Bill Cara’s Blog for Mar 12, 2013

CTA Trading Desk Morning Report

[2:40pm ET] Good afternoon, Bill here.

For most independent investors and traders, it’s been a tough year – one that I opined in mid-November would change for the better, and it started out that way. Unfortunately, for some us, we have held steadfast in our belief that capital market and economic conditions were such that precious metals ought to be lifting as well. Instead they have been basically side-tracking and then suddenly dropping at times, without warning. However, I’ll now opine that precious metals are basing for a lift-off sometime in April and that equity indexes like GDX and GDXJ will double within ten (10) months.

My associate Harp Singh, who previously in the blog has given us roadmaps and also presented his views at the Cara Toronto 2012 Conference, and will again this year, uses his own technical analysis tools to project future prices. He called today to say he believes that massive buying will commence on or soon after April 1 and that this Bull run will persist through mid-January to mid-February 2014. He believes all equity sectors will be involved as the broad market moves higher.

How high? For the DJIA, Harp is looking for a move to 14700 and then a ~3% pull-back say to 14200 before the Dow lifts to 15600 or possibly higher into next January. At 1556 the S&P 500 has already broken out and will now side-track a bit before following the Dow higher. He projects a first move in the S&P to 1610-1625 before pulling back to 1565, which would be followed by a surge to 1775-1800 into January. For Gold, he’s forecasting a top in the same timeframe at 2900-3000 with a candlestick on top possibly in the 3200-3300 level.

In Harp’s words, “the equity market, particularly precious metals equities, will soon give us the highest return in the shortest time that it has for several years. This will be a good market to trade, and all investors should be long.”

You know that there are always two sides to any perspective on capital market prices. But, as you also know, I do agree with Harp’s forecast. In fact both of us believe that a falling US Dollar will be the great enabler.

All views are welcome, of course.


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

As I write this, equity futures are slightly lower but gold and gold miners are up with miners outpacing the metal. We have been waiting for metals and miners to finally bottom and when they do, we will see short squeezes start a profitable rally in the space.

The CEF trade study that I posted a couple of weeks ago was the start to that trade but it is only up slightly at this point. However, the fact that it never got stopped out is a success and looks to mark the exact end of the decline. It was a high potential buy with a defined stop-loss area – exactly the type of trade that I like. (FD: we are long CEF).

Here is the updated GDX chart. The long trade continues with the next buy point marked along with the sell-stop. Remember, this is not a recommendation to buy or sell a security.

ggimage02_031213.png

I rarely, if ever, post trades in this manner so please remember that this is a simply a trade study and not a recommendation to buy or sell securities. (FD: we are long a number of gold and silver mining stocks).

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 2,526.00 6:45AM EDT Down 0.52 (0.02%) Components, Chart, More
^BFX BEL-20 2,632.20 5:52AM EDT Up 2.30 (0.09%) Components, Chart, More
^FCHI CAC 40 3,839.51 6:59AM EDT Up 3.24 (0.08%) Components, Chart, More
^GDAXI DAX 7,982.59 6:45AM EDT Down 1.70 (0.02%) Components, Chart, More
AEX.AS AEX General 352.30 6:45AM EDT Up 0.74 (0.21%) Components, Chart, More
^OSEAX OSE All Share 526.69 6:45AM EDT Up 1.04 (0.20%) Components, Chart, More
^OMXSPI Stockholm General 379.76 6:44AM EDT Down 0.42 (0.11%) Components, Chart, More
^SSMI Swiss Market 7,773.68 6:45AM EDT Up 15.03 (0.19%) Components, Chart, More
^FTSE FTSE 100 6,506.60 6:45AM EDT Up 2.97 (0.05%) Components, Chart, More
FPXAA.PR PX Index 1,028.22 6:58AM EDT Down 6.23 (0.60%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,504.05 7:45AM EDT 0.00 (0.00%) Chart, More
GD.AT Athex Composite Share Price Index 934.03 6:44AM EDT Up 4.34 (0.47%) 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.


