Friday, August 3, 2012

Take Profits Now and Accumulate Cash The conditions for a sharp sell-off are present

Some described Wednesday’s trading as “mixed,” but a more apt description would be “mixed up.” The day started with a computer glitch that had an impact on the first 45 minutes of trading in 148 stocks, some of which appeared to trade at 20 times their normal volume and rose as much as 4.8% in minutes. The NYSE electronic safeguards kicked in preventing a “flash crash” similar to that of 2010, but many stocks halted trading until the problem was cleared, and the exchange said that some trade adjustments would be made.

The Fed’s much-expected announcement to continue with its present policy went off as anticipated. But the central bank noted that economic activity had “decelerated somewhat over the first half of this year.” That’s a shift from their assessment in June that the economy had been expanding moderately this year. The Fed’s next meeting is Sept. 12-13, but more easing could take place between meetings. After the Fed’s announcement, stocks fell and the U.S. dollar rose.

At Wednesday’s close, the Dow Jones Industrial Average was off 33 points at 12,976, the S&P 500 fell 4 points to 1,375, and the Nasdaq was down 19 points at 2,920. Volume on the NYSE may be adjusted due to the glitch, but has been reported at just over 1 billion shares, while 488 million shares traded on the Nasdaq. Decliners outpaced advancers on the Big Board by 1.6-to-1, and on the Nasdaq, decliners were ahead by 2.9-to-1.

Nasdaq Chart
Click to Enlarge

Trade of the Day Chart Key

Unlike the other indices, the Nasdaq is still confined to a trading range defined by a five-month triangle. Just as it appeared that the index would break from its bearish resistance line at 2,960, it reversed down from the line and closed near its low of the day at 2,918. The immediate support for the Nasdaq is the 20-day moving average (green line) at 2,917, and the next support is its 50-day moving average (blue line) at 2,880. (more)

Why Property Taxes Will Soar Civil Unrest, Rise of a Third Party - Martin Armstrong

Why Property Taxes Will Soar

Civil Unrest, Rise of a Third Party

click here to read

We Are Now Just Weeks Away From A European Bombshell

from KingWorldNews:

Today Michael Pento told King World News we are now just weeks away from a European ‘bombshell.’ Pento predicted, “In my estimation, the ECB is about three or four weeks away from giving a banking license to the EFSF and the ESM. This will lead to unlimited purchases of European debt, and an unlimited dilution to their currency.”

Pento also warned, “I am telling my clients, I am gearing them towards the inevitable inflation,” because “you will see the most salient moves in precious metals, base metals, energy and agricultural stocks and commodities.”

Pento also discussed what will happen in other key markets, but first, here is what Pento had to say about the Fed and ECB decisions: “My first impression was that the reports we had from the Wall Street Journal that the Fed was imminently going to interfere with the markets (with more QE), once again proved to be untrue. Bernanke is waiting for Jackson Hole. He’ll make some kind of announcement, like he did back in 2010, and then he will start to put his plan to destroy the currency in effect, probably in September.”

Pento continues @

McAlvany Weekly Commentary

Why is the Money Leaving China?

About This Week’s Show:
-Outflow of illicit Chinese funds skyrocketing
-Inflow of funds go into Singapore and Hong Kong
-Templeton’s Dr. Mobius calls for gold backed cash

First Republic Bank (NYSE: FRC)

When it comes a stock hitting a 52-week high, I always say I prefer to look for stocks that are hitting a "new" high. To me, this would be a stock that hasn't hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn't just any move higher, it was a key breakout.

First Republic Bank, together with its subsidiaries, provides personalized relationship-based preferred banking and business banking, real estate lending, trust, and wealth management services to clients in metropolitan areas of the United States. Its deposit products include checking, money market checking, savings, and passbook deposits, as well as certificates of deposit. The company's loan portfolio comprises residential mortgage loans and lines of credit, commercial real estate loans, residential construction loans, small business loans, personal loans, and Eagle One lines of credit. It also provides wealth management services including investment strategies and products, trust and custody services, full service and online brokerage, financial and estate planning, access to alternative investments, socially responsible investing, and foreign exchange. The company offers its products and services through 63 offices, including 58 preferred banking licensed deposit-taking offices in 8 metropolitan areas, such as San Francisco, Los Angeles, Santa Barbara, Newport Beach, San Diego, New York City, Boston, Portland and 5 offices in Santa Barbara, Honolulu, Seattle, Salem, and Las Vegas that offer exclusively lending, wealth management, and trust services.

To review First Republic's stock, please take a look at the 1-year chart of FRC (First Republic Bank) below with my added notations:

FRC had been trading mostly sideways for the last 6-7 months, while running into resistance at $34 (red). After a quick sell-off in May, the stock has worked its way back up to that $34 level. The $34 resistance meets my definition of a clear resistance level that would be an important 52-week high breakout if FRC could manage to break above it. The stock also seems to find support at $32 (blue) quite often.

The Tale of the Tape: A long trade could be entered on FRC if it breaks above $34, with a stop set below that level. A long position could also be entered on a pullback to the $32 level, which could then be added to if the stock breaks out to the new high.

Gold & Why We Are Facing A Real Catastrophe Going Forward / August 2, 2012

Today Stephen Leeb, who is Chairman of Leeb Capital Management, spoke with King World News about the dreadful warning legendary value investor Jeremy Grantham’s recently issued: “This is a guy that has come to the view of resource shortages over the last 2 or 3 years. He’s becoming much more vehement about it, saying we could have real catastrophes in the food market, in water, etc., and energy could be right behind.”

The acclaimed money manager also discussed gold, but first, when asked about the dire situation the ECB faces, Leeb responded, “They’ve got to start buying bonds, period. It’s very simple, Spain cannot survive with bond yields over 7%. I doubt they can survive with bond yields much over 5%, when you’ve got no growth and 25% unemployment.”

Stephen Leeb continues:

“25% unemployment is the kind of unemployment we had during the (Great) Depression. It surprised me (that the ECB did not take significant action), and it makes me think, what is going on behind the scenes? My guess is we are putting tremendous pressure on Germany.

Every other country in Europe, including Great Britain, is ready to ease and buy bonds….


Chart of the Day - Reynolds American (RAI)

The "Chart of the Day" is Reynolds American (RAI), which showed up on Wednesday's Barchart "All-Time High" list. RAI on Wednesday posted a new all-time high of $46.84 and closed up +0.54%. TrendSpotter has been long RAI since June 13 at $41.74. U.S. District Court Judge Richard Leon on Wednesday denied an FDA motion to dismiss a lawsuit by Lorillard Inc. and R.J. Reynolds Tobacco Co. filed last year that alleges financial conflict of interest and bias by several members of the Tobacco Products Scientific Advisory Committees. The suit specifically alleges that some committee members have conflicts of interest because they were paid expert witnesses in anti-tobacco lawsuits and have financial ties to pharmaceutical companies that make smoking-cessation products. Last Tuesday, RAI reported Q2 adjusted earnings of 79 cents per share, beating expectations of 76 cents as the company focuses on cigarette alternatives such as snuff and chewing tobacco for future sales growth as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher. Reynolds American with a market cap of $26.6 billion, is the parent company of R.J. Reynolds Tobacco Company, Santa Fe Natural Tobacco Company, Inc., Lane Limited and R.J. Reynolds Global Products, Inc. R.J. Reynolds Tobacco Company, the second- largest U.S. tobacco company, manufactures about one of every three cigarettes sold in the United States, including five of the nation's 10 best-selling brands.