Is This the Top For T-Bonds?

gainspainscapital.com / By Graham Summers / December 12, 2012
Today the US Federal Reserve announced that it would be implementing QE 4: a policy of spending $45 billion per month buying Treasuries on the long-end of the yield curve until employment falls to 6.5%.
So between this and QE 3 which was announced just two and a half months ago, the Fed will be printing $85 billion per month.
First and foremost there is no evidence that QE creates jobs. Consider the case of the UK.
Since the crisis began, the Bank of England (BoE) has announced QE efforts equal to $598 billion in the UK. The UK’s GDP is $2.43 trillion. So the BoE has engaged in QE equal to over 20% of the UK’s GDP.
Despite this massive amount of QE, 2.53 million people are out of work today in the UK, up from 2 million at the start of the Great Crisis in 2007. Similarly, the UK’s GDP remains well below its peak.
In simple terms, QE fails to generate economic growth or jobs. End of story. The BoE spent 20% of the UK’s GDP on QE (a truly staggering amount) and more people are unemployed now than when it started. And GDP has yet to get even close to its pre-Crisis highs.
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MASTERCARD (MA) NYSE – (SIA Daily Stock Report)

MASTERCARD (MA) NYSE – Dec 13, 2012 (SIA Daily Stock Report)
GREEN – Favoured / Buy Zone
YELLOW – Neutral / Hold Zone
RED – Unfavoured / Sell / Avoid Zone
MASTERCARD (MA) NYSE – Dec 13, 2012 (SIA Daily Stock Report) – Since we last updated Mastercard (MA) 7 weeks ago, MA has moved up almost 8% (while the S&P 500 is up a little over 1%) and is now closing in on its next target resistance level at $505.46. Support is now at $448.83 and again at $406.52.
*** Since moving in to the Favored zone in the SIA/S&P100 Report back in June 2011, MA has remained a valid holding and is up over 60% during this time. The S&P 500 is up a little over 8% over the same time frame.


After a short stint in the Neutral zone in the SIA/S&P100 Report, Mastercard (MA) has had an impressive February now in the 8th spot. Having now moved through its last target resistance point at $408.60, the next resistance level is at $451.12. Support is now at $385.03 and again at $335.19.
*** – Although Mastercard did move down into the Neutral zone it did not trigger our technical stops and remained a valid holding.

Since we last updated Mastercard (MA) 7 weeks ago, MA has moved up almost 8% (while the S&P 500 is up a little over 1%) and is now closing in on its next target resistance level at $505.46. Support is now at $448.83 and again at $406.52.  (more)

The Power Of Spreads!

A typical investor nowadays will be involved in trading and investing in the stock markets and even investing in precious metals, such as gold and silver to help diversify and grow their portfolios in these volatile economic and political times.  Over the last several months, if you utilized the buy-and-hold strategies in the stock markets and even in gold, the typical investor has made money.
As we look at the chart of the ES (e-mini S&P 500 futures):

We notice that stock market has been in an uptrend.  Also if we look at the gold futures chart, it shows an uptrend as well:


Now, we focus our attention in the grain spreads in particular starting in late July when the grains started to shift downward after incredible upward runs for May, June, and early July in light of the U.S. drought situation.  In particular we look at the May / July spread for Chicago wheat markets:


From the peak of July 23rd to today's date, this spread has has an incredible downward run.  I, of course, had been advocating bearspreading during this time frame as export sales were tapering off and the market seemed to rationing demand in the wheat export arenas.
We can illustrate the power of leverage in these grain spreads because, in my opinion, it was a better investment (trade) than buying & holding either the stock market or gold futures.

 

 In conclusion, for an investment of $ 100,000, your better return from 7/23/12 to 12/13/12 was the bearspread in Chicago wheat (May/ July) vs. either one of the long ES and Gold futures positions, which beat out the other strategies by a factor of 11!   The difference was in the margin where the bearspread was only $ 270 per spread while the ES and Gold futures contracts were much higher, at $ 3850 and $ 7425 per contract respectively.
 Conclusion:  When looking at investments in the futures markets and even the stock markets, you should consider trading futures spreads as the lowered margin in certain key markets might give you a competitive advantage that not most traders or investors are looking at every day.  I spend the majority of time trading these spreads, so I am constantly looking for these opportunities on a regular basis.

Dolby Laboratories, Inc. (NYSE: DLB)

Dolby Laboratories, Inc. provides products, services, and technologies for various stages in the content creation, distribution, and playback process in the entertainment industry worldwide. It designs and manufactures video and audio products for the film production, cinema, and television broadcast industries; and provides services to support film production, television broadcast, and music production. The company is involved in licensing technologies, such as signal processing systems for movie soundtracks, DVDs, Blu-ray discs, personal computers (PCs), digital televisions, mobile devices, video games, satellite and cable broadcasts, and online streaming; and developing technologies for mobile devices for 3D, digital cinema, post-production, and LED backlit LCD televisions. It also offers cinema processors, which are used to read, decode, and play back a film's soundtrack and calibrate the sound system in a movie theater. In addition, Dolby Laboratories, Inc. provides broadcast products to encode, transmit, and decode multiple channels of audio for DTV and HDTV program production and broadcast distribution; and professional reference monitor, a video monitor used in the production and post-production of cinematic and video content.