Cara 100 Company research notes from Seeking Alpha

Amazon.com (AMZN)

Mar11: 11:00 AM The launch of the fabled Amazon (AMZN -1.1%) smartphone has been pushed back from Q2 due to manufacturing challenges at Foxconn, display industry contacts tell Digitimes. A Taiwanese paper previously reported the phone would launch in Q2 or Q3. If/when the phone arrives, Amazon is expected to be as aggressive with pricing as is has been for its Kindle tablets and e-readers.


Apple (AAPL)

Mar12: 7:37 AM Jefferies’ Peter Misek cuts his price target on Hold-rated Apple (AAPL) to $420 from $500. He’s slashing his revenue numbers and seeing about a 25% chance the company misses Q1 guidance after Jefferies’ recent supplier checks. “Historically when handset makers fall out of favor, they fall faster/further than expected.” Shares -0.7% premarket.


Boeing (BA)

Mar12: 7:00 AM Boeing (BA) has reportedly received an $18B order from Dublin-based Ryanair for 200 jets in a deal that is set to be confirmed next week, when Irish Taoiseach Enda Kenny visits the White House. It’s not clear whether Ryanair will acquire the 737-800 or Boeing’s new ‘Max’ model. The booking would be one of Boeing’s largest ever and presumably mark the end a feud that goes back to 2009 over a collapsed order.


Broadcom Corporation (BRCM)

Mar11: 7:02 PM A new Broadcom (BRCM) digital cable adapter SoC makes it easier for cable video to be delivered to “Boxee boxes, smart TVs and other types of IP-connected video devices,” Light Reading observes. The BCM7576’s integration of an IP mini server allows it to decrypt content so that it can be shuffled around home networks, and onto retail devices. The chip can also handle up to four video feeds using a single-tuner – current adapters often require multiple tuners.


Costco (COST)

Mar12: 6:56 AM A bright spot from Costco’s (COST) FQ2 report is that membership fees rose 15% to $528M – an improvement based on volume not a price hike. Looking at the retail sector, William Blair says the company’s low e-commerce profile helped keep it strong in merchandise categories while peers Target and Wal-Mart slipped in February. 3:24 AM More on Costco (COST) FQ2: net profit +39% to $547M, boosted by a $62M ($0.14/share) tax benefit. Comparable sales +5%, with U.S. +5%, international +6%. Excluding positive impact of forex and gasoline prices, comparable sales +5%, U.S. +5%, international +4%. Operates 622 warehouses, plans to open another 14 by end of FY.


Enterprise Products Partners LP (EPD)

Mar12:7:45 AM Enterprise Product Partners (EPD) receives the transportation commitments necessary to support development of a 270-mile Gulf Coast ethane pipeline. It will originate at the company’s Mont Belvieu, TX facility and transport ethane to multiple petrochemical plants in Texas and Louisiana.


Exxon Mobil (XOM)

Mar11: 9:52 AM Exxon Mobil (XOM -0.3%) says it has started production from the Telok natural gas field, located offshore Malaysia in the South China Sea. The Telok A platform is the first phase of the Telok natural gas project, which will consist of two four-legged unmanned gas satellite platforms; a total of 14 development wells are planned.


25 Footlocker (FL)

Mar11: 7:53 AM Sterne Agee’s Sam Poser recommends buying Foot Locker (FL) after shares fell off following the company’s disappointing Q4 results . The analyst thinks the retailer’s margins will improve and notes valuation levels are attractive.


Merck (MRK)

Mar12: 8:30 AM Merck (MRK +3.3%) says that the Data Safety Monitoring Board will allow the company to continue with its large-scale trial of its blockbuster Vytorin cholesterol drug, indicating that no safety issues have come up. Some analysts had hoped that the trial would already have demonstrated Vytorin’s effectiveness and so could be halted. Alas, the study will continue until September 2014.


