Thursday, November 8, 2012

MUST LISTEN: Eric Sprott Presents to Manhattan Investors at Investorium

click here to watch

Richard Russell – I See Catastrophic Insane Bubbles Everywhere

from King World News
Today the Godfather of newsletter writers, Richard Russell, has written a very serious piece discussing the fact that we are seeing insane bubbles in many different areas. But Russell also covers the state of the gold market and what investors should be doing with their gold.
Here are Russell’s thoughts in his latest note to subscribers: “What’s Bernanke doing for the dollar – or to the dollar? By creating multi-millions of additional dollars, the Bernanke Fed has knocked the dollar down. But due to weakness in other major currencies, the dollar (which is now oversold) has rallied over the last day or so.”
Continue Reading at…

Surprising Investment Beating 99% of the Market is Signaling a 'Buy'

The winners of the past six months are likely to be among the best performers in the next six months, according to research published in a number of academic studies. And relative strength (RS) can be used to find the biggest winners of the past six months. We can calculate RS to find the best trades in the U.S. market, or even apply the calculation to all of the stocks and ETFs trading around the world.

Using U.S. markets, we can identify the strongest trades from more than 7,000 stocks and ETFs. Adding global stock markets, we can find the top trading candidates from a list of more than 26,000 stocks and ETFs. Although I would only trade stocks or ETFs that trade in the United States, knowing that the trade is one of the strongest in the world boosts my confidence that this trade is likely to be a winner.

One way to apply RS is to buy stocks when their RS rank is above 80, meaning the stock or ETF has outperformed 80% of the alternative investments during the past six months. Right now, I was surprised to see one ETF on the buy list using both the U.S. and global calculation methods: iShares MSCI EAFE Index Fund (NYSE: EFA).

With an RS rank of 99, this ETF has outperformed more than 99% of U.S. investments during the past six months. In addition, EFA has a global RS rank of 82. This strength makes EFA a buy.
The ETF holds the largest stocks in the world's leading stock markets, including Nestle (OTC: NSRGY), BP (NYSE: BP), Novartis (NYSE: NVS) and GlaxoSmithKline (NYSE: GSX). Because EFA is a benchmark for international stock performance, it points toward potential strength in global large-cap stocks. These are the kind of stocks that could do well if economic growth is better than expected around the world, or if traders become interested in dividend-paying stocks as an alternative to the low interest rates available in global bond markets.

There are a number of reasons why EFA could go higher in the months ahead, but RS doesn't tell us why prices should go up. The indicator simply tells us that EFA is likely to be among the best performers in the next six months and is a buy.
EFA Chart
In the past, EFA's global RS rank has topped 80 thirteen times since it began trading in 2001. Buying when RS crossed above 80 would have delivered winning trades 10 times (77% of the time) and the average gain a month after the signal was given is 11.35%. This time, I think the gain could be almost twice that level within six months.

During the past year, EFA has formed a double-bottom pattern. The depth of that pattern provides a price target of $64.49, about 20% above the recent price. Based on the combination of RS indicators, that target seems realistic.

The last time both U.S. and global RS were on a buy was in 2009, and the ETF gained more than 39% over 28 weeks. There have only been three signals like this in the past, and all were winners over the next three months. But three trades is a very small sample size, so we can't really draw conclusions from that.
EFA Chart
Risk can be managed with the 10-month moving average. This long-term indicator is useful for spotting long-term trend changes. If EFA closes below that average, which is at $52.29, it could indicate that stocks have entered a bear market. Using that price as a stop-loss level limits risk to less than 3%, an exceptionally small amount of risk for any trade.

Recommended Trade Setup:
-- Buy EFA at the market price
-- Set stop-loss at $52.29
-- Set price target at $64.49 for a potential 20% gain in six months

McAlvany Weekly Commentary

Power Shift in China

About this week’s show:
-New leader Xi Jinping takes power in China Nov. 8th
-DeutscheBank betting against strong Chinese growth
-Next U.S. President faces Fiscal Cliff and unsolved deficit

Was That It For This Round Of The “Housing Recovery”?

