Tuesday, March 9, 2010

NUCLEAR CALL

Or WHY YOU SHOULD OWN PRECIOUS METALS. This scenario is out of the predictions of bears and bulls alike which is why I am posting this. It scares the hell out me and it better you. An explosive final stage of a cyclical Bull move here?? Wouldn't that just about make everyone wrong and destroy ALL bears. Certainly a melt up and panic in actual buyers could occur and cannot be discounted. Will it? I cannot tell you but do not discount this following excerpt and link...

The cyclical bull we are in right now is about to morph into a completely different animal than just about any other bull market in history. And most certainly this bull will not fit in the same category as the `02-`07 bull. I think we are about to bypass the second phase of a normal bull market and jump straight to phase three, the ending stage.

This is a bull spawned by the printing of literally trillions and trillions of dollars by central banks around the world. You can see by examination of the chart above that this bull has been much more aggressive than the last one, rallying over 70% in its first 10 months.

The recent move to new highs by the Russell, Mid Caps, and Nasdaq suggests that the third leg of the bull is now underway. As most intermediate term rallies last 20-25 weeks trough to trough and this rally is on week 4, we probably have at least 10 to 15 weeks left before we can expect a top.

http://news.goldseek.com/GoldSeek/1268145810.php

43 comments:

  1. Sorry Kli, I don't buy into the inflationary due to a weaker dollar gold bulls for this trading year. Our trade competitors (China, Middle East, Europe) will continue to support the US dollar in the short term to hold onto the trade advantage, and buy up commodities and precious on the cheap with their massive US Forex reserves. A weak US dollar will cause a massive acceleration in unemployment and social unrest in exporting nations counting on the trade advantage of a strong US dollar. The weak euro manipulation is just political press to shift the blame of local inflation on Hedgies like Soro's instead of their political leaders who will try to out print the US (competitive devaluations) and export their way out of their deficit problems. Greece is just giving lip service, the government will collapse if real austerity goes on for more than a year.

    Same goes for the pipe dream of S&P 1400+ and gold as the hyperinflation savior over the next year. At this point gold will trade slowly up in a range due to it monetary reserve value and measure of the level of competitive devaluations of the other fiats.

    The collapse of the current US dollar will not be orderly or immediate and will take down all US leveraged paper assets at the same time, but that is not now as long as the Central Banks are firmly in control.

    As for the S&P we missed the daily top of the Bollinger Band around 1150, it could make another shot but as Analyze pointed out and Joe is positioning, the risk is now staying long in the short term with retracement targets at 1110, 1060 and the 1045 (200 dma). The S&P is not in P3 nor is it in a commodity blow-off mode, Best term is trading range meat-grinder, as policy makers try to slowly deleverage real estate and continue to monetize debt globally in an orderly manner.

    A serious black swan event like a 9.5 quake in California setting off 50+ feet tsunamis may throw a monkey wrench in things, but until then you trade the maximum pain Central Banks and Policy Makers are willing to endure not wishful controlled doom and gloom that benefits the Prechter and hyperinflation gold bug faithfuls, under their scenarios Alpo and Ammo are far more valuable than gold or fiat.

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  2. Further note, S&P 200 week moving average is upper resistance (about 1225 now), policy makers know a commodity spike past that is pretty much the death knell for the market and will try to expand the time horizon of the illusion of prosperity even as unemployment increases, wages decrease (called increased productivity in econ terms, and consumption further slowly curtailed except for the basics.

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  3. Red you gotta admit this is NOT in the cards for most of us making predictions......certainly not in mine....but thought it must be a consideration. interstingly a meltup as you know would not be in the central bankers best interest but if the BRICKS come after the dollar it could play out.

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  4. The BRICKS would dump the debt instruments first (both US Treasuries and Corporate), take the cash (causing a massive move up in the US dollar along with the effect of higher interest rates from the bond dumping), and go on a simultaneous buying frenzy of every hard asset not bolted to the ground and corporations that did not have the risk of Nationalization. The melt up would be in the anything considered capital and the melt down would be considered in anything considered debt or leveraged by debt, a nightmare for debtor's but a boon for creditor nations until there is nothing left to buy or the printing presses are turned on full blast to try and re-monetize the debt tsunami.