Starbucks (SBUX)

Mar11: 2:46 PM Starbucks (SBUX) continues to increase its investment in locally-sourced coffee beans in China as it sees forecasts for coffee consumption for the region continue to move higher. The market for packaged coffee products is estimated to be set to rise 75% to 16B yuan ($2.5B) by 2017 which fall in line with the company’s plans for 1,500 stores by 2015. Early response to American phenomenon Starbucks in lower-tier Chinese cities has been stronger than expected.


Toyota Motors (TM)

Mar11: 2:24 PM Toyota (TM +0.4%) wrapup: 1) The automaker says it will increase hiring during FY13 to reverse a two-year trend. 2) A new political action committee in the U.S. will be tasked with looking after Toyota’s interests in North America. 3) Recent comments from execs reveal that Toyota will become more flexible about shipping car production from one nation to the other to improve efficiency. 4) The Lexus brand is desperate to see relations between China and Japan cool off with new forecasts showing annual luxury car sales will exceed 3M by 2020.


Vale (VALE)

Mar11: 2:24 PM Vale (VALE +0.3%) confirms it is suspending investments in its $6B Rio Colorado potash project in Argentina, which it says is not “in line with Vale’s commitment to discipline in capital allocation.” The project has been plagued with cost overruns due to inflation which has raised labor and materials expenses.


Wal-Mart (WMT)

Mar11: 8:28 AM A government panel in India rules that Indian companies don’t have to make disclosures about their lobbying activities in a determination which could have a favorable read-through for Wal-Mart (WMT). The same panel is expected to issue its report on the U.S. retailer to the government next month.


Vad’s Catch of the Day


Kaimu’s Sound Money


Harp’s Roadmap


CTA Trading Desk Post-Close Report



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mikede
mikede
March 13, 2013 10:51 am

on your new arrival!! no sweeter words than papa..
I think you mentioned that McEwen at pdac meeting
was not to favorable on the streaming royality model.
If I have this right can you explain his thoughts.

Les
Les
March 13, 2013 8:38 am

note the topping out of all four symbols I watch, the two Euro symbols forming lower highs while junk bonds and the S&P forming higher highs. Yet RSI is ready to give another sell signal and is bearishly divergent from the S&P500’s price. Watch Euro markets and Yen for clues. ——————— Congrats Bill & Pat on yer second grandchild ——————— I have Deron’s swing trading ETF book and was interested in the use of Fibonnaci time frames. I placed it over the $SPX chart in my FSC account and forgot about it, leaving it as a curiosity. I was however… Read more »

JVS3
JVS3
March 13, 2013 3:53 am

Congrats, Mr. Cara!

Very wonderful!

ChicagoMark1
ChicagoMark1
March 13, 2013 2:50 am

Bill, Thanks for all the good info. I have a question on your 12-18 months bullish stance on equities. It appears that over the last several years once the price of oil gets up over $100 a barrel, stocks either stall out or sink. With your bullish thoughts on equities and commodities do you really think that a weaker $USD will allow both oil and stocks to rise together? Is there an oil price that would temper your bullishness on stocks? My fear is that inflation will crush 70% of the US population who do not own stocks or precious… Read more »

Bill Cara
Admin
Reply to  ChicagoMark1
March 13, 2013 3:27 am

ChicagoMark1, As a consumable, with domestic supply now bursting out in the US, and foreign supplies readily available at relatively low prices, I think the price of WTIC Oil will remain largely in the 90-100 range, which will allow fuel costs to remain pretty much where they are today. But extra demand as the economy grows, more drivers on the road, etc, will push revenues higher for the Oil companies, so they too will participate in the equity market boom that I anticipate. Early in the Bull cycle that I am forecasting, I believe rising inflation will be a non-factor… Read more »

Bill Cara
Admin
March 13, 2013 2:32 am

“Went perfectly” says Will.

14them34me
14them34me
March 12, 2013 7:26 pm

Sync, are you watching ? Call me a convert. Watching for entry bit lower. Do you usually do BB or BBRY ?

