Bill Cara’s Blog for Mar 1, 2013

CTA Trading Desk Morning Report

[7:00am ET] Good morning, Geoff here.

Stocks: The bulls failed to prove that stocks could make new highs yesterday. As seen in the chart below, bears won out which simply means that buyers are drying up and until we see them come back, it is time to remove stock risk. However, the recent rise in volatility has moved sentiment away from extremely bullish (bearish for the market) which is favorable for dip buying knowing that the liquidity pump is turned on. My thesis of a sideways trading range like we had in September and October of last year may work out, we shall see.


Gold: Volume is beginning to dry up on declines. This is a good sign for gold and gold miners to lift. A reliable buy signal is for an uptick in $BPGDM off the lows, but that has not occurred yet.

The shift from equities to gold may be starting but until trend actually changes, it has not.

For those of you receiving the free weekend reports, I will not be producing one this week due to family obligations. However, my Monday morning report will be robust.

Have a great trading day and weekend!

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 2,440.80 6:44AM EST Down 25.80 (1.05%) Components, Chart, More
^BFX BEL-20 2,557.00 3:13AM EST Down 1.00 (0.04%) Components, Chart, More
^FCHI CAC 40 3,674.51 6:58AM EST Down 48.49 (1.30%) Components, Chart, More
^GDAXI DAX 7,677.74 6:44AM EST Down 63.96 (0.83%) Components, Chart, More
AEX.AS AEX General 337.48 6:44AM EST Down 3.05 (0.90%) Components, Chart, More
^OSEAX OSE All Share 519.90 6:44AM EST Down 0.63 (0.12%) Components, Chart, More
^OMXSPI Stockholm General 373.69 6:42AM EST Down 1.63 (0.43%) Components, Chart, More
^SSMI Swiss Market 7,572.01 6:43AM EST Down 21.66 (0.29%) Components, Chart, More
^FTSE FTSE 100 6,329.71 6:44AM EST Down 31.10 (0.49%) Components, Chart, More
FPXAA.PR PX Index 1,008.50 6:58AM EST Down 6.07 (0.60%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,486.04 7:59AM EST 0.00 (0.00%) Chart, More
GD.AT Athex Composite Share Price Index 997.31 6:43AM EST Down 10.68 (1.06%) Chart, More

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

Enjoy your day.

Cara 100 Company research notes from Seeking Alpha

Vad’s Catch of the Day

Kaimu’s Sound Money

Deron’s Daily ETF Analysis

Since February 25, we have been operating on a “sell” signal that was generated by our rule-based market timing system (learn exactly what that means). We have been using that same market timing strategy internally since 2006, and it has always done a pretty good job of keeping us in line with the intermediate-term trend of the broad market, which is where we operate with our short to intermediate-term swing trading system.

Although stocks have actually moved slightly higher since our most recent sell signal was triggered, it’s important to understand the market does not always need to immediately break down in order for the timing model to have value.

Sometimes a sell signal is generated and the market immediately rolls over, but other stock market timing sell signals lead to an initial short-term bounce before the market moves substantially lower.

Obviously, we can never know in advance what will happen immediately following a new sell signal. Still, we always respect a bearish market timing signal by moving to cash and/or tightening up stops on long positions and waiting for conditions to improve before establishing new long positions. A new sell signal also allows us to selectively short sell stocks and ETFs with relative weakness.

To clearly illustrate the different ways a market can behave after receiving a sell signal from our market timing model, the charts below detail the subsequent price action of two different intermediate-term sell signals that were generated by our market timing strategy in 2012:


After a decent rally in early 2012, the distribution days began piling up in late April and early May, forcing us out of several long positions by May 3 and generating a 100% sell signal on the close of May 4 (as annotated on the chart above). In this case, the timing of the signal was perfect, as the market plunged 7% over the next 10 sessions.

Following a very short-lived rally in August/September of 2012, the number of distribution days once again began increasing within a short period of time, and leading individual stocks began falling apart as well. These are two of the main components (along with a few proprietary tweaks) that determine when our market timing model issues a new sell signal.

Given the bearish action described above, our market timing strategy generated a sell signal on the close of October 12, 2012. But although this prompted us to quickly exit our long positions, this time the stock market did not immediately come unglued.

Instead, there was a short-lived bounce that inevitably attracted some “late to the party” Charlies who were not paying attention to the bearish volume patterns in the market. Nevertheless, after one day of stalling on October 18, the market sold off sharply, erasing all of its gains from August and September:


Finally, let’s look at our most recent sell signal that was issued on February 25, 2013 (just four days ago). Much like the price action that followed the most recent sell signal from October of 2012, stocks did not sell off right away. Rather, the broad market bounced higher for a few days:


Because we are not mystical prophets, we don’t know if the market will sell off sharply over the next few weeks. Nevertheless, we have not been willing to establish new long positions over the past few days (though we entered a few new short positions) because experience has shown us exactly what can happen when the volume patterns in the market suddenly turn bearish.

Although the market pushed higher on February 26 and 27, it did so on lighter volume. This followed three out of four big declines on higher volume. Yesterday (February 28), the market stalled, which reinforced the sell signal generated by our stock market timing model on February 25.

Quite a few “gurus” claim that market timing doesn’t work, but those who believe this are clearly not following the right indicators. Broad market volume patterns, combined with poor performance by leading individual stocks, always play a crucial role in identifying significant market tops and bottoms.,/p>

Many investors make the mistake of focusing purely on price patterns or percentage gains of a broad-based index, while paying little or no attention to the market’s volume patterns. To learn more about why volume is such an important indicator, check out 5 Technical Reasons Stocks May Soon Move Lower, an article we wrote on October 8, 2012 (just four days before our October 12 “sell” signal highlighted above).

When volatility increases, trading can become quite emotional, which can easily lead to bad decisions and a ton of regret. The best way to remove (or at least minimize) emotions from trading is to follow a well-defined and disciplined trading strategy at all times.