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

DLB has been trading sideways overall since August. During that stretch, the stock has created a $30 support (blue) and a $36 resistance (navy). You can see that the $36 resistance had also been a support back in March and April. DLB currently appears to be headed back up to the $36 resistance.

Canadian Real Estate Advice

Since the financial meltdown of 2008, real estate’s been the asset of choice. In fact even earlier – with Nine Eleven – most people started falling out of love with mutual funds and tech stocks, and retreated to the property womb. Thus began the greatest housing boom in Canadian history.

But all booms end. And now that 70% of us own some, financed with an ocean or mortgage debt, real estate’s the new Nortel. Will 2013 be the year everybody gets squished when the elephant rolls over?
That depends on you.

Here are five housing trends to mull.

Pent-up demand.
 Not from buyers this time, but sellers. After all, last year brought new mortgage regs, tighter banking rules, slowing sales and the first negative media stories about real estate since the bust of the early Nineties. As a result, legions of sellers withdrew their properties rather than extending listings and risk getting vultched in a crappy market. As 2012 ended, there were nothing but pooches for sale in many neighbourhoods. It was like going to a retirement home  looking for action. (more)

Chart of the Day - Telus Corp (TU)

The "Chart of the Day" is Telus Corp (TU), which showed up on Wednesday's Barchart "All-Time High" list. Telus on Wednesday posted a new all-time high of $65.97 and closed +1.06%. TrendSpotter has been long since Nov 23 at $64.79. In recent news on the stock, Dejardins upgraded Telus to Buy from Hold. Telus on Nov 9 reported Q3 EPS of $1.08, slightly above the consensus of $1.07, and announced a 10.3% y/y increase in its quarterly dividend to C$0.64. Telus Corp, with a market cap of $21 billion, is the largest telecommunications company in Western Canada and the second largest in the country.

Jim Sinclair: Cartel Cap Will Fail As Eastern Cash Market Gold Demand Will Drive Gold Over $3500/oz!

from JSMineset, via Silver Doctors:
Jim Sinclair has sent an email alert to subscribers regarding the blatant gold and silver manipulation in the wake of Wednesday’s QE4 announcement. Sinclair states that the Fed via Goldman has been capping gold in the $1700′s for months via the ESF, but that the Fed’s capping of the gold market via paper will fail spectacularly as Eastern physical gold demand overwhelms the paper manipulators and drives the price of gold well north of $3,500/oz.
Gold will trade at $3500 and above on its own merits with Eastern demand in the cash market being the engine of price. The Fed via Goldman has capped gold in the paper market for months. They were so obvious between $1775 and $1800 that Petunia can call the strategy. Goldman is, in all practical senses, the Exchange Stabilization Fund because ESF is only a brokerage account. There is no fund in terms of what one thinks a fund’s office should look like. Read the law.
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Technical Trades Of the Week – SPX, Dollar, Nat Gas

Wednesday’s price action was very bearish yet again and we are patiently waiting for a counter trend pullback to happen. While three are some good looking plays out there I really do not want to get long until the market clears the air with a bout or three of strong selling. Remember 3:4 stocks follow the market and the odds of picking a commodity or ETF that bucks the trend is unlikely. 

SP500 / Broad Stock Market:

We have seen a bug run up in stocks this month and things are looking a little long in the teeth. A large number of stocks are trading above their upper Bollinger band and the broad market is testing that key resistance level also. Typically when a Bollinger band is reached we see price reverse for a couple days at minimum.
While the equities market is in a new uptrend as seen by the moving averages I pullback seems imminient. The last two days has formed reversal candles and are pointing to lower prices.

Dollar Index Hourly Chart:

This chart shows a possible bottom forming in the dollar pointing to a 3-8 day pullback in stocks.

Gold Futures Hourly Chart:

Natural Gas Hourly Chart:

Morning Trading Conclusion:

Looking at the charts on several different time frames, not all shown here, technical analysis shows a pullback in stocks is highly likely. This is what we are currently positioned for.
The US dollars downward momentum is slowing and if it can find a bid today it should trigger strong selling in both stocks and commodities. Gold and silver are down sharply along with miners.
We have been watching natural gas for a few months and know that it has been trading inverse to what stocks do. This bodes well for a bounce in natural gas if stocks start a sell off. That being said, natural gas is trading at a key tipping point that could spark a very fast and hard drop. This knife can fall at a speed that will take a slice out of your trading account if not traded and managed properly (tiny position and use of a stop). I actually like natural gas the more it moves down and could issue a buy alert on it today or this week. I would like to see volume decline at this level showing the momentum is slowing…