Saturday, August 15, 2015

Jeremy Grantham: One of the World’s Most Respected Investors Predicts 2016 Stock Crash

Jeremy Grantham thinks US stocks could crash next year.

Grantham is the founder of GMO, a firm that manages $118 billion. He’s widely respected for warning about the 2000 market crash and the 2008 financial crisis.

Although most large money managers will tell you to always be in the market (which means you will always pay them fees), Grantham is willing to speak his mind, even if that means telling people to get out of the market.  (more)

Canadian Dolar: World’s Most Hated Major Currency Hits 11-Year Low

Years of near universal easy money policies led to an investment boom in commodities, which led to overproduction that coincided with languid demand, which led to a crash in prices, which led to a rout in commodity currencies. Then the Fed started its cacophony about raising rates; it pulled hot money into dollar assets, pushed up the dollar further, and left commodity currencies twisting in the wind.

Among them, one stands out: the Canadian dollar.

The rout in commodities has ravaged Canada’s oil patch and its mining sector. For example, home sales in Calgary, the epicenter of the oil patch, have plunged 25% year-to-date. Canada is in one of the most magnificent housing bubbles the world as ever seen, and when it pops in Toronto or Vancouver, there will be fireworks. But not yet. (more)

Crude Oil Extremely Oversold, Approaching Bottom

Crude Oil is once again making headlines, as the selling pressure continues. Basically, the rebound which started from $48 per barrel in middle of March 2015, came to an exhaustion point by early May at around $65 per barrel. Super bears and perma-deflationists believe that Crude Oil is most likely entering another 20 year secular decline (similar to 1980s and 1990s). I do not hold this view myself.

I believe Crude is now in the process of forming a major bottom. In recent times I have recognised that energy stocks have started to recover despite Oils sell off. Very high corporate insider buying activity in the sector is a major buy signal, especially while sentiment survey readings have hit rock bottom levels. In particular, CEOs of energy companies have dramatically reduced the count of US oil rigs, which almost guarantees a noteworthy fall in future supply.

Finally, from the technical perspective, Crude is once more oversold from short and long term perspective. We are looking at at least 1.5 standard deviations below the mean right now. Keep a close eye on this one as the reversal could be in any day now…

Entergy Corporation (NYSE: ETR)

Entergy Corporation engages in the electric power production and retail electric distribution operations in the United States. It operates in two segments, Utility and Entergy Wholesale Commodities. The Utility segment generates, transmits, distributes, and sells electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and distributes natural gas. The Entergy Wholesale Commodities segment is engaged in the ownership, operation, and decommissioning of nuclear power plants located in the northern United States; sells the electric power to wholesale customers; offers services to other nuclear power plant owners; and owns interests in non-nuclear power plants that sell the electric power to wholesale customers.
Take a look at the 1-year chart of Entergy (NYSE: ETR) below with my added notations:
1-year chart of Entergy (NYSE: ETR)
ETR has been trending lower for the past 8 months. Over that time, the stock has formed an important trend line of resistance (blue). Any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. ETR obviously has an important trendline of resistance, which currently sits right around $70. A break above that line should mean higher prices, overall, for the stock.

The Tale of the Tape: ETR is currently stuck under a down trending resistance. A break above that resistance should mean higher prices for the stock, thus a long trade could be made. Short traders might look to enter a trade at the resistance.

What Is So Special About 7?

Everything in life moves in cycles. Seconds, minutes, hours, days, all add up to become part of a cycle. Some cycles, such as the beating of the heart move fast, while a millennium moves very slow. This article will draw your attention to a very important 7 year cycle. (Charts courtesy unless indicated). (more)