Friday, May 25, 2012

Richard Russell: We Are Entering Second Half of the Bear Market

from KingWorldNews:

With tremendous volatility in global markets, the Godfather of newsletter writers, Richard Russell, warned his readers that “something BIG is heading our way,” and “I wonder how much longer the decline will continue to be orderly.” Here is what Russell had to say: “As of today’s closing, Dow down 14 out of 16 sessions! This is one you can tell your kids about. And still no collapse in breadth, and still no crash. The only thing I can make out of it is that a lot of people are standing their ground.”

Richard Russell continues @

John Williams of ShadowStats Warns of US Hyperinflation By 2014


John Williams : I’ve been a consulting economist for 30 years. What I’ve found over the decades is that the government’s reporting has moved further and further away from common experience, and really, the average guy has got a pretty good sense of what’s going on. If you feel the economy is not as strong as the government is saying or that inflation might be higher than what they’re reporting, you’re most likely right because you’re dealing with the real world. The numbers use to deal much closer to real world experience. And with the unemployment number, if you, let’s say, went around the entire country and asked everyone whether he or she was unemployed, you’d get an immediate answer. Most people have a pretty strong opinion as to what’s up, they have a job; they know what’s going on. But if you put all those numbers together, you’d come up with a much higher unemployment rate than the government reports, or at least the headline government number to date. So that’s all due to definition. In order to be counted in the headline unemployment rate — and keep in mind, the government actually publishes six levels of unemployment. The third level they call U3 is the headline number — you have to obviously be out of work and willing and able to take a job, but you have to have actively looked for work in the last four weeks. There are people who’ve stopped looking for work after a period of time when there are just no jobs to be had, yet they’d take a job if it were available, and they otherwise consider themselves unemployed. They want a job; they are willing and able to work. And again, they’d take it as soon as it was offered. If you haven't been looking in the last four weeks, the government will count you as a discouraged worker so long as you've looked for work in the last year. If you haven't actively looked for work in the last year, they don’t count you at all. Before 1994, anybody who was a discouraged worker, irrespective of the period of time, was counted as a discouraged worker. So that where you have the U3 unemployment rate at, I believe it’s 8.2% in March, the government’s broadest number U6 (which includes what I call the short term discouraged workers, those who have given up looking for work, but not for more than a year) and also includes people who work part-time for economic reasons (they can’t get a full-time job, they want a full-time job but you know, no full-time job is available) that’s running up somewhat over 14%. And what I do is I add to that my estimate of the longer term discouraged workers — those who have been discouraged more than a year. That puts you up over 22%. What happens here is the people who are unemployed roll out of the U3 level; they become discouraged because there are no jobs to be had, and so they go into the U6 level. And after a year, they roll out of the U6 level in terms of going into another world that the government does not count. I still estimate them, so my number is broader than the government’s number. So when you see the unemployment rate dropping, yet the broader measures are rising or staying at near historic levels, you do not have an economic recovery and that’s what we’re showing. - in a recent interview with the Financial NewsHour

Dow Chemical Bullish Signs

Shares of Dow Chemical Company (NYSE:DOW) ended the trading session higher by $1.09 or 3.7% from its previous close. Dow's price action formed what is considered to be a bullish engulfing candle that could very well signal a continuation of trend or reversal of the ongoing weakness.

Dow Chemical Company (NYSE:DOW) is a diversified chemical company that provides chemical, plastic, and agricultural products and services to various essential consumer markets. The company sell its products to food, transportation, health and medicine, personal care, and construction markets.

Dow's recent stock range was formed by a trough where calculated support was defined at $31.58 and by a peak that established the resistance level at $36.08. This range could be used by traders managing their positions.

Traders wanting to establish a position in Dow or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk, as it shows where the bears were able to push the stock down, before the bulls step in with a bid. (more)

4 'amazingly cheap' gold stocks

by Adrian Day, editor Global Analyst

Adrian DayThe senior gold stocks are “amazingly cheap” and here we are looking at a package of four such stocks as a way to participate in the eventual share price recovery.

Here's a look at four favorites: Freeport Copper & Gold (FCX), Barrick Gold (ABX), Newmont Mining (NEM) and Yamana Gold (AUY).

