Wednesday, December 14, 2011

The COMEX does not have the GOLD & The CME does not have the Money

Gerald Celente : "I do not think the COMEX has it ( The Gold) and I have been hearing stories coming out that what they are delivering isn't as its finest as it is supposed to be and I also do not believe that the CME Chicago Mercantile Exchange has the money to back what they are saying were going to do " Gerald Celente told RT America this 13 December 2011 " something is wrong here " he added

How to Play Google on Its Way Back to $700: GOOG

Amid a market that has taken investors on its own version of Mr. Toad’s Wild Ride, tech giant Google (NASDAQ:GOOG) has been quietly advancing. Its recent rise from the October abyss has brought it to a key multi-year resistance level.

The $630 price area has acted as an impenetrable ceiling, halting each and every attempt from the search behemoth to return to its all-time highs north of $700. If GOOG is finally able to break out in the coming weeks, higher prices are likely to follow.

Unfortunately, many traders become quickly discouraged by the expensive price of GOOG stock and conclude they are unable to participate. But option traders know that spreads provide the ability to structure cheap trades on stocks that appear out-of-reach for the undercapitalized retail trader.

Consider the following bull-call spread idea, for example. You could buy to open the GOOG March 640 Call and, at the same time, sell to open the GOOG March 660 Call for around $8 ($28.60 – $20.60).

The max risk comes out to $800 and will be incurred if GOOG remains below $640 at March expiration. The max reward is capped at the distance between strike prices ($660 – $640 = $20) minus the net debit, which comes to $1,200 ($20 – $8 = $12). The maximum reward is captured if GOOG resides above $660 at March expiration.

The cost of the trade is equivalent to purchasing about 1 and 1/3 shares of stock — cheap by just about any standard. By going out to March, traders allow GOOG plenty of time to stage its advance higher. As is the case with any breakout pattern, traders need to wait for prices to break through resistance before pulling the trigger.

Biggs Remains Bullish Stocks, Favours U.S. and Asian Equities – 60%-70% Net Long

Barton Biggs, managing partner and co-founder of Traxis Partners, talks about Europe’s debt crisis and the outlook for stocks.


  • “I’m biased toward the long side,” he told Bloomberg Television’s “In the Loop” with Betty Liu today.
  • “U.S. big-capitalization, U.S. stocks and Asian stocks are the best houses in a fairly tough, bad neighborhood.”
  • Biggs said equities may surge or drop 20 percent because of concern about budget negotiations and Europe.
  • while he doesn’t want to be fully invested in equities, “it’s hard to get really bearish.”
  • The S&P 500 rose 0.9 percent since then through Dec. 9.
  • His optimism on stocks has fluctuated along with the market.
  • He reduced the net-long position, a gauge of bullish versus bearish investments, in the Traxis Global Equity Macro Fund to about 40 percent at the end of September before increasing it to 65 percent on Oct. 17 and 80 percent on Oct. 31, according to past visits on Bloomberg News.
  • On Nov. 21, he said he cut the figure to less than 40 percent and might go even lower.
  • On Dec. 2, he said he’d raised the level to about 60 percent.
  • The S&P 500 (SPX) dropped five straight months through September before surging 11 percent in October and dropping 0.5 percent in November. The benchmark gauge for U.S. equities fell 1.5 percent to 1,236.47 at 4 p.m. New York time today.

Jay Taylor: Turning Hard Times Into Good Times

12/13/2011: Confessions of a Wall Street Whiz Kid (Peter Grandich)

How eliminating paper money could end recessions

A little-noticed tidbit in the ongoing European budget negotiations is Italy plans to ban the use of cash for transactions over 1,000 euros. Italy wants to cut down on tax evasion, but we should hope that other countries start to realize the enormous economic benefit of ditching cash.

Already, a movie character depicted as carrying a large quantity of cash can be reliably assumed to be doing something illegal. Meanwhile, the rise of phone-based mobile payments services such as Square and the emergence of a complete mobile banking industry in Africa point to the arrival of the day germ-ridden cash will be as inconvenient for small transactions as it is for large ones. At that point, cash will be left with its rump use as a medium of exchange for drug dealers, tax evaders, and other shady operators and we can expect countries to start banning it altogether. The first country to impose that ban will find there’s an appealing hidden benefit: Without cash, there’s no need to ever have an extended recession.