    It's an end game card not expected until 2011-2012.

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  5. Joe,

    I am hearing a lot of rumbling on iron ore. According to what I read the price of iron ore is set on a yearly basis and BHP and RTP are pushing for a 50% increase on the new yearly price.

    If this happens coal could rise along with iron ore.

    Any thoughts?

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  6. That sounds absurd to me, but sometimes absurdity can be it's own force of nature.. Hard to rule anything at all out these days, which I dislike immensely.

    To the recent kli hater(s?), gold is an exception where there is a single thing we can rule out; a sustainable collapse in the value of the metal.

    I can only assume gold is discussed a lot here because it's the least tainted by the global ponzi pageant. If some (more) nation(s) throws their sash down and runs away crying prematurely, how is kli or anyone supposed to make any promises about something other than gold, maybe oil?

    Gold scares me as a trade (also everything else), but as a hold it's the only thing I can still feel good about. If they sold stock in GS executives (rather than the company itself), that would probably be a good buy-and-holder also.

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  7. kli,

    I agree with Red, I do not see S&P at 1400, anything over 1225/1240 especially for commodities is KISS of DEATH and bankers know it.
    The main danger the next two yrs is treasuries. I do not see collapse of U.S. dollar in the short term. Gap trading & Swing trading is the best way to make money from market this yr.
    Joe

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  8. Oh and thanks for mentioning the iron ore thing Temo I'll do some research over wine later. The ridiculously basic things like that do have a certain appeal in uncertain times.

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  9. I suppose long would be the way to be if you were sure that the American ponzi would take home first prize in aforementioned pageant. Even then though the afterparty is going to get ugly so be ready to stuff your pockets at the buffet and get the hell out of there.

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  10. No argument guys.....also anyone notice the hammer on $gold just noting that formation in the past too

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  11. Temo,

    Industrial metals are rising due to speculation from China, Brazil,,etc, this would be temporary and beyond this yr I can not see iron ore keep rising, having said that money can be made trading it this yr.

    http://www.mine-engineer.com/mining/iron-ore-price.htm

    http://www.businessweek.com/news/2010-03-09/brazil-s-bovespa-stock-index-advances-erasing-earlier-decline.html

    http://www.reuters.com/article/idUSTRE61D0JH20100214

    Joe

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  12. One thing to keep in mind around SPX limits, is that we all had targets around 1150 several weeks ago, but seeing the ponzi helium balloon continue to melt higher has a way of removing conviction as the outer limits are reached with no sign (yet) of a visible breakdown or topping pattern. There are always higher possible targets off formations, in fact 1239 is an overall possible maxout on SPX, and other targets exist. But there was also a higher target in play back in January that was not attained. In all practicality, what we do agree on is that buying time is something they value, and the best way to do that is to enter consolidation ranges with the little chop house of horrors on either side to eliminate retail trader wealth and keep the ill-fated P3 dream alive for short squeezes, while also giving tradeable ranges to longs. They want to claim at least an equal high here at 1150 but also keep the short dream alive as well. Also remember our scenario from several weeks ago, when people not of this forum, were calling for the end of triple digits on SPX and I pointed out max pain being 110 on SPY. For this month it is 105, a week and a half away. That is not to say that each and every month you can peg the OPEX value of SPY on that number, but one would expect at least some attempt on the behalf of MMs to have a downswing. At the very least they will chop it between 1130 and 1150 a couple times if not take it lower just to establish a consolidation range. In any event, any given day does not fortell the next, RIMM was ramping yesterday and died on the high seas like a starved seagull today, but who would have predicted it to fail? In other words, expect 1156-1130 range and play it that way unless it breaks it. Food for thought at least. - Analyze.

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  13. Joe, Thanks for the links.

