Bill Cara’s Blog for Mar 20, 2013

CTA Trading Desk Morning Report

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

The government of Cyprus voted not to allow the theft of depositor’s money to pay for a bailout – I’m sorry, I meant “tax” of depositor’s money. Whether they caved to public pressure, their own conscience or pressure from Russia, we will never know.

We should all be happy for the Cypriots, but these actions have affected how all people think of their bank deposits and will not be forgotten, especially by those in New Zealand who could be facing the same actions in their future. The other good news for Cyprus is that there should be a bump in GDP due to the inflow of Russians visiting their banks. Bloomberg reported that flights from Moscow are at full capacity – I’m not sure how accurate that is, but it sure makes for a good story.

As you know, even when the Fed was hinting at an earlier end to QE than originally anticipated, we were steadfast in our conviction that the end is not at hand. The recent events in Cyprus may close the door on the “bail in” strategy and thus, we remain confident that QE will continue regardless of what the Fed says today.

Why any rational thinking trader would be short gold is beyond the grasp of this humble scribe. Isn’t it clear by now that gold has been and will continue to be a very important investment for the intermediate term? Of course, my opinion doesn’t mean anything to the global gold trade so I must stick to price action.

Gold price is entering another volatility squeeze, so we can look forward to increasing volatility soon:

ggimage01_032013.png

I have circled the areas where volatility squeezes occurred in the past. You can see that in the majority of the time, price moved in the direction that it was “leaning” when price broke out. Currently, price is leaning on the upper Bollinger Band, but price has not broken out yet and may continue to consolidate within the trading range marked.

Daily Gold Techie:

ggimage02_032013.png

You can see how important it is for price to break out of the trading box by exceeding $1620. It is getting late in the cycle and I think the bears are pushing down on price hoping to get a move to a new daily cycle low before price moves higher. Should price breakout to the upside, trend measures will switch to UP and the hedge fund shorts will be bailing quickly and price should pop higher.

The fly in the ointment for the bullish case in Gold is the US Dollar which continues to move higher on recent news events that could continue to power the trend. For those bearish the buck, you are very much in the minority. Public opinion on the Dollar is overly optimistic which is a precursor to a top, not a bottom, but we shall see.

You know we are bullish gold. However, as a trader you need price to confirm fundamental analysis. Should price not break out this cycle, probabilities are good that the low is in so it should be only a matter of time. If price breaks down out of the box, the trend will continue to be down. Trade accordingly.

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 2,455.02 6:45AM EDT Up 54.02 (2.25%) Components, Chart, More
^BFX BEL-20 2,604.70 Mar 19 Down 3.30 (0.13%) Components, Chart, More
^FCHI CAC 40 3,790.05 6:59AM EDT Up 14.30 (0.38%) Components, Chart, More
^GDAXI DAX 7,986.89 6:45AM EDT Up 39.10 (0.49%) Components, Chart, More
AEX.AS AEX General 354.16 6:44AM EDT Up 2.11 (0.60%) Components, Chart, More
^OSEAX OSE All Share 521.86 6:45AM EDT Down 1.40 (0.27%) Components, Chart, More
^OMXSPI Stockholm General 374.25 6:44AM EDT Up 1.18 (0.32%) Components, Chart, More
^SSMI Swiss Market 7,838.77 6:45AM EDT Up 49.17 (0.63%) Components, Chart, More
^FTSE FTSE 100 6,446.22 6:45AM EDT Up 4.90 (0.08%) Components, Chart, More
FPXAA.PR PX Index 982.63 6:59AM EDT Up 1.68 (0.17%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,449.20 8:00AM EDT 0.00 (0.00%) Chart, More
GD.AT Athex Composite Share Price Index 922.95 6:44AM EDT Down 0.48 (0.05%) 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

Adobe Systems (ADBE)

Mar19: 4:39 PM A little more on Adobe: Free cash flow was $261.8M, well above net income of $178M. Marketing Cloud (online ad tech) revenue +20% Y/Y to $215M (21% of total). Digital Media revenue -5% Y/Y and digital marketing +1%, both affected by shift to subscriptions. EMEA was soft, -10% Y/Y. Americas -1%, Asia -1%. Opex +16% Y/Y thanks to cloud software investments. Gross margin was 84.4%, -530 bps Y/Y (due to cost of supporting cloud services)


China Telecom Corp (CHA)

Mar20: 2:59 AM China Telecom (CHA): Q4 net profit -17% to 2.36B yuan ($380M) vs consensus of 2.04B yuan. Revenues +17% to 73.1B yuan vs 73.2B yuan, with wireless data sales boosted by iPhone use. ARPU 53.9 yuan, stronger than expected. Mobile subscribers +8M to 160.6M. To boost capex 40% this year to 75B yuan.


