Friday, December 16, 2011

Griess: Use Gold’s 300 Day Moving Average

Ron Griess of the Chart Store suggests that the 200 day is the wrong technical indicator to focus on regarding Gold.Looking back to this run, he suggests the 300 day is the more supportive index:


click for larger

Moody's Turns To Canada: Ontario Outlook Revised To Negative, "Softening Economic Outlook" Cited

And so the focus shifts to the quietest neighborhood on the block: "The negative [Moody's] outlook on the province [of Ontario] reflects the softening economic outlook, Ontario's growing debt burden, and the extended timeframe to achieving a balanced budget." What's next: someone dares to question the stability of Canadian banks which as we it turns out may have a few hundred billion in hyper-rehypo assets (Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging)) pledged there... and there... and there... and so, ad inf.

From Moody's:


The change in the outlook reflects Moody's assessment of risks surrounding the province's ability to meet its medium term fiscal targets given the recent slowdown in provincial economic growth and the resulting risks to the province's ability to stabilize the recent accumulation in debt.

"The negative outlook on the province reflects the softening economic outlook, Ontario's growing debt burden, and the extended timeframe to achieving a balanced budget," said Moody's Assistant Vice President Jennifer Wong, lead analyst for the Province of Ontario.

The province's Fall 2011 statement, released in November, revised its forecasts down for provincial growth in 2011 and 2012 to 1.8% and 1.8% from 2.4% and 2.7%, respectively. The provincial economy is particularly affected by the moderation in US growth, given its higher export share relative to other Canadian provinces and the high proportion of international exports (roughly 80%) destined for the US.

The province set out in its 2011-12 budget a plan to return to fiscal balance in 2017-18. Moody's has highlighted that the extended period of fiscal consolidation presents an element of risk in achieving the planned consolidation path, and a risk to stabilizing and reversing the recent deterioration in the province's financial position. At March 31, 2011, Ontario's net direct and indirect debt, at roughly 200% of consolidated revenues, was at the high end of the spectrum for Canadian provinces, whose ratings remain in the narrow range of Aaa to Aa2.

The slowdown in provincial economic growth presents a challenge to the already lengthy planned consolidation path, particularly given the strong expense growth seen in recent years. Expense growth leading up to the recent downturn was relatively robust, highlighting the challenge ahead. Indeed, expense growth averaged 7% annually in the five years to 2007-08, with health expenses having grown at an average of 8%. The fiscal plan presented in the 2011-12 budget assumed expense growth of roughly 2% annually for the duration of the plan.

Nevertheless, Moody's reports that Ontario's high investment-grade rating reflects high debt affordability and the high degree of fiscal flexibility inherent in the institutional framework governing the way Canadian provinces operate. The current low interest rate environment has enabled the province to issue long-term debt bearing historically low coupons. While the proportion of revenues consumed by interest payments has increased with the recent accumulation in debt, this remains manageable given the province's fiscal flexibility. Moreover, the province's large and diversified economy and growing population provides access to a broad and productive tax base and, as such, remains a source of credit strength.

While Ontario retains sufficient fiscal flexibility inherent in the institutional framework to adjust its fiscal outcomes, thereby improving its financial position, difficult policy decisions are required.

"We believe that increased fiscal discipline will be required to sustain debt affordability," said Ms. Wong. "If a credible plan to address the fiscal imbalance and stabilize the debt burden is not implemented in the next provincial budget, expected in March 2012, downward pressure on the province's Aa1 rating would emerge."

Moody's P-1 rating on Ontario's commercial paper program remains unchanged.

The Province of Ontario is Canada's largest province, representing approximately 40% of national GDP. The province's population measured approximately 13.2 million in 2010.


A rating upgrade is unlikely in the near term given the current context of continued consolidated deficits and debt accumulation.

An inability to address continued consolidated deficits and to stabilize the debt burden over the medium term would put downward pressure on the rating. Further downward revisions to growth would also place pressure on the province's ability to achieve medium term fiscal targets and would place negative pressure on the rating. Finally, if debt affordability were to deteriorate due to higher-than-expected increases in debt levels or a significant rise in interest rates, the province's fiscal flexibility would be reduced, exerting downward pressure on the rating.

The methodologies used in this rating were "Regional and Local Governments Outside the US", published in May 2008, and "The Application of Joint-Default Analysis for Regional and Local Governments", published in December 2008.