Why would a cashless society be a depression-less society? Starting about 40 years ago, it became clear that central banks had the power to end most recessions pretty easily, independent of fiscal stimulus. If your economy is saddled with idle resources—unemployed workers, vacant office spaces, factories that aren’t running all their shifts, trucks cruising down highways half-empty—what you need to do is increase the flow of spending through the economy. You do that by cutting interest rates. When rates fall, business investment, homebuilding, and durable goods purchases all rise and next thing you know everybody’s back to work. That’s how the American economy worked from the mid-1970s until 2008, and there wasn’t much more to say about it. When recession comes, cut interest rates, and growth restarts. Economists could happily move on to more interesting topics, such as: How do countries get rich rather than simply escape recession?

But there is a problem with this simple recession-fighting formula. The number zero.

As Paul Krugman wrote in a 1999 Slate column about Japan’s decadelong depression, “whereas U.S. interest rates in early 1982 were in double digits—and could therefore be sharply reduced—Japanese short-term interest rates have been below 1 percent for years, apparently leaving little room for further cuts.” Japan couldn’t reduce interest rates to spur economic activity, because interest rates couldn’t fall below zero.

Today, the United States is in the same boat. That doesn’t mean there’s nothing a central bank can do to fight a recession, but it does mean the standard formula of simple rate cuts won’t work.

Now we come to the miracle of the cashless society. Stop for a moment and ask yourself why the interest rate can’t be reduced much below 1 percent. The trouble is cash. At any given time, relatively little paper currency circulates in the United States. Instead, most of the American money supply consists of bank accounts and other electronic stores of value. People prefer to keep money in bank accounts because it’s convenient and because you get interest on it. If the rates were driven below zero—in effect a tax on holding cash in the bank—people would just withdraw money and store it in shoeboxes instead. But what if you couldn’t withdraw cash? What if all transactions were electronic, so the only way to avoid keeping money in a negative-rate account was to go out and buy something with the money? Well, then, we would have solved our depression problem. Too much unemployment? Lower interest rates below zero, Americans will start spending and investing again, the economic will grow, and unemployment will go back down to its “natural rate.”

Some people could, it’s true, try to horde gold, diamonds, or other valuable primary commodities. But this would amount to a price boom, creating mining and exploration jobs. It would also increase the wealth of everyone who already owns jewelry, expanding their consumption. The savvy investor, meanwhile, will realize that the price of gold is sure to crash when the recession ends and interest rates go back up, which should put a break on hoarding.

So is all hope of stopping recessions lost as long as we’re saddled with cash? Not necessarily. Fiscal policy and efforts to boost future expectations of inflation can have a similar impact: Higher inflation in the future is more or less equivalent to a negative interest rate. Berkley economist Brad DeLong proposes a Rube Goldberg scheme to combine a negative nominal interest rate with sporadic lotteries that would invalidate currency with certain serial numbers. The idea is that while people might try to stockpile cash, the knowledge that bills would be destroyed at random should inspire people to spend. But boosting inflation or randomly invalidating currency are bizarre and unpalatable proposals for the economic and political elite. Scrapping cash, on the other hand, is simple and elegant, which is why it will happen some day soon.

Chart of the Day - Dollar General (DG)

The "Chart of the Day" is Dollar General (DG), which showed up on Monday's Barchart "All Time High" list. Dollar General on Monday posted a new all-time high of $41.50 and closed up 2.18%. TrendSpotter has been Long since Nov 30 at $40.57. Dollar General was last featured in "Chart of the Day" on Aug 30 when the stock showed a big upside breakout and closed at $35.76. In recent news on the stock, Deutsche Bank on Dec 7 upgraded Dollar General to a Buy from Hold and raised its price target to $48 from $38 based on valuation and accelerating traffic trends. BMO Capital on Dec 6 reiterated its Outperform rating and raised its target to $47 from $40. Dollar General, with a market cap of $13.6 billion, is a discount retailer in the United States.


Where to Keep Your Money? Martin Armstrong

Where to Keep Your Money?

Now What's Going On

click here to read

Charles Ellis: Ten Basic Rules for Investing Success

On this week’s WealthTrack, Consuelo Mack interviews legendary financial consultant Charles Ellis. His “Winning the Loser’s Game: Timeless Strategies for Successful Investing” is an investment classic. Now he’s written a new investment primer with Princeton economist Burton Malkiel, “The Elements of Investing. Ellis offers basic rules to succeed in the financial markets.