Sync
Sync
Reply to  14them34me
March 12, 2013 10:33 pm

I trade on the TSX, but I refer to BBRY just for the majority of those on the site that trade on the NASDAQ. If I were to attempt to predict the day close, I would lose any credibility that I may hold. BB or BBRY is extremely difficult to predict on a day to day basis. The current price of around $15 is a fair price to buy in. My overall cost is 14, and I would add more if I did not own as many shares as I currently do. I can promote BBRY in the medium-run for… Read more »

14them34me
14them34me
Reply to  Sync
March 12, 2013 11:46 pm

Thanx. I wasnt trying to put you on the spot. Besides, you mostly look at different time frame than me. I’m just thinking chart is looking good for the intermediate term. Yeah…too long a time frame for most here.

Bill Cara
Admin
March 12, 2013 6:53 pm

Pat and I were pretty excited when our son Will phoned to say that Fiona was in labor and headed to the hospital. We are hoping for the best!

Milesquare
Milesquare
Reply to  Bill Cara
March 13, 2013 12:49 am

Good luck Grandpa

Bill Cara
Admin
Reply to  Milesquare
March 13, 2013 12:58 am

Milesquare,

Apparently the event will happen around midnight. But visiting hours are not til 3pm. All excited here! It’s all part of life’s cycle, one of the wonders of nature.

Bill Cara
Admin
March 12, 2013 6:45 pm

As the precious metal markets are close to completing a cycle bottom, and broad equity markets are, in my view, ready to pull-back ~3% before lifting to much higher levels, I received a call from my associate Harp Singh to give me his road map for the journey north, one to start early April. I posted my notes at the top of the page.

x
x
Reply to  Bill Cara
March 13, 2013 11:32 pm

For educational reasons only, I’m curious what factors led to the upward adjustment from 14300/13600 @ the 2012 conference to 14700/14200. I’m a learner and was very intrigued by Mr. Singh’s contribution to 2012. Both in upstairs and down…

westcoaster
westcoaster
March 12, 2013 5:59 pm

Company took some kind of writedown on one of its properties. Continues to find and mine quality deposits. Maybe a buy opp here? from Yahoo finance: Moving forward, in keeping with the goal of building shareholder value through the creation of future cash flow and sustained solid operational performance, SEMAFO will focus on the development of its flagship Mana project with particular emphasis on the new high-grade Siou Sector. The Siou Sector has one million ounces of initial in-pit inferred resources at an average grade of 4.6 g/t Au and a recovery rate of over 95%. The Corporation expects to… Read more »

szoya
szoya
March 12, 2013 4:46 pm

Gross: #ECB should ease shortly. #Euro needs to decline to support peripheral countries

Kyle
Kyle
March 12, 2013 4:36 pm

Vad — would be interested in your view of this statement …

Chicagostock Trading [email protected]
#SP500 should not put in all time highs to keep buyers supporting dips looking for new highs, in turn setting up bag holders. #stockaction

Thanks much,

Kyle

basketguy
basketguy
Reply to  Kyle
March 12, 2013 5:31 pm

Kyle,

Simple Translation…Breakout Traders buying the market at new highs are like sheep and deserve to lose all their money….Those buying the market here will be left selling at a loss when we have a normal market correction sometime soon..

Vadym Graifer
Reply to  basketguy
March 12, 2013 5:59 pm

This is too broad statement… without any qualifiers about how market gets to new highs it’s insufficient. Breakout traders buying new highs is what creates a trend; to say that they will necessary be wrong equals to saying that trends do not exist. People refusing to buy new highs are those same people that watch this rally from a sideline for years, complaining about how unsustainable it is. There is however distinction between various ways of coming to those highs: – consolidation near the high creating a mini-range to break is a valid breakout setup; – sharp vertical spike into… Read more »

Kyle
Kyle
Reply to  Vadym Graifer
March 12, 2013 6:21 pm
Vadym Graifer
Reply to  Kyle
March 12, 2013 6:27 pm

I don’t apply waves… Chart formations, volume, simple moving average and Bollinger Bands to visualize volatility, and common sense… that’s all.