from Zero Hedge
In the seven weeks since Bernanke unleashed monetary policy hell on the world, much has been made of the ‘housing recovery’ and how his policy will help sustain this boomlet. Unfortunately, facts being those annoying things that they are, this is absolutely not the case. Aside from a one week knee-jerk ramp in refinancings – no doubt driven by every mortgage broker in the country dialing-for-dollars on the basis that Ben’s-got-your-back – mortgage applications have fallen for five weeks in a row… We presume this merely means we need another moar unlimited QE – which given the fiscal cliff fiasco, is as likely as not. In fact, the next round of housing weakness, which is due imminently now that Obama has been reelected, will serve as the alibi the Fed needs to continue the unsterilized portion of Operation Twist 2 set to expire at the end of the year, and which as we explained, will mean that starting January 1, the Fed will monetize $85 billion/month in TSYs and MBS instead of just $40 billion in MBS.
Continue Reading at…

Close Short Positions in AAPL, but Do Not Buy Yet

Apple (NASDAQ:AAPL) — On Oct. 9, Apple opened at $638.65 and I said, “On Monday… a head-and-shoulders breakdown, occurred following more production problems with the new iPhone 5. Despite reduced trading volume due to Columbus Day, enough sellers surfaced to drive the stock’s price through the neckline at $655 on a breakaway gap.

“This is a classic breakdown — it just doesn’t get any clearer than that. However, a fall to $605 would not change the long-term direction of the stock (which is still up) and could present a good buying opportunity. I’ll review it when it gets there.”

Then, on Oct. 26, I said, “Those who shorted the stock may want to take profits this morning if it opens lower. However, the stock may head even lower with its next target the 200-day moving average line at $587.”

On Tuesday, Apple closed at $582.55, under its 200-day moving average at $591.92, and is finding support at $570.

It is time to cover short positions. Those who shorted the stock on our Oct. 9 sell recommendation and continued to hold the position until now made 9% in less than a month. And those who purchased puts or applied other options strategies could have reaped much bigger profits.

Current shareholders should continue to hold since the long-term trend of one of the best-managed companies on the planet is bullish. However, its price action does not yet tell us to buy Apple. If Apple gives a clear technical signal to buy, I’ll report it here.
Trade of the Day – Apple (NASDAQ:AAPL)

Post-Election Trading Made Simple

Over the past two months shares of gold (NYSE:GLD) and Apple (NASD:AAPL) have had a sizable bite taken out of their share price. Active traders along with the longer term investors have had a wild ride this fall watching these investments slide to multi month lows. The big question is when will gold and apple shares bounce?
Here we are again with another election behind us and Barack Obama in the White House again. Many think this means four  years of the same thing… Printing, Inflation and higher stock prices.
Is this good or bad for Americans or the world for that matter? I doubt it, but who really knows and who cares because there is nothing anyone can do about it now. So buckle up your seat belt and focus on trading and investing with major trend both within the United States and abroad using exchange traded funds.
Currently the broad stock market and commodities are in a full blown bull market so the focus should be to buy the dips until proven wrong. Below are some charts showing the important breakout levels for Apple, metals, oil and key indexes like the Russell 2000.
Be aware that during pullbacks which last more than a month which is the market has done, some of the biggest drops in price happen just before prices bottom… Scaling into positions is the key to minimal draw downs.

Apple Inc. – AAPL Stock Chart:

Shares of Apple clearly show the down channel which must be broken before investors start buying again. This stock seems to have big potential for $650 to be reached quickly. If Apple shares rise so will the overall stock market… 
AAPL - Apple Shares

Gold Spot – GLD Exchange Traded Fund:

During August and September investors flooded the gold market in anticipation of QE3. Since then gold has been drifting lower with profit taking and because of some slowly strengthening economic numbers in the USA. Gold looks ready for a run to the $1800 but may stabilize here for a few weeks first.
Gold Breakout

Silver Spot – SLV Exchange Traded Fund:

The price of silver moves similar to that of its big yellow sister (Gold). While the charts look the same silver is highly volatile and can super charge your portfolio when metals rally.

Crude Oil Spot – USO Fund:

Crude oil has been correcting for a couple months also and still has a lot of work to do before a new uptrend to be triggered. Currently oil is trading in the middle of is trading range but once the price breaks above $93 per barrel a good investment fund would be USO.
Oil Breakout

Russell 2000 Small Cap Index – IWM

Small cap stocks typically lead the broad market in both directions. They are the first to rally and the first to rollover and sell off. The major indexes like the DOW, SP500 and NYSE have not formed clean chart patterns which is why my focus is on the Russell 2000. Small cap stocks are now showing a rising relative strength compared to the SP500 large cap stocks and this is very bullish for stocks in general. The best way to trade this index is through the exchange traded funds IWM and TNA.
Rut Breakout

Post-Election Trading Breakout Summary:

In short, history shows that equities tend to rally after an election.