    All check out this video. This guy puts it out each afternoon, unfortunately I am sleeping at the time so I dont get to see it until the next day but he gives a little insight on whats happening. Unbelievable the financials are up over 100% this past year.

    http://www.youtube.com/watch?v=RLywYHKoYAs

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  14. Analyze,

    1120-1158 range grind might continue for a while, down side if GS really wants to bring in shorts is around 1040/1050 and breaking upside to 1230. Having said that, no one should trade based on that assumption, trade based on what market GIVES you. I sleep well at night since I do not even try to guess what market is going to do day by day. Watch the tape especially on individual stocks or sectors and react to movements you see.

    Joe

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  15. Joe, I keep forgetting that point you mentioned before, down here in the TA rathole. That is the revised plan - screw the targets play the tape and let the chips fall where they may. Presumption of the ranges just blinds one to the opportunities. - Analyze.

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  16. Analyze,

    Pure TA is the thing of the past since this is not the same market of the past yrs. FED runs it completely, fundamentals, PE ratios,,etc really do not apply any more. Tape how ever does not LIE, focus on the tape.

    Joe

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  17. Joe, I think the struggle most of us (including me) have by using the tape instead of having pre-defined candidate positions and targets, is we feel late to the game by the time we notice a given sector is beginning to ramp, while having targets in mind beforehand is the easier way to be mentally prepared to put on a position. I can look at various positions, action off gaps etc. to get those entries, still most people trade to the positional strategy I mentioned before. Got any tips on overcoming that block? - Analyze.

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  18. Analyze,

    In regard to quant programs GS uses, lot of the new ones are designed by the best former NSA programmers, no body beats those mther fckers, the best geeks in the world with multiple phds and master mathematicians. GS pays them lot more than NSA.

    Joe

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  19. ditto Analyze.

    To me TA is a science and reading the tape is an art. I was never good at art which is why I became and engineer.

    Having 20 charts up of various plays and watching the price and volume to play any gap is about the best I can do for now.

    I do find a the Waxie 30 minute opening gap rule helpful in playing the gaps. It doesnt always work but it works more than it doesnt.

    On a gap up if a new high is made after 30 minutes thats a go long signal. The reverse is true for a gap down. If a new low is made after 30 minutes then go short.

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  20. Analyze,

    Start in targeted sectors like tech, telecom, or commodities with stocks that are doing poorly in compare to their competitors but overall are still good companies, watch how much retracement they have had, daily volume, pattern changes,,etc and study them at night and watch them daily in your streamer. For example ALU and SPRINT. Sprint is underperformed compare to main competitor like Verizon, or AT&T and justifibly so due to debt, how ever at $3 which was 50% haircut from high of 6 looked way too shorted, GS and other heavy hitters know it. I watched Sprint for a week and noticed price was stabilizing around 315-320, sign that big boys were covering shorts and accumulating and bingo yesterday and today it broked out. I do that with commodities as well, with commodities you also need to keep your eye on physical price of the metal as well, for example SWC.

    Joe

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  21. Joe, it's a dine and dash market because of the GS guys, they have turned everything on its head. Seek and destroy mission. You could literally use traditional TA and play opposite to it and probably do well. I have a friend who mentioned a great paper he found about how all those guys operate and control markets, still pestering him to get a copy, sounds like interesting material. - Analyze.

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  22. Analyze,

    Oil is another good example, I have noticed at least for now any time oil gets close to $82 a barrel it can not break thru, I saw DTO which is double short oil dro to 61 yesterday in low volume and turned which was the signal to jump in, traded it for $1.5. Focus and practice will make you a good tape reader.

    Joe

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  23. Temo, same with me, I am geared to think mathematically about trading, the comfort level of my candidate positions by sector, entry/exit plan etc. The hurtful days is when you circle them all and none of the entries are there lol.
    Joe, got it from your post above, you are looking for essentially oversold/short squeeze candidate with low implied volatility and a general sector ramp as the breakout trigger. For example telco was showing a rare amount of ramp yesterday, it has been a dog for awhile, that was the catalyst for that type of setup. - Analyze.

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  24. Joe, your oil example is similar to the contrarian approach which has worked very well in this market, rather than jump on retraces in an uptrend, which is what short-biased people have done, watch for the entry the other way at support levels, and if the price action and volume support it, go the other way long. Or vice versa to that if you are using plays on selling the short side. - Analyze.