Our proven system for market timing allows us to operate with confidence during stressful periods in the market. Are we wrong sometimes? Of course! But successful trading isn’t about being right or wrong (ego); rather, it’s about doing the right thing. When traders consistently do the right thing in trading, the money eventually follows.

Are you are frustrated by recent stock market volatility, but still concerned you might miss critical turning points in the market? Lower your stress by signing up for your 30-day risk-free trial subscription to The Wagner Daily, our swing trading newsletter that always includes access to our market timing strategy that works.

Point and Figure on Canada


Harp’s Roadmap

Cara on the Metalminers

Cara on the International Markets

CTA Trading Desk Mid-Day Report

CTA Trading Desk Post-Close Report


86 thoughts on “Bill Cara’s Blog for Mar 1, 2013

  1. First thing is the subject in this reply was not auto filled in by default, so manually re-entered it.

    Search is working better now but still needs to be set to a deeper level on the output side.

    Currently if I search for “Quasi” I only get a link to the two Community Chat forums currently on the site. To be useful I should get a flat collapsed newest first list of all my posts and all posts which contain that word. Each one would be linkable to view and then hit back to return to the list for another post selection.

    PS I just noticed I don’t have the option to save this reply, only preview and then the save button appears.

    1. I think I might have to do something drastic to make the search provide some reasonable results. So that might be a feature that gets added after release.

      However, for your particular search, a currently-unlinked/undocumented feature might be more useful. Check out (you can add “/comments” after any user’s profile page to see this list for them).

      Oh, and yeah, for some reason I have the forums set to require preview. I’m not sure if there’s a good reason for that, so I may turn it off.

      1. I like the addition of the “Re:” prefix and auto repeating the subject. Also like the fact that the first 40 characters are no longer echoed at the top of the post, that was rather confusing.

        Now with respect to this user comment search I like it, very close to what I’ve been used to on other sites. Now for the deluxe version put the following on the wish list,

        ** 1- When you click on a users name you go to their “account page” with boxes for “view, track, content” could we add a box for recent comments which just echos your link above.

        ** 2- When the page opens the default is: title, summary (first 200 char), view link, post date.

        ** 3- At the top of the default page is a toggle button to switch from summary view to the full body text view as shown in your example. (note if some posts included graphics there would just be an image tag, unless you click view post)

        PS, sometimes I think it might be good to actually talk once in a while, might speed up the communication, especially when brainstorming the pros and cons of things like flat or thread, forum organization and size etc. I’m on Skype “Quasime2”, but don’t have it loaded all the time, just let me know if thats an option and I’ll turn it on at an arranged time. Note we could also do a conference call between all of us at some point.

        Just a thought to try and help in the most efficient manor, I know Bill is probably pushing to get things up and running, but launching with a buggy site might be a disaster.


        1. “I like the addition of the “Re:” prefix and auto repeating the subject. Also like the fact that the first 40 characters are no longer echoed at the top of the post, that was rather confusing.”


      2. good reason = people should review their posts (at least scan them) before committing them to the real world

        saying this as I know I will catch myself in Preview Stage and go back at least a few times in the future LOL

        1. minor formatting note: on the post Preview page below the Preview and Save buttons the original post (you are replying to) appears. It just seemed a little crowded (more to do with beta status I am sure) and a little more space below those buttos would be good. Maybe also a default heading that says something simple like “You are replying to this post:”?

          Just thinking too about this helping keep posts organized on the site. People can confirm they are replying to the thing they want to which will save admin time later reorganizing/moving posts.

        2. Geoff you can always use the edit feature, however that is only available until someone replies to you post then its frozen.

          So in the daily Comm Chat you may have virtually zero time but in a sub forum you may have a few minutes or days depending on the frequency of replies.

    2. quick note — search is working better – did search for “still needs to be set to a deeper level on the output side.” and this thread was returned.

      The Community Chat was too — above this post in the search results. A minor quibble, but the post above has the exact phrase “still needs to be set to a deeper level on the output side.” and the Com Chat didn’t (from the post list I scrolled down to in the result). Since the above post has the exact phrase, shouldn’t it come up first? More a comment on how the search algorithm is set up then this particular search.

      One other comment: is it possible to have search terms highlighted in results (once you click to that search result link)? It would help when you are scrolling down through the post to easily find where your search term is mentioned. I see this being helpful once launched when we are reviewing prior posts or catching up on specific issues of the moment. (bonus feature: toggle highlight on and off per user input (checkbox or something) so once you locate your term you can turn off highlighting for readabilty)


      PS – I am just going to post as I react to things so take (or leave) posts as you want to — just throwing ideas out there

      1. Yes Geoff I see the same thing, however I didn’t put the search string in quotes, so I was picking up on the individual words. So yes “on”, “the”, “to” etc were all in Com Chat Oct 9th somewhere in a comment. However it should have picked up just about every folder / forum on the site, it didn’t.

        The second output is the “Search Feature” forum, which contains the whole continuous string and it is second in line because the output is set to oldest first, I think that should be changed to newest first as that’s what you’re normally looking for. Down the road these outputs will be very long and you don’t want to have to scroll all the way to the bottom.

        Now if I put the string in quotes it only returns the “Search Feature” forum.

        I think the big problem is the search output is just the folder/forum and isn’t broken out to the individual post level. Now I can still click on an output folder and then open my FF search, input the same string and then toggle thru the posts with each found string highlighted.

        A little cumbersome when myself and most people are used to much more control over their search and output formats.

        1. Ah yes, the quotes. I forgot to put them around the text when I first searched. When I did it again, yes that post was the only one returned.

          You raise a good point about search results sorting. I also think ‘relevance’ should eventually be a sort option along with date newest/oldest since some searches are more for finding certain topics/ideas/phrases.

