Showing posts with label Fed. Show all posts
Showing posts with label Fed. Show all posts

Tuesday, July 1, 2014

WORLD CUP OF CHARTS


The US tries to keep hope alive, very much like this market.  Utilities, munis, corporate bonds, and treasuries have all been big winners so far through 6 months.  The SP500 is up around 5% and the Dow is up around 2%.  All in all, not much has happened, but a slow grind higher in the midst of a world ripping itself apart due to our leadership deficit in so many places.  Its a good thing the US soccer team has a great coach and so do we as Janet Yellen stands at the helm, guiding us ever so gently in a ZIRP environment.

Here's just a few charts I look at daily.  Near the end I've highlights stocks I've watched, bought, missed, or feel like there may be opportunities in soon.

XLU - Why not utilities?  Utilities must be signaling that rising interest rates are pretty much a myth and will never happen.



XLU:SPY


IMPORTANT CHARTS
APA - Energy Sector has had an awesome run, is this starting to tire?


ARCP - Looks constructive now.


COP  - Overbought?  Each of those recent peaks in RSI have resulted in short term pullbacks.  Traders may want to exit and buy again on any weakness


EWY - Emerging Markets finally coming back?


FB - A run into earnings.... exit a day or two before they announce?


FCX - Who knows what the cost of production is/was for gold and silver, but as gold hit $1250, the destruction of gold, silver, metals, and miners suddenly stopped.  FCX has had a nice run since hitting $30 with a unexplained pop today taking it above $37.


IXN - This etf has been a long-time powerful winner.  Short term looks a bit overbought.



JBLU - Finally breaking out.  Look at the RSI at the top showing overbought.




JOY
There is some risk here of a reversal and fall to mid 50's.




KMI - Nice run.  Is there still momentum to move higher?



KRE - US Regional banks are certainly nicer than European banks.  It looks like there is room to go 5% higher at least.


SLW - Momentum is here.  The 14 Week MA crossed over the 40 Week.  This is a significant longer term signal suggesting continued upward pricing.


VTR - We need a bounce here.  VTR is extremely tied to longer term bond yields.  The 4% dividend yield is nice.



OTHER ITEMS - FOR CONSIDERATION

AAPL - APPLE - Probably goes to $100.  Probably should wait on this one as risk/reward set up isn't great.



 DUK -DUKE ENERGY - Utilities are all the rage.  A possible breakout as the higher-highs and higher lows just keep coming.




GDXJ - JUNIOR GOLD MINERS
Will the evil gold cartels and traders allow gold to continue to rise?  COT report shows large increase in commercial shorts, probably doesn't bode well for gold, unless some geo-political shock comes to light.... we haven't had any of those lately have we?






GILD - GILEAD - Hard to buy here, but this should be a strong earnings report and the rebound has been impressive.



GMT - GATX CORP - Railcar leasing seems simple enough.  



GOOGL - GOOGLE - Same risk / reward trade off as AAPL, however I think GOOGL is better than AAPL.




INTC - INTEL - Strong breakout.  INTC seems to have its swagger back.  Any pullback can be bought.



HAL - HALIBURTON - Energy anyone?  Too late to buy here.







MSFT - MICROSOFT - Remember when we could have bought at $26 on its way to $30.  I think this is a hold and not a buy. 



OXY - OCCIDENTAL PETROLEUM - Wait for a pullback and confirm price action.  This has run a long, long way.





O - REALTY INCOME - The leader in long-term triple net leases.  I like the action here and has a nice dividend.



PPLT - PHYSICAL PLATINUM - Very nice.



SCCO - SOUTHERN COPPER - Nice chart, would have like to buy on the bounce.  Is housing going to slow?


Stocks have run quite a bit.  I like Realty Income, Gilead, and GATX Corp, and possible AAPL with an eye toward earnings.  Otherwise, energy has been unstopple, it just seems hard to buy now.



GOATMUG
Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/

Wednesday, February 12, 2014

THINKING OF BITCOIN? THE DEVIL'S CURRENCY

Just in case you were thinking about buying some bitcoins, perhaps it is the father of lies and temptation who is the source of your wandering thoughts.....



Bitcoin seems to be under attack from governments, hackers, and the corporate-types as Apple un-approved the bitcoin app this week as well.  Could AAPL or GOOG be ready to enter with their own crypto-currency like a Googlecoin?  We all know that corporations and government are tied pretty closely, could a special request have come from .gov to shut down apple user access to bitcoin?  We probably won't know, but it hasn't been a good week for bitcoin as it suffered a flash crash.  I hadn't owned any, but on the crash, I picked up my first .5 BTC just for grins.  I'm still in the money but the screen shot of the Bitstamp Exchange is a little scary.

