Tuesday, May 14, 2013

VIX Chart

news.goldseek.com / By CAPTAINHOOK / Monday, 13 May 2013
No, this has nothing to do with the sci-fi movie. It has everything to do with real life however; life closer to home, because we are living in an increasingly hostile environment characterized by both increasingly difficult and dangerous times. The wars – wars on multiple levels – are coming closer and closer to home every day. And slowly but surely – one by one – increasing numbers of people are beginning to see it because it’s starting to materially affect their lives. They are coming to the realization that even though they may just be simple folks (from wherever), they are at war with extremists all over the world, including those (especially those) at home. And no amount of distraction will change such an enlightening once realized, not what Miley Cyrus is wearing out on her date tonight, not what Kim Kardashian is talking to herself about – nothing.

No, once you have had one of your limbs blown off simply because you were standing at the finish line of marathon you start to ask some hard questions, where the pabulum the establishment’s mainstream media feeds us simply no longer cuts it for many, not those directly affected, or friends and relatives. Of course for most it’s equally difficult to accept the extreme views of conspiracy theorists; however again, when these things come closer to home, like having the entire city of Boston locked down in martial law like conditions so that literally thousands of jackbooted Nazi like hooligans could hunt down a 19-year old kid seems a bit extreme to some, especially since this whole incident could have been manufactured. This is what it was like in Nazi-Germany as a terrified populous allowed their liberties to be stolen by Hitler’s hooligans.
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Eric Sprott: Investment Outlook (May 10, 2013)

Eric Sprott: The Golden Answer To Chinese Import Data

Submitted by Eric Sprott, Etienne Bordeleau, and David Franklin of Sprott Group,

Manufacturing data in the last several months has suggested that economic growth around the world is slowing. However, China’s export growth surprised the market this week and unexpectedly accelerated in April, even as shipments to the U.S. and Europe fell. This has created a conundrum for analysts and market watchers. How can China be growing while the countries that purchase its exports are slowing? The numbers don’t add up.

Digging deeper into these figures, several analysts have come to the conclusion that the numbers are faulty. Bank of America Corp. and Mizuho Securities Co. analysts have gone so far to say the figures have been inflated by fake reports. An “astounding” 92.9 percent jump in exports to Hong Kong, the most in 18 years, raises questions on data quality, researcher IHS Inc. said. They even call some of the data ‘absurd’, suggesting that exporters are ‘faking orders’ to obtain export-tax rebates. These observations challenge the credibility of Chinese economic data once again.

It is has been suggested that China’s robust appetite for commodities from iron ore to crude oil show that Chinese domestic demand is healthy, alleviating concerns about a renewed slowdown. China’s recent surge in gold imports puts this ‘increase in domestic demand’ observation into question. Our analysis shows that trade statistics are biased by the large gold inflows the country has experienced over the past few years. Because gold imports are accounted for in the “import” numbers of the current account (instead of the capital account like other investments), they artificially inflate the total import numbers published in the Financial Press. We say “inflate” because gold, unlike other materials, is mostly used for investment purposes and as such should not qualify as an import of “goods and services”, which is used to measure real economic activity. Now that China is importing significant quantities of gold, trade flow numbers are becoming more distorted. (more)

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Financial Astrology: Bond Update

We could again see a shift in the bond market on May 20th that will in my view be a warning of what is to come on June 20, 2014.  The speculation that the Fed will end its QE and bond buying program in 2014 could be the signal that the top in the bond market will be near June 20th next year.  We have been trading TBT with a very accurate strategy since the beginning of the year and we may again have another opportunity for a long position in the near future.  On January 9th we issued a trade alert for a long position near $65.  We followed up on February 24th with a recommendation to trim profits near $69 and advised there could be a pullback March 11th-March 27th.  On March 10th we reminded subscribers to close the remaining position with the impressive move to $69.42.  Looking back our trade target was within .42 cents of the high and the pullback materialized exactly on our target date of March 11th

Near June 12th-15th there could be news that money is flowing out of bonds and into the markets.  Watch for a pullback to near $61.40 to add a long position on TBT (ProShares Ultra short Treasuries)

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Four Hot Stock Sectors to Beat the Summertime Blues

Before you sell in May, consider this buying strategy
by Jonathan Burton
Market Watch

SAN FRANCISCO (MarketWatch) — “Sell in May and go away” is the old Wall Street chestnut imploring investors to steer clear of the U.S. market’s seasonal weakness between May and October.
It’s good advice — the U.S. market typically suffers from the summertime blues. For example, since 1979 the Russell 1000 Index has gained 3.5% in the six months through Oct. 31, versus an advance of 8.3% in the six months through April 30, according to Ned Davis Research.
The smaller-cap Russell 2000 Index fares even worse, up 0.6% from late spring into early fall against a 10.7% rise from late fall through early spring.
Continue Reading at MarketWatch.com…