  2. Jeff I see Bill has been saying how great the search feature will be on the new site. We might want to put a note in the intro that its still underdevelopment as the performance right now leaves alot to be desired.

    Big problem is the output which at this point just gives you the forums which contain your criteria, you then have to go to each one and use your browsers search to find the criteria in each forum, way to cumbersome and no one is going to do that.

    I’m thinking maybe we are having the engine search the wrong database, searching forums gives us an output of forums. We need to be searching the individual comment database which will give us the output of all comments containing the criteria.

    Just another idea to look at, hope your Thanksgiving was great.


    1. Bill sometimes takes things off the wishlist and states them as facts for the new site. Hopefully people won’t have excessively high hopes. All the comments are stored in the comment database, so if that wasn’t being searched you wouldn’t ever get a match for text that was in a comment. The main problem is that in Drupal, comments are “second-class citizens”. There are “nodes” (almost every other kind of content) and there are “comments”, which are not nodes. The search function likes to point you to nodes, and just incidentally searches comments as well. In the next version, they are supposed to make comments “nodes” as well, but until then I’ll have to work something out.

  3. [No set time] Motor Vehicle Sales
  4. 8:30 AM ET Personal Income and Outlays
  5. 8:58 AM ET PMI Manufacturing Index
  6. 9:55 AM ET Consumer Sentiment
  7. 10:00 AM ET ISM Mfg Index
  8. 10:00 AM ET Construction Spending
  9. 1 in Accumulation Zone
  10. 1 in Buy alert
  11. 10 in Sell alert
  12. Accumulation Zone (11%): Monthly 7, Weekly 15, Daily 13
    Distribution Zone (13%): Monthly 16, Weekly 23, Daily 0

  13. As I was watching the dollar index blast off the launch pad this morning, this quote kept replaying in my mind “For Detroit, the time has come — to fix what the city’s elected leaders have failed to fix, as regime after regime tried to wish it all away.”

    In essence, Detroit has become a microcosm of Washington D.C. (without the conspicuous contribution from Johannes Gutenberg’s invention, of course)|topnews|text|FRONTPAGE

    The 10 year US treasury yield failed to convincingly break above 2% earlier this week and has now traced out a nice head & shoulders pattern.

  14. Good morning.

    08:30 Personal Income/Spending
    08:30 PCE Prices – Core
    09:55 Michigan Sentiment – Final
    10:00 ISM Index
    10:00 Construction Spending
    14:00 Auto/Truck Sales


    CEO – CNOOC downgraded to Reduce from Neutral at Nomura.

    GPS – PT Lifted from $36 to $39 @ Canaccord. Hold

    TEF – Telefonica upgraded to Neutral from Conviction Sell at Goldman.

    TGT – Target upgraded to Outperform from Market Perform at Wells Fargo to reflect reduced Canada dilution and improving operating metrics, tailwinds from the PFresh grocery remodel and REDcard rewards program, increased eCommerce focus, and exposure to a housing recovery. Valuation range raised to $73-$78 from $61-$65.


    “I have a question, a question for the president: Do you hate all rich people, or just rich people who don’t contribute to your campaign? Do you hate poor people or do you just hate poor people with jobs?”

    ~ Rand Paul

  15. as equities weaken. Something I wanted to see as a sign of investor rotation, rather than ‘last to leave the dancefloor’. Follow through key of course and a weekly pivot bottom.

    On the international stage, UK conservatives have been hammered in a by-election as national populism surges with Nigel Farage’s UKIP party. Definitely a threat in later federal elections.

    … while just across the channel Francois Hollande will likely be thrown to the lions before too long, with some fantasising a Sarkozy return (he’s off running his own hedge fund in London) while nationalist candidate Marine Le Pen sits waiting in the wing for the 2017 (I think) French Presidential elections. These dates are all critical to Armstrong’s gold bull thesis.

    Next little peek at European politics is German parliamentary elections in September, although I hear Merkel’s party is under pressure in local and state elections.

    Curreny wars, political circuses, economic malaise and no one wants to own precious metals at this critical point… sounds about right

      1. My 2 cents, and it’s merely an observation of the current pattern:

        PMs behavior in relation with equities depends on the type of events sending equities up or down. If it’s a US economy weakness, deflationary news of any kind etc, PMs drop with equities. If it’s EU stability related news, equities drop while PMs rebound.

        This is consistent with idea of USD and PMs being safe haven in case of Euro collapse, and inconsistent with idea of PMs playing this role in case of US economy crash. Rather it indicates that PMs should crash with it. Again, it’s merely an observation of the pattern working lately; situation is too liquid to be confident that it will hold.

        1. To add, there are more cross-currents, and one of them is PMs dropping when signs pointing (rightly or wrongly) to economic recovery appear. Today for instance the headline below

          10:00 (US) FEB FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 77.6 V 76.3E (highest since Nov 2012)

          sent PMs down. Summing it all up, it seems that EU collapse is the strongest factor in favor of POG/POS.

          1. ALOHA!!


            I will have to disagree that adding any “one” indicator can justify (right or wrong) the movement of any one commodity price. We are just too egocentric here in the USA. In the 1980s there was hardly any Asian participation in the gold market,now every country is participating and the Asians, especially China in a big way. Does anybody in China really care about what the UM CONFIDENCE INDEX says or for that matter Bernanke before they go buy a kilo of gold? Do they care if the COMEX is paper? If everything is so rosy because QE is ending then why do the foreign central banks keep buying gold and why doesn’t the US Treasury just sell off all its gold, which is the largest gold holding?

            The UM CONFIDENCE INDEX makes good toilet paper!

            First lets look at the UM CONFIDENCE INDEX for consumers.

            Each month The Conference Board surveys 5,000 U.S. households. The survey consists of five questions that ask the respondents’ opinions about the following:

            Current business conditions
            Business conditions for the next six months
            Current employment conditions
            Employment conditions for the next six months
            Total family income for the next six months

            On July 2007 it was 90 and six months later it was 70! That’s how fast it can change!

