Thursday, October 31, 2013

How to smooth out the bumps

I ran across this article over on Business Insider.

I always have trouble getting logged in to comment so here is my comment on this:

Former Obama advisor has suggestion

I would say that all of the benefits that the Federal govt. provides for all of it's citizens are a form of economic insurance. That includes Social Security, Medicare, SNAP, Unemployment insurance, etc.

These programs only apply to certain groups. Mostly the retired or the poor/unemployed. So a limited impact.
What is missing is single payer coverage for medical care for all of the people. Having medical coverage takes away the single largest cause of personal bankruptcy. Having medical "insurance" through broad taxes distributes wealth through the base of society. And that wealth is there when needed. Money is a fungible item, meaning that what we don't spend in one place can be spent elsewhere. Social Security allows people to work and consume and not obsess with surviving in retirement. The same could be said of single payer medical. This kind of benefit is something that all of society has to agree on, and that is a stretch in this country today. But the gap between the haves and the have nots continues to widen with dire social consequences if not addressed. The wealth must be spread around.
And of course, if labor in general had more power the wages/benefits would be a larger part of the pie in this country and that provides resilience in an economic downturn. Contrary to modern conventional "Chicago wisdom".

Along that line.... Would this country have ratified NAFTA if labor was strong??
Would we be as accommodating to China???

just thinkin'

Wednesday, October 30, 2013

Mr. Hyde?

Warren Buffet has made the market analogy of Mr. Market being a bipolar entity.  An over exuberant personality who then changes to overly depressed and pessimistic.
Another analogy would be of Dr. Jekyll and Mr. Hyde. In a market that most agree is the product of low interest rates and easy money I would contend that the momentum and thus the outlook of the markets in general can change on a dime if Dr. Jekyll thinks for a moment that he will not get his fix.

Today the US Fed released it's statement. They said nothing new and reiterated their intent to keep on doing what they have been doing for months. Buying govt. treasuries in the same amounts.....

The knee jerk reaction of the stock market was up.  "Yippee! The easy money will continue".
And then selling came in.
My impression of the situation was that some big stock holders were looking for an opportunity to unload some long stock and the heavy buy volume was just what the Dr. ordered.
A market doesn't reverse on bad news. It reverses on good news. The Fed statement should have been good news. But the market got weak.
We will probably start to obsess over the "taper" again. "When will the Fed take away the easy narcotic?"

Markets rarely turn on a dime. A change in trend is a process..


Saturday, October 26, 2013

Mo?.... Mo?....

Here is more skepticism along the lines of the last post:

And here is a cute pic of a baby bear.....


Conventional Wisdom

The "wisdom" for some time now, perhaps a year or so, has been to get out of the bond funds because interest rates were going up. Well, interest rates did go up. The ten year T rate went from 1.6% to almost 3%. But lately the long term interest rate has slid back to the 2.5 % range. Even as the stock market continues to melt up. As recent as Sept. 5th the rate was at 2.90%.

Time and again in the markets I see shifts in what individual markets do in direct contradiction to the "wisdom" that is put forth in most of the financial journals and on the electronic media. Until a catharsis occurs and the wisdom changes suddenly.

Right now the wisdom is that the stock market is the place to be. This has been a terrific year and has surprised many with the strong and resilient moves higher. Which seems to be based on an expectation of continued easy money from the U.S. Federal Reserve. The worse the unemployment rate, the higher the stock market.

But a strange thing is going on in the bond market. It is going up in price at the long end. Interest rates are declining.

I thought inflation was just around the corner. The industrial metals have been acting strong recently. At least they seem to have broken some long downtrends. Will it prove to be just shorts covering, temporarily?

The reason some will give is that Janet Yellen has been tapped to be the new head of the Fed. And she supposedly has a rep for being a dove towards inflation and interest rates. Perhaps. Usually the macro-economy rules the interest rate markets.

The recent strength in the long bond may prove to be short covering there.....

The reason I am pursuing this line of thought is the pattern that prices have formed in the Pimco Real Return Fund.

I see an inverse/ upside down head and shoulder pattern. A pattern sometimes the sign of a bottom. but in this instance a very weak right shoulder. As if the normal sentiment that makes such a price pattern is abbreviated and the market is taking a hurried shortcut to the upside.

I have regained a heightened sense of risk in stocks.


Wednesday, October 23, 2013

Low interest auto loan revisit

Here is the answer to my wonder at the low interest on my latest auto loan:



Lithia Auto Dealers

This will teach them to mess with ghickey!


Stall Speed

The S&P feels like it just hit stall speed.... It is high noon here....1200pst


Gold and the Yen

For some time I have noticed what appears to be a correlation in the way gold trades and the Japanese Yen trades intraday. As well as a looser correlation with the daily prices of the two.
In the charts below I illustrate a recent example of the intraday similarity in the price movements and then a longer term Yen chart.