FYI, Obamacare's enrollment is about to come to an end (unless the deadline is changed) and I'll be back to posting with regularity.  Sorry for the absence, just can't handle the volume and maintain the posts.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/

Thursday, July 18, 2013

TAPERING.....RIGHT!

I have been very busy tending to so many things I have not had much time to post. I plan on doing a chart bonanza in the next couple of days since we have just finished a very good quarter with some drama thanks to Uncle Ben Bernanke and his pals at the Fed. To think they could even hint at tapering! What a joke.

Ben's tapering threat certainly didn't get received well, but he came back and simply suggested that he was kidding!  I think the tapering talk was really forced on him and will be again as the bond market's rates are rising, and we all know that Ben can only do so much.  In fact, we've discussed often how the Fed actually follows the market, I'm guessing this is some of the same.

Speaking of the Fed, let's go back in time and examine just how things were back in the 1920's leading up to the crash of 1929. It may be instructive and entertaining. I've wanted to comment on all the best of Americana given the court rulings of the Supremes and also the case involving a hooded teenager, but alas, I have no time to comment on things that are simply a distraction from investing and trying to figure out what next weakness in the economy will reveal itself. Enjoy the video and look for more posts in the days to come.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/

Thursday, May 2, 2013

MACRO UPDATE - Sotheby's (BID)


Over the years I've highlighted a few of the major "turning point" indicators I've watched over the course of my involvement with the equity markets.  One of those that I found years back was the relationship that has held between the overall markets and that of Sotheby's.  I guess Sotheby's is a perfect example of disposable income at its best sort of like a Tiffany's or other high end retailer.

The redish line is (BID), while I've added the SPX behind in black.  BID seems to be an early turn indicator in the last two major swoons in early 1999 and also in late 2007, I've marked those in blue.  Late in 2012 again has presented us with a major turn signal where BID certainly has fallen, yet in this Fed stimulated world.... SPX continues to fly (marked in red at the far right of the chart).




While the overall markets "should" according to this two instance example begin to turn, it might just be a safer bet to short BID and just forget about shorting the overall market.  Are we even allowed to short anything?  Tomorrow's employment report will be interesting as we've heard from the Fed that they are willing and able to pump to the moon, as labor participation rates continue to decline, unemployment figures seem to improve as well.  I'm very interested to see what happens when the unemployment trap is set and the Fed needs to restate that they didn't really mean that they would really stop stimulating when the unemployment rate actually gets in the high 6% range.

 As with everything, I'm sure we'll just have a new set of rules or a new boogey man that will require unlimited printing and liquidity-less liquidity.




GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Sunday, April 28, 2013

WHERE ARE WE? (Sector Rotation Models)


I suppose that I could lavish you with lots of thoughts about how were are stuck in some crazy feed-back loop of Fed induced mirages and half recoveries yet it would only be tired old cry that prattles on about how the deception will work well, till it doesn't.

So, instead of singing the same old tune and holding my nose and buying those stocks that have been defensive and leading this nutty rally for the last year or so, I'll simply provide a snapshot of the old sector rotation model that we've examined before.  My guess is that we are nearer to the far right side of this image which would suggest that the equity markets have topped AND we are in early recession.  The only fly in the ointment if you will is that I have been holding utilities, healthcare, and consumer staples for almost two years and these stocks have been our leaders!  This segment of the equity markets usually doesn't maintain leadership for this long, so as usual, there are new, weird, and unknown forces at work in this screwed up Fed driven market.



If we think we really are progressing along the economic cycle, you might dip a toe in the finance area, (which I did when I bought some regional bank stocks several months ago).  Those are about flat still, so I guess we'll see how long it takes for the economy to finally break down in a real way and have those interest rates rise, bringing helpful and healthy rising net interest margin...... hold  your breath about rising rates, it probably won't ever happen.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Wednesday, April 17, 2013

RECOUPLING....T-BOND REVIEW (TLT,TBF, XLU)

I've posted a number of charts in the past months that examined the amazing experience we had in 2012 where typical market relationships melted into nothing and became completely useless.  One old notion that treasuries acted inversely to the equity markets was one of these.  In 2012, we witnessed treasuries increasing in value (yields falling) and equities rising, frankly, this isn't normal.

