Thursday, July 1, 2010

Canada Day, Eh!

July 1st is the day Canadians "take off" to celebrate Canada Day, so the there will be no trading in Toronto.

McAlvany Weekly Commentary, June 30, 2010

Global Financial Market Rollover? David McAlvany from Zurich, Switzerland

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RBS Warns: Global Stocks, Commodities to Crash

Global stocks and commodities, outside of gold, are poised to crash amid continued woes for banks, according to RBS strategists.

Central banks will have to keep easing, which means Treasuries and gold will rise, while equities and commodities plummet, they wrote in a research note obtained by CNBC.

"Surely risks associated with us being wrong are low, i.e. (Treasury) rates stay where they are," wrote chief RBS credit strategist Andrew Roberts.

"But risks associated with us being right are 10 percent returns in 10-year Treasuries and at the same time that equities/commodities will collapse far beyond what even some equity bears anticipate." (more)

Garth Turner: Diversification Is Crucial

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The Future Market for Alternative Cars

Tesla became the first American automaker to go public since 1956 today as shares began trading under the ticker TSLA on the Nasdaq. With its most expensive car selling for more than $100k, Tesla is looking to strike a chord with wealthy yet environmentally conscious car buyers. Later this year, Chevrolet hopes its Volt (a price tag about half the size of the Tesla Roadster) will become the first electric car for the masses.

Building this industry from the ground up isn’t an easy task. There were more than 260 million registered vehicles in the United States last year and only a small percentage of those are fueled by alternative energies.

The transportation sector consumed 27.92 quadrillion British thermal units (Btus) of energy in 2008, roughly 28 percent of all energy consumed in the U.S. Of that, petroleum products accounted for nearly 95 percent. Electricity and natural gas combined accounted for less than 3 percent. (more)

Why Gold Prices Pop

Is the Market Due for a Modest 'Right Shoulder' Rally?

With all the grim economic news out of Europe and China and the disappointing U.S. jobs report released Wednesday, it might seem counterintuitive to expect the stock market to rally. But there are three technical reasons to suspect the market will muster a modest rally in the next few weeks.

* The VIX "fear index" is flashing an extreme of negative sentiment, which usually signals that the market is at a bottom.
* The "head and shoulders" chart pattern many see hasn't really completed the classic form.
* Time symmetry suggests another rally into mid-July.

These all may sound like obscure and overcomplicated reasons to expect stocks to rise under current conditions, but read on for the analysis. (more)

Market Top?

"If this isn't the mother of all head-and-shoulder top formations, I've never seen one,” Russell told MarketWatch. “If this formation falls apart, I expect the break to signal the start of a brutal decline in stocks... If the formation breaks down, I think all previous plans, scenarios and strategies will hit a stone wall.

“Wall Street and public sentiment will turn black bearish. Consumers will head for the storm cellars, and once in, they'll shut the door above them and lock it."

A breakdown of this chart would be a few days of new lows for the Dow, about 60 points down from where it ended yesterday. The S&P chart looks very similar… except it’s already making new lows.

Silver – A Brief History of De-monetisation

Silver - A Brief History of De-monetisation8.71012

'The major monetary metal in history is silver, not gold.' - Nobel Laureate Milton Friedman

Although now in correction mode, gold hit another all-time high this week. As we have said on a number of occasions, gold is rising due to the instability of the global financial system. Gold is money and as the ultimate global currency and store of value, the yellow metal is regaining its place in history as a trusted reserve currency.

But throughout history, gold has not been the only monetary metal. Silver has always played a role alongside gold. In fact, up until the beginning of the 20th Century, more people used silver as money than they did gold. You wouldn't know it though, would you?

Beginning in the last quarter of the 19th century, the major economic powers, the US and Great Britain, systematically de-monetised silver. That is, they worked to remove silver from the global monetary system. This conclusion is debatable but as you will see the decision to stop using silver as money was not one taken voluntarily by the people. (more)

Stocks dive as second quarter ends

Stocks finished lower after a late-session retreat, as investors piled out of a downbeat quarter that ended with Wednesday's session.

The major indexes had teetered on either side of breakeven throughout the day as investors weighed a weak jobs report against an improved European bank outlook that provided earlier support.

But all three indexes turned down sharply as the session ended. The Dow Jones industrial average (INDU) lost 96 points, or 1%, to finish at 9,774.02. The S&P 500 (SPX) closed down 1% at 1,030.71 and the Nasdaq (COMP) lost 1.2% to end at 2,109.24.

All three indexes' closing figures were the lowest since late 2009. Declines were broad-based, with 29 of the 30 Dow components ending lower Wednesday. Diversified manufacturer 3M (MMM, Fortune 500) managed to hold an 0.6% gain. (more)

A Dow Theory sell signal?

At least according to some interpretations of the venerable Dow Theory, a bear-market signal was generated at Wednesday's close, when both the Dow Jones Industrial Average (DJIA 9,774, -96.28, -0.98%) and the Dow Jones Transportation Average (DJT 4,008, -33.65, -0.83%) closed below their previous correction lows of early June.

This interpretation appears to be the one favored by two of the Dow Theorists tracked by the Hulbert Financial Digest: Jack Schannep, from, and Richard Moroney, of Dow Theory Forecasts.

The third Dow Theorist that the Hulbert Financial Digest identified as having already turned bearish, and so today's action is mere confirmation of that bearish trend. He is Richard Russell, editor of Dow Theory Letters.

In addition to previously concluding that the Dow Theory was bearish, Russell also has indicated that he would view a Dow close below 9,800 as being bearish according to another technical analysis formation: the so-called head and shoulders. That occurred Wednesday, of course, with the Dow closing at the 9,774 level.

Earlier this week, Russell wrote that the breaking of the head-and-shoulders formation would have very bearish consequences: "All previous plans, scenarios and strategies will hit a stone wall. Wall Street and public sentiment will turn black-bearish. Consumers will head for the storm cellars, and, once in, they'll shut the door above them and lock it."

-- Mark Hulbert

Chart of the Day