Wednesday, October 8, 2014

US Dollar is Extreme / By Gary Tanashian /
Using Tom McCellan’s article discussing a “blow off” move in the US dollar and its very bearish net short position by commercial traders as a starting point, I would like to talk about the USD and gold and how they each fit in to the global macro backdrop.  We could add silver into the mix as well because its failure in relation to gold (ref. the gold-silver ratio’s breakout last week) is the other horseman (joining Uncle Buck) that would indicate a changing macro.  Here’s the McClellan piece:
Commercials Betting on Big Dollar Downturn
First I would question the term “blow off” when talking about the USD.  Markets that have come off of long term basing patterns and broken above resistance with plenty of overhead resistance still to come have not blown off.  A blow off is Nasdaq 2000, Uranium 2007, Crude Oil 2008, Silver 2011, etc.
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3 Income Stocks for a ‘Monthly Paycheck’: Apollo Senior Floating Rate Fund (NYSE:AFT), Recon Capital NASDAQ 100 Covered Call ETF (Nasdaq: QYLD), Home Loan Servicing Solutions (NASDAQ:HLSS)

Up until a few years ago, dividend stocks were a fairly well-trodden beat for the financial reporter to cover, with lots of familiar names coming up over and over again.
When the Federal Reserve began its multiple rounds of quantitative easing, it began buying tons of bonds. The result is that bond prices rose and yields dropped to historic lows.
Investors who were used to having large chunks of their portfolio set up in fixed income investments saw a lot of that income dwindle almost to nothing. (more)

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CommVault Systems, Inc. (NASDAQ: CVLT)

CommVault Systems, Inc. provides data and information management software applications and related services primarily in North America, Europe, Australia, and Asia. The company develops, markets, and sells a suite of software applications and services under the Simpana brand. Its Simpana software suite includes solution for the backup and restoration of enterprise data for file systems, applications, databases, and virtual machine systems; integrated data archiving solution that optimizes data tiering and improves information governance; and enterprise-wide storage optimization for email and files reducing space on primary storage. The company also provides solutions for protection of critical applications and data with snapshots and real-time replication; Web browser that allows search, sort, select, and retrieval of corporate files and information from online, archive, and backup data copies; and Robust, which allows centralized management and reporting on operations across multiple environments.
Take a look at the 1-year chart of CommVault (NYSE: CVLT) with the added notations:
1-year chart of CommVault (NYSE: CVLT)
After selling of consistently into April, CVLT has held a very important level of support at $45 (green) for most of the following 5 months. No matter what the market has done during that time, CVLT has always found support at that level when tested. Now, the stock has approached $45 again and that could provide another bounce higher.

The Tale of the Tape: CVLT has a key level of support at $45. A trader could enter a long position at $45 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.
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Saudi Arabia Goes Rogue, Risking Oil Price War / Pam Martens and Russ Martens /October 7, 2014
In the mid 1980s, there was a different King and a different oil minister in Saudi Arabia than present today, but, other than that, the threat of an oil price war within the ranks of OPEC has all the hallmarks of early 1986.
Typically, cartels like OPEC are supposed to act in unison on prices. But last Wednesday, Saudi Arabia’s state-owned oil company, Saudi Aramco, stunned world oil markets by acting alone in cutting its official crude price by $1 per barrel for November deliveries to its Asian customers. It also dropped its price by approximately 40 cents per barrel to U.S. and European customers.
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8 Reasons Why The Long-Bond Is Going Under 2.50% / by Tyler Durden / 10/07/2014 10:07
Via Scotiabank’s Guy Haselmann,
I’ve been a bond bull since February, frequently predicting that the 30 year would fall below 3% by the end of the year.  Last week, I said it would fall below 3% by Thanksgiving; a call I still standby.   For the reasons that I mentioned on a morning call, I will give the shortened version of a case why the long bond may even be headed toward 2.5% in 2015.
As the country managing the world’s reserve currency, the US needs to run a chronic current account deficit to supply the world with dollars.  Yet, in running a chronic perpetual deficit it undermines confidence in it.  This is what is known as the Triffin Dilemma.
Many believe QE3’s printing of $1 trillion per year (of a fiat currency) would be the tipping point that would debase the dollar.  Bitcoin become popular and Gold soared.  The world was flush in dollars.  EM corporates issued in dollars, expanding the outstanding float of such securities 7x versus 2006 levels. The debasement never happened and now that the QE is ending, the world will have fewer dollars. In turn, the dollar is under pressure and Bitcoin has collapsed (75%).
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