NYSE Just a Fraction Away From a Breakdown Break under current support could lead to test of October low

On Monday, the news that impacted U.S. stocks was again all about Europe. Both Moody’s and Fitch rating agencies warned of credit downgrades. And Fitch predicted a “significant economic downturn in Europe.” European markets took a big hit with Germany’s DAX down 3.4% and France’s CAC 40 off 2.6%.

But even though Europe’s troubles were the focus of yesterday’s sell-off, China also has investors concerned due to a reported slowdown in November export growth. The Shanghai Composite lost 1%.

Banks and financial stocks were sharply lower. But so was the technology sector following a profit warning by Intel (NASDAQ:INTC). The big chip maker lost 4% due to hard-drive shortages. Advanced Micro Devices (NYSE:AMD) was off 4.3% and Micron Technology (NASDAQ:MU) fell 1.2%.

Volume was surprisingly low yesterday with the NYSE trading just 777 million shares and the Nasdaq crossing 438 million. Decliners outpaced advancers on both exchanges. On the NYSE, decliners were ahead by 4-to-1, and on the Nasdaq, the ratio was a negative 3-to-1.

UUP Chart
Click to EnlargeTrade of the Day Chart Key

Yesterday, the focus was again on the U.S. dollar. The dollar has a direct inverse impact on the price of stocks and commodities, and the PowerShares DB US Dollar Index Bullish Fund (NYSE:UUP) is close to a major breakout.

Yesterday’s gap up is very bullish (bearish for stocks), and it was accompanied by a buy from the stochastic. But in order for it to complete a breakout it must punch through both the $22.40 bearish resistance line and October’s high at $22.62.

NYSE Chart
Click to Enlarge

The NYSE Composite is an important chart indicator because of its broad market representation and predominant role as a market leader since the low of March 2009. But since July, it has been the Composite that has failed to follow through on rallies and led the decline in the July/August, October and November “corrections.”

With the index now just a fraction away from a breakdown through the 7,285 support line, as well as the 50-day moving average at 7,330, traders should follow its track very closely. A break under the current support could easily lead to a test of the 6,985 line and the October low. Note yesterday’s sell signal from the stochastic.

Conclusion: Yesterday’s sell-off with its focus on financial and technology stocks puts the ball back into the clutches of the bear. But headlines continue to dominate the markets, and so if the focus shifts to this week’s important U.S. economic reports the bulls could assert themselves again. At 8:30 this morning, the November retail sales forecast is for 0.5%, and at 2:15 p.m., the FOMC meeting’s decision will be announced.

And on Thursday, the jobless claims, producer price index (PPI), core PPI, industrial production, and the Empire State Index, as well as the Philly Fed numbers, will be released. Friday brings us the consumer price index (CPI) and core CPI.

4 Long-Term Buy Signs: MRK, NWSA, SPY, USB, WMB

As the broader market, represented by the S&P 500 SPDRs (NYSE:SPY), attempts to surpass the price highs seen in October and November, the 50-day moving average remains well below the 200-day moving average. When the 50-day moving average crosses above the 200-day, it is a signal that the stock price has been improving and that the correction may be over within a stock. The signal should not be used in isolation though, as it is prone to false-breakouts. The following stocks have not only seen the shorter-term moving average cross above the longer-term average, but they are also exhibiting strong on-balance volume - an additional indicator of strength that should add to the reliability of the signal.

New Corp (Nasdaq:NWSA) has had a strong year, up 18.97% year to date, to $17.56 from $14.76. In early December the 50-day moving average crossed above the 200-day moving average, indicating strength. On-balance volume has also been rising, signaling buying interest in the stock. Throughout the year, $18 has been stiff resistance, with the 52-week high at $18.35. A rise above $18.35 is a strong predictor for continued strength - $20 to $21 is the target. On the other hand, an inability to get to (or hold above) that level means the range is likely to continue. (For more, see Moving Averages: What Are They?)

Merck & Company (NYSE:MRK) has rallied back after being hit hard to the downside in August. The 50-day moving average crossed above the 200-day moving average in early December, indicating the potential for further price appreciation. On-balance volume confirms the signal, but ultimately the stock will need to climb above resistance at $36.56 (July high) in order to keep the uptrend in motion. If this occurs, the next target is the May high of $37.65. Short-term support is at $35, with longer-term support at $33. A drop below $33 is a sign of weakness and a further potential slide in price. (For more, see Moving Averages: Strategies.)

