Friday, November 2, 2012

Don Coxe – A Gold Bull, Bond Bear & Commodity Supercycle

from KingWorldNews:

Today 40-year veteran Don Coxe told King World News, “… when that bond bear market comes under way, it will be the next phase of the commodity supercycle.” Coxe, who is Global Strategy Advisor to BMO ($538 billion in assets), also added, “What’s fascinating to me is we’ve had this tremendous bull market in gold, against a bond bull market.”
Here is what Coxe had to say: “As of August 12th, 1981, the constant dollar Dow Jones Average, which was deflated by inflation, was back to where it was after ‘Black Monday’ in 1929. Think about that. What that meant was in real terms from 1929, in the next 52 years you had a negative return on stocks.”
Don Coxe continues @

Eric Sprott: Investment Outlook

How does the US achieve a sustained recovery if “the 99%” continues to suffer perpetual decline in real income?

by Eric Sprott & David Baker, Sprott Asset Management

Other than some obligatory arrests for disorderly conduct, the Occupy Wall Street movement celebrated its one year anniversary this past September with little fanfare. While the movement seems to have lost momentum, at least temporarily, it did succeed in showcasing the growing sense of unease felt among a large segment of the US population – a group the Occupy movement shrewdly referred to as “the 99%”. The 99% means different things to different people, but to us, the 99% represents the US consumer. It represents the majority of Americans who are neither wealthy nor impoverished and whose spending power makes up approximately 71% of the US economy. It is the purchasing power of this massive, amorphous group that drives the US economy forward. The problem, however, is that four years into a so-called recovery, this group is still being financially squeezed from every possible angle, making it very difficult for them to maintain their standard of living, let alone increase their levels of consumption.

One of the central themes that arose out of the Occupy movement was the growing sense of unease among the average American citizen with regard to growing imbalances in wealth within the US. The rich are getting richer while the poor get poorer. That feeling is entirely legitimate. According to the US Census Bureau, in 2011 the median income of US households, adjusted for inflation, fell to $50,054. This is 4.9% below its 2009 level, and 8.9% below its all-time peak of $54,932 in 1999.1 This is not encouraging data. It implies that the average American household is almost 9% poorer today than it was thirteen years ago.  (more)

Indicators Point to Major Market Decline Ahead

There appears to be a higher-than-average chance of a long-term trend change this quarter. Presidential elections have marked significant turning points in SPDR S&P 500 ETF (NYSE: SPY) in the past. Generally, we have seen the trend accelerate after the election. And this time around, we have a troubling stochastics sell signal occurring at the same time as the election.
SPY Chart
This trade signal has correctly identified market sell-offs that lasted at least two years 57% of the time, but there have only been seven sell signals like this in the history of SPY.  (more)

C.R. Bard, Inc. (NYSE: BCR)

C. R. Bard, Inc. and its subsidiaries design, manufacture, package, distribute, and sell medical, surgical, diagnostic, and patient care devices worldwide. The company’s vascular products include percutaneous transluminal angioplasty catheters, chronic total occlusions catheters, guidewires, introducers, and accessories; peripheral vascular stents and stent grafts, vena cava filters, and biopsy devices; electrophysiology products comprising electrophysiology laboratory systems and diagnostic, therapeutic, and temporary pacing electrode catheters; and fabrics, meshes, and implantable vascular grafts. Its urology products consists of infection control Foley catheters to reduce the rate of urinary tract infections; surgical slings to treat stress urinary incontinence; brachytherapy services, devices, and radioactive seeds to treat prostate cancer; intermittent urinary drainage catheters, and urine monitoring and collection systems. The company’s oncology products comprise specialty vascular access catheters and ports, vascular access ultrasound devices, dialysis access catheters, and enteral feeding devices to treat and manage various cancers, and other diseases and disorders. Its surgical specialty products include soft tissue repair products, such as hernia repair implants consisting of synthetic and natural-tissue configurations, and hernia implant fixation devices.. The company markets its products to hospitals, individual healthcare professionals, extended care facilities, and alternate site facilities.

Please take a look at the 1-year chart of BCR (C.R. Bard, Inc.) below with my added notations:

1-year chart of BCR (C.R. Bard, Inc.)

