Sunday, January 29, 2012

BACK TO ANALYSIS



With a little time to stop and look back at some charts this weekend and see where we've been some interesting points emerged. As many of you already know the reason that technical analysis is used  is to try and predict the future movement of markets based on past parameters principally price and volume. We have entered a very dangerous market phase now with liquidity being a primary time bomb for all participants but I still believe that time honored aspects of T/A have a role. 


What do these price movements represent? Are they a reflection of market mood? Do they reflect fundamentals? Let's look at fundamentals for just a moment. In early 2008 silver for instance was trading at $20/oz and many of the silver miners were trading 2-3 times their current levels with silver at $33/oz. So much for fundamentals.  Technical analysis holds that prices already reflect all such trends before investors are aware of them. Therefore using technical analysis should guarantee the investor superior returns over the fundamental market participants. Somehow that does not happen quite so easily. WHY NOT? Let's just employ a simple stock trading acronym KISS. This stands for Keep It Simple Stupid. In this case one needs to accept the simple principle that psychology is used to drive market prices......emotions primarily fear and greed are used as the battering rams on the sheep. Don't feel badly if you are a sheep. Most participants are. Its very hard not to be. These methods are time proven to be very effective. To fully understand just how controlled markets have been one only needs to do a review using key words of history of manipulated stock markets. Yes that's right....its a rigged casino. So what does that mean for us as sheep. One thing that we need to recognize is why a long term major participant like Jim Rogers calmly sits and smiles when asked about his investment strategy and readily admits that he is a terrible market timer. More correctly he is saying he doesn't care what the market does in the short term ....weeks and months.....He is more interested in longer term cycles and how they will affect his investing. This is still a form of technical analysis. Rogers knows very well that the shorter term market movements are designed to separate the most money from the most participants possible.  


This is why I try not to give a definite or definitive prediction on short term market moves....only probabilities of direction based upon the evidence available. The longer term cycles and longer term charts are your most reliable tools and when coupled with multiple fundamental factors provide a degree of confidence for your trades. Market psychology (Fear and Greed) will continue to be used on you even if you understand this.  So when you are told to separate your emotion, that is what is being referred to. That is very hard to do when you see your account down 60%. Just ask Jim Rogers back in 2008 during the crushing of commodities and precious metals how it felt. His response to that question in late 2008 was once again a smile and simple response that he was buying more at these cheap prices and they were still in a secular bull cycle. Today we still have the same fundamentals present which is more printed fiat must be generated to levitate the market.


Rogers knows very well as an insider what many of us have discovered over the years and that is the markets have always been rigged....its just that you didn't realize it before. Your job as an investor is to understand what the intention of that power is. For instance, where are we right now? What's the best guess? For one listen to what Ben Bernanke is telling you. He is telling you several things. The economy is terrible. How do you know that ...well in fedspeak he is telling you that for the foreseeable future things are so weak that he is guaranteeing interest rates to be locked in at virtually zero into late 2014. That absolutely fits with what we have talked about here for over three years now along the timeline of the Kondratieff economic cycle. He is telling you that we are entering the final deflationary phase. This means that he will be forced to print incredible amounts of fiat to keep us out of collapse this year. The fed also is trying to prop up their western governments with the printed money. At least through this U.S. election cycle. Watch the price of essentials food and energy and their effects on the stability of the governments. As this reaches maximum pain more nations will band together with currency swaps to avoid the dollar as the reserve currency and its deleterious effects on their economy and developing nation's economies. Then and only then will Ben be forced to pull his foot off the printer.


Meanwhile where are we in the game of price movements in the miners and precious metals? We may very well have hit a bottom. I am not all in just in case they decide to rip it down further, but I am hopeful we have seen a very tradeable  bottom. We have had an 8 month correction off the high in silver. This is no accident. Same 8 months as in 2008....and occurring within a secular bulll market already at ten years. The one caveat here and not to be overlooked is gold had only a 5 month correction. That should give you pause....but we are getting closer if it is not the end of the beatdown. This is why I try and hold a core just as Roger's basically does. I'm sure he trims positions as I do when things get frothy and adds as oversold conditions develop. He is not going to tip his hand other than to state the obvious. The obvious is nature. Nature demands a restoration of confidence and that requires a washout of the malinvestment. Gold and silver are money...they have been for thousands of years.  gl all





































this should bear watching with those volume moves













19 comments:

  1. Nice post. I clicked on the chart and couldn't get back to the blog. Had to close window and come back in.

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  2. Worked perfect the second time.

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  3. http://seekingalpha.com/article/322807-the-silver-singularity-is-near

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  4. jim will be watching urz again see what you think

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    1. looks good to 3 .....i won't play the sector

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  5. I still read Phil Davis of Phil's Stock World. Today he wrote that he is at 50% cash and feels the markets are over extended. He also wrote that the Bankers want to continue to print money, so as to maintain (inflate) the equity markets and the US lifestyle. Not a big suprise to those of us that read Kli's blog.


    The Keystone Speculator wrote all last week that the markets were toppy and need to sell off. Perhaps we are getting that sell off now.

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  6. LLEN is getting volume based off acquisition of mine for 5.50 per share...they are trading at 2.90...chinese play be careful...dd required

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  7. thnx guys.....action on PMs and gold n silver is expected and shows no real price suppression by the big boyz "yet" ....looks as though buying on weakness is holding....may get another day of this

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  8. a lot of people that are bullish on gold expect to see pullback to 1680sh here.....today's action makes me doubtful

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  9. price action speaks volumes.....hehehe .....literally.....and today so far is saying buying on weakness by the real money

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  10. LLEN....looks very good with the beatdown and china stimulating once again

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  11. LOL, I dumped LLEN last week, had been holding it for several months. Reviewed the reason I got it originally. The reasons were still valid, yet it didn't do what I expected. I decided I didn't understand it, so I dumped it.

    The LLEN deal today confused me. They claim that the are paying 16 mil for a mine with stock. They claimed the value of the stock as over $5 per share. Yet the stock price is $2.85. Didn't they really buy the mine for about 9 mil? Seemed a bit misleading to me. I like transparency.

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  12. Ken, I was in same boat with you but sold earlier than last week...so much potential but so like you said transparency is nil...just watching right now...

    I'm looking at BCRX on bird flu/pamdemic rumblings...I hope it is just that...I'd rather it be rumors...but might play it for the rumor...though SE asia/China is having some bird flu issues

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  13. hey I wonder if CRIS is something to jump into now? FDA approval today, actually down with short covering....

    basel cell cancer it huge...Roche is partner....

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    1. not sure how big a market there is for this rx.....basal cell ca is not aggressive and easily curable with relatively minor office surgery........might play it on a pull back to support.....i'll look

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    2. I know it's minor but that burning skin hurts like heck...also seems to come back after scrape and burn process....

      I believe basel cell is largest pre-cancer diagnosis by doctors..I have some first hand experience here...but how many people can say they surfed North shore, Costa Rica, Mexico and California :)

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    3. skied rockies in shorts and shirts at 1200ft with no spf way too many times......and paid the same price.....excision works wonders....closed aspen a basin vail and crested butte many springs.....sometimes we skied in our swimsuits...girls were beautiful bouncing moguls in bikinis

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  14. also anyone have an idea on this pink sheet miner that flew today...up 418%

    USSID.PK

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  15. USSID.pk was USSIF.pk as of last Friday. 1:5 Reverse Split. I actually own a bunch but the 418% is misleading.

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