US Bancorp (NYSE:USB) recently managed to breakout above a downward sloping trendline that began in February, 2011. This, coupled with 50-day crossing above the 200-day moving average, is a positive signal for the stock. On-balance volume has been ripping higher since August, and the stock is close to July and October highs. The intra-day October high is $26.64 and the July high at $27.17. Clearing these levels sets up a test of the 52-week high at $28.94. On the other hand, a drop below $23.50 indicates weakness.

Williams Companies (NYSE:WMB) is up 28.03% year to date, to $31.65 from $24.72, and has the potential be strong going into next year as well. The 50-day crossed above the 200-day moving average recently, and on-balance volume has been rising aggressively since October. The stock will need to clear the 52-week high at $33.47 to keep the current uptrend moving. If that level is broken, there is no resistance in sight until $38 to $40 - levels not seen since 2008. On-balance volume has leveled off recently though. If the stock does move higher, ideally OBV should confirm. Support is $29 and can be used as a stop level, as a drop below indicates weakness.

The Bottom Line
The 50-day moving average has crossed above the 200-day moving average in these stocks, signaling continued strength. This indicator is not enough on its own though. Price action will need to continue to push through resistance levels, and on-balance volume should confirm the moves. Support levels should also be watched closely, as a drop below support is a sign of weakness

How Safe Is Your Cash?

Question: A few years ago, I remember hearing that money market funds were covered by FDIC protection just like certificates of deposit and savings accounts. Are money market funds still FDIC-insured?

Answer: The short answer is no, money market fundholders don't have the same guarantees that holders of CDs, money market deposit accounts, and checking and savings accounts have.

But your memory serves you well because money market fund investors were accorded extra protections when the financial crisis evolved in 2008. At that time, a large money market mutual fund, the Reserve Primary Fund, "broke the buck," meaning its holdings dropped in price, which in turn caused the fund's net asset value to drop lower than $1. That event created panic selling among some holders of money market funds, prompting the Treasury Department to start a new program, similar to FDIC insurance, for money market funds.

Under the Treasury's program, investors who owned money market funds before Sept. 19, 2008 (the date that the Treasury introduced the program) were guaranteed to be "made whole" if their funds' net asset values dropped below $1. (This FINRA posting provides details on the program.) The Treasury's program expired a year later, however, meaning that the Treasury, FDIC, or any other entity do not insure the assets in money market mutual funds. Thus, if the peace of mind of a guarantee is important to you, you'll need to stick with CDs, money market deposit accounts (not to be confused with money market mutual funds), and checking and savings accounts. Just be sure to mind the limits on FDIC insurability.

Not All Is Lost
That said, the fact that money market funds aren't insured doesn't mean you should automatically eschew them. Yields on nearly all cashlike vehicles are low across the board right now, but at other points in time, money market mutual funds might provide better yields than you'd obtain with other cash products. In addition, money market funds also offer daily access to your money, which is not an option for CD holders. Finally, there's the convenience factor: If you frequently move money into your long-term investments from your cash accounts, holding a money market fund with your investment provider can make these transfers seamless.

It's also worth noting that, notwithstanding the high-profile case of the Reserve Primary Fund, money market funds have a good record of preserving investors' capital. Since the introduction of the first money market fund 40 years ago, there has been a very small handful of funds that have broken the buck; all the rest have maintained stable net asset values. And following the financial crisis, the Securities and Exchange Commission, which regulates money market funds, imposed more stringent standards on money funds, instituting new requirements for liquidity, credit quality, and maturity.

If you do opt for a money market fund for your cash holdings, take a common-sense approach to ensure that you don't get stuck with an outlier. As with all investments, be on high alert if a money market fund offers an appreciably higher yield than competing funds and does not have ultralow expenses; that can be a red flag that it's taking more risks than its peers are. (Morningstar doesn't provide data or analysis on money market funds, but you can find data about current yields and expense ratios on your financial providers' websites.)

It also makes sense to stick with money funds offered by very large providers with extensive operations outside of the money fund business. Thus, in a worst-case scenario in which a money market fund's NAV falls lower than $1, the provider could contribute the cash to make investors "whole." (Several financial providers quietly did so during the financial crisis; shareholders suffered no ill effects.) Finally, if you have a lot of cash on the sidelines, it's worthwhile to spread your positions among multiple providers for diversification purposes; you might also consider splitting your cash assets among accounts that offer FDIC protections as well as those that do not.