            Could it get any more nebulous??? Precondition screen they only call households that are employed 100%! If someone called me up and asked me those five questions I would have to completely guess 100% on every one of them! How does an employee know anything about current business conditions much less business conditions in six months? If you want to know about business conditions then go to the NFIB OPTIMISM INDEX which is at its lowest since 2008! Isn’t it employers who hire employees and not the reverse? Also who here knows if you are going to get laid off or fired from one day to the next? Even if you are not laid off how do you know your pay will not be reduced or some benefit be cut tomorrow. Already there is a 2% increase in SS deductions, so that cuts into net pay, so that is 2% less to spend across the board. When and how does that factor into the UM CONFIDENCE INDEX?

            Heck why don’t we go look at the Baltic Dry Index and see how great things are? Click on the 5Y chart!
            BDI LINK:

            Obviously consumers are not that happy if shipping is at record lows!

            There has been an ongoing media blitz at all levels of government and central banking and central bank member banks to jawbone the POG down and I am sure the NY FED is working overtime behind the scenes to push the momentum. That is not just me talking “conspiracy”, but if anyone would read my past SOUND MONEY I have that documented in US FED past FOMC Meeting Minutes going back to the late 1970s in order to influence currency values. Would it be too far a stretch to think the NY FED would want to influence gold values? I mean, if people are buying gold and silver instead of US Treasuries isn’t that competition? What is it that monopolies do historically when they feel threatened by competition? Here’s a hint … it’s usually something dishonest and unfair. In this case:

            -Lying about the end of QE, which only one of twelve FED Pres voted for.
            -Threatening foreign gold vaults with FATCA.
            -Threatening Swiss banks with US investors with FATCA.
            -Imposing a 30% withhold on US funds moving offshore.
            -A 55% tax on US citizens contemplating giving up citizenship.
            -GS says POG @ $1200!

            Holy cow, you guys actually act like the US Federal Reserve and the US Treasury and their “data minions” are perfect angels who are completely incapable of acting fraudulently. How long ago was TARP? Anyone here remembering any of that fraud??? One day Kramer is touting Bear Stearns the next day its BK … its gone! You actually think there is a link between vague mainstream media data jawboning and prices from day-to-day? I could get selective and prove any point you care to make about the direction of any market price it’s so convoluted on a daily basis. One day Bernanke gives a “hint” QE is ending and the next day the most influential US FED president, Bullard, comes out and directly says NO WAY!!! The complete opposite of what Bernanke hinted at the day before in front of Congress. There is a reason Bernanke never gets sworn in when he testifies …

            Sorry, but after 12 years in the gold market these POG down turns have always been precursors to worse economic and monetary debt events ahead. Given the current correction duration it should be a biggy! Nothing at the US Treasury indicates there will ever be less debt issued or less spending or less taxation. Historically, the pedal is to the metal in DEBTWORLD! I really do not see any other way these powerful debt based entities could retain their power without more debt. If anyone knows of a way let me know!

            Right now we have …
            -NO BUDGET
            -NO DEBT CEILING

            The complete opposite of the BUDGET CONTROL ACT OF 2011!

            Now if I wanted to convince the masses not to buy gold then I would move some of that $85BIL QE gunpowder over to GS and JPM to short gold on the COMEX and TOCOM. Then I’d yell how QE is ending every time I can!

            I have to agree with Bill and say … turn off the noise!

          2. Kaimu, I’m not sure who exactly you were responding to – especially with the bit about Holy Cow!

            One comment you made I found interesting, and that is, gold downturns preceding worse monetary economic news ahead. Perhaps rather than finding the reason in sneaky manipulation, you could instead see a deflationary impulse that not only carries down gold, but other commodities as well – the ones more sensitive to a removal of leverage. Following that, bank loans drop off, and then finally the equity market falls.

            Certainly the eurozone right now is having relatively intense deflationary pressures. Each time you read about a bank going down in Spain that’s money vanishing from the economy.

            In recent months or weeks copper, platinum, wheat, oil have all had problems, right along with gold & silver. Palladium is one of the few that has done well.

            My last point: if the Fed was all-powerful and could smash the price of gold at any time it felt like it, why then the 13 year bull market? Or are they just being clever in allowing the price to rise to confuse us all?

            Maybe as Armstrong says, the price of gold is just a market like any other – sensitive to inflationary and deflationary pressures, and we’re in one of those deflationary impulses like we’ve seen many times in the past, where some bidders just drop out of the marketplace for whatever reason.

          3. Grym –

            I think housing won’t move down until interest rates rise. Once they rise back to normal levels, housing will suddenly become high risk again. And all those MBS the Fed bought will turn into very long duration 3% bonds. MBS have that annoying quality. Just when you want people to pay off their mortgages, the pesky homeowner suddenly finds their current fixed rate is a really good deal.

            And I also agree that without the 1 Trillion a year borrowed & spent by the treasury each year, we’d be spiraling down just like Spain. That’s why the guys in power in Washington are terrified of cutting a nickel from current spending. They know what will happen.

  16. Don’t like the open even tho’ it’s favorable to my positions in SQQQ and GDXJ.

    the djia 10 atr is 125 pts. There was a 119 pt move in the first half hour (when the big boys nail Ma & Pa), or roughly 93% of an average day’s move in the first 15 min. Ditto the Naz, about 93% of the move in the first 15 min.

    I am watching both recent gaps and the 50 DEMA as potential exit points. I saw the recent tops as tradeable tops, not THE top for the Naz. And the recent gold low as a tradeable bottom.

    I would recommend one put NUGT and USLV on a watch list particularly the former for a LT trade. And DSLV for a ST trade. No positions in either.

