Saturday, March 14, 2015

Trader Who Called Oil’s Rout Sees Crude Below $40

by William Watts
Market Watch

NEW YORK (MarketWatch)—Investors and traders looking for the oil rout to give way to a V-shaped recovery are likely to be painfully disappointed, said a hedge-fund manager who made a killing betting on falling oil prices in 2014.
“I still believe we’re going to go below $40 and you’re going to have a look at the lows. I think it’s going to happen faster now than people think,” said Doug King, the London-based chief investment officer of the $260 million Merchant Commodity Fund, in a telephone interview on Friday.
The fund saw a 59.3% return in 2014, driven in large part by bets oil prices would fall. Prices for both West Texas Intermediate, the U.S. benchmark, and Brent, the global benchmark, dropped by more than half from their mid-2014 highs by the end of the year and are down for the year in 2015, as well. King said the fund is up around 8.5% year-to-date.
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Microsoft (MSFT): Could Be in Big Trouble Here

Even though the Nasdaq Composite Index just closed last month at all time highs, Microsoft (MSFT) can’t say the same.

The rally off the 2009 lows recently had MSFT hitting its 23% retracement level based upon the 2000 highs and 2009 lows. As it was nearing the 23% Fib level, it was also at the top of a rising channel. When MSFT hit this dual resistance, it stopped on a dime. Could this have been an 800 pound resistance point? So far it appears that way.

Of late, MSFT has broken below rising channel support and was kissing the underside of resistance at (1) above. This is not a good price point for MSFT to fall in price. MSFT wants/needs to climb back into its rising channel ASAP.

MSFT could earn the name “Mr. Softee” for a different reason if weakness starts to develop here.
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Dollarama Inc (TSX:DOL). Could Be a Great Investment No Matter What the Market Does

The Canadian economy is starting to look a little shaky.
Investors from Alberta and Saskatchewan can attest, since they’re seeing evidence of it personally every day. Real estate markets in both provinces are drying up, especially in areas where energy is the main driver of the economy. Consumer spending is down as well, mostly on big ticket items. CIBC is even predicting that Alberta’s economy will suffer a mild recession in 2015, before rebounding in 2016 along with energy prices.
The other thing that isn’t really looking strong is Canada’s real estate market. Sure, headline numbers are up, but that’s mostly based on strength from our two largest markets—Toronto and Vancouver. In January, prices actually declined in eight of Canada’s largest 11 cities. Alberta led the decline, but prices have also declined 5% in Montreal in the last seven months, and Halifax’s real estate is down 5.5% in the last five months. (more)

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Trina Solar Limited (NYSE: TSL)

Trina Solar Limited operates as an integrated solar-power products manufacturer and solar system developer in the People’s Republic of China, Europe, the United States, and other Asia Pacific regions. The company designs, develops, manufactures, and sells photovoltaic (PV) modules comprising monocrystalline PV modules ranging in various power outputs; and multicrystalline PV modules ranging from 230 W to 310 W in power output for use in residential, commercial, industrial, and other solar power generation systems. It sells its products to power plant developers and operators, distributors, wholesalers, PV system integrators, and regional and national grid operators.
Take a look at the 1-year chart of Trina (NYSE: TSL) below with the added notations:
1-year chart of Trina (NYSE: TSL)
TSL has been in mostly a sideways to down move over the last year. What has become clear over that time is that the $11 price (blue) is very important to the stock. Not only was $11 a key support last summer, but it was also a strong resistance for the stock over the last 4 months. Last week TSL broke above that $11 resistance and may now pull back to it as support.

The Tale of the Tape: TSL has a key level at $11. A trader could enter a long position on a pullback down to $11 with a stop placed under the level. However, a short trade could be made instead if the stock breaks back below $11.
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Is Gold Overpriced?

Gold futures have fallen over 10% from the high price set this January, and about 35% from the five year high made in 2011.  Given the correction we've already seen, how can one contend that gold may still be overpriced?  The answer lies in its relative value and the current structure of the precious metals markets.
One ounce of gold will currently buy around 74 ounces of silver.  This is near the higher end of its recent range.  Since 2000, the ratio of gold to silver has ranged from around 80:1 to a low of about 33:1.  

The increase in this ratio since 2011 has not been caused by a rise in gold, but by the fact that gold has fallen relatively less than silver: (more)
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Trade of the Day: AutoNation (AN)

AutoNation, Inc. (AN) may be a short-term winner, even if the market continues to flatten out or decline this quarter.
On the surface, the company presents itself as an auto retailer for new and used cars with primary markets in Florida, California and Texas. Geographic concentration is a risk now that the oil sector has slowed down; however, we think there is an underappreciated opportunity in the short-term precisely because of those risks.
It is true that most of AutoNation’s revenue is from car sales, with 57% of revenue coming from new-car sales and another 23% from used-car sales. But the earnings picture is where it gets more interesting. Just over 40% of AN’s earnings are from “Parts and Service.” That slice of the pie comes from a mere 15% of their total revenue. (more)

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The Simple Test Tocqueville’s John Hathaway and Doug Groh Use to Determine if Gold Is at a Bottom

by JT Long
The Gold Report

Gold investors have been through a nuclear winter, but the future looks bright as mining companies bask in the glow of lower costs, better exchange rates and a flurry of mergers and acquisitions. In this interview with The Gold Report, Tocqueville Asset Management fund managers Doug Groh and John Hathaway share the names of mid-cap companies that could emerge successfully and one truly contrarian play that could be a tenbagger if their forecasts are correct.
The Gold Report: Since we last talked in August, have precious metals bullion and mining shares bottomed?
John Hathaway: It looks as if they are trying to make a stand. In early November, we got down to $1,140/ounce ($1,140/oz). Only time will tell for sure.
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