We've speculated as to why this happened, but without fail we always came back to, "Fed manipulation" as the key distorting factor.  Is it really that foreign investors needed safe sovereign holdings and continued to by US bonds without regard for yield?  Maybe.  Was it that Joe 6 Pack was abandoning his fear and rushing headlong into the equity market.  Possibly, with a portion of his holdings.  Each answer may be correct as the Fed's insatiable desire to buy up mortgages and treasuries has artificially suppressed yields and also forced Grandma and pension managers to elect for riskier assets with "new" money in an attempt to make something.  I think this is why our equity leadership has been focused like a laser in dividend paying stocks in defensive sectors.  The average investor doesn't trust this rally and hasn't, so as he holds his nose he buys utilities, consumer staples, and healthcare and shuns small caps and technology.

Don't think utilities have been a safe-haven?  Check this out.  I haven't sold my XLU yet, but is is on the agenda.



As 2013 dawned, we've seen a recoupling of the old relationship in the first few months, and I for one, am very happy.  Yet, as happy as I have been, an odd sense of dread kicked in as the relationship over the last few weeks started to break down.  Perhaps it was Cyprus, or perhaps the huge rally in the first quarter just needed a breather, but bond yields started floating lower, yet the equity markets just continued to press higher and float out in space to new highs.  I 've highlighted the chart of TBF (which is the etf that shorts treasuries which shows the relationships I've been watching).  In this chart, TBF should move in lock-step with the equity market (SPX) which is the black line behind the TBF chart.

A month or so ago I put this chart up and called for a change in direction for the stock market, but it didn't come.  The weakness in TBF suggests that a healthy correction is in store for stock markets.



Don't get too bearish and over extended here, but certainly the chart suggests a bit lower in equity markets.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Tuesday, March 19, 2013

DIVERGENT REALITY - MARKET UPDATE


Somehow, someway, the markets simply keep moving up.  Perhaps they are climbing a wall of worry.  Perhaps stimulus that is coordinated and assisted by loose monetary policy simply keeps all the plates spinning.  At some point, gobs of stimulus will meet the headwinds of a global financial slowdown in Europe, an inflationary overheating and under performing Asia and Pacific Rim, and a flight to safety from risky assets as smarter money says, "screw this".

ISLAND BACKGROUND
Quickly, let's review a little about Cyprus.  The tiny island attempted to create its own niche economy in Europe by becoming a financial haven.  They offered very low tax rates and an even lower concern for the origins of the global cash horde that was being deposited within their banks.  Cyprus become an outsized financial powerhouse and a haven for money laundering.  Russian gangsters like Putin and his crony oligarchs have hidden massive amounts of stolen money in Cyprus.

Bankers were all too happy to take the money and of course, they had to invest in bonds of other Euroland sovereigns.  They purchased a ton of Greek debt, which of course has been a disaster.  Cyprus' financial condition has been a known problem for a while, but clearly, the ECB desired to act.  As little as a month ago, financial and political leaders in Cyprus stated emphatically that bank institutions were fine and depositor money was safe.  This weekend, this all changed as Cyprus posted documents outlining the "bailout" where the ECB would step in and give approximately $10 billion in funds, but it required depositors to kick in a total of about $7 billion.  Now think about this.  This isn't the bank getting crushed.  This isn't some bond holder or stock purchaser, this is someone that was saving and simply putting money away.  Depending on how much you have, you'd potentially pay anywhere from 7% to 12%, in a sense, you just took a pretty big haircut for being dumb enough to save and trust a bank.

LOCKED OUT
Over the weekend, the people started hearing about a bank lock up and started sharing information about the vote about the fate of their money that was going to be held on Monday.  Clearly the upset people took to the street and wouldn't allow politicians to steal their money and give it away.  As I type, political and financial leaders in Cyprus attempt to walk a very small line where they can somehow appease the ECB and global banking syndicate and yet keep their heads as they have awoken a very interested and angry population.  The Cypriot legislative body will attempt to forge a solution that placates the bankers and limits the impact on regular folk that never had anything to do with Cyprus banking institution's purchases of Greek bonds with their deposits.

Don't forget too that the Russians are the ones that will take a huge hit in this "bailout".  Possibly the ECB calculated that the funds were illegally garnered, but my guess is that Putin and his buddies will not take kindly to a 12% or greater haircut of their stash.  The ECB is screwing around with these guy's personal cache of money, they better watch it.

