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Commentary

May 17, 2012

THE ERA OF EASY MONEY

Today I give you a chart to ponder:

This one gives even me the willies. This, of course, is the S&P 500 over the last ten years. I have added a line to indicate what I think inflation has done. If you could have invested in something that kept pace with inflation over the past ten years $11,000 would now be about $19,000. But, if instead, you invested (as Jack Vogel would reccomend) in an S&P 500 fund your $11,000 would only have grown to $13,500. You would have lost a considerable amount of purchasing power. Buy and hold anyone?

But the situation is even worse for the average investor, or anyone with a 401k. The S&P 500 companies generated a lot of wealth through their operations over the past 10 years. Where did that money go? The S&P 500 companies pay less than 2 percent dividends. So, that wealth did not flow back to shareholders. Where did it go? And why won't investors, professional and amateur, pony up to the bar and pay more for S&P 500 stocks? Why? Why isn't the S&P 500 sitting at 19,000 today instead of a paltry 13,500? It is a problem of perceived value. If you are not getting paid to hold a stock - either through dividends or through share price growth - why bother?

We live in the Greenspan/Bernanke ERA OF EASY MONEY. How is that working out for the average Joe? Take one more look at the chart above and then please explain to yourself, if you can, how capitalism is working out for you in America now?

Anyone care for another Bailout please? How about we keep throwing public money at corporations without the public taking any equity positions in those corporations?

Or maybe the average Joe should start getting something for his buck.

May 13, 2012

Here is a link to 'JP Morgan's Loss Could Be America's Gain', by Joseph Palermo on Huffington Post. Here is a quote.

"Any setback to the policy-making elite's long-term project of pauperizing the working class in this country is a good thing. Jamie Dimon's $2 billion comeuppance is already sparking a renewed effort to impose a tougher version of the Volcker Rule that would at least ban the kind of proprietary trading in derivatives that caused JP Morgan's recent multi-billion dollar losses. The shattering of this latest Wall Street Ponzi scheme is a good thing because it shifts the optics and forces a conversation about greater federal oversight.

With new evidence mounting each day that the system is as broken as it was before the meltdown of September 2008 and will likely require another colossal taxpayer bailout at some point, the public might be able to compel even the isolated 1 percenters among Washington's policy elite to take heed."

I think the incident reals two glaring truths:

1. Too Big To Fail is too big too effectively manage risk.

2. Too Big To Fail is too big to succeed.

When will stockholders wake up to the fact that these really big banks are more valuable broken up?

May 9, 2012

Tobby Connor sends along this posting:

Gold is at or Very Near, a Long-Term Bottom

I am making Monday's premium report available to the public. 

I doubt anyone was surprised by the reversal in the dollar index today.



It's been made painfully clear that Bernanke is not going to tolerate a rising dollar, at least not for very long. Cycles are still working, and still generating bounces out of daily cycle lows, but they are never allowed to get any traction before the next beat down starts.

I would say there's a pretty good chance that today's reversal is signaling that the current daily cycle topped on day four, and the pattern of lower lows and lower highs is still intact.

Presumably the dollar will now start to decline and penetrate the May 1st intraday low before the next significant bounce. The daily cycle timing bands have adhered pretty closely to standard durations in the dollar index. I don't see any indication that has changed, so we can probably expect the next significant bounce sometime around the last week of May.

Stocks: If the dollar cycle has topped then the half cycle low scenario is still on the table.



In this scenario the stock market is on day 19 of its daily cycle and due to form a half cycle low at any time. As most of you probably remember, I've been expecting an extended consolidation in the general stock market. A dollar cycle topping on day 4 and a half cycle low on day 19 would be consistent with that theory.

If by some chance the dollar can recover and continue to rally for a few more days it could force stocks to penetrate the April 10th low. In that scenario I would re-phase of the daily and intermediate cycles as shown in the chart below.



At the moment I have no idea which scenario has greater odds of playing out, although I must admit the reversal today does not look good for the dollar.

Gold:

In my opinion gold is trying to move down into one more failed and left translated daily cycle, which I'm pretty confident would mark an intermediate degree bottom. However, as you can see from the chart below, as soon as Bernanke broke the dollar rally gold lost all of its downside momentum.



This has turned gold's B-Wave decline into a mostly sideways consolidation for the last two months. If the dollar has indeed topped then I have my doubts that gold will be able to finish its intermediate decline and penetrate the April 4 low. The fact that the current daily cycle is running out of time may indicate that we are going to have to leave the April 4 low as an early intermediate bottom.



I would prefer to see gold drop down and penetrate $1612 as it would make the intermediate cycle count 'fit' better. I know that's not what most of you would like to see. Most of you probably just want the draw down to end as quickly as possible. I on the other hand understand that this is a secular bull market and that this is going to be a winning trade (well unless the bull market has ended). So I'm not overly worried about a draw down. In a bull market timing mistakes get corrected.

