Wednesday, May 6, 2009

Broader Market Technical Analysis Update

Roy Martens
4 May 2009
The big picture hasn't changed much this past month. The most surprising news, at least for the ones in the dark, was that China is hoarding Gold. Their reserves have risen a lot and they intend to expand their stockpile even further. Although this is very good news for Gold in the long run it didn't really have a big impact on the Gold price last month, which is kind of surprising.

Such news is huge because the monetary reserves of China are enormous and although they say they will not shift their reserves into Gold at this time, I wonder if they will still hold that position if the dollar should tank.

Most likely this positive news was put aside by the announcement that the IMF intends to sell a lot of its Gold in order to raise cash and support the various countries that are in trouble, which should have a negative impact. We, however, have to look past this negative force for Gold because once the Gold reserves of the IMF (and other Central Banks) are gone there is nothing left to cap the price of Gold! (more)

Gold, Silver & Oil Special Trading Report

Chris Vermeulen
May 4, 2009
Gold & Silver Report

Gold and silver have been making a nice controlled pullback since their high in February. With precious metal prices drifting lower making clean looking waves like these it's generally a sign of profit taking before another move higher.

In my opinion the broad market is over bought and has been for about 2 weeks. With most sectors Bullish Percent Charts at levels of previous intermediate tops (4-6 week cycles) it's important that we tighten our stops on current trades and be ready for playing the down side for broad market equities.

When the board market starts to slide I expect to see money move into gold, silver and precious metals stocks. I do not think we will see a huge slide in prices for the DOW and SP500 but it's very likely we could see prices pull back 10-15% from these current levels.

When people start to panic and worry about prices dropping again, money will start to flow back into gold and silver. Both of these metals are great to trade but I would like to note that silver is not as widely owned as gold, so it tends to move a little more freely. When money moves in, it surges higher and when money is pulled out of the metal it drops like a rock. (more)

Technically Precious with Merv

By Merv Burak CMT

May 4 2009 11:11AM

Another down week for the precious metals. Neither gold nor silver seem to be able to get any steam behind their moves. Maybe there is still more down side to come. Let’s see if that 200 day moving average will hold.



Interesting phenomena with the 200 day moving average line. The simple average line has turned downward even though the price of gold remains above the line. This is probably the result of the removal of the data 201 days ago and replaced by the data today, with both events given equal weight towards the calculation of the moving average. Using the weighted moving average line the more recent data is given greater weight towards the calculation of the moving average and the line slope remains positive.

Since issuing a bear signal the long term point and figure (P&F) chart has set up a support at the $870 level. $855 would be a new bear low for this latest trend. However, the chart has also set up a pattern that could cause the P&F to reverse itself and go back into a long term bull mode. At this time that would require a move to the $930 level and give us an initial projection to $1050. For now we’ll just have to wait and see which way the wind is blowing and which direction the price will take. For now the bear projection remains to the $705 level.

As for what the normal indicators are telling us, well they are not yet bearish as is the P&F chart. The gold price remains above its positive sloping (weighted) moving average line although it is heading towards the line. The momentum indicator remains just above its neutral line in the positive zone but just below its negative trigger line. The volume indicator is showing more weakness and remains below its negative sloping trigger line. As far as the normal trend and strength indicators are concerned the long term rating remains BULLISH for now. (more)

The Worst Case Scenario (Someone Has to Say It)

Since the economy began sliding downhill in late 2007, mainstream economic and market experts have consistently erred on the sunny side.

As late as June 2008, mainstream consensus held that the U.S. was heading for a “soft landing” and would avoid recession. Several months later, the slump was acknowledged to have started in January 2008, but we were supposed to see renewed growth by mid-2009, with unemployment peaking in the eight-to-nine percent range. A quick “shovel-ready” stimulus bag was supposed to set us back on the road to prosperity.

In January, recovery projections were pushed forward to late 2009. Today, the consensus is for a mid-2010 recovery, with unemployment peaking at just over 10 percent. Clearly, the mainstream has struggled to catch up to reality for well over one year. What are the chances that they finally have it right this time? (more)

More than one in five homeowners underwater: Zillow

On Wednesday May 6, 2009, 2:58 am EDT

NEW YORK (Reuters) - Home values in the United States extended their fall in the first quarter, with more than one in five homeowners now owing more on their mortgages than their homes are worth, real estate website said on Wednesday.