BCR rallied very nicely until mid-July. Since May, the stock has created a very important support level at $95 (red). That $95 level is the “neckline” support for BCR’s head and shoulders (H&S) pattern. Above the “neckline” you will notice the H&S pattern itself (purple). Confirmation of the H&S would occur if the stock broke below its $95 “neckline”. If BCR breaks that level, the stock should move lower from there.

Keep in mind that simple is usually better. Had I never pointed out this H&S pattern, one would still think this stock is moving lower simply if it broke below the $95 support level. In short, whether you noticed the pattern or not, the trade would still be the same: On the break below the key $95 level.

AAPL Looks Ready Bounce & the Next Best Trade Ideas

AAPL shares have been in free fall mode all October spooking investors with a $120 drop from the all-time high in September. As well all know, though it's hard to follow without a proven trading strategy to keep us focused but the key is that you must buy when others are selling and then sell when everyone is buying.
Apple shares really have helped in holding the overall stock market up in the past but recently it has been a big drag on the broad market. Taking a look at the chart below you can see my analysis and thoughts of this giant.
The red horizontal line shows the key level where high volume traded in the past. For the market to reset (flush out investors/traders) it must shake as many longs out before it can start rising again. By the price breaking below that level which also happens to be a Century Number $600, most of the stops were placed down around this level. The volume spike of 40,000,000 shares clearly shows it triggered stops once that $600 level was broken. We want stops run because it give more power to the next rally/bounce.
AAPL Shares Bottoming


The NASDAQ has formed a similar chart pattern and is heavily weighted with AAPL shares. Trading NQ futures, QQQ, QLD or the XLK exchange traded fund as a much more affordable way to play a bounce/rally in the coming weeks.
NDX - QQQ Shares Bottoming

Russell 2000 Index:

I really like the Russell 2000 index because small cap stocks can rally hard and fast outperforming the large caps like AAPL, SP500, NASDAQ and DOW. This index is looking ripe for a bounce in the coming days which could trigger the next major rally to new highs. You can plan this index through TF futures contract, IWM, TNA, UMA exchange traded funds.
IWM - TNA Funds Bottoming

Trading Conclusion:

While this setup looks very promising because the election is almost over and the Santa Clause rally is just around the corner. Know that some of the biggest drops in the market happens during times when the market is running the stops. It is a natural tendency to take big positions which things look great, but that is not how you do it... Take calculated position sizes knowing indexes could fall another 2-3% before putting in a real washout bottom.

Technical charts point to $130-an-ounce silver in the coming Golden Cross upswing

Technical charts are great at explaining the past action of prices. It is more speculative to try to spot these patterns repeating. Yet one very accurate predictor of price advances in the charts in the past has been the so-called Golden Cross where the 50-day moving average price for gold crosses over the 200-day moving average.

Silver prices track gold with a bias to outperformance so the Golden Cross or Blue Cross for silver is a great indicator for price surges in the most volatile of metals too. Bullion investor Peter Degraaf has highlighted the price increases that have followed this indicator since 2005.

Blue Cross price increases
For 2005-6 he noted a 100 per cent increase after the Blue Cross. For November 2007 it was 45 per cent. And for 2009 to April 2012 the multiplier was 250 per cent. Here’s what the chart looks like now:

Just to match the last upswing would give us $130-an-ounce silver in the next major market move.

Would it not be typical of of the capricious silver market that while most attention is now currently focused on the potential downside, silver is actually about to give us another huge upward price shift?
At the fundamental level everything is also in place with QE3 money printing at $40 billion a month and counting. Perhaps next week President Obama will be re-elected and some of the US political uncertainty begin to clear, and then you could imagine all financial markets getting a relief rally, including precious metals.

We may have already seen the low for silver’s trading range and now be staring at a much larger upside than anybody is currently contemplating.

Chart of the Day - Discover Financial Services (DFS)

The "Chart of the Day" is Discover Financial Services (DFS), which showed up on Wednesday's Barchart "All-Time High" list. Discover on Wednesday posted a new all-time high of $41.02 and closed +1.86%. TrendSpotter has been long since Sep 28 at $39.73. Discover was last featured by "Chart of the Day" as of the close on July 27, 2012 at $36.41. In recent news on the stock, Janney Capital on Oct 10 initiated coverage on Discover with a Buy and a target of $47. Discover Financial Services, with a market cap of $20 billion, operates the Discover Card with more than fifty million cardmembers, the Discover Network with millions of merchant and cash access locations, and the Goldfish credit card business in the United Kingdom.