THE GLOBAL BANK DEPOSITOR'S DILEMMA 
Banks essentially removed the "haircut" from bank accounts almost immediately, and therefore the effective "tax" was confiscated.  As a depositor, what would you do now?  Can you trust the bank?  As a citizen in a Euroland country like Italy, Spain, or even Portugal, are you certain that this would not happen to you?  The outright theft of deposits is simply too easy for governments when they can shut a bank down electronically and remove funds before anyone has a chance to prevent it.  The Cyprus example is surely a scary test case.  So what will they do?  We are hearing that there is calm in other Euro countries and no one is rushing to take their funds.  The better question in my mind is WHY AREN'T THEY?  It only takes a few people to start a panic, reasonable depositors should be calmly removing funds.  Do you think they wouldn't do something similar in the United States given extraordinary circumstances?

I've often advocated that you should have some cash on hand in case banks were suddenly inaccessible and you should also couple that with some physical metal holdings like gold, silver, or even palladium.  Make a trip to the bank today and get enough cash to ensure you could make it through a couple of weeks with no problem.  I'll do another follow post about metals, but is there any way this cannot be bullish for them?

INVESTMENT IMPLICATIONS - EMB:TENZ -




Despite what you are told and what we are seeing, the global financial markets don't like this.  US markets somehow keeps levitating, but that divergence is getting way out of bounds of what it should look like.
Take a look here at the EMB:TENZ ratio chart.  Remember, this is a measure of the emerging markets stocks versus the ten year treasury.  Essentially, this is a measure that show when investors desire risk versus when they want safety.  Emerging markets have been really under performing and in a sense, the 10 year treasury is beating on a relative basis.  If investors were feeling risky, they'd want to go long emerging markets.  As you can see in this view, the ratio of EMB:TENZ has been very good at tracking the SPX (black line behind the red/black ratio) and probably even leading it up and down.  Now look what has happened recently.  The ratio has cratered suggesting that investors don't want emerging risk at all.  Despite the risk-off move, SPX continues to power higher.

RISK ON?  RISK OFF?
This is a slightly different look, which might be better.  It is still the same concept charted with the MSCI Emerging Markets Index against the Dow Jones Treasury Index.  I provided a monthly view and I think it shows how strikingly in sync this relationship is.  The only two questions we should be asking is how long can the divergence remain, and which direction will it resolve?





GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Tuesday, March 5, 2013

PAPER TIGER? PAPER CITY?


GHOST CITIES
Please take a few minutes to watch this 60 Minutes video on China's ghost cities.  I've written about this several times, but given the recent new action by the Chinese government to curb real estate inflation, it seems as though the may be new movement in possible deterioration of their most-loved asset market.  The Communist government announced new taxes that require sellers to pay 20% capital gains taxes and also mandated that purchases of second homes must be paid for with 60% cash down payments.

WHAT ELSE CAN THEY DO?
Given the investing approach and lack of alternatives, who knows if this will be the final straw that blows them up?  As we know, central planning and central banking and a zero interest rate world creates all sorts of mal-investments and mis-allocation of investments to compensate for distortions in yield and risk.

Enjoy;



Thanks for reading.  I've been slammed with lots of projects, please check back frequently as I am trying to post more.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Friday, February 8, 2013

THE END OF NORMAL? - TBF

I think 2012 was one of those years that made you just say, "What the heck?".  Examine the following chart of TBF (short 20 year treasuries) and SPX in the background.

DECOUPLING?
The "normal" relationship between stocks and bonds suggest that when the bond price falls (yields rise) and stock indices will actually increase as you assume that money flows out of bonds (sending prices lower) and into stocks (chasing prices higher).

In the graph below, which includes TBF (the short version of treasuries)  we see that in 2010 and 2011, these two charts moved in tandem, just as expected.  Suddenly, in 2012, the relationship turned on its head and did just the opposite.  In 2013, we have a resumption of the old co-movement.

TBF and SPX - http://scharts.co/WHPScS




INVISIBLE HANDS
What could have caused this divergence from the normal relationship?  What caused it to come back into alignment?


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Wednesday, January 30, 2013

NO EXITS - GOLD AND SILVER


CONTRACTION?
This morning's release of GDP data suggested that government spending reductions in military have caused a fall in the growth USA's GDP.  The third quarter had a growth rate of 3.1%, the fourth quarter showed a -0.1% GDP.  Inventories are building, and it looks as though alot of "income" was pulled forward to avoid the fiscal cliff and increasing tax rates.

THE FED IS HERE
Despite the stock markets being down just a tad, gold and silver are higher, why?  The reduction reaffirms what we should all know, that the Fed will never exit and cannot remove their stimulative QE which is shuffling $85 Billion monthly of Federal Reserve Notes between different assets like treasuries and MBS.