The gap between bullion and the stocks of companies that produce the stuff has widened.

There are many reasons for this: costs have gone up; miners have lagged fiscal discipline (overpaying for acquisitions and issuing too many dilutive shares); investors are buying gold for protection not profit (and hence are drawn to bullion); and the gold ETFs make buying gold easy.

In the past nine month, the gap has widened, with gold stocks valuation relative to bullion falling almost 30%. (more)

Wheat Fields Parched by Drought From U.S. to Russia: Commodities

Droughts withering wheat crops from the U.S. to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year.

Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state’s climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg.

Wheat traded in Chicago rose as much as 18 percent in the 10 days through May 21 on concern that the market is returning to the droughts of 2010. Russia and Ukraine curbed exports that year and prices more than doubled to $9.1675 a bushel by February 2011, the month when world food costs tracked by the United Nations rose to a record. Analysts surveyed by Bloomberg expect futures to gain 13 percent to $7.51 by mid-July. (more)

QCOM appears to be on its way back up after profit-taking

Qualcomm (NASDAQ:QCOM) — This company is a leader in developing products and services based on its advanced wireless broadband technology. And its performance had been outstanding until it was hit with a shortage of chips fromJapan.

That and profit-taking drove the stock from its March high of over $68 to its bullish support line and 200-day moving average at $57.22.

Earnings are expected to increase to $3.25 in 2012 versus $2.70 in 2011, and analysts have a target of between $75 and $81 within 12 months.

Long-term buyers should add this premier tech stock to their portfolio now, and traders should expect a rebound to $63-$65.

Trade of the Day – Qualcomm (NASDAQ:QCOM)

Baker Hughes Incorporated (NYSE: BHI)

Baker Hughes Incorporated is engaged in the oilfield services industry. Baker Hughes is a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. It also provides industrial and other products and services to the downstream refining, and the process and pipeline industries. The company may conduct its operations through subsidiaries, affiliates, ventures and alliances. It operates in more than 80 countries worldwide. The company operates in five segments. Four of these segments represent its oilfield operations and their geographic organization: North America, Latin America, Europe/Africa/Russia Caspian and Middle East/Asia Pacific. It's Industrial Services and other segment includes downstream chemicals, process and pipeline services, and the reservoir development services group.

To analyze Baker's stock for potential trading opportunities, please take a look at the 1-year chart of BHI (Baker Hughes, Inc.) below with my added notations:

Over the last 2-3 months, BHI has formed a strong support at $40 (black). Starting back in March, BHI has tested that $40 level on 5 or 6 occasions. In addition, BHI has created an important level at $45 (blue) as well, both as support (December and January) and resistance (April - May). The stock appears to be pulling back to the $40 support level again.

The Tale of the Tape: BHI is currently trading between its $40 and $45 price levels. A long position could be entered on a pullback to $40 or on a break above $45 with a stop placed below the level of entry. However, if you are bearish on the stock or overall market, a short trade could be made on a break below the $40 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven't thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you'll be around for the next trade. Capital preservation is always key!

BOMBSHELL: Citigroup Boss Says ‘Greece WILL leave the eurozone on January 1, 2013′, Predicts ‘Massive wave of contagion across Europe’

from Daily Mail:

Greece will leave the single currency eurozone on January 1, 2013, a senior economist at the world’s second-largest currency trading bank has claimed.

Citigroup’s Michael Saunders said Greece’s new currency would fall in value immediately by 60 per cent – and unleash a massive, yet manageable, wave of contagion across Europe.

In a note to clients, he said the likelihood of Greece leaving the euro in the next 12 to 24 months was now between 50 to 75 per cent – and assumed there would be a ‘Grexit’ at the start of next year.

The firm based its case on the belief that Greece would fail to form a government capable of implementing austerity measures after its next set of elections on June 17. This would ‘accentuate’ the stalemate between the nation and its creditors.

Mr Saunders said: ‘We assume Grexit occurs on January 1, 2013, with Greece staying in the EU and receiving external loan support [to mitigate risks of social unrest and collapse of civil society].

‘We expect that Grexit will be followed by a series of policy responses aiming to prevent a domino-style collapse of the banking system and escalating economic disruption.’

Read More @