The long term Yen has the look of  bottom being formed and with a move coming soon. A move up in the yen should push the USD down further and faster. Maybe.
At any rate, if the Yen goes up I expect Gold to do the same.
The charts:


my car loan

My old vehicle

So I bought a vehicle from a Lithia auto dealer the other day. The saleswoman mentioned the skyrocketing prices of her LAD shares that she held through the lows of '09. That stock has gone from $1 to $75 over 4 years. Not bad.

And then I got to thinking why the stock has done so well. The company is making money off of schmucks like me. I don't like buying cars and this experience was no exception. It took extraordinary measures to get them to budge on the price. And after the fact I found out that I paid too much for the vehicle. Of course. I always do.....they are the pros. (Pun INTENDED!)

But the reason for this post is the interest rate I obtained with financing. (yes, financing)

1.62% for 5 years from Wells Fargo. I don't know how they can make any money at that rate.

Borrow the money on the short end and lend it longer I suppose. What happens when interest rates on the short end rise?

And even thoough I have good credit I dread to see what happens to the car industry if and when interest rates go up.

the maid and the new car;)

Just thinkin'




Monday, October 21, 2013

The Best Gold Stock?

A few days ago I was looking through my list of gold company stocks. One that jumped out at me was the chart of AngloGold/Ashanti (AU).

It has the look of a stock that is trying to go up. There is that triple top that I look for and a rounded bottom. As I have said before I prefer rounded bottoms....;)

Wait and see.....

Just looking at this chart I would set a price target of about $18.

don't get greedy....
Control risk always.

To the Sun, Edith

In the interest of bragging I mention that FSLR is going up, and fast. I had recommended it a few post back due to the strength I was seeing in the intraday trading. Chart below.

GOL is starting another move today. Time will tell.

control risk, the price will tell you when you are wrong......


Thursday, October 17, 2013

DHT Holdings

I ran across this chart awhile ago. It is of DHT Holdings company, which is an operator of crude oil tanker ships. They are losing money. The chart looks about the same as GNK did 2-3 months ago.
Intraday the volume is on the buy side. Not much volume. Yet. But the volume will come later if the stock gets underway to the upside.

I was intrigued by this link in which the author points out that if the company were liquidated the stock holders would see a gain of about $2/share. In other words the physical holdings of the company are worth more than the stock. If I remember right that is the kind of thing that Benjamin Graham liked.

control your risk,

Wednesday, October 16, 2013

CU later

Copper prices look set to initiate an upward trend. Time will tell of course.

The stock indexes feel strong. There may be some "trading" around a debt limit decision today if one actually comes to fruition, but the action of the markets in the face of a potential default tells me that the economy is picking up and the markets want to be there when it does.

Industrial metals stocks have been on a tear.

And emerging markets may resume their march to the future. The world is full of people who want some of the good life. The last few years of financial difficulties has not stopped the will of common people in the poorer areas of the world to keep working to improve their lot. And many of those countries have governments that will constructively work for the benefit of their people. This growth will be positive for basic materials around the globe. And the energy situation will allow it to happen as debts will become easier to repay by the flexibility of business to expand made possible by affordable energy sources. The push to "green" will continue with the increased affordability of solar and wind, and natural gas will be a tremendous boon.

We may be at the start of another commodities boom. Time will tell.

Trade with the trend.
Cut your losers.
Let your winners run.
and you will have controlled your risk!


Friday, October 11, 2013

Don't argue with the tape

The stock indexes, in particular the small cap stocks look good. This market can't wait to get this debt ceiling nonsense behind it.

This chart says a lot about the future of this country. I am not sure if it is prosperity or inflation. But things are looking up.

Act accordingly.

Gold hammered??

The reports from the Chicago Mercantile Exchange (CME) this morning of are one large sell order that caused a large drop in gold price such that the electronic trading was halted for several seconds.

Some of the gold bugs have been alleging manipulation of the gold price for some time and I take those accusations with a grain of salt. However, from a trading perspective it is suspicious that anyone, particularly a large concern with a large amount of gold to sell would just place an order so large that it moved the price $25. It makes no sense. A large holder expects to unwind a long position of weeks or months. And an order so large as to move the market is counterproductive to an orderly unwind.

This happens at a time when the US Dollar is WEAK. And by weak I mean nearing  lows. This should be a cause for gold to rise in price.

Is the price of gold being manipulated to mask the decline in the dollar? That is the question I ask myself this morning.

The article is here:

After I posted this above I got to thinking. Not something that I do often enough it seems.

I found a chart of long term US Dollar index. It looks significantly different from the charts that I usually use of UUP, the dollar bull ETF.
On the actual DXY chart the USD is in the middle of a historical range and can go either way from here. Although it looks set to go down to me.
But not the calamity I had been expecting.

This event, my lack of accurate information, speaks volumes to the importance of money management. Money management is the key to making money in the markets.