    FD: long SQQQ/GDXJ

  17. As Geoff mentioned, the 61.8% Fib retracement is 337. While this level may hold also according to Dan Norcini, Dan Norcini has a worst case level of 272 on the HUI ( a 20% drop from here).
    The below analysis compares well the 2008 drop to today’s drop. The 2008 drop was up to the 75% level. So we should expect that in the really worst scenario the 272 level will hold because of the strong fundamentals today’s (Money priting, currency wars, central banks buying gold, better cash positions in company (SLW and others)) and there is no current banking crisis. The drop will be shallower in my opinion as the fundamentals and circumstances are not the same as in 2008.

    So yes, it is not the time to be a weak hands as Geoff and Bill as mentioned. While a lot of us have suffered a 40% drop in their portfolio, the rewards to risk ratio ( ?% increase vs only 20% drop) at this level makes me confident that it is better to hold the bags and not capitulate.

    As mentioned by Bill, we should focus on the stocks that the Sprott and are accumulating. Do the relative strenght of a stock vs HUI, GDX, GDXJ are a good way to select which stock will outperform in the future bull phase?
    Any other indicator should we look at to see which security is getting accumulated?


  18. Big Silver Copper Reserves in Montana
    Operating Troy Mine
    Another one called Rock Creek in final stages of permitting
    Earthquake caused a temporarily shutdown in operations since mid-winter which will hurt quarterly and annual revenue, but they’re debt free and cash-flow positive.

    The chart looks scary, and may still fall some more. But it’s at a huge discount for long-term holders at the current price regardless.

    DYODD – I just picked up more at $1.65

  19. I often wonder about the validity of “fundamental reasons” for precious metals to go up. Evidently, for the past year or two years, precious metals have been on a downward trend while “fundamental reasons” are suggesting otherwise. Platinum and palladium are moving up, but I think that has a lot to do with the auto industry recovering from the deep slump of past years.

    There’s also been a lot of talk about “manipulation” of the precious metal prices. Every time when it looks like the precious metals are off and running, the prices got knocked down again. “Manipulation” is often the crying reason. However, my thought is that true or not, “manipulation” could go on indefinitely, much like the QE’s. With that thought, why would precious metals be on any sustained upswing. It will just get knocked down again and again indefinitely.

    Almost everyone here also agree that “technically speaking”, sentiments are extremely bearish, precious metals are very much “Oversold” and at levels that are “cheap”. These are reasons for a bounce coming.

    Granted all the above are happening and true, I am thinking we still need a catalyst, a spark to light the fire. Whether we are looking at only a “dead cat bounce” (ie. in the case of “manipulation”) or a more sustained move (ie. if “fundamental reasons” play out), we still need that spark to get it going.

    So until I sense that someone, or something, had light the fuse, I’m sitting on my hands at this juncture. May be Vad is right, ie. Europe’s economy could be the spark.

    Just my 2 cents.

    1. Almost everyone here also agree that “technically speaking”, sentiments are extremely bearish, precious metals are very much “Oversold” and at levels that are “cheap”.

      I don’t. Gold retreated from 1800 area to 1500 – aside of holders’ wishes, what is there to consider this level oversold, this sentiment extremely bearish and these prices cheap? To illustrate my POV, let me recall what happened to oil. After hitting 150 it started its retreat, and we heard “oversold” and time to go back up” at 130… 120… then “oil will never lose 100,” and after that big fund run by life-long oil expert blew up… and who cares to remember how low oil got before it finally rebounded, although never revisited former highs? Accompanying question of course is, how many lost how much on that mind-boggling drop?

      I don’t pretend to know where “oversold” for gold is so it wouldn’t get any “oversolder…” my point rather is, what is there to indicate this level as such? Every time I ask this question, I get a load of fundamentals and macroeconomics and geopolitics and monetary policy failures thrown back at me – but those are not TIMING tools, they were the same when gold was at 1800, so they do not indicate the price level for the ultimate bottom. Can’t also omit the fact that when I called for oil to go down to 80 (and even that proved to be too optimistic), the same set of factors was cited to show that it was impossible…

      1. Vad –

        I agree, I see no absolute level for gold that marks it as oversold. It all seems relative.

        Geoff’s sentiment charts do suggest that currently there are a whole lot more bears than bulls and that’s a good contrary indicator but as you point out, its not necessarily a timing indicator to be counted upon or a specific level beyond which gold will not drop. In the past the sentiment index appears to have generally indicated a snapback will come relatively soon once sentiment breaches a certain level, and we appear to be there now.

        Alas, no snapback has presented itself to date.

        I did an analysis of “fair value of gold” on my site – “barrels of oil per gold ounce”, that sort of thing. Summary: it’s fairly priced w.r.t. other commodities, likely underpriced w.r.t. the amount of paper money floating around. But that’s not timing – in fact I think that sort of analysis is useless for timing. From what I see in my valuation charts, especially having to do with paper vs gold, trends can continue for 30 years in one direction. Nice from the standpoint of viewing the Grand Sweep of History, but not so useful for trading.

        1. ALOHA!!

          Then contrary the herd will believe there is no way US Treasuries could get any more “overboughter”! Is 1.26% the bottom for 7-year yields?

      2. Vad Wrote: Every time I ask this question, I get a load of fundamentals and macroeconomics and geopolitics and monetary policy failures thrown back at me – but those are not TIMING tools, they were the same when gold was at 1800, so they do not indicate the price level for the ultimate bottom.
        attached chart tells the story along with what Vad is saying. How can anyone say the bottom of gold is in?
        Bear E

        1. Pretty much… that pink line could have been drawn just as well at 1800, 1700, 1430, 1280, 1000…

          Now, using this same chart and looking at it from the point of view of charts having no PREDICTIVE value but rather helping build If-Then scenarios, the price is contained in horizontal channel within 1500 – 1923, and currently is downtrending within that channel. Now, IF it holds this low area, reverses and breaks above 1800, it will have broken the downtrend within a channel. If after that it breaks the high, it will have broke the channel itself and likely reestablished primary uptrend. If it loses 1500, downtrend is intact and there is no reliable indication where it ends. New set of scenarios will have to be worked out when price gives new data points.

