And, these wrongs need to be addressed. And that’s where the rub is – shall we take the lbs of flesh here and there or are we going to get back to the rule of law and start applying them – rhetorically what do you think Taibbi would like to do. If I brought one of the crooks to him and handed this person over to Taibbi, I wonder what he would do???

            Paul Ryan mentioned ‘fair tax’ last night I believe and I don’t think that was an error, as well as Christie mentioned something out of the lefts handbook too although I can’t recall the specifics at this time. As Kaimu’s Sound Money points out over and over – ‘here is the reality’. So if we’re going to have a chance at slowing the debt clock this country has to grow as well as reduce the drag on the face of America – the thing they call the federal government. And as Kudlow pointed out last night this current administration has signed some 3 trade agreements, China has signed 38 this year. If I wanted to destroy America…

            regards,
            Earl

        • I think of der Spiegel as sassy and sarcastic, but not... [#112794]
          By: jock (1011 comments) Go to top ↑

          I think of der Spiegel as sassy and sarcastic, but not liberal. FWIW. They do a great job interviewing the high and might.

  11. http://is.gd/g5aYlR WARNING: Obama fans will probably not... [#112790]
    By: Bull Hunter (3552 comments) Go to top ↑

    http://is.gd/g5aYlR

    WARNING: Obama fans will probably not enjoy this tune.

    ——

    I’m hoping that someone comes up with something just as clever but about Romney.

    • Good... [#112791]
      By: prodisc (73 comments) Go to top ↑

      Good Stuff

    • Nice lines and a charming voice to boot BH. My, has it... [#112793]
      By: Les (7233 comments) Go to top ↑

      Nice lines and a charming voice to boot BH. My, has it already been 3 years since the last Obama song bash? http://www.youtube.com/watch?v=zhhkF3dqXR0

      ————–

      A number of times Prometheus has popped up in my media consumption, so I decided to look him up in the classic texts by Robert Graves. I noted that Pandora was Zeus’s vengeance against an insult by Prometheus, who in giving much to humans, had imprisoned in a jar all the Spites that might plague mankind: old age; labour, sickness, insanity, vice and passion. They of course were released by Pandora and subsequently attacked all mortals. Delusive Hope, however, whom prometheus had also shut in the jar, discouraged them by her lies from committing mass suicide…

      Someone in the Obama camp has a wicked sense of humour.

  12. ... [#112787]
    By: kaimu (3289 comments) Go to top ↑
    • So Kaimu ...Im reading between the lines here and trying to... [#112818]
      By: Ventilation Blues (164 comments) Go to top ↑

      So Kaimu …Im reading between the lines here and trying to draw a few connections … what of Assante? (CVE:ASE) then? … MaQuarries have invested heavily last month, its Ghana , and its Gold and … its down 50% from its open price.

      • ALOHA!! Not much more to report other than the Asante Gold... [#112821]
        By: kaimu (3289 comments) Go to top ↑

        ALOHA!!

        Not much more to report other than the Asante Gold home page at their website:

        Asante Gold Corporation (TSX.V: ASE / Frankfurt: 1A9) is a junior gold exploration and development company headquartered in Vancouver, British Columbia. Our current focus is Ghana, West Africa where we are exploring the Fahiakoba concession, which adjoins to the north of Perseus Mining’s new 288,000 oz/year Edikan Mine.

        It’s an early stage explorer is all. I think they have a good land position and a good CEO who is highly experienced with gold exploration in Ghana. No 43-101. Beyond that it is too early to tell.

        Being down 50% means it is a better buy now than when it IPOed should you want to buy now. In fact the company has better fundamentals now than when it IPOed only because it has more positive drill holes, but then that is what a junior exploration company does. It “explores”!

        FD: I own 120,000 shares @ $0.08CAD. I have not sold any shares.

  13. been keeping one eye on commodity stocks since BHP released... [#112795]
    By: Les (7233 comments) Go to top ↑

    been keeping one eye on commodity stocks since BHP released its annual report.

    Take a look at BHP’s price today.

    FCX, CAT, EWA Oz ETF, Russia ETF RSX all underperforming the US indexes. Unless AAPL is going to power the Q’s higher (and I see its closed an exhaustion gap from Monday) then I am getting curiouser and curiouser. Would like to see what sector is holding up the indexes in Bill’s WIR this weekend.

    I’m not a commodity futures trader, although listening to Bill these years has taught me to keep one eye on this sector, especially as the dry spell deepens its grip. Here’s to hoping this hurricane coming up the gulf brings some relief.