GLD
Intra-day Gold looks to really like the report of GDP contraction as it's ETF proxy GLD is bouncing.




http://scharts.co/XSeCgL

SILVER 
Silver also bounced.  The key for silver will be to clear through the $32.50 area.  Stock charts won't do an intra-day chart for commodities in my set up, so I'll have to post a chart later.


In addition, here is a view of silver that is a 1 year look.


$36.88 seems a long way away from here, but continued real action by the Fed cannot hurt.  If anything, this continues to provide a very solid "fundamental" base from where silver will mount an attack higher.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Tuesday, December 25, 2012

MERRY CHRISTMAS!


I wanted to extend my deepest and most sincere blessings to you and your family this Christmas.  I pray that you are blessed and that this year-end time brings you closer to God who through His son, Jesus brought salvation to all that desire it.

I pray that readers gain a real relationship with, rather than an intellectual understanding of their Savior.

I began preparing for the year-end wrap up yesterday and as I reflected on the blog I couldn't help realize what a hard year this was for me personally due to family illness issues and professionally thanks to the Fed and also President Obama's healthcare law.  I have grown up a lot this year and have had so many great opportunities to make hard choices.  Fortunately, I was able to make many of them correctly, but could not have done it without input from God, family, friends, and physicians.  I am very blessed.

As I'm typing this Christmas morning and my family is taking a break in their present opening, I wanted to wish you so many great blessings this year.  Know that I am praying for each of my clients (I do daily) and for the folks that stop by and read this blog.  

The coming year is going to be just as nutty I feel, thanks be to God that I have faith.  I've questioned so many times how bleak life would be without a belief that there is something more, something greater, and something for which there is a purpose.  How hard a life this would be without Jesus!  And thank God that those Mayans ran out of rocks!  Please look for a year-end wrap up and outlook for 2013 coming soon.  

MERRY CHRISTMAS!

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Saturday, December 22, 2012

WHERE NOW WITH SILVER?



SILVER DONE?
Clearly the recent action in the markets has caused many to completely abandon the notion that precious metals are awesome and they now contend that they are dead and gold and silver will become the next prepper's widow maker.  This may be true, and to confirm it, I wanted to examine the charts and also some of the reasons that this would be correct.... and why it wouldn't.

CHART HEADING DOWN....MAYBE
Take a look at the weekly SLV chart.  Some may ask why SLV, the easy answer, is this is the one that I have saved in my stockcharts system, but very importantly, this is what you'd buy if you didn't have a safe full of silver bullion or Silver American Eagles.




In this example we see that SLV did hit near the $35.00 area that we had identified a turn and then melted lower to the $31.00 level where it bounced off it's 200 day moving average (black line).  That strong bounce sure looked good, however the rebound was short lived.

Last week, the $30.00 level was breached and the etf suffered a nasty close at the $29.00 level.  If you were an owner of SLV you'd have to be very concerned that a fall back down into the downward channel through $27.50 would be very, very ugly.

$SILVER
For those of us that hold silver in other forms than SLV, I wanted to put up the commodity silver price up so we could look and see if there were any differences in the chart.



Unfortunately, real silver is already in a downward channel and a similar level of $27.50 is very important.  The close on Friday was actually odd to me in that the equity markets got spanked (if we now call down 1% spanked) while silver was up a tad.

As bad as it looks for silver, there is one shining hope left, and that is that the 14 day EMA is still above the 40 day EMA (on a weekly chart) and the slope of that relationship is still positive (flat to up to the right).  As of this moment, this very long term trend indicator still has a hold on the trade and no sell has been signaled.

WHY NOW?
It has seemed like that ever since the Fed tied their unlimited QE to achieving some job employment number that all precious metals have been falling with renewed vigor.  I'm not sure it that is a result of many suggesting that there is now some end on the horizon of infinite Federal Reserve action and that would somehow tame the beast of inflation that was surely expected to come.  Or, perhaps traders realized that the Mayan calendar prophecy was going to fall on its face and therefore there was no need for extra stores of the shimmering metal.

Another rumored explanation for the recent vicious sell off is none other than that some hedge funds are forced to sell GLD and SLV due to redemption requests.  The famous manager John Paulson has been rumored to be selling his largest positions which do include GLD.  As we all know any significant move in gold will cause silver to move in lockstep with it.

