Bill Cara’s Blog for May 8, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning, Geoff here.
Most tops can be described as processes.
Most bottoms can be described as events.
Tops can take weeks to play out as overbought markets generate sell signals followed by the shorts that took those signals getting squeezed. That action drives the market higher when it looks like it should be falling.
Bottoms typically end with a whooshing sound as the last of the longs throw in the towel in a final, fear induced climax low that marks the end to the decline.
I have been writing here about watching for that final climax low in gold that will be constructive towards the next bull market in the yellow metal. A bull market that could bring the miner:gold ratio back to historic averages which would generate returns that will blow your hair back. So far, the whooshing sound has not been heard.
This bottom in gold, and we believe that the odds are very good that we are bottoming, has been more of a process so far. That means that many traders patience has run out and they don’t believe in the miners anymore so most have exited their positions and won’t get back in until the sector is much higher than today.
Yesterday, the US Dollar formed a reversal candle on day 4 of its rally which sets it up for a decline in the greenback from here. That price action would help both stocks and commodities, so we are watching for the dollar to continue the cycle price action from the January high.
However, that does not rule out a final climax event in gold. Yes, the dollar formed a reversal candle, but should it rally one more time, gold could get hit into a final low and, albeit painful, it would be the best price action for gold bulls.
With that said, here is what I wrote last week:
“Years ago, I made the statement that the gold bull market would end when the public talked about the mining stocks like they did the technology companies in 1999. I don’t think that parties will be filled with banter about proven and probable reserves, but you get my point. With that in mind, yesterday I read that a recent Gallup survey found that the American public thinks that the safest long term investment available to them today is gold. Here’s the breakdown of the survey:
28% chose gold
20% chose real estate
19% chose CDs
19% chose stocks/mutual funds
8% chose bonds
6% chose other/no opinion
This same survey was done in August of 2011 when the price of gold was near its all time high and 34% of those surveyed chose gold at that time. Because gold still holds the top spot after being much lower 8 months later, I would not be surprised to see the 34% number exceeded when gold is at $1900 again.
The gold market is a relatively small market and as money managers and the public become more engaged in the yellow metal, the price will make new highs along with the miners. In 1997, most people had little idea what Cisco or EMC did, but at the height of the bubble in 2000, most people knew exactly what they did and owned the companies. When everyone owns Newmont, look to get out – but we are no where near that point now.
I don’t expect this dollar bounce to last too long, maybe a week at the most. That should give traders a few more chances at the miners at these lower prices.
With Europe falling back into recession and the US slowing, our prediction of more liquidity programs seems virtually assured.
Keep your powder dry, you may need it.
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|
||21.50 (1.04%)||Components, Chart, More|
||3.00 (0.14%)||Components, Chart, More|
||64.60 (2.01%)||Components, Chart, More|
||71.54 (1.09%)||Components, Chart, More|
||3.04 (1.00%)||Components, Chart, More|
|^OSEAX||OSE All Share||465.70
||2.38 (0.51%)||Components, Chart, More|
||3.45 (1.07%)||Components, Chart, More|
||36.79 (0.61%)||Components, Chart, More|
||20.94 (0.37%)||Components, Chart, More|
||3.00 (0.33%)||Chart, More|
||10.08 (0.73%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||629.52
||14.35 (2.23%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad’s Catch of the Day
Kaimu’s Sound Money
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report
Jeff Borsato’s Hidden Truth
My journey to finding a wedding suit
I am no fan of wearing suits to work every day. Old habits die hard and the financial industry continues to demand formal dress codes of it’s staff- both those who are paid more than enough to afford it and the vast majority who need discount deals to look the part.
My own search for deals on suits started over a year ago after requiring extensive upgrades to a wardrobe that was dated, way too big (both because styles moved to slimmer cuts and I lost a good 20 pounds) and in need of something more formal. Trips to department stores and high-end retailers left me somewhat uneasy: I had no idea what I was doing and suits ranged in price from $250 to $2500. Very often I couldn’t tell how much a suit would cost by looking at it or feeling the fabric; price appeared almost arbitrary.
With time and effort I began to understand more and more, I learned about different cuts, materials and which brands were priced higher for the name and others that were more competitive. I wrote previously about an ebay retailer I found called “The Wizard of Ahs”, and successfully ordered proper work suits for less than half the prices paid at a department store. This was critical work, not only because I upgraded my suit wardrobe but because I save a large sum doing it, freeing up extra cash for other purchases.