Disney (DIS)

Mar20: 8:39 AM Disney (DIS) says it will distribute an upcoming 3D movie from director Toni Myers jointly with IMAX (IMAX). The partnership will mark the first time the two companies produced an IMAX movie together. Mar19: 11:00 AM Disney (DIS -0.8%) is reported to be working on an app that will allow paying cable/satellite users to stream shows from ABC live to mobile devices. The development could be the next leap forward for “TV Everywhere” as none of the other major broadcasting networks offer the service at the moment.


Juniper (JNPR)

Mar19: 10:01 AM A harsh downgrade to Sell from Goldman sends Juniper (JNPR -4.5%) lower. The firm is worried about share loss and margin pressure in the carrier router space (42% of 2013E sales) thanks to Alcatel-Lucent’s (ALU) 2012 arrival, sees Juniper’s switching share flattening thanks to Cisco’s Nexus 6000 launch and the impact of software-defined networking, and expects “continued share loss” in security hardware thanks to “product feature gaps and the cannibalistic effect on sales from the transition to a software model.” 2013-2015 estimates have been lowered.


Microsoft (MSFT)

Mar19: 1:25 PM More on Microsoft: The WSJ reports the DOJ and SEC are examining allegations from a former Chinese Microsoft rep that he/she was told by a local Microsoft exec to “offer kickbacks to Chinese officials in return for signing off on software contracts.” Also being reviewed are allegations resellers offered bribes to score software deals with the Romania’s communications ministry, and that Italian consultants lavished gifts and trips on procurement officials to win government deals. The probe is said to be in the preliminary stage. 11:33 AM Microsoft (MSFT +0.1%) roundup: 1) Microsoft has acquired NetBreeze, a developer of language/data/text analysis tech. NetBreeze’s tools will provide social media analytics for Microsoft’s Dynamics CRM suite. Salesforce and Oracle also have ambitions in this space. 2) Weak PC forecasts or not, Acer CEO J.T. Wang claims momentum for touch-enabled Windows 8 hardware is picking up. 3) Can you say ‘Surface’ in Mandarin? Microsoft has opened a store on Alibaba’s popular Tmall shopping site. The company’s Chinese profits have long been hurt by widespread piracy.


Schlumberger (SLB)

Mar19: 10:29 AM Oilfield services companies suffer another down day after Schlumberger (SLB -1.3%) sounded an alarm for the sector, warning that customers have reactivated fewer rigs than expected and pricing is still an issue. It was a “clarion call of realism,” Simmons analysts say, virtually ensuring negative Q1 guidance from SLB and making positive revisions from other oil service firms “a steeper climb.” HAL -1.9%, BHI -1.3%.


Silver Wheaton (SLW)

Mar19: 5:42 PM Silver Wheaton (SLW) says attributable proven and probable reserves increased 38% in 2012 to a record ~1.1B silver equivalent oz. consisting of 851M oz. of silver and 4.9M oz. of gold. Attributable measured and indicated resources rose 28% to a record 603M silver equivalent oz. consisting of 529M oz. of silver and 1.39M oz. of gold.


Target (TGT)

Mar19: 1:19 PM Target’s (TGT -0.9%) biggest problem so far in its launch in Canada is empty shelves as shoppers flock to new stores. Execs says the strong store traffic has exceeded expectations, but the supply chain will be adjusted accordingly. Music to TGT investors from a Canadian retail analyst: “Everybody is dying to try the store.”


Vad’s Catch of the Day


Kaimu’s Sound Money


Harp’s Roadmap



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johnuk
johnuk
March 21, 2013 11:37 am

Fresh evidence has been revealed about how MI6 and the CIA were told through secret channels by Saddam Hussein’s foreign minister and his head of intelligence that Iraq had no active weapons of mass destruction. Tony Blair told parliament before the war that intelligence showed Iraq’s nuclear, chemical, and biological weapons programme was “active”, “growing” and “up and running”. A special BBC Panorama programme aired on Monday night details how British and US intelligence agencies were informed by top sources months before the invasion that Iraq had no active WMD programme, and that the information was not passed to subsequent… Read more »

Illini
Illini
Reply to  johnuk
March 21, 2013 11:50 pm

It’s more than sad. It’s depressing. Seems to me that the world is run by psychopaths. They have no conscience.