In the last week, Morgan Stanley and Citibank both called on their clients and advisers to sell shares of Paulson's fund and GLD was the single largest holding at nearly 30% as of September 30, 2012 - http://www.stockpickr.com/pro/portfolio/john-paulson/ .

AN EYEBALL'S GLANCE
As I eye ball things, it also seems like the period from October through year-end is always weak for silver as well.  Perhaps it is seasonal.  2011 was up significantly, so we can't say that it works all the time, but hopefully it won't be like October 2008 where silver was completely destroyed and taken down to the $8.00 level.

CONCLUSION
The real story here is that silver has some issues and you'd be smart to look for some kind of bounce at the $27.50 area.  If it doesn't come, the low twenties are easily in play.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Friday, November 16, 2012

FEELING LIKE KYLE BASS


MOCKING LAUGHTER
Oddly enough, the most viewed posts on my website over the past three years relate to Kyle Bass, the founder of Hayman Capital.  I'm not sure if I should take that as an affirmation that I've done a good job of finding interesting and relevant material or just that I have been a conduit for posting his newsletters and trading ideas from time to time.

Prior to the latest market swoon, I've been feeling a bit like Kyle Bass as I've been reflecting on the market's performance and direction over the last four years and have been personally lamenting to myself that all of the gains in the market are not truly based on a real recovery or fundamental economic production.  Yes, I've been able to document many winning strategies over the course of this volume-less levitation as I've suggested that corporate bonds, dividend paying stocks, defensive industries like healthcare would shine, metals would benefit, and refiners would surge higher.  While those plays have led to healthy gains, I'm not a big fan of holding your nose and buying, I'd like to invest (long) when I felt convicted that there were solid underpinnings for company and economic growth rather than an approach based on reactions to unlimited QE and stupid government fiscal ineptitude.

WHEN WILL IT END?
In a way, I probably feel much like Kyle Bass as he is frequently poked and mocked for his "doom" trades where he has shorted JGBs and has other several sovereign bond disaster bets in play.  One only has to look at the Japanese 10 Year Bond yield to note that the Hayman Capital short there hasn't been a pleasant one to hold.



While Bass may be a loser in this trade, the magic question will simply be, "How long can he stay in it?" since yields have fallen almost 25%.  The answer is certainly, I don't know, but the thing I am certain of is that directionally, Kyle Bass is correct.  The toughest part of one of these macro theme trades is staying solvent long enough to see the strategy through till the prediction is manifest.  Personally I've felt like the fall of Chipolte (CMG) would never come and took some significant losses along the way.  Happily though, reality does set in and if you have managed your exposure well enough, you can see the fruits of your shorts....

Kyle shared in a recent Bloomberg interview more of his dire and reasonable predictions about Europe.  Please enjoy, it is very short, only about two and a half minutes.




It is interesting to note that he is now using a 3 to 4 year time frame.  I am betting that he really thinks it will be shorter, but we've been able to witness just how adept sovereign nations are at extending and pretending and somehow keeping reality from actually hitting.  The central banks and politicians may be able to delay the day in which payments are due by rolling debt and cramming it down on investors, but I think I agree with Kyle that unemployed teens and disgruntled citizens will ultimately force an end to an ugly and financially unstable system.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Sunday, November 11, 2012

OVER THE EDGE? - LESSONS FROM THE FED

COMING DOOM
We are going to hear more about more about the fiscal cliff and how it will bring the country to its knees.  In reality the fiscal cliff should be a great opportunity for both parties to achieve a level of success and implement a long-term strategy for fiscal and economic success for our country.

Unfortunately our elected officials don't live in reality and the election results suggest to the President that raising taxes is the course the people have demanded.  On the other hand, Republicans, spurned by voters will hold fast their fidelity to the "producers" and attempt to keep taxes low for the highest income earners.

Truthfully, no outcome will really work as the politician's plans for 10 year deficit reduction and projections about reigning in spending are all simply made up accounting garbage.  The healthcare mandate alone will have cost overruns well beyond anything estimated and our other entitlements won't fare much better.  Despite this truth, our politicians aren't in the business of taking serious aim at real issues, they are in the business of dividing and wrangling for a small victory on a meaningless issue to be able to say to their special interest that they got something for them.

WWFD?
So why is this important?  As odd as this seems after writing the text above, I'm pretty convinced that the Dems and Repubs will do exactly what the Fed would do and do more of what got them in this mess in the first place.  Since we know that the Fed's response to all negative news and all empirical data that shows that what they've been doing hasn't helped is simply to do more of their devaluation and do it in bigger size, we can guess that Congress and the Senate will do exactly the same!