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  25. Analyze,

    "Joe, got it from your post above, you are looking for essentially oversold/short squeeze candidate with low implied volatility and a general sector ramp as the breakout trigger. For example telco was showing a rare amount of ramp yesterday, it has been a dog for awhile, that was the catalyst for that type of setup."

    THAT'S WHEN YOU MAKE REAL KILLING THIS YR. There is one exception to that rule and that one is SWC. If you recall, I mentioned in January you can trade SWC all yr this yr and do well due to real nice daily gaps it gives you.

    Joe

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  26. Those are great points tonight Joe, and thanks for the feedback. A short summary of it is, do not look for the involved TA setups and targets, identify and watch for OPPORTUNITIES and let the tape be the trigger. - Analyze.

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  27. In the Gold and Silver sector kli mentioned list of stocks to track, in oil and natural gas sector track SGY, SLB, and PBR. In aluminum area CENX and AA. In airline industry I already made a killing on LCC. In telecom area ALU and sprint. I am CHEAP and do not like over inflated pigs like AAPL, GooG, or PCLN. DTO is the only expensive one I play.

    Joe

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  28. "do not look for the involved TA setups and targets, identify and watch for OPPORTUNITIES and let the tape be the trigger"

    That's exactly how I have done it this yr and have already made my target for what I wanted to make this yr.

    Joe

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  29. Thanks Joe this has been very helpful and much appreciated.

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  30. Joe, I agree with Temo, thank you for the conversation tonight. This string of comments tonight is high value to those who read it and apply it. - Analyze.

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  31. Hyena finds the weak one before he strikes....that is an extinct

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  32. Here is an interesting perspective. It says Paulson and Soros are so vocal about gold because they are leading the herd into a huge pump and dump. http://www.roubini.com/financemarkets-monitor/258514/the_gold_bubble

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  33. interesting view but I think roubini is talking JPM's book since they have a large short on gold and as it rises it increases their pucker factor.

    PM's and commods are the only hedge against the fiat currencies.

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  34. correction not r0ubini but Rick Bookstaber a policy advisor to the SEC which makes it all the more suspicious to me.

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  35. Leading the herd? A couple guys aren't going to succeed (or try) at manipulating the global gold market.

    It takes really big banks to do that, duh.. And near as I can tell their pockets are already pretty well stuffed with short contracts.

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  36. Stick with following the cheap liquid stocks in 1 or 2 sectors Joe mentioned to start with. Joe has been doing this for decades and tracking half a dozen sectors in his sleep. The gap and swing trades are short and sweet before the herd moves in, then the algos kick in and rip the crowd apart.

    DTO has the short term volatility bonus/detriment, if you intend to hold positions more than a day, straight plays and shorting the inverse ETF is advised versus holding leveraged ETFs.

    Skimmed parts of Clif Drokes new book, only minor disagreement is Kress advocating gold ETFs in the 2012 time. The legal claims of ETFs will come into question as liquidity dries up in the system, which gets back to the strategy you are better off shorting the inverse if you don't want to do straight stock plays.

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  37. More evidence of my poor trading skills. Had been following Sprint since june. Went long planning to hold until $10+ in 2011 or 2012ish. Bought at $3.45 about a month back, got irritated when it chopped down to $3, and now it's rocketing. Goddamn.

    Other stock I think *should* make a move is RNOW - anyone have any comments?

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  38. Joe,
    Thanks for contributing. How do you read the tape? I use streaming charts through an discount broker. Anything better than what I am doing? They are supposed to be in real time, so..

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  39. CBS,

    At night study the historical prices and technical charts on yahoo individual stocks within sectors you like, look at various moving averages + streaming charts, also make sure you have access to live real time streamer which shows constant price movement & volume and compare it to overall market movement.

    Joe

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  40. CBS,

    It's important to compare the 15 DMA on individual stocks you are interested to see the patterns developing.

    Joe

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  41. Joe, Thank you. I will try to keep questions to a minimum. I don't want to become a nuisance. I really appreciate your effort to share what you know.

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  42. I just bought ALC at 32.5 for me and the wifey.

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