Meaning: Add to your winners. Cut your losers. Never average down.
That way even an idiot like me can make money.


Wednesday, October 9, 2013

Pressure cooker

The averages are down. But the intraday action says that this market wants to go UP!

Particularly the materials. X.... 


GOL....  So. American Airline....

Things are looking up.  Unless the lunatics persist in destabilizing the world economy.

Santelli, can you think of another cause? This one must be costing you money.

right now I'm eating biscuits with my next door neighbors bee's honey on them... Yum!


Tuesday, October 8, 2013

The Alamo


The Tea Party. Who are they? Well, you can recognize them easiest on the street because they will have a gun strapped to their belt. These Tea party zealots are also the "2nd Amendment solution" people. And when a Tea Partier says they will exert their 2nd Amendment solution they mean that if things don't work out for them by democratic process, in other words if by voting they do not get their way, they will take their guns out and force the world to comply to their demands.

This is the same mentality that has led the US Congress to find itself debating whether to shut down the U.S. govt. for an extended period for lack of a funding solution. And it is all over an ideological position that objects to a law requiring all citizens to buy a health insurance plan. A law intended to reduce the number of those not receiving medical care due to lack of ability to pay and a law with the objective of reducing national healthcare costs for the nation. A law that is very similar to the law in the state of Massachusetts that was enacted by the last Republican contender for the White House, Mr. "Mitt" Romney.

The Tea Partiers remind me of those Texans that fought and died at the Alamo as they attempted to wrest Texas from the control of the Mexican government. The same Mexican government that made the mistake of inviting U.S. citizens to settle in that wild land in return for their loyalty. They overestimated the ability of those Anglos to be loyal to Hispanics. The defenders of the Alamo managed to get themselves into an untenable position that resulted in the last man dying.

The Tea Party is having it's Alamo now, with the position they have taken in Congress. The Affordable Care Act was passed into law by Congress and ultimately declared constitutional by the Supreme Court. But this small minority in Congress is unhappy with the outcome of the democratic process. They are intent on extorting concessions by the threat of a default on the sovereign debt of the United States of America. As they near this precipice of default, the markets and the economy will feel the effects. And money will be lost by big and small business alike. And it is big business that funds the Tea Party. Big money that has been idle due to a lack of competition in the economy and is now being used to foster a philosophic and ideological idea of "free markets" and "free people". All the while ignoring the fact that no market is absolutely free. All markets and economies function under a set of rules. All societies function under a set of rules. It is the changing of some of these rules that they are objecting to. And their ideological position must stem from the idea that if people are allowed to see that a govt. sponsored program can work then "government" by the people may not be all bad, and may actually be a solution to some of our problems.

As the big money finds itself on the losing end of the markets due to any serious dip into default they will question the effectiveness of their funding of these lunatics. And then will be when the Tea Party dies. They will lose the funding of the deep pockets. And perhaps then the" Occupy" movement will take over the more humane concerns of the American people and rein in the power of the money of the 1% and advance the cause of the 99%, with a rallying cry of "Remember the Alamo!" Or some such.

Friday, October 4, 2013

"As Ford goes..."

There was a saying many years ago. It went, "As GM goes, so goes the country". Referring to the U.S. economy. And at the time whatever was good for General Motors was good for the country. That may be true today, but being a chart oriented trader and investor I need a good chart to look at. That chart is Ford. Take a look at this long term chart of Ford.

I love "triple tops" because the area above the tops seem to be a magnet drawing prices up there and beyond, partly due to the greed of the short sellers but mainly because prices should not see the same high price three times if that price is TOO high. So often a break above is a good trade and the continuation of a trend......

Perhaps the saying should be: "As Ford goes, so goes the country".

I sure hope so.

What is UUP??

A 5 min. chart of UUP, the US Dollar index fund....

An intraday rally today as stocks look increasingly strong...


Latest good looking chart/ MCP

Molycorp is looking strong lately.

Control your risk, limit any downside. If I am wrong I accept that my timing or view may be wrong. At least for now......

Wednesday, October 2, 2013



The Doctor is Well

Copper is holding up well despite the U.S. soap opera. It looks like the world economy may be on the way to a time of expansion.

EEM is looking good.

keep some powder dry and don't shoot until you see the whites of their eyes.


The Tea Party Effect

The U.S. dollar is down again. The world must be wondering if our political trouble will spill over into our dependability as a world reserve currency. And who can fault dollar holders for wondering.

Our rural partisans are running amuck in our nations capital. Those rural counties of this nation that get a disproportionate share of federal government spending are complaining of government debt.
And they want to do away with this countries first big step toward fixing our dysfunctional health care system by continuing to dismantle the ACA.

It is a pathetic show.

And it is reflected in the decline of the U.S. Dollar.

In spite of this, or maybe because of this, the basic materials remain strong. For now.

And First Solar is strong.......

Control risk,