The solution is not to fix anything or change structurally any spending or tax course, it will be to simply defer entitlement cuts and agree to raise tax rates slightly.  The grand bargain will allow both sides to win and will damn our country to lose.  The country's loss won't matter though because both political sides will be able to crow to their supporters that they did what was best and achieved a great deal.

This non-solution course will buy time and isn't that what leadership is all about?  Look at the ECB as it deals with Greece.  Look at the Fed dealing with banking solvency.  Look at our President in dealing with Middle East issues.  The problems are so big that leaders simply work to defer the day of reckoning as often there is no other way to handle the massive problems.  As we know though, if you lie and put off recognition of issues they often become unmanageable and can't be handled in a fashion that limits damage.  After years of Presidents and Congressional leaders putting off the tough issues, we are about to see just how out of control they are.  The incredible $1 trillion deficit spending we've had over each of the last 4 years has only brought the issue to the top of the heap, these issues were there already, they just can't be put to the side like they have been so often before.



GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/    

Thursday, November 8, 2012

PRESIDENTIAL THOUGHTS


Our country's voters (and probably a few voters that are not from our country) have cast their ballots and re-elected Barack Obama.  I am not shocked by the outcome of the election, although I did think that Romney might win the popular vote only to lose the electoral college vote, so the end result is the same.

How did we get here?  I'll list a few major themes that allowed Conservatives and Republican's to lose another major election.

NO ONE WANTS A PRESIDENT FROM MASS.
1)  Republican's selected a John Kerry-like candidate for their man.  As wonderful and honest a man as Romney is, he is a Boston RINO from the upper crust of society.  He is soft spoken, cultured, and totally dry.  Poor people and minorities would not give this guy a chance simply because he is typical "white guy" that hates them or doesn't understand them in their view.  Romney could give 100% of his annual earnings to charity and the poor and this would only reinforce to them that "rich whitey" has so much money he didn't even need it.  While we don't want to say it, many of the religious right and the African American religious did not support Romney because Mormanism is perceived as a cult.  It was not until mid October when the Rev. Billy Graham endorsed him that some Evangelicals came into the fold, but I am sure this was an issue for more than a few people.

FALSE PARTY
2)  Republican's are not conservative.  The Republican machine did a pretty good job of co-opting the Tea Party movement in 2010 and essentially neutralizing the threat of those wacky tea-party people.  Right-wing conservatives are waking up to the fact that the Republican party is very similar to the Democrat party on 90% of the issues with the exception of three social issues.  These issues are immigration, sexual orientation, and sex/life issues.  While the Republican's all speak a ton about fiscal control and limiting the size of government, they somehow don't think that applies to two major things as they end each sentence with, "We'll never cut defense spending and don't tax the wealthy".  So, effectively they don't believe in reducing government or fiscal control.   Real conservatives are tired of this bull and the facade that Republicans are their party is falling apart.

47% OR WAS IT REALLY MORE?
3)  47% is really closer to 51%.  Romney said some pretty politically incorrect things when he was video taped speaking to wealthy donors.  The only real issue with what he said was it was correct.  The unfortunate truth is that the demographics are really worse than the 47% he spoke about and we are now entering a stage where I believe it will not be easy to reverse.  When almost 1/2 of the electorate relies on government for some sort of service or income, it is difficult to sell them that "free stuff is not a good thing".  Obama has used the economic crisis to increase dependency and the future is very bleak for politicians that promise austerity and cuts to bring the US fiscal house into order.  Right now, Republicans are saying we'll cut your benefits and Democrats are casting them as evil and promising more help.  If you were the 50% of American's on some sort of government program or service, who would you support?  Another strike against the Republicans is that this 50% is the only group that is growing (having kids or coming across the border).  Hispanics, African Americans, and others have birth rates that far exceed those of conservative whites.  This growing group of voters will clearly vote for candidates and policies that force the wealthy to support them.