          Hope it helps.

  20. Gold direction, I have no idea. It seems like Central banks are throwing massive amounts of paper money via the COMEX to drive the price lower. However, once people decide they don’t want to exchange paper, but rather have the real thing this disconnect may start something. What I see from reputable dealers like the mints is Very large sums of physical gold and silver are in fact sold out. Right now, the price is relatively in line with COMEX, but the question will be for how long as supply dry up.

    1. Cheapy,

      Hang in there.

      What we are seeing with the QE is Bernanke’s fantasy solution and has done nothing but extend the suffering. Eventually his failure will be obvious and reality will win. Gold will be perhaps not just the best, but the only good place to be.

      The lack of a job is probably your worst problem and the one government is avoiding by spinning and/or ignoring data and news. If you are not tied to your location go where there is some kind of work. When you are working other things can wait.

      It is said, “Misery loves company.” Not really so, I know, but be assured your present condition is NOT unique. My son has lost three jobs and his current one is hanging by a thread, but when he is working his attitude improves immediately.

      1. Same here cheapy, I went through a very difficult time in 2008 and am still having trouble seeing the light, had lost my life long career permanently due to illness 3 yrs prior,took on to much risk to make up for my inability to make an income,self employed before so I had/have no pension, and then the crash happened.I wouldnt wish it on anyone. Even though I was right about the pog heading higher I had my head handed to me on a plate.That is difficult to accept.
        I am trained in a new non physical career now and making headway,although it is still incredibly difficult with the illness and all,the future looks better. I dont know what I could offer to help,possibly search for a new direction that you can get passionate about,be dilligent, and persistent. It just doesnt seem possible that the miners could be at levels they were 20yrs ago in there bear market, but that is the reality unfortunately. I wish you the best of luck.

      2. Cheapy,

        I have read your posts on this blog for many moons. I hope more are to come. You do not comment much anymore and I have noticed. Hoping things improve. I too am a loser on gold and miners (RBY). Got out of MUX last year in August. Just dumb luck. It’s a casino. Still hold PHYS/PSLV.

    2. Cheapy….. anything that involves humans and money will eventually take its toll… leave it all behind for a few years and focus on the ‘ world ‘ around you, ie., the non-human world… as little contact as possible… it may mean leaving your every-day life as you know it, but get away from the routine.. and don’t look back…

      1. Cheapy,

        Having spent over 25 years in financial services, my identity and values were reflected by how well I was performing in my business, and this was a very unhealthy thing. When I retired I transferred these problems into measuring happiness and well-being by the results of my trading. This was just more unhealthy behaviour. I don’t know what line of work you were in when employed, but you may have developed similar self-identity issues that made it appear that trading securities would provide solutions. Look elsewhere and get help from others who are able to give you new directions to move in. Perhaps a completely new form of work is in order and retraining for it will re-charge your batteries. I became engaged in a completely new area of business on a casual basis as a mentor and this meant less time and interest in trading, and less stress. I spend much less time thinking about the money I lost in the market and more about the positive things happening in my life. All the best in your journey.

    3. Cheapy, I hope things get better for you…I was also unemployed for six months last year. The first thing I did was sell out of all my positions, even my core holdings, and raised cash. Personally, I’d not like to depend on the markets while in that kind of situation…

      You said your Miner portfolio “ruined” you. What I’ve learned on this site over the past 5 years was to scale into positions, put protective stops under purchases, and not be “stubborn”.

      If it’s any consolation, I’ve also violated these principles, namely in August 2010 by buying put options on SPY and DIA ahead of the best September on record for the markets…I foolishly kept averaging down, finally tossed in the towel that October…lose $7,000 in options in 40 days, it’s a pretty significant loss…well, live and learn.

      Sincerely hope that things get better for you.

  21. I am a bit conflicted on this, as it doesn’t feel like the good moment to lecture anyone… at the same time, if this is an opportunity to get a few more folks to listen, it’s wrong to let it go as it may prevent someone else from repeating this ruinous path, repeated all too many times by all too many people as it is. So, with that in mind, I want to offer a few points to ponder.

    1. Beware of someone whose one answer to everything is gold.
    2, Beware of someone who think there is one answer to everything.
    3. Your answer to everything is that there is no single answer to everything.
    4. Whenever you find answer to something, verify it by charts.
    5. Learn to read the charts as, not being an answer, they help you test your answer and instruct you how to act.
    6. Whenever your thinking and charts are in conflict, go by charts (a.k.a., Trade what you see, not what you think).
    7. Whenever you see, read or experience cult-like conviction in any trading vehicle not changing with charts’ change, that’s losing side of the trade.
    8. Whenever you see, read or experience conviction that any adverse movement is caused or explained by manipulation, that’s losing side of the trade.
    9. Everything is a trading vehicle and obeys the laws of the market, whether market is real or manufactured; nothing is above the laws of the market and thus cult-worthy.

    1. Informative and interesting thread today.

      I’d also differentiate between a trade, an investment and a hedge, with pertinent time frames and outlooks associated with each.

      Vad spoke of PM outlooks pertaining to different scenarios in $US or Euro.
      I’m living under a currency pegged relative to those two. The outcomes of which I have no idea.

      The SNB is a major currency manipulator and amassing massive FX reserves that risk leaking into the domestic economy or becoming massive losses in the event of Euro or $US failure. That either or both outcomes may eventuate I have no idea, although the signs aren’t encouraging.

      In that sense the most intelligent advice I’ve heard from any investor/analyst is Marc Faber’s 25% in stocks, precious metals, real estate and cash I think it was. Anyone 100% in one asset group without tight risk management is asking to lose their head.

      The only thing I’m losing my head over is frikin taxes, but our household path of austerity is almost finished – an enlightening microcosm of what the world must eventually go through.