U.S. home values posted a year-over-year decline of 14.2 percent to a Zillow Home Value Index of $182,378, resulting in a total 21.8 percent drop since the market peaked in 2006, according to Zillow's first-quarter Real Estate Market Reports, which encompass 161 metropolitan areas and cover the value changes in all homes, not just homes that have recently sold.

U.S. homes lost $704 billion in value during the first quarter and have depreciated $3.8 trillion in the past 12 months, according to analysis of the reports.

Declining home values left 21.9 percent of all American homeowners with negative equity by the end of the first quarter, Zillow said. (more)

666: Goldman's latest bonus bears the mark of the beast

Something strange is stirring. Even the young are joining the chorus of concern that this tarnished giant is part of a financial oligarchy that holds the US in its grip, writes Stephen Foley in New York

Sunday, 3 May 2009

Something strange is afoot when Popbitch – provider of a weekly email beloved of students, stuffed full of celebrity tittle-tattle and links to the silliest miscellany of the web – breaks off from such glorious trivia to encourage readers to support, a deadly serious website measuring the political tentacles of the mighty investment bank.

Something strange, too, when Simon Johnson, a former chief economist at the International Monetary Fund, becomes a hero of the internet and the satirical comedy-show circuit on cable TV, promoting his theory that the US is in the grip of a financial oligarchy.

The credit-market catastrophe that has plunged the world into recession is everywhere stirring new ways of thinking about how banking relates to the wider world, but nowhere more so than among a generation coming into political consciousness in these searing times. Something is brewing, some argue, that could make the "regulatory-financial complex" something to rail against in the same way that the military-industrial complex was in the Cold War. (more)

Insiders Selling At A Furious Pace

Joe Weisenthal|May. 5, 2009,

Last week there was a report that corporate insiders were selling at a faster rate that at any time since October, 2007 -- right near the top of the market.

Well, the market's only raged higher since then and insider selling is only getting more intsense.

The Pragmatic Capitalist has aggregated recent insider transactions. As you can see from his data collected (unfortunately the tables won't fit here, do click over), insider sales dwarf insider buys both in frequency and in volume. Insiders are selling their stocks in multi-million dollar blocks, while the few buys are much smaller.

If nothing else, it means that a lot of executives probably saw the abyss (a violent drop from the ranks of the wealthy to poor) and want to de-risk to ensure that no matter what happens to their stock, they've taken some skin out of the game.

Short-Term Opportunity with Bank Stocks?

The Ruff Times
Contrary to popular opinion, I’m not an infallible predictor of investment opportunities. Having made that courageous admission, let me now offer you this interesting tip:

A rare opportunity may be shaping up with bank stocks.

No, the economy didn’t suddenly stage a comeback while you were having a good night’s sleep. Bank stocks may soon become hot due to an anticipated change in how they may be able to value their “assets.”

Blame is big these days, and banks have blamed our current economic mess on the “mark-to-market” rules they were bound by. Mark-to-market means banks have been obliged to value their collapsed assets according to current market value…kind of like how we common folk have only the current appraisals of our homes to go by, not what they were worth a year or two ago.

Needless to say, the current value of banks assets have made these institutions’ balance sheets look like crap. Hence, the banking crisis. But all that may be about to change.

If you can’t change your bottom-line statistics, change how those statistics are recorded. Should mark-to-market be abolished, as is expected, banks would be able to re-inflate the value of their toxic assets to something far more inspiring.

And that should immediately give bank stocks a good bump.


Hey…maybe they’ll do something like that for us everyday people, too, huh?




FIRST: Now, as I said, I’m not the best short-term forecaster in the world. Nor do I want to be. The short-term often varies wildly from the long-term outcome and takes a special kind of temperament.

Even so, if you want to get in on this one, buy bank stocks now while they’re very cheap. That will obviously reduce your risk on the downside and increase your profit on the upside.