Suits are a bit of a fetish hobby for me now, and I hate seeing so many poorly dressed guys on Bay street spending more than they have to while still looking like they are wearing their father’s suits. A man should feel like a king in a good suit, even if it costs him a quarter of what the 1 percent-ers are paying.
Eventually I started looking for a suit for my upcoming wedding. It demanded something several steps up from the bargain basement options I had previously looked to. I starting visiting travelling suit shows for more variety and customization, these were events where men pick through swatches of material, get measured and suits would be constructed in low-cost regions such Asia at competitive prices. I found a small Canadian born retailer of custom suits called Suits in the City and compared to a few of the larger shows, I found in them the right mix of price and quality that I will stick to for future purchases.
Started by Paul Abrams in 2008, Suits in the City came about following a trip to Hong Kong tailors that convinced him Canada was ripe for a travelling custom suit product. Suits range from $575 up to about $1600 depending on the fabric, this range is similar to most of the large travelling suit shows that construct their product in Asia such as Maxwell Clothiers and Raja Fashions.
For the office worker who needs suits for daily wear I would stick to base level suiting that fits well and allows for enough movement to prevent tearing. If your budget allows, give a mid-rang suit with a finer “super 120″ fabric a try, but be careful, there are no shortage of bulky suits made with good fabrics, fit and construction are key.
For Canadians, we know our most popular options for suits are at the low to medium end are Moores, Tip Top or The Bay and at the high-end a Harry Rosen or Gotstyle in Toronto. The base model suits at the first 3 stores generally sell for about $400-500. These are cheap suits fused with glue in Asia. They will fall apart after weekly wear day in and day out. In my own observations the $575 model I bought from Suits in the City would match up against a $700-800 suit purchases at The Bay or a low end Hugo Boss at Harry Rosen, all being partially canvassed for a better feel and durability.
This is where good scoping of retailers is critical: I spent $100 more than a cheap suit for something that looks better, will last longer and fits properly. Fit is half the battle when it comes to suits, most men fail to understand this and its what makes a cheap suit look double the price when the right man is wearing it well.
For some guys $575 might be even too much for them, if that’s the case consider buying suits at bargain sale bins during the off months at Tip Top, just understand that the costs to tailor it properly could add considerably to the costs for the suit. (Add to that the shorter life span of these products, you might be setting yourself up for more headaches in the future).
Buying a suit, or updating your wardrobe for work can be a significant expense, just remember if you elect to buy retail that most stores vastly overcharge for what they are offering, and any notions of “Italian” suits, or “custom made” are nonsense under $600 retail. If you are just starting out in finance and will be locked into a suit 4 days out of 5 each week, consider starting with the basic grey and blue suits and some solid dress shirts. These stay in fashion longer and are suitable for most occasions. If you are in search of something more formal for a special event or wedding, consider going up a notch or two into the bespoke or made to measure region. This is where you can spend $1500 or $1000 for the exact same suit depending on where you go. Shop around, consider your options and sales, but dont neglect the travelling suit shows that come to most major North American cities, my experience with 2 different companies has been generally favourable, and I still maintain you can buy decent work suits on e-bay for under $400 if you fit into a standard off the rack size.
For my wedding suit I discovered a Made to measure program at Gotstyle Menswear in Toronto that suited both my father and I in something better than usual, and in a fit that was slimmer and modern for me and classic for my father. This is key when selecting suits for multiple people such as wedding parties, people’s bodies are different as are their particular tastes. Within such a framework a personalized tailor can ensure you are comfortable in your new suit while still maintaining a sense of style. After wearing the suit for the big day I realized why the extra costs of hand-crafting are worth it: I was comfortable, it moved with my body, breathed and was lighter than most off the rack suits. It is a delicate piece of clothing and I can only wear it for special events but that suits me fine, I take out my cheaper suits for everything else, and just change up the tie’s to stay fresh!
Guys will expend titanic amounts of energy to earn an extra %1 ROI in a year, for a $100,000 portfolio that’s $1000. With some time and effort you can save that amount easily simply by finding the right spot to buy your next 2 suits.
Use your head gang,