Thursday, January 16, 2014

Baltic Dry Continues Collapse - Worst Slide Since Financial Crisis

Despite 'blaming' the drop in the cost of dry bulk shipping on Colombian coal restrictions, it seems increasingly clear that the 40% collapse in the Baltic Dry Index since the start of the year is more than just that. While this is the worst start to a year in over 30 years, the scale of this meltdown is only matched by the total devastation that occurred in Q3 2008. Of course, the mainstream media will continue to ignore this dour index until it decides to rise once again, but for now, 9 days in a row of plunging prices is yet another canary in the global trade coalmine and suggests what inventory stacking that occurred in Q3/4 2013 is anything but sustained.

Baltic Dry costs are the lowest in 4 months, down 40% for the start of the year, and the worst start to a year in over 30 years...

As we noted yesterday...
Of course, we are sure the 'lead' that the Baltic Dry seems to have over global macro will be quickly ignored...

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Palladium: My Favorite Chart Setup For 2014

I’ve spent the last couple of weeks really digging into my chart book. Many of you guys already know, but I look at more charts on more time frames than you can ever imagine. The way I see it, if you put in the work, there is always a good risk/reward out there, whether on the long side or short side, stock, currency, or commodity. It doesn’t matter to me whether we’re buying Microsoft or Coffee futures. To me it’s just supply and demand, so what’s the difference?
There is one chart that really really stands out to me. And that is the weekly chart of Palladium. I’ve briefly mentioned it before, but I think it’s worth bringing up again as we enter the new year. First let’s get some perspective. This is a long-term arithmetic scale bar chart of Palladium prices going back to 1969. It’s brought to us by and shows the all-time highs in 2001 up towards 1100. That’s currently 50% above today’s prices. I like that, it gives us plenty of room. But also notice this pattern of converging trendlines that’s developed over the last couple of years since that 2011 decline:
1-15-2014 palladium chart store
Here is a better look at what I’m talking about. This is a weekly bar chart giving us a closer look at these converging trendlines. You see, more often than not, these sort of consolidations tend to resolve themselves in the direction of the underlying trend. In this case, the trend is up since 2008 and this action is correcting the initial 400+% rally that got it here. The measured move based on this pattern takes us above 1200, so to think we can retest the all-time highs is not out of the question at all.
1-15-2014 PA weekly bars
One last thing that I’d like to mention is how many times this downtrend line has been tested. Depending on your count, we could be talking about 5-6 tests of resistance. In my experience, the more times that a level is tested, the higher the likelihood that it breaks. I think it happens soon and our confirmation would be when prices take out last year’s highs. Depending on your time frame and risk parameters you can wait or anticipate it. In my opinion, as nice as this might be, I don’t think there’s any reason to rush it. This is such a humongous base, that the upside potential on a breakout is massive and we’ll have plenty of time to participate.
And that’s not to say there aren’t other beautiful charts out there. I think the weekly $USDCAD chart, for example, is gorgeous and breaking out of this multi-year base. But I bring up palladium as a setup. Like I said, it’s not ready to trade yet. But coming into the new year, I think this one could be a monster. We’ll see…
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EnerNOC (NASDAQ: ENOC): Stock Could Reward Traders With Almost 40% Gains

Did you ever wonder why a number of electric utilities hand out rebates for energy-efficient appliances? After all, you'd think these firms want customers to burn more energy and rack up higher electric bills. That's not the way they see it though.

A number of utilities aim to operate near capacity to best utilize their own infrastructures, and they dread summer heat waves or other periods of high power consumption that can push their systems to the limit. Building a buffer into their capacity means building costly new power plants, and utility companies would like to avoid yet another financial burden.

In response, many utilities, along with their biggest corporate customers, are working with Boston-based EnerNOC (NASDAQ: ENOC) to help modulate energy consumption during peak usage times.  (more)

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Lennar Corporation (NYSE: LEN)

Lennar Corporation, together with its subsidiaries, engages in homebuilding, financial services, and real estate businesses in the United States. The company operates in Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida, Homebuilding Houston, Financial Services, and Rialto Investments segments. Its homebuilding activities primarily include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land. The company also offers financial services, including mortgage financing, title insurance, and closing services for buyers and others. In addition, it is involved in sourcing, underwriting, pricing, managing, and monetizing real estate and real estate related assets, as well as provision of real estate capital and asset management services.
Please take a look at the 1-year chart of LEN (Lennar Corporation) below with my added notations:
1-year chart of LEN (Lennar Corporation)
After sliding lower from May through August, LEN finally found its footing. Since then the stock has hit a key resistance level at around $38 (blue) multiple times. Two weeks ago LEN finally broke out above that important $38 level and is now pulling back to it. The stock should be moving overall higher from here, assuming it holds above $38.

The Tale of the Tape: LEN had a key level of resistance at $38 that should now act as support on any pullbacks. A long trade could be entered on a pullback to $38 with a stop placed below that level. A break back below $38 could negate the forecast for a move higher.
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Next Real Estate Collapse Will Make 2008 Look Like a Dress Rehearsal!

Fabian Calvo from says, "This next collapse will make 2008 look like a dress rehearsal for the really big multi-bubble collapse we will be seeing. Calvo's company buys and sells $100 million in distressed real estate debt a year. Calvo, who does business with millionaires and billion dollar hedge funds, says, "A year ago, a third of the room would say buying gold and silver was just kind of crazy. Today, you have half of the room investing much more than 10 or 15% of their portfolio into physical gold and silver. To me, that is a big signal."

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Chart of the Day - Genmark Diagnostics (GNMK)

The Chart of the Day is Genmark Diagnostics (GNMK).  I found the stock by sorting the New High List for frequency in the last month, skipped the stocks that didn't have a positive gain for the last week and month and used the Flipchart feature to review the charts,  Since the Trend Spotter signaled a buy on 12/20 the stock gained 11.92%.

It is a molecular diagnostics company focused on developing and commercializing its proprietary eSensor(R) detection technology. The eSensor' XT-8 system is the second generation in GenMark Dx's eSensor' platform, utilizing electrochemical detection technology to detect nucleic acids on a microarray. The XT-8 System enables multiplex detection of DNA and RNA targets. The Company has developed four diagnostic tests for use with its XT-8 System. Its Cystic Fibrosis Genotyping Test, which detects pre-conception risks of cystic fibrosis, and its Warfarin Sensitivity Test, which determines an individual's ability to metabolize the oral anticoagulant warfarin, have received FDA clearance. It has also developed a Respiratory Viral Panel Test, which detects the presence of major respiratory viruses, and a Thrombosis Risk Test, which detects an individual's increased risk of blood clots.

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