      I want to buy on strength; Livermore confirmation that the thesis was correct, but I’m happy to dip the toe a little at these levels – silver makes an attractive paperweight. Thus I have a small hand in the game should the paper market break overnight. Not likely at this point but again, I just do not know.

      One item missing from other charts on silver is the volume interest at respective prices, so I post the following chart. Volume resistance at $35 is as clear as day. The gaping chasm of relative low volume below the present range should serve as a warning that if a drop below the range does not immediately turn around (bear trap) then $20-$19 is the next serious support.

      No such chasm of volume interest in the GLD chart. Are they using silver to smash gold? Dunno, don’t care anymore. Break that range support and I’ll put aside cash, something also lacking in our wealth portfolio.

  22. Good morning
    Does anyone have insight into a potential correlations between the gold and coal miners? Both trapped in a long death march down. Any possibility that a swing low may be on the horizon for the coal miners?
    Bill commented weeks to months back coal is a strategic metal and the admin. attack on it may be misplaced. Sentiment and RSI in the coal miners appear extreme.Any thing positive for the coal miners?
    long $ACI

    1. ACI’s been a hard-luck story for almost two years. I sold my shares at a loss and didn’t look back…Cloud Peak (CLD) is more attractive to me, although I’ve no position in it…resistance to West Coast export ports in the US, particularly in Washington State, is one issue…CLD did export some 4.4 MMT to Asia in 2012…ACI has more of a met coal focus as opposed to thermal, hence it is a bit more susceptible to steel production in a weak global economy…my opinion is that the outlook for sea-borne thermal coal is going to improve, as countries like Japan and South Korea back away from nuclear power plants for energy production.

      How that all translates into bottom-line improvements for companies like ACI is above my pay-grade…good luck.

      1. Thanks goldbug58
        I’ve made the worst mistake be being long $ACI and staying long though have stopped out of 1/3.
        Noticed last week that India is looking to acquire coal assets. But I bet if a move to buy the depressed coal assets arrive, suddenly US coal becomes a strategic asset-as Bill noted a few weeks back-and any deal is scuttled. $WLT is constantly rumored to be sold but trades as bad as $ACI and all other coal names.
        Hey the gold and currency markets are telling of growth to come? Therefore maybe US steel could be a mover if the old bridges are replaced.New factories? I’ll believe when I see it (though with nat gas abudent i do believe it will come).
        I’ve noticed PE should be interest but $ACI recently secured debt @ 9.75%-pretty high in this environment.

    1. What do you think of this article? Seems to indicate that patience (rather than patients!?) might be required.

      A lot of these companies I’m seeing mentioned have been around since 1990, and they’re trading at a buck, at their current burn rates, about one year away from running out of money.

      It does all sound really interesting though.

      1. Grym,
        Yes the ‘consultant’ title does have it’s perks apparently.

        Sorry to hear your state of things. We are down to 7.5% unemployment officially in WA. We don’t have state income taxes either…just user pays for goods and services. 8.6% sales tax.

        Personally I love the small is beautiful concept except when it comes to my equity position. The siren song of real estate like many things is hang on…but only you get to decide when to take your (paper) losses and plunk yourself down near a wild west beach with less stress. I sold my house in Atlanta the year its value tanked $100K and never looked back.

        Here is my ideal 1 room NW hideaway:

        RE: Subprime rumor: FHA has has funded flexible Adjustable rate 5/1 ARMS for years. They feature a max cap of 1% per year after the fixed term. Considering the incredible low rates, they are pretty hard to beat with a stick if you are buying shorter term. And they are easy to refinance. Come April the onerous MI (FHA mortgage insurance) becomes a permanent fixture (no forgiveness after 5 years)so be quick. Conventional looks nicer with decent credit; get your 3/1, 5/1, 7/1 and 10/1 ARMS all day long. Step right up. Get’em while they’re hot!

  23. Hope everyone is well.

    I had dinner with a few friends, one who sells mortgage products to consumers. He noted that companies like his, and others like quicken loans with wall st banks underwriting, are minting money right now selling fha loans and refinances to folks who only have 3.5% down payment, or are refinancing paid off homes, to fund their retirement because they have no retirement after the dot com crash and 2008 crash.

    Interesting times…”there is nothing new on wall st”

    the market seems to be consolidating but past leaders such as apple are done for a while. and new leaders like google, are poised for lift off.

    Another associate of mine works for Polk, the folks who track car sales data. He was very bullish as new car registrations have regained the peaks, prior to the 2008 crash. When i asked him what is driving this he gave me one obvious and one not so obvious answer. He said the Fed and the low interest rates for loans was primary driver. and secondly that the existing cars out on the road as a whole, are the oldest they have ever been and thus need servicing and costly maintenance.

    I actually beg to differ on reason 2. My current car was purchased last yr for $11k with 93,000 miles on the clock. the car is in excellent shape mechanically. Since i have no debt on the car, and gauging by how many miles i drive per yr, and the fact this car i bought can easily last 250,000 miles, i will save a lot of money not paying interest and not absorbing new car depreciation.

    If you currently own your car outright today, i urge you to keep up to date with routine maintenance and it will last you a looooong time. prob longer than you can imagine or want to keep the car.

    Then i began to think about the new cafe requirement; by 2025 mpg for new cars will be mandatory over 50mpg. But what if our currency by 2025 is in shambles, and gas is $15 per gallon, and income doesnt adjust for inflation? Will American’s still be in love with the automobile? will 50mpg be any better than what we have today? Will that economic condition finally help alternative fuel vehicles?

    Whether the markets are regathering more energy to go higher or giving up, is anyone’s guess. But i do not believe the govts of the world will stop printing. But as you can see with action in gold/metals and poor miners, price discovery is not a mission statement of the stock markets.

