Thursday, September 25, 2014

Is Corn Heading For A Bounce?

There's a big opportunity setting up for commodities investors...
Thanks to mild weather and plenty of rain, the U.S. is expecting the largest corn crop it has ever seen.
But good news for corn supply is bad news for corn prices... The price of the commodity has fallen around 20% this year. And many expect it to keep falling.
While corn prices may be set to fall in the short term, a boom is just around the corner. And investors are about to have a great chance to get in...(more)
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Why Oil Prices Are Dropping Despite Mideast Unrest

by Jeff Rubin
Financial Sense

In the past, military conflicts in the Middle East and the attendant threat of supply disruptions would send oil prices soaring. Today, oil prices are falling even as the region is seemingly unraveling. Civil wars are unfolding in Iraq, Syria, and Libya, atrocities by ISIS have the western world mounting military action, and Hamas and Israel are coming off arguably the most intense period of conflict in years. The region feels like a tinderbox. Oil supply has already suffered in Libya and Iraq and the threat of production losses is looming over other countries in the region.
Historically, such widespread unrest would have caused global oil prices to march higher, but instead of rising against the backdrop of heightened geopolitical risks, Brent, the global price benchmark, has recently sunk below $100 a barrel. Despite the unrest in the world’s most important oil producing region, the price of Brent is now actually 16 percent lower than it was in June.
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S&P500 At Historic Highs Relative to Gold Miner ETF GDX

Precious metals have been the big story lately as Silver crashes to 4-year lows and almost anything with the word “Gold” in it continues to struggle and underperform other equities. Today I want to take a look at the S&P500 compared to the Gold Miners since they are right near historic levels.
Here is a daily line chart showing the ratio between SPY and GDX since last summer. We are literally right at the all-time highs in this particular ratio (note: the ETF GDX has only existed since 2006):
9-24-14 spy vs gdx
A break of this key resistance would give us a measured move target up near 10.38 which is almost 16% from current levels. We’ve already broken the down trend line from last December’s highs in the ratio. But a breakout to new highs, which looks likely would be another bullish development.
I can see a scenario where we continue to consolidate up here and then break out, or even correct a little bit to the downside in order to properly acknowledge this former overhead supply. But a confirmed breakout here would be extremely constructive, and from where we stand today, the higher probability outcome.
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National-Oilwell Varco, Inc. (NYSE: NOV)

National Oilwell Varco, Inc. provides equipment and components for oil and gas drilling and production; oilfield services; and supply chain integration services to the upstream oil and gas industry worldwide. The company’s Rig Technology segment offers offshore and onshore drilling rigs; derricks; pipe lifting, racking, rotating, and assembly systems; rig instrumentation; blowout preventers; coiled tubing equipment and pressure pumping units. The Petroleum Services and Supplies segment provides consumable goods and services to drill, complete, remediate, and work over oil and gas wells. Its Distribution and Transmission segment provides pipe, maintenance, repair, and operating supplies and spare parts to drill site and production locations, pipeline operations, processing plants, and industrial facilities; procurement, materials management, and logistics services.
Take a look at the 1-year chart of Varco (NYSE: NOV) with the added notations:
1-year chart of Varco (NYSE: NOV)
NOV may be forming a bearish chart pattern known as a double top. Double tops are reversal patterns and are as simple as they sound: Rallying up to a point (T), selling off to a support, and then rallying back up again to approximately the same top (T).
NOV appears to have formed the double top price pattern (blue) over the last 3 months. As with any price pattern, a confirmation of the pattern is needed. NOV would confirm its pattern by breaking the $80 support (red) that was created by the double top pattern.

The Tale of the Tape: NOV has formed a potential double top. A short trade could be made on a break of the $80 level. Since there is no guarantee of a breakdown, a long trade could be made at $80 if a trader is willing to disregard the pattern.
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Too Big Not To Fail | McAlvany Commentary 2014

This Week’s Show:
Collapse of Complexity is a recurrent pattern
Governments will sacrifice all to maintain norm
The FED’s 4 Trillion Dollar Liquidity Trap
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Standard & Poor’s Warns on Germany Triggering the Next Debt Crisis, Investors Would Lose their Shirts

A true debacle happened. Just when we thought the euro was safe, that ECB President Mario Draghi had single-handedly duct-taped the Eurozone back together in the summer of 2012 with his magic words, “whatever it takes.” Markets assumed that they were backed by the ECB’s printing press, and they loved their assumption. Spanish, Italian, even highly dubious Greek debt, some of it with a fresh haircut, soared. And hedge funds and banks gorged on it and loved it. The debt crisis was over! Stocks soared even more. Money was being made.
So bank bailouts continued, and the Eurozone recession proved to be a nasty long-term affair, but no problem, everything seemed to be guaranteed by the ECB. Debt-sinner countries, as Germans like to call them, could suddenly borrow for nearly free, and neither deficits nor debts mattered to financial markets.
But now comes ratings agency Standard & Poor’s and douses our illusions, because that’s all they were, with a bucket of ice water. The soaring popularity and electoral successes of Germany’s anti-euro party, Alternative for Germany (AfD), could push Chancellor Angela Merkel and her party, the conservative CDU, to take a harder line against bailouts, hopes of QE, and all manner of other ECB miracles that financial markets had been counting on. And it could spook them. And the nearly free money could suddenly dry up. So S&P warned:
None of this would matter much, if we were to assess that the euro crisis is safely behind us. However, this is unlikely to be the case. Eurozone output is still below 2007 levels, and in 2014 the weak recovery has come to a near halt in much of the euro area. Unemployment remains precariously high and disinflationary pressures have been mounting. Public debt burdens continue to rise in all large euro area countries bar Germany.
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