    But the grains are all consolidating nicely or approaching breakout setups, except rice. As Martenson points out, that’s gotta be a hit to GDP in the not too distant future if this run of weather continues and prices push to new 5 year or all time high records. Some like corn and soybean meal are already there.

    http://www.peakprosperity.com/blog/79547/us-drough

  14. Let's see, do I rent a movie tonight or watch the GOP? I... [#112800]
    By: Bill Cara (4105 comments) Go to top ↑

    Let’s see, do I rent a movie tonight or watch the GOP? I think it’ll be GOP just to compare the speeches to next week’s Dems convention, for reality TV entertainment of course.

    Btw, for a light-hearted movie, Pat and I thought Salmon Fishing in the Yemen was a worthwhile diversion. Once we figure out how to hook a computer to the big screen, we’ll get Netflix and go for something like “A Separation”.

    :)

    • Bill, Buy a good video card with HDMI out plug it into the... [#112805]
      By: 123 (78 comments) Go to top ↑

      Bill,
      Buy a good video card with HDMI out plug it into the HDMI on your TV. Then buy a wireless keyboard and mouse. That’s the set up I use.

      123

    • Hi Bill - Like last eve I take the pleasure to present a... [#112806]
      By: Luggie (639 comments) Go to top ↑

      Hi Bill – Like last eve I take the pleasure to present a preview: “President Obama promised to slow the rise of the oceans and to heal the planet. My promise is to help you and your family.” And let there be full natural resource development with modern technology and methods unhindered by redundant regulators, restricted education options for K-12, oh and by the bye Yoko Ono etc. Happy Trading. Too long NAK

    • Ah, the movie to rent is obvious to me. Stanley Kramer's... [#112814]
      By: Ilya (572 comments) Go to top ↑

      Ah, the movie to rent is obvious to me. Stanley Kramer’s “Ship of Fools” starring Oskar Werner.

      I’m wondering how much grease paint has and will be applied to the ‘actors’ on stage at both conventions. It’s similar in many ways to the Oscars where ignorant bumbletons vote themselves accolades while the great unwashed eat popcorn.

      A circus is a circus under whatever intent or guise.

  15. Don't know about infinity but for now: (US) NBER President... [#112804]
    By: Vadym Graifer (4341 comments) Go to top ↑

    Don’t know about infinity but for now:

    (US) NBER President Emeritus Feldstein: Bernanke will not unveil new QE tomorrow, economy improved somewhat; Not much Fed can do even if wanted to – CNBC
    - Housing and business investment will not be moved by 25bps reduction in rates.
    - More easing would lead to inflation pressure.

    • How can he announce more QE with markets not far from all... [#112809]
      By: Milesquare (281 comments) Go to top ↑

      How can he announce more QE with markets not far from all time highs and interest rates at 50-100 year lows?

      But he is wreckless. I wish he’d just drop Ben Franklins out of helicopters like he said he would………that would work better than rewarding banks with more QE

  16. they release the redacted speech at 8am so we should know... [#112810]
    By: ea32da32 (2362 comments) Go to top ↑

    they release the redacted speech at 8am so we should know the market direction before the market opens; futures should go nuts at that time. Gentleman & Ladies ; Are You Ready. LOL;-) watch it be a flop.

    Earl

  17. ... [#112811]
    By: ea32da32 (2362 comments) Go to top ↑

    ooops.

  18. Michael McKubre on Cold Fusion's rise despite political... [#112815]
    By: MtnGntx (241 comments) Go to top ↑

    Michael McKubre on Cold Fusion’s rise despite political academic suppression
    (Dr. Michael McKubre of SRI International (formerly Stanford Research Institute) in Menlo Park, California, USA.):

    “McKubre laid down the gauntlet saying that any scientists who will investigate the field with an open mind, complete with the rigors of the scientific method, if they are honest, will be satisfied that cold fusion is real. The science is that mature. The only ones who don’t accept it are the ones who haven’t studied it, or whose cognitive dissonance is so great that they dare not embrace it.

    McKubre’s advice to scientists mirror’s that of Rob Duncan, Vice Chancellor for Research at the University of Missouri, who says: “Think for yourself; don’t let anyone else do your thinking for you.” And “Once you form a new opinion, speak it openly.”

    “This is so important to mankind and science; if you have any talents to bring further elucidation, you are morally bound to do it. Your choice is either to keep working on what you’re doing, or change to work on this.” But many are not willing to make that choice, pick up stakes, and transport to new world.”

    http://tinyurl.com/9dz77w3

    My comment: We like the scientific method. Unfortunately, too few in our scientific community actually apply it.

  19. ... [#112872]
    By: tgifbipo (190 comments) Go to top ↑

    delete