    In addition i sense a depreciation of morality in this country. an ‘every man for himself’ mentality. where we depend on govt and care of only ourselves. everywhere i look its about the facade people portray on social networks and the glamour portrayed through celebrity worship and sports.

    If anyone has read the Hunger Games, it sometimes feels like i live in the capital of Panem. Where jobs and growth is still occurring somewhat in NYC (now DC is the new wall st). But other areas of the country like California, Chicago, Detroit, etc are in a spiral south.

    As the govt clamps down on the 2nd amendment, i hope you realize America is the last place on earth where it’s citizens have a right to bear arms, to keep their own govt in check. as this right erodes, i am already fearful what future lays ahead.

    In a world of glitz of NYC, there have been an increase in crime the past months. from rapes, burglaries, robberies, suicides on the subways, etc. it reminds me of the crime i saw here as a child in the 80s.

    I hope you are well in your corner of the world. We are going to have to stick together, communicate, and be leaders in our communities to fight the good fight against some of the large/connected/invisible enemies threatening social equity around the world.

  24. Same old… but more people and more exhibitors. Better organized. Today is a more relaxed day. Monday am gets tough.

    First thing I noticed is that all the large mining companies are here and visible. Nobody I talked to so far — including any of the newsletter writers — seems to have a clue why gold and silver and the mining stocks have crashed to this extent. Some think the pain will get worse. Most think this is the time to buy, and I agree with that.

    Already agreed to do a conference in Bahamas in Eleuthera in Feb 2014 with David Skarica (Addicted to Profits). He moved there from Nassau — for many of the same reasons I moved. Eleuthera btw is a great place. We took kaimu there the year he came to the Nassau conference in 2009.

    Met with V.K. Misar, Sr. Mining Geologist, representing the Govt of India. Large booth. I’ll be back before the convention is over.

    Met with a delegation of four from China.

    Talked with an investment banker from Germany who is also setting up a bank in Costa Rica.

    You cannot meet people like this if you don’t come.

    Hospitality tonight is from CPM Group and also PDAC Media. I’m sure I’ll find a few more.

    I’m doing this on a tiny netbook, so the typos will be worse than ever!

  25. I learned this phrase here. but in practice learned this in the 90s as i interned while at nyu at one of the largest brokerage firms on wall st. now part of Bank of America.

    There are many terms and titles, and comp plans have changed since then, some thankfully aligning with longer term client objectives.

    but the majority of the activity today is still rooted in sales. Most “financial advisors” will and do get required certifications. But if you cannot sell or persuade individuals to part with their money, the business and or new career will never flourish.

    That is why i value the learnings here and teachings of Bill, Vad, and community the most. No one should care more about your money than you.

    Many individuals who work with brokers from the large hb&b brands do not even realize that the advisor on the other end of the phone is the trained navy seal of sales people.

    There is a new movie being made right now, starring leanardo decaprio, playing the role of Jordan Belfort, “the Wolf of Wall Street.” Do you know what Jordan does today? He is known now for his motivational seminars on “Closing” and sales strategies. and warns to only utilize his techniques on people who should be taking action that you are suggesting.

    Learn to take emotion out of your trading plan, because there are many wolves still among us.

    Intro Straight Line Closing system by the Wolf of Wall St:

    Jordan Belfort – The Single Most Important Skill You Can Master: Persuasion

    1. Oh my…. he makes the hair stand up on the back of my neck.

      A car salesman once told me the key to knowing a buyer from a tire kicker was a quick scan of 3 things: ‘teeth, watch and shoes’.

      1. loannetter –

        I think the car salesman is right. I don’t wear a watch, my shoes…on a good day I wear shoes, and I would be extremely unlikely to actually buy a car from a dealer.

        Private parties is where its at. You’ll have a better chance to notice they are lying (at least they aren’t professional at it – unless they happen to be in sales) and real people have the good grace to feel guilty when telling an untruth, there’s a decent chance you’ll get a good percentage of the real story behind the sale, and you can get a sense of the care the car has had from the way they keep their house and garage. Good luck getting any of that from a dealer…

        There’s no sure thing, but I like to go with the odds.

        1. davefairtex,

          Actually I did take my own advice and bought a car from a private party last year. Nice garage and complete books in a ring binder with tabs no less. Even my mechanic was impressed. He let me take it for a mechanical review overnight without a deposit. Just my old junker as collateral. Of course he knew where I worked. Fair’s fair.

  26. Gold rolling over is getting noticed – duh – but the charts that caught my eye are in the currency space. Looking at Schnell pull out the time frames on a number of G12 currencies:

    The chart that really got my attention is the 2004 – 2013 downtrend on Uncle Buck that is about to be tested, with the same multi year charts in commodities that are neutral to nearly bearish in the case of gold. Those are monthly bars on this chart.

    Uncle Buck about to come roaring back, or has this been the head fake that precludes continued respect of trendline resistance? I suspect this years “sell in May and go away” may take on special signifance at what looks like a critical junction for the dollar. We shall see.

      1. np. typo where head fake ‘precludes’ continued respect of the downtrend, should read ‘precedes’.

        I see follow through on the Oz all ords double top this morning – although support has yet to be breached – and new lows on Chinese exchanges. Fits in with the NYSE breadth indicator that didn’t budge going into Friday close. As always we shall see.

        As Bill said, global investors are clearly undecided, if not nervous here.


        If the Italian old guard don’t like the democratic process, replace it once again with another technocratic government that’ll play ball with the Troika? That’ll be an interesting development to say the least:

  27. Good times roll again…for some: Inside the first Goldman Sachs partners’ dinner in SIX YEARS as lavish parties return for bankers

    Prior to the global economic meltdown Goldman Sachs were renowned for it’s lavish gala dinners for it most profitable bankers
    Goldman hosted its first event since the crash last month
    It was a lavish affair with 450 bankers and their partners flown in from around the world to attend
    Earlier this year the investment bank posted a $2.9 billion quarterly profit

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