A SOCIAL CHANGE
4)  Social issues need to frankly go away in the Republican talking points.  Yes, conservatives love to talk about how they hate abortion, gay marriage, and other moral high-ground issues, the problem is that the US is no longer moral.  Our country is a collection of people that simply desire to distract themselves with sex, sexual expression, drug use, and technological distraction.  As long as they are "satisfied" with cheap food, a home, electronics like cable tv, games, and computer access, a sexual partner, and transportation their basic needs are met.  The secularization of America simply means they don't care what God says and they feel they have no right to judge that gay guy or child molester as long as it doesn't bother them.  Anything goes in the US today as long as it doesn't interfere with Joe 6 Pack's time in front of the toob or on his IPAD.  If the Republican's want to win, they must drop the social platform and simply answer every question about social issues with the following statement, "My personal view on XXX doesn't have anything to do with government, I think we need to concentrate on making the government smaller and more efficient and getting American's jobs.  The bigger government is, the more it crowds out the private sector.  Next question."  Until the Republicans master this statement, they will be doomed to run out a bunch of vanilla candidates that often times will be found as adulterers and will lose every election.

Now my fellow Christians might be offended that I am saying to repress my/our thoughts on social issues that are sin and an abomination in the eyes of God, but I will state emphatically that we must know the real state of the country we live in and realize that we will never have elected officials win positions of power with our current approach.  Our children have been fed daily doses of inclusiveness and have been told that all people deserve to win even if they don't make an effort.  Even in children's sports we award the worst team a trophy encouraging poor results and essentially reducing the accomplishments of the winners.  Kids are told they are told to never discern between right or wrong as wrong might be "right" for those people.  The liberal agenda has been successful in destroying the moral fiber in much of the United States and it is getting worse.  Those kids that have been the target of this re-education are now voting!.  My point here is simply that real conservatives need to focus on the issues that will put them in power, after election they can then attempt to change the tide of moral bankruptcy as leaders.

LADIES
5)  Finally, the Republican's didn't win women.  As crazy as it sounds Democrats did a great job of painting Romney (and all Republicans) as monsters that don't want to let them have contraception or abortions.  Think about this just how low our country has fallen when a single issue defines if a person votes for a candidate..  For younger women the election hinged on who would allow them to get the pill and abortions so they could have sex without consequences!!!!  When this is as far as our female voters think, we really are in trouble.  Once again, this issue underscores that voters are now more concerned with their own welfare and pleasure than that of the country.  The Declaration of Independence states that we are endowed with the Right of Life, Liberty, and Pursuit of Happiness.  We now are a nation that believes we have a right to Free Food, Free Healthcare, Free Homes, Free Phones, and Judgement Free Pleasure.  Notice that I used the word FREE not Pursuit.  The issue for the Republican party here is that they need to address the economic situation of these women and leave the moral choices out of the political arena.  Telling women that they cannot have birth control will not endear themselves to the new voting women.

RACE
6)  I planned to end this post here, but I'll state what I've thought since last election in 2008.  I am proud that my country elected Obama as our first half-black man to the office of President.  Race hustlers like Al Sharpton and Jesse Jackson will tell you that our country is terrible and that racism in this country is pervasive, but clearly that isn't true as we would never have elected Obama had that been the case.  A huge group of white women and white young people re-elected President Obama this cycle.  Frankly in my mind, it is simply more supportive of the fact that the US is not racist as we elected President Obama twice.  It is hard not to argue one single thing though, that African American people are racist.  Exit pooling data suggests that black voters voted 12:1 for Obama, meaning that only about 8% of African American voters went for the other guy.  That is pretty much block voting and that suggests to me group-think rather than individual assessment and analysis.  Group think is essentially racism.  My contention here is simple, that black voters voted based on the color of the candidate and not based on the merits, skills, talent, experience, or the record of the two people.  Perhaps it is like Obama said, it was revenge, but I've never seen revenge work out well for anyone involved.  Ultimately African-American unemployment is higher than it was 4 years ago and I see very little that this President has done to improve conditions for our minorities except promise them help.  Republicans better find a minority candidate that will appeal to African-American voters or else they will remain on the outside looking in if African Americans continue to vote based on color.  You might counter and simply say that Republicans just don't address or represent the issues that blacks are concerned about, but I'd simply say, till we have a viable African American candidate we'll never know.

WRAP UP - GASOLINE, GOLD, AND SILVER
To wrap this up, I've considered this election cycle to be entertaining and revealing.  I still believe that no matter who would have won, the US is in a terrible situation and the financial consequences for our collective irresponsibility will hit home very hard in the next four years.  The reality is that the winner of this election is/was going to be a big loser and receive the blame for the "big one" that is coming.  Perhaps Romney will be grateful that he didn't win as the situation unfolds.

Continue to watch the Middle East as this win puts Israel in a position that it is alone and now will act in a fashion as a person that feels cornered and unsupported.

The election of President Obama bodes well for gold and silver as Bernanke now has received a clear mandate to continue what he does best.  I also like gasoline here and am actually buying UGA.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/