Thursday, March 14, 2013

McAlvany Weekly Commentary

Mark Faber: Endless Government Manipulation

About This Week’s Show:
-Stocks moving higher but NO bargain
-Manipulated markets require diversification
-Gold near a tradable low
About the Guest: Marc Faber is a Swiss investor. Faber is publisher of the Gloom Boom & Doom Report newsletter and is the director of Marc Faber Ltd which acts as an investment advisor and fund manager. More Information

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Gold and Silver Manupilation?

by Martin Armstrong
Armstrong Economics

Question: Is there really a banking cartel that artificially suppresses gold/silver prices in order to convince the world to continue subjecting itself to a fraudulent fiat currency monetary system that is led by the US dollar?
Answer: NO WAY!!!!! Do banks manipulate markets including gold & silver? The answer is ABSOLUTELY! However, they do so only short-term in and out with fake analysts who only say buy when the banks sell it to investors at every top. They by no means manipulate gold and silver to support fiat currency. They are not public servants. They care only about short-term trades. That is part of the bullshit put out to cover-up being wrong when they only say buy. Why do these people always say buy at every top and to explain the decline they then blame the banks? Isn’t your job to say look out the banks are selling this high?
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Long-Term Forecast for Gold – 2014 and Beyond

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Kyle Bass Warns “The ‘AIG’ Of The World Is Back”

Kyle Bass, addressing Chicago Booth’s Initiative on Global Markets last week, clarified his thesis on Japan in great detail, but it was the Q&A that has roused great concern. “The AIG of the world is back – I have 27 year old kids selling me one-year jump risk on Japan for less than 1bp – $5bn at a time… and it is happening in size.” As he explains, the regulatory capital hit for the bank is zero (hence as great a return on capital as one can imagine) and “if the bell tolls at the end of the year, the 27-year-old kid gets a bonus… and if he blows the bank to smithereens, ugh, he got a paycheck all year.” Critically, the bank that he bought the ‘cheap options’ from recently called to ask if he would close the position – “that happened to me before,” he warns, “in 2007 right before mortgages cracked.” His single best investment idea for the next ten years is, “Sell JPY, Buy Gold, and go to sleep,” as he warns of the current situation in markets, “we are right back there! The brevity of financial memory is about two years.”  (more)

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Jive Software Inc (NASDAQ: JIVE)

Jive Software, Inc. provides a social business software platform to businesses, government agencies, and other enterprises. Its Jive Engage Platform enables collaboration across two principal communities and employees within the enterprise, and customers and partners outside the enterprise. The company's Jive Engage Platform is used as a communications tool and collaborative workspace that supports and enhances knowledge sharing, facilitates communication within and across organizational boundaries, and enables individuals to work together to achieve common business goals. Its platform allows customers and partners of the enterprise to connect socially with one another, as well as with the enterprise, in a structured online community that enables users to ask questions, post answers, and communicate about a product or particular issue. In addition, it provides Jive What Matters, a user interface to track, consume, manage, and filter critical business information, communications, and actions; Jive Apps Market, a secure market of business applications that are integrated to and accessed from within the Jive Engage Platform; and professional, support, and training services.
To analyze Jive's stock for potential trading opportunities, please take a look at the 1-year chart of JIVE (Jive Software, Inc.) below with my added notations:
1-year chart of JIVE (Jive Software, Inc.) The main price level to watch on JIVE is $16 (blue). Not only was the $16 resistance readily apparent over the (7) months and back in March, but that price also acted as support just last week. So, the $16 level is key to this stock. Assuming the stock moves higher, the increments of $2 (red) have also acted as common price levels for the stock.
The Tale of the Tape: JIVE's key level to watch is $16. A long position could be entered at the $16 support with a stop placed below that level, or a short play could be made on a break below $16 if that should happen.
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The Stock Market Trend & Hot Sector ETF’s

Trading with the trend should be your main focus for long term success no matter what type of trader you are (Options Trader, Stock Trader, or ETF Trader) although it’s not as easy as it sounds.
The good news is that there is a simple trading model that removes 95% of trading analysis and greatly reduces trading related emotions because the key technical analysis rules based on one of the world’s best chart technicians (John Murphy) technical analysis methods have been applied to the chart automatically. The key is to identify the trend of the market. Once that is known you can focus on trading strategies that take advantage of the current trend.
Over the past few years I have been creating this indicator/chart layout tool which converts my chart reading experience, tips and tricks into a simple system removing analysis paralysis which cause most individuals to second guess what they see and don’t pull the trigger. Using too many indicators or read/listening several other traders commentaries with different views than you causes this paralysis.
My simple red light, green light model clearly shows a viewer the current trend and expected price range (high and low) looking forward a couple days. I uses a series of data points like volatility, volume, cycles, momentum, chart patterns and logic rules. It even shows extreme pivot points helping you find low risk entry prices for both bull and bear market conditions.

Recent trends and signals for the SP500 Index Daily Chart:


Trading With the Trend – The Sweet Spots

Knowing the direction of the market is simple using the chart system above but trading with the trend is not that simple because of natural human behavior. Instead traders fall victim to trying to pick a top or bottom because they think the price is overbought or oversold and they want to catch the next big trend change.
We all know the saying “the market climbs a wall of worry”.  Well, the biggest worry most traders have is buying long in a bull market because stocks and price always look overbought and ready to top each week… This leads to people trying to get fancy picking a top only to get their head handed to them a few days or weeks later depending on how stubborn they are to exit a losing position.
The key to long term success is to buy during broad market (SP500) corrections once sentiment, cycles and momentum are starting to flash extreme oversold conditions. These show up as green arrows on the trend chart. At that point most sectors and high beta stocks like IBM, GOOG etc… should be at a key entry points with most of the downside risk removed already. Remember ¾ stocks follow the broad market so it only makes sense to follow it also.
What about a runaway stock market? This is when the stock market does not pullback but just keep grinding its way higher and higher… The only thing you can do is sit in cash, or look for a stock or sector that is having a small pause or pullback and get long with a small position until you get that broad market pullback and major by signal to add more.

Below are a few sectors showing a minor pause/pullback within this bull market.


Mid-Week Trend Conclusion:

Overall, the broad market remains in an uptrend. While I would like to see the SP500 pullback and give us another major buy signal like it did in December and February I do mind that much if prices keep running higher as it just give us more cushion and potential profits for when the trend does eventually roll over and flip signals. I hope you found this report interesting. It’s just scratching the surface of this topic but it’s a start.
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One Of The Greatest Opportunities In History For Investors

from King World News
Today one of the wealthiest people in the financial world spoke with King World News about what he considers to be one of the most incredible opportunities he has ever seen for investors. Here is what Rick Rule, who is the CEO of Sprott USA, had to say about that opportunity and creating great wealth: “One of the things that is interesting at this point, Eric, is the, ‘why bother’ question? When investors go through a bear market like this where they haven’t been making any money they ask, ‘Why would I take this risk?’ The thing you have to point out to investors and speculators is that history repeats.”
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