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Investment Education 101: Mortgage Interest Rates

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Forget Gold: Only Food, Tools and Resourcefulness Will Matter In a Mad Max Scenario

When we talk about Mad Max scenarios, we are talking about events where the world as we know it no longer exists. No banks, no credit cards, no grocery stores, no gas stations, and a landscape devoid of law & order.
It’s an outlier to be sure, but one that has been experienced by millions of people throughout history.
Worst case scenarios do happen. And when they do, the activities associated with the regular flow of commerce as we understand them today cease completely.
Historically, this has happened more often than not as a result of economic calamity stemming from states that take on massive amounts of debt, with the end result being widespread war and total economic destruction.
Should such events come to pass in our modern era, everything we believe to be valuable today will be redefined, and only those assets of real worth will maintain their trading power.
According to cyclical analyst and historian Martin Armstrong, the dominant objects of value during a socio-economic collapse are those goods that can be used immediately for the purposes of survival or barter. (more)

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How to Spot & Time Stock Market Tops

Since the middle of April everyone and including their grandmother seems to have been building a short position in the equities market and we know picking tops or bottoms fighting the major underlying trend is risky business but most individuals cannot resist.
The rush one gets trying to pick a major top or bottom is flat out exciting and that is what makes it so darn addicting and irresistible. If you have ever nailed a market top or bottom then you know just how much money can be made. That one big win naturally draws you back to keep doing it much like how a casino works. The chemicals released in the brain during these extremely exciting times are strong enough that even the most focused traders fall victim to breaking rules and trying these type of bets/trades.
So if are going to try to pick a top you better be sure the charts and odds are leaning in your favor as much as possible before starting to build a position.
Below are a few charts with my analysis and thoughts overlaid showing you some of the things I look at when thinking about a counter trend trade like picking a top within a bull market.

Utility Stocks vs SP500 Index Daily Performance Chart:

The SPY and XLU performance chart below clearly shows how the majority of traders move out of the slow moving defensive stocks (utilities – XLU) and starts to put their money into more risky stocks. This helps boost the broad market. I see the same thing in bonds and gold this month which is a sign that a market top is nearing.
That being said when a market tops it is generally a process which takes time. Most traders think tops area  one day event but most of the times it takes weeks to unfold as the upward momentum slows and the big smart money players slowly hand off their long positions to the greedy emotion drove traders.
Look at the chart below and notice the first red box during September and October. As you can see it took nearly 6 weeks for that top to form before actually falling off. That same thing could easily happen again this time, though I do feel it will be more violent this time around.

SPY ETF Trading Chart Shows Instability and Resistance:

Using simple trend line analysis we see the equities market is trading at resistance and sideways or lower prices are more likely in the next week or two.

Stocks Trading Above 150 Day Moving Average Chart:

This chart because it’s based on a very long term moving average (150sma) is a slow mover and does not work well for timing traded. But with that said it does clearly warn you when stocks are getting a little overpriced and sellers could start at any time.
General rule is not to invest money on the long side when this chart is above the 75% level. Rather wait for a pullback below it.

Stocks Trading Above 20 Day Moving Average Chart:

This chart is based on the 20 day moving average which moves quickly. Because it reacts quicker to recent price action it can be a great help in timing an entry point for a market top or bottom. It does not pin point the day/top it does give you a one or two week window of when price should start to correct.

How to Spot and Time Stock Market Tops Conclusion:

As we all know or will soon find out, trading is one of the toughest businesses or and one of the most expensive hobbies that one will try to master. Hence the 95-99% failure rate of individuals who try to understand how the market functions, position management, how to control their own emotions and to create/follow a winning strategy.
With over 8000 public traded stocks, exchange traded funds, options, bonds, commodities, futures, forex, currencies etc… to pick from its easy to get overwhelmed and just start doing more or less random trades without a proven, documented rule based strategy. This type of trading results in frustration, loss of money and the eventual closure of a trading account. During this process most individuals will also lose friends, family and in many cased self-confidence.
So the next time you think about betting against the trend to pick a top or a bottom you better make darn sure you have waited well beyond the first day you feel like the market is topping out. Stocks trading over the 150 and 20 day moving averages should be in the upper reversal zones and money should be flowing out of bonds and other safe haven/defensive stocks to fuel the last rally/surge higher in the broad market.
Also I would like to note that I do follow the index futures and volume very closely on both the intraday and daily charts. This is where the big money does a lot of trading. Knowing when futures contracts are being sold or bought with heavy volume is very important data in helping time tops and bottoms more accurately. And the more experience you have in trading also plays a large part in your success in trading tops and bottoms.
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Harry Dent ~ Market Update : Start Selling Now

We see a megaphone pattern in the markets and we expects the markets to go a little higher still before running into resistance. Gold may also go higher for a while after almost crashing. Lastly, we are seeing a peaking pattern in junk bonds, so we think now is the right time to start selling those high yield junk bonds.

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