ChrisM
ChrisM
March 21, 2013 3:28 am

Geoff, this morning you wrote “especially by those in New Zealand who could be facing the same actions in their future”. Could you expand on that please – I have friends in NZ and would like to give them a “heads up”.

jragusa
jragusa
Reply to  ChrisM
March 21, 2013 11:36 am

Chris,

Here is Mishs’ view on New Zealand’s [lack of] guarantee on bank deposits:

http://advisorperspectives.com/dshort/guest/Shedlo

The Minister noted that deposit insurance is difficult to price and blunts incentives for both financial institutions and depositors to monitor and manage risks properly. The full statement from the Minister can be accessed at:
http://www.beehive.govt.nz/release/maintaining-con

ChrisM
ChrisM
Reply to  jragusa
March 21, 2013 1:48 pm

jragusa,
thank you.

baz22
baz22
March 21, 2013 2:18 am
schnauser
schnauser
March 21, 2013 12:45 am

Goldbug58,

Do NOT buy GORO, they have over-promised with their divi, and it is about to be cut. This is NOT a buying opportunity. Their production has been decreasing the past few quarters and they can’t afford the dividend anymore. They are very good marketers of their “gold dividend” but its going up in smoke soon. DYODD.

ea32da32
ea32da32
March 21, 2013 12:31 am

Greetings all; I’m still feeling the effects of a two month turnaround at the plant and now covering vacations slots which have been compressed into the remaining months of this year but, better then sitting on my can doing little;-). An old friend of ours shared this story with me and I thought some of you could appreciate it too. http://londonbanker.blogspot.ca/2013/03/chop-off-t… Re: Happy Birthday to the silent death of liberty Grym, excellent remarks on your post, as well as the followup from Bill – very sorry Bill had the airport experience, my wife and I decided when all this TSA… Read more »

Grym
Grym
Reply to  ea32da32
March 21, 2013 4:03 pm

Earl,

“Grym, excellent remarks on your post, as well as the followup from Bill – very sorry Bill had the airport experience, my wife and I decided when all this TSA mess started we’d never fly anywhere again.”

Thanks.

My wife and I have stopped using commercial air too. I hate government’s heavy hand in so many areas that I’m determined to avoid all I can.

ovidet
ovidet
March 20, 2013 7:29 pm

Anyone knows what happened to Deron’s Daily ETF Analysis? I found his analysis pretty informative and convenient to read it on Bill’s blog.

Jack Senett
Reply to  ovidet
March 21, 2013 12:50 am

Deron’s ETF analysis is no longer appearing on the Cara Community blog.

BillySundance
BillySundance
March 20, 2013 5:31 pm

…back on yesterday’s conversation Prices have indeed gone up on lots of items in the grocery or hardware store due to higher prices for materials and labor. I would also add that following the 2008 debacle, there has been a consolidation in many manufacturing industries which seems to have led to fewer distributors of certain types of products and greater pricing power for the remaining manufacturers. I’ve noticed that many stores/businesses have become a lot more savvy and knowledgeable of the habits of their customers – through rewards programs and data mining. At Lowe’s for instance I find that some… Read more »

baz22
baz22
Reply to  BillySundance
March 21, 2013 1:50 am

Hell, Billy, those ‘ deck screws ‘ are the same ( $ 95.00 ) the past four seasons since Jan., 2012 !! …. Yes, Lowes and HD do have ‘ specials ‘ ( fencing in winter, etc.. ),but the basic materials, such as 2x’s, 4x’s, sheetrock, plywood, OSB, etc, increase yearly .. Funny thing is, the same vendor supplies Lowes And HD around here !!.. GE’s appliances have increased 30% in 2 years.. As I buy and fix-up homes ( like Toby’s part-time work, full time passion ! )the costs of ‘ demand items ‘ ( necessary ) goes ever… Read more »

basketguy
basketguy
March 20, 2013 3:07 pm

Markets always punish the masses then resume their trend…. How many are hoping that the 1530ish level holds in Gold? You always see this…Price trying to hold a level..Then SMASH…Price is driven through that level then Springs back to life…. Something tells me we will see them SMASH and when we no longer love the price it will start its fast rise while most watch in amazement… Seen it happen too many times…An area of support gets crushed then a V bottom and a quick rise… How many are Hoping gold holds the low 1500 level? Too many for me…So… Read more »

c2ski
c2ski
March 20, 2013 3:05 pm

It’s that time of year again!

http://simpletax.ca/

Ynot
Ynot
March 20, 2013 2:53 pm

Sneaking in under the radar…

This is why Jamie Dimon is richer than ‘you’.

http://www.foxbusiness.com/news/2013/03/20/jpmorga

Bull Hunter
Bull Hunter
March 20, 2013 2:17 pm

MSFT – Microsoft estimates lowered @ BMO. Market Perform. PT = $30

——

Miners:

LSG – Lake Shore Gold PT Lowered from $1.70 to $1.00 @ RBC

Bull Hunter
Bull Hunter
March 20, 2013 1:33 pm

ADBE – Adobe Reiterated with a Buy @ Deutsche Bank. PT Lifted from $47 to $50.