Please see the Credit Policy page on for a copy of these methodologies.


Although this credit rating has been issued in a non-EU country which has not been recognized as endorsable at this date, this credit rating is deemed "EU qualified by extension" and may still be used by financial institutions for regulatory purposes until 31 January 2012. ESMA may extend the use of credit ratings for regulatory purposes in the European Community for three additional months, until 30 April 2012, if ESMA decides that exceptional circumstances arise that may imply potential market disruption or financial instability. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on

Information sources used to prepare the rating are the following :
parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

5 Agriculture Stocks With Dividends: CMP, CZZ, DE, MON, TNH

Increasing prices for agricultural products do prove to be a boon for farmers, who will now earn large profits for each piece of grain and drop of milk produced. While it is unlikely for the average person to suddenly switch careers to become farmers in order to get a piece of the action, but as investors we also ride this wave by entering positions in agricultural related companies as a picks and shovels play.

The rationale is that farmers will need the best seeds, fertilizers, animal feed and other agricultural inputs in hopes of producing the largest yields possible. Therefore, the company's that are selling products to the farmers should be in for a decent payday as well. However, there is a curious conundrum for many income-oriented investors when venturing into the agriculture sector. In most cases, it can be difficult to find a cost-effective way to increase exposure to agriculture stocks while also obtaining a satisfactory income stream through dividends since many companies reinvest rather than giving money back to shareholders. Although an investor should always hold a diversified portfolio to minimize company-specific risk, a selection of these stocks could offer a bit of the best of both worlds.

Agricultural Stocks To Know


Market Capitalization

Dividend Yield

Monsanto Co.(NYSE:MON)



Cosan Ltd.



Deere & Company. (NYSE:DE)



Compass Minerals International(NYSE:CMP)



Terra Nitrogen Company(NYSE:TNH)



Bottom Line
Food prices will likely continue to rise as our population grows and biofuel development gains popularity. As a result, the companies mentioned in the table above could be a good addition to any portfolio.

Precious Metals, Equities & Oil Long Term Outlook Part II

It’s that time of year again and I’m not talking about the holiday season… What I am talking about is another major market correction which has been starting to unfold over the past couple weeks.

I have a much different outlook on the markets than everyone else and likely you as well. However, before you stop reading what I have to say hear me out. My outlook and opinion is based strictly on price, volume, inter-market analysis, and crowd behavior and you should put some thought as to what I am saying into your current positions.

My fundamental thinking is also a contrarian one. I feel that gold and silver have risen because of obvious reasons being printing of money but also fears that fiat currenecies will become obsolete in the next 5 years.

The problem with that thinking is that most or all the bad news has come out with Europe and we know there are still major issues to resolve but the end of the world did not happen. Looking forward 5 years countries will have stopped acting like teenagers spending more money they they have on their credicards and start creating budgets which they will abide by.

What does this mean? It means the global economy as a whole will be stronger than ever before. We may have a few bumps along the way but I feel countries and individuals will be better than ever 5 years from now

Two weeks ago I sent my big picture outlook to my subscribers, followers, and financial websites warning of a major pullback. You can take a quick look at what the charts looked like 2 weeks ago:

Since my warning we have seen the financial markets fall:
SP500 down 2.6%
Crude Oil down 4.4%
Gold down 9.6%
and Silver down 12.2%

If you applied any leverage to these then you could double or triple these returns through the use of leveraged exchange traded funds. The amount of followers cashing in on these pullbacks has been very exciting to hear. The exciting part about trading is the fact that moves like this happen all the time so if you missed this one, don’t worry because there is another opportunity just around the corner.

While my negative view on stocks and precious metals will rub the gold and silver bugs the wrong way, I just want to point out what is unfolding so everyone sees both sides of the trade. I also would like to mention that this analysis can, and likely will change on a weekly basis as the financial markets and global economy evolves over time. The point I am trying to get across is that I am not a “Gloom and Doom” kind of guy and I don’t always favor the down side. Rather, I am a technical trader simply providing my analysis and odds for what to expect next.

Let’s take a look at some charts and dig right in…

Dollar Index Daily Chart:

SP500 Futures Index Daily Chart:

Silver Futures Daily Chart:

Gold Futures Daily Chart:

Crude Oil Futures Daily Chart:

Mid-Week Market Madness Trend Analysis Conclusion:

In short, stocks and commodities are under pressure from the rising dollar. We have already seen a sizable pullback but there may be more to come in the next few trading sessions.

