Monday, February 25, 2013

Richard Russell – 3 Key Charts & Some Things To Think About

from King World News
With key global markets at or near breakout levels, and gold turning higher in after-hours trading, the Godfather of newsletter writers, Richard Russell, released 3 key charts covering everything from stocks, to commodities and gold. KWN even included a bonus chart of hedge fund activity in gold. Here is what Russell had to say in a note to subscribers: “From its recent high, the Dow (intraday yesterday) was down almost 200 points. Normally, this would be considered an overdue minor “back-off” from an overbought situation … When one Average advances to a new high, and that new high is unconfirmed by the other Average, trouble may be waiting.”
Richard Russell continues:
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The Best Stock for the Comeback Commodity of 2013

Although gold prices have taken a big hit of late and may be at the onset of a major pullback, there's one metal that's only recently started to rebound and is taking some stocks with it -- aluminum.
Since August of last year, aluminum prices have rallied from a multi-year low of 82 cents a pound to the current price of 96 cents a pound. Some say the shape of aluminum's price chart suggest a breakout is imminent, while others say the breakout is already underway.
Either way, with aluminum prices on the mend, companies like Alcoa (NYSE: AA) and Century Aluminum (Nasdaq: CENX) are finding it's easier to turn a profit. If aluminum prices continue their march toward higher levels, then these companies may post far wider profits this year than anyone is expecting, making aluminum stocks a potential Cinderella story for 2013.
A picture is worth a thousand words
The past couple of years haven't been good for the aluminum industry. After aluminum prices peaked around a two-year high of $1.35 a pound in early 2011 and began to fall to that late-2012 low of 82 cents a pound, aluminum companies commensurately suffered. For example, Alcoa's per-share profit plunged from 72 cents in 2011 to only 24 cents per share in 2012. Noranda Aluminum Holding (NYSE: NOR) watched its bottom line slump from $1.05 a share in 2011 to 2 cents a share in 2012.
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Crisis Investing 101: Real Estate Assets Provide Safety in Good Times and Bad

Real estate used to be the bedrock of many investors' portfolios. It used to stand the test of time as a sensible, solid investment across most every economic situation. That was until 2007, when the entire real estate market experienced what was unthinkable only a few years earlier: It plunged in value.
The real estate bubble that led to a stock market crash and the subsequent Great Recession is a story most people know: Overzealous lenders were giving away too many bad loans, while builders with access to easy money were developing too many homes. Everyone was happy and home prices soared.
But as home prices went up, people needed to borrow a lot more money. And eventually, those lenders couldn't afford to keep up with all the defaulted loans from bad creditors. Meanwhile, the oversupply of homes started to punish prices lower, leaving many homebuyers stuck owing way more than their homes valued.

Despite the real estate crisis, many savvy investors used the downturn to buy properties at bargain basement prices that will likely create profits regardless of what happens with the overall market. And indeed, just recently this downtrend in prices started to stabilize. Statistics from around the country are indicating upticks in prices and demand. (more)

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Why Warren Buffett is Loading Up on This Agricultural Giant

During the course of 2012, investing in agricultural stocks proved to be tricky. One of the nation's worst droughts on record up-ended the business model of so many companies as crops wilted and cattle were brought to premature slaughter.
Yet there were a few beneficiaries of the drought.

Back in July, I suggested that Bunge (NYSE: BG) and Ingredion (Nasdaq: INGR) would prosper, and in that time, they've scored gains of 22% and 42% respectively.

Back then, I looked at another major agricultural play, but sensed that it was too soon -- perhaps the back half of 2013 and into 2014 was the time to really focus on this company, I thought.

Warren Buffett has other ideas. He's already loading up on shares of Archer Daniels Midland (NYSE: ADM), acquiring 6 million shares in the fourth quarter of 2012 at an average price of $27.

Shares have risen a bit further since, and show signs of breaking out of a longstanding trading range.
Though the turnaround for Archer Daniels is several quarters away, Buffett and others have begun buying now. (more)

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Hyperinflation: A Graphic Presentation

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Why Investors Should Prepare for a Correction

We've all been through this drill before.
As if living through the effects of the 2007-2008 financial crisis and the Great Recession wasn't enough, investors continue to sit by and watch as officials in Washington wrangle over the question of how to get the U.S. government's spending problem under control.
If there's any lesson the whole "fiscal cliff" fiasco taught us, it's that our leaders in Washington have absolutely no problem with dragging out negotiations while bringing financial markets to the brink of disaster.

That's why, as we approach the March 1 deadline for the "sequester" -- a series of across-the-board cuts to the U.S. government's discretionary budget put in place in order to force Washington's hand -- investors should expect more of the same.
"We've seen this once or twice pretty much every year for the past three years. People get very optimistic about U.S. growth and then some sort of a shock happens that causes a growth scare and each time it catalyzed into a 5-10% correction in the S&P 500... And I expect exactly the same thing this time around," said Elliott Gue, Chief Strategist for Top 10 Stocks and High-Yield International on CNBC Asia Thursday evening.
"I actually think it's one of a number of things that's going to represent a bit of a headwind for the U.S. market going forward." said Elliott.
You can watch Elliott's full interview here.
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US Weekly Economic Calendar

time (et) report period Actual CONSENSUS
8:30 am Chicago Fed national activity index Feb.   -- -0.11 (3-mo)
TUESDAY, Feb. 26
9 am Case-Shiller home price index Dec.   -- 5.5% (y-o-y)
9 am FHFA home price index Dec.   -- 5.6% (y-o-y)
10 am Consumer confidence index Feb.   62.5 58.6
10 am New home sales Jan.   384,000 369,000
8:30 am Durable goods orders Jan.   -5.0% 4.3%
8:30 am  Weekly jobless claims  2-23
-- 362,000
8:30 am GDP revision 4Q   0.5% -0.1%
9:45 am Chicago PMI Feb.   53.9 55.6
8:30 am Personal income Jan.
-2.4% 2.6%
8:30 am Consumer spending Jan.   0.2% 0.2%
9:55 am UMich consumer sentiment Feb.   76.4 76.3
10 am ISM Feb.   52.5 53.1
10 am Construction spending Jan.   0.7% 0.9%
TBA Motor vehicle sales Feb.
15.1 mln 15.3 mln
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