Kyle
Kyle
Reply to  basketguy
March 12, 2013 5:43 pm

Yep. Here’s another interesting (market profile) chart (although it’s a little whacko at the bottom)…

http://stocktwits.com/message/12416665

Vadym Graifer
Reply to  Kyle
March 12, 2013 5:08 pm

Sorry, I am not sure what they are trying to say. Squeezing things in 140 characters sometimes makes them vague. I’d need it rephrased.

Les
Les
Reply to  Vadym Graifer
March 12, 2013 5:53 pm

he’s saying no new high for the S&P, rather distribution here as dip buyers become bag holders aka investors.

jimddavis
jimddavis
March 12, 2013 3:35 pm

Last week Armstrong stated Monday would be a top in the Dow at around 14,349. Looks like he may have called it the way the market is acting. Man that guy is good. He said gold and silver late last year would bottom around March too.

Bull Hunter
Bull Hunter
March 12, 2013 2:09 pm

CVS – CVS Caremark downgraded to Neutral from Buy at Goldman due to relative valuation and decelerating EBIT trends. Price target remains $57.

JimG
JimG
March 12, 2013 1:45 pm

“Sales of subprime auto asset-backed securities have increased year-to-date to nearly $4-billion (U.S.), almost double the volume during the same period of 2012, according to Deutsche Bank data. Subprime auto sales now account for 34 per cent of all auto ABS issuance, surpassing levels last seen in 2007.” “U.S. auto makers, including General Motors and Ford Motor, estimate that demand for cars and trucks will stay resilient in 2013. That, in turn, can help boost sales of total auto subprime ABS to as high as $25-billion, up from $18-billion in 2012, according to Deutsche Bank.” http://tinyurl.com/a78uncd Subprime borrowers took 43.2… Read more »

Bull Hunter
Bull Hunter
March 12, 2013 1:42 pm

AAPL – price target and earnings estimates were reduced at Jefferies. Supplier channel checks indicate lower sales for the first quarter and that the iPhone 5S and low-cost iPhone launches could be pushed to the third quarter. Price target is now $420. CSCO – Cisco downgraded to Hold from Buy at Standpoint Research. GOOG – earnings estimates were reduced at Oppenheimer through 2014. Earnings will be negatively impacted by Google’s toolbar policy change, and only partially offset by Enhanced Campaigns. SNDK – SanDisk initiated with a Buy at Cleveland Research. Target $70 UTX – price target was increased at UBS… Read more »

kaimu
March 12, 2013 12:46 pm
basketguy
basketguy
Reply to  kaimu
March 12, 2013 1:10 pm
Bull Hunter
Bull Hunter
March 12, 2013 12:21 pm

Good morning.

14:00 Treasury Budget

——

INFY – Infosys downgraded to Negative from Neutral at Susquehanna to reflect valuation and high expectations. Price target is $38.

——

“63% Think Congress Can Always Make Things Worse (the Other 37% are Wrong)”

~ Mike Shedlock

davefairtex
davefairtex
March 12, 2013 12:05 pm
  • 1 in Accumulation Zone
  • 5 in Buy alert
  • 15 in Distribution Zone
  • 3 in Sell alert
  • Accumulation Zone (5%): Monthly 6, Weekly 9, Daily 2
    Distribution Zone (28%): Monthly 31, Weekly 26, Daily 29

    davefairtex
    davefairtex
    March 12, 2013 12:04 pm
  • 7:30 AM ET NFIB Small Business Optimism Index
  • 7:45 AM ET ICSC-Goldman Store Sales
  • 8:55 AM ET Redbook
  • 11:30 AM ET 4-Week Bill Auction
  • 1:00 PM ET 3-Yr Note Auction
  • 2:00 PM ET Treasury Budget