Overall, the charts are starting to look very negative which the majority of traders/investors around the world are starting to notice. With any luck they will fuel the market with more selling pressure pushing positions that my subscribers and I are holding deeper into the money.

Now that the masses are starting to get nervous and are beginning to sell out of their positions, I am on high alert for a panic washout selling day. This occurs when everyone around the world panics at the same time and bails out of their long positions. Prices drop sharply, volume shoots through the roof, and my custom indicators for spotting extreme sentiment levels sends me an alert to start covering my shorts and tightening our stops.

Hold on tight as this could be a crazy few trading sessions….

Al Korelin (The Korelin Economic Report)

Recently we were interviewed again by Al Korelin and focused basically on our views and reasons for following the insider activity on the resource companies.

The Korelin Economic Report

Chart of the Day - Alaska Air Group (ALK)

The "Chart of the Day" is Alaska Air Group (ALK), which showed up on Wednesday's Barchart "All Time High" list. Alaska Air on Wednesday posted a new all-time high of $72.15 and closed up 2.37%. TrendSpotter issued a Buy signal on Dec 1 at $70.18. In recent news on the stock, Raymond James on Dec 6 initiated coverage on Alaska air with a Market Perform. Citigroup on Nov 22 reiterated its Buy rating on Alaska Air with a target of $81 and recommended using the pullback as a buying opportunity. Citigroup on Nov 29 called Alaska Air its favorite name in the space. Alaska Air, with a market cap of $2.5 billion, is a holding company that has two principal airline subsidiaries: Alaska Airlines, Inc. and regional Horizon Air Industries.


How Cheap Are Gold Stocks?

Europe A Preview Of Debt Crisis In The U.S.

A Devastating Dollar Short-Squeeze Is Gathering Steam

The Dollar Index has blasted through key resistance at 80, threatening to “unwind” carry-traders who borrowed dollars for next to nothing in order to speculate on other assets. Chief among those assets is gold, which got savaged yesterday in a $100 selloff that seems hell-bent on testing September’s key low. The low lies at 1543, basis the Comex February contract, but we doubt that it will hold. In fact, earlier, we had told subscribers there was a 60% chance that February Gold was about to dive to at least 1459, a technical target derived from our proprietary Hidden Pivot Method. We shall see. In any event, gold and silver – as well as crude oil, the euro and the commodities complex– will come under heavy selling pressure if the short-squeeze on the dollar continues.

Concerning the U.S. dollar’s powerful surge, although it was driven initially by fears over the possible collapse of Europe’s financial house of cards, the rally has taken a life of its own that is being driven by dollar short-covering. The buying is not yet at panic levels, but a surge will be impossible to stop once if it picks up any more speed. Although the central banks can affect the markets for a short while with talk of bailouts, all of them acting together are puny relative to the quadrillion-dollar juggernaut that is about to fuel an unwind of the dollar carry-trade. Over the years, we’ve written many times about this potential Mother of All Short Squeezes. The paradox was, and is, that the dollar is intrinsically worthless, a form of debt rather than money. In point of fact, as we have pointed out here numerous times, the $20 bills in your wallet are worth no more, fundamentally, than the $1 bills. Even so, that’s not going to help the Masters of the Universe who borrowed dollars promiscuously in order to leverage them to the sky.

From a technical standpoint, we’ve been expecting the NYBOT Dollar Index to hit a Hidden Pivot rally target at 81.11 and then back off. The surge is closing on that number now, up from around 75 in late October. But if the pivot resistance gives way easily — and especially if buyers re-energize the rally by pushing above the 81.44 peak recorded last November – the central banks and all those who are short dollars are in for some very rough sailing. So will those who have been betting on a politically-induced rally in the euro. Our target for the March 2012 contract is 1.2556, and we expect it to hold. If not, the fragile credit edifice that has been holding Europe together is all but certain to crumble.

Why Crude Oil Prices May Not Affect Pump Prices

Since Oct. 4, the price of West Texas Intermediate (WTI) crude oil is up 33%, but the news media has barely given this story a second look. If the price of oil is up that much, presumably the price of gas should be crippling the wallets of consumers. So why haven't we noticed?