——

Miners:

GORO – Gold Resource Corporation Reiterated with a Buy @ Sterne Agee. PT = $25

goldbug58
goldbug58
Reply to  Bull Hunter
March 20, 2013 2:02 pm

“GORO – Gold Resource Corporation Reiterated with a Buy @ Sterne Agee. PT = $25”

I’ve been looking at GORO for a few weeks now…gold miner that pays a nice dividend…I don’t know much else about it, but understand that it is possible to receive those dividends in physical gold or silver…

Any yea/nay votes on GORO here? Any positive/negative comments on it?

Flight Plan
Flight Plan
Reply to  goldbug58
March 20, 2013 3:00 pm

Link to GORO report here….

http://www.sec.gov/Archives/edgar/data/1160791/000

Flight Plan
Flight Plan
Reply to  goldbug58
March 20, 2013 2:51 pm

Goldbug58: The working cap at GORO continues to drop. I think there is not enough to continue the current dividend. Take a look at the latest 10-K annual report.

Vadym Graifer
Reply to  goldbug58
March 20, 2013 2:19 pm

“GORO – Gold Resource Corporation Reiterated with a Buy @ Sterne Agee. PT = $25”

Any yea/nay votes on GORO here? Any positive/negative comments on it?”

Only this… remember a week or so ago Bill posted an article about broker ratings and their hidden meanings? Let me add:

BUY = we have accumulated enough shares and don’t mind to start dumping them
STRONG BUY = someone take it from our hands, we are so ready to get rid of those shares
STRONG BUY REITERATED = please, pretty please, someone, anyone, buy it from us, we are suffocating here

bigwad1
bigwad1
Reply to  Vadym Graifer
March 20, 2013 2:53 pm

Those rating analogies are so close to true it’s scary.

There is always a well planned out agenda when you are perpetrating a legal robbery……

FISH ON!

Bill Cara
Admin
March 20, 2013 1:22 pm
barry
barry
Reply to  Bill Cara
March 20, 2013 4:03 pm

As to the Silent Death of Liberty…ie

“To the point of the silent death of liberty, it’s probably nowhere more noticeable than at customs & immigration at the airport.”

There are many signs things are not all well in the U.S.A. Picture Department of Homeland Security in these driving around Arizona, Texas and New Mexico

http://www.youtube.com/watch?v=0pS9aw5pcJo

Bill Cara
Admin
March 20, 2013 1:17 pm

Eric Sprott, who is a major player in the gold market, says the Fed is suppressing the price of gold:

http://sprott.com/markets-at-a-glance/do-western-c

Grym
Grym
March 20, 2013 12:50 pm
Bill Cara
Admin
Reply to  Grym
March 20, 2013 1:12 pm

My day at Harvard yesterday was interesting. Meeting. Lunch at the Faculty Club. Meeting. Dinner at No Name. Flight home. Dreadful weather. Ice, horizontal sleet, rain, high wind. School classes cancelled. Not a good day to be flying in a small Q400 turbo-prop. Probably not a good day to be flying at all. But it was a good day overall. To the point of the silent death of liberty, it’s probably nowhere more noticeable than at customs & immigration at the airport. The questions being asked, the gratuitous insults given, the comedic Hollywood B-movie stare-downs, etc, was all too much… Read more »

bigwad1
bigwad1
Reply to  Bill Cara
March 20, 2013 2:43 pm

Welcome to the USA, land of the free. The only place in the world where the money managers out number the working taxpayers!

If you control all the money you can control all the people all the time….

Bull Hunter
Bull Hunter
March 20, 2013 1:27 pm

Good morning. 07:00 MBA Mortgage Index (-7.1%) 10:30 Crude Inventories 14:00 FOMC Rate Decision —— AAPL – Apple Initiated with a Buy @ Canaccord. PT Lowered from $650 to $600 ADBE – Adobe Downgraded to Hold from Buy at Stifel. ADBE – Reiterated with an Underperform @ FBR. PT Lifted from $28 to $30 CMI – Upgraded to Outperform from Market Perform @ William Blair. WAG – Walgreen Upgraded to Overweight from Neutral at JPMorgan. WAG – Walgreen Upgraded to Buy from Sell at Citi. PT Lifted from $32 to $51. WAG – Walgreen Downgraded to Buy from Conviction Buy… Read more »

davefairtex
davefairtex
March 20, 2013 11:05 am
  • 4 in Buy alert
  • 5 in Distribution Zone
  • 16 in Sell alert
  • Accumulation Zone (10%): Monthly 4, Weekly 9, Daily 17
    Distribution Zone (16%): Monthly 22, Weekly 19, Daily 9

    davefairtex
    davefairtex
    March 20, 2013 11:04 am
  • 7:00 AM ET MBA Purchase Applications
  • 10:30 AM ET EIA Petroleum Status Report
  • 2:00 PM ET FOMC Forecasts
  • 2:30 PM ET Chairman Press Conference