The reason is because the wholesale price of gasoline on Oct. 4 was $2.61 and two months later on Dec. 2 the average wholesale price had only risen 1 cent to $2.62. We've all learned that when oil rises in price so does the price of gas. So why not this time?

The Tale of Two Oils
There are actually 161 different types of oils traded according to the International Crude Oil Market Handbook, but if you ask an oil investor they will tell you about WTI and Brent Blend crude oil. WTI oil is refined in the Midwest and Gulf Coast area and is the traditional source of the majority of the oil used in the United States. If you want a high quality oil, you want it to be sweet and light and that comes from a low sulfur content and low specific gravity. WTI is lighter and sweeter than Brent Blend crude which makes it higher quality and more expensive in normal market conditions. WTI is the oil that is traded at the New York Mercantile Exchange (NYMEX) making it the traditional benchmark for oil traders around the world.

Brent Blend crude is a more sour oil because of its higher sulfur content. It is actually a mixture of multiple types of oil that come from the North Sea, and when oil markets are acting in a way that is considered normal, Brent Blend crude is largely used in Europe. It doesn't take much to knock the oil market out of balance. Because of changes in the North American oil landscape, European companies are finding it more profitable to export their oil to the United States.

That North American change is a shift in the way oil moves. In the past, oil has moved north from the Gulf Coast, but the recent discoveries in Northern states as well as Canada have sent oil moving south. Cushing, Okla. is where WTI is housed and priced. Because of these new flows, the Wall Street Journal recently called Cushing the "Roach Motel" of oil. Oil can get in but it can't get out. This, along with other geopolitical issues has caused a change in the oil markets; this is a change that is good for the consumer, at least for now.

We Love Brent!
Because of the problems with WTI oil, Brent Blend crude has become the benchmark for gas prices, at least for now. While WTI has seen a 33% increase since Oct. 4, Brent Blend crude has seen a modest 7% increase and because gasoline prices are not strictly correlated to oil prices, this has caused the consumer to see an average price at the pump of $3.29 as of Dec. 2.

The Bottom Line
The oil market is a volatile market. Wars, weather events and broken pipelines are just a few of the many factors that could make what we pay at the pump see a steep increase virtually overnight but for now, consumers are the beneficiaries of this recent changing of the guard in the oil market.

Housing Prices Will Bottom in 2012: Freddie Mac

Housing prices are likely to move lower and bottom out in 2012 with modest appreciation likely in 2013, Freddie Mac(FMCC.OB) Chief Economist Frank Nothaft said in his outlook on Wednesday.

The Freddie Mac Housing Price Index is forecast to dip by 1% in 2012, marking the sixth consecutive year of declines. The index is expected to move higher by 2% in 2013.

The economist said in his report that national indexes masked sizable variation in local house-price performance. "Some markets have appreciated over the past year and are likely to gain further in 2012, while those markets with higher vacancy rates and relatively large distressed sales will continue to see downward price pressure over the next year."

Mortgage rates are likely to stay "very low" at least till mid-2012 thanks to the Fed's "Operation Twist". The economist also expects housing market to be better in 2012 though not "robust".

Nothaft believes the rental market could provide some support to housing activity in 2012. "A full-fledged recovery in the housing sector will likely elude the U.S. in 2012, but new construction and home sales are expected to be greater than in 2011," he wrote, pointing to rising rents and falling vacancies in most markets. "Good rental market fundamentals and a dearth of new apartment completions should translate into more starts of rental buildings with five or more units, pushing total housing starts up slightly more than 10 percent in 2012."

The better fundamentals in the rental market could also drive up refinancing and origination volume of multi-family loans.

On the other hand single-family originations and refinancing activity might see a decline. "While single-family refinance volume is currently strong, many borrowers have already locked in relatively low rates, or are constrained (because of being underwater or having late payments) thus reducing refinance activity over time," according to Nothaft. " Further, somewhat higher mortgage rates in the second half of 2012 (after the expiration of 'Operation Twist') will reduce financial incentives to refinance."

The economist predicts economic growth will likely strengthen to about 2.5% in 2012, with the stronger-than-expected data in recent months providing evidence that momentum is beginning to pick up again. The unemployment rate will continue to edge lower but remain "uncomfortably above 8 percent", he wrote.