To me a move below $1612 means that we didn’t waste an entire daily cycle on a sideways consolidation and that we have all of a new intermediate cycle still ahead of us. That's why I would prefer to see gold poke through the April 4 low. It would signal that we have more time to rally, an entire daily cycle more.

So even though we weren't  able to time a perfect bottom, I'm confident that we have entered 'close enough' and when the regression to the mean occurs, and it always eventually does, our mining positions are going to deliver a very hefty profit.

Heck, if one was willing to just turn their computer off and wait for the bubble phase of the bull market, our current positions are probably set up to deliver a 500-1000 percent gain. Of course the cost is that you have to ignore the market and go on with your life for the next several years. 

When you think about it, that's a pretty good bargain. Do absolutely nothing, and get rich doing it.

I think we are at, or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks. If you like today's report the $10 one week trial is still available. That includes the archives, cycle counts, COT reports, and model portfolio. I strongly suggest one read the last several weeks of reports so they understand how we got here and what is unfolding."

..................

About 5:30 yesterday morning I awoke to the lights of 6 emergency vehicles next door to my house. My neighbor, friend, and gardening partner had a heart attack and they wheeled him into the ambulance. Judy and I took his wife to the hospital. Paul is younger than I. As we go about our regular business, let's try to remember what is really important, and how precious life really is.

May 4, 2012

Keep your eye on the Money Flow

I am going to wait for gold and silver to bottom, as Toby's article below would suggest. Meanwhile, I think we are watching markets that are skewed by the actions of Benny and the Feds. The first three months of this year saw a substantial rally in Equities. But, I ask, from whence cameth the dough? Hedge Funds during that period were seeing net OUTFLOWS, and just now are starting to see money creeping back in. Here is a related link.

http://www.reuters.com/article/2012/05/02/investing-fundflows-ici-idUSL1E8G2MME20120502

So where did the money that drove that rally come from? Benny? The Hedgies? If the point of all that manipulation was to drag the retail stock customer back into the market, the effort would seem to have worked. Just remember that when markets are at their absolute peaks Mutual Fund Inflows are at their peaks.

Here are some links:

http://www.growthstockwire.com/3041/The-Anatomy-of-a-B-S-Trade

http://www.merlehazard.com/Merle_Hazard/INFLATION_OR_DEFLATION.html

http://www.dailywealth.com/2061/I-ll-Refer-to-This-Book-for-the-Rest-of-My-Life

http://www.dailywealth.com/2065/What-REALLY-Works-on-Wall-Street

http://www.growthstockwire.com/3038/Investors-Should-Be-Glad-the-Economy-Is-Still-Weak

http://www.growthstockwire.com/3034/-Guru-Investors-Are-Loading-Up-on-This-Hated-Tech-Stock

http://money.cnn.com/2012/04/21/markets/imf-firewall/

http://www.financialsense.com/contributors/daniel-amerman/inflation-and-hidden-gold-taxation- 3-historical-case-studies

http://www.huffingtonpost.com/2012/04/11/seven-and-a-half-things-you-need-to-know_n_1416946.html

And here is a note from Rich Kolon:

"According to Jim Sinclair, the sanctions on Iran includes trades going thru a system called SWIFT, to determine if sanctions are being violated by any companies sending money to Iran. China intends to bypass SWIFT by trading gold for oil with Iran. SWIFT goes into operation on June 28th. At that point, gold will officially become a currency.

http://www.jsmineset.com/

Rich"

May 2, 2012

Tobby Connor sends along this posting:

THE INFLATION TRADE IS ON: BERNANKE HAS BROKEN THE DOLLAR RALLY

It may not seem like much happened yesterday, but a very important event occurred. Yesterday the dollar index breached 78.65. The reason that is significant is because 78.65 marked the intraday low of the prior daily cycle. A penetration of that level indicates that the current daily cycle has now topped in a left translated manner and a new pattern of lower lows and lower highs has begun. Any time a daily cycle tops in a left translated manner it almost always indicates that the intermediate cycle has also topped.

In this case it would indicate that the intermediate dollar cycle topped on week two and should now move generally lower for the next 10-12 weeks, bottoming sometime in late June or early July, about the time Operation Twist ends.



Now that we have confirmation that Bernanke has broken the dollar rally I'm confident in calling April 4th an intermediate bottom (B-Wave bottom) in the gold market. Gold should now be entering the consolidation phase of the next C-Wave. I expect a test of the all-time highs sometime this summer as the dollar moves down into its intermediate bottom.



That being said I have no interest in a 15% rally in gold. The real money will be made as the mining stocks exit their bear market, re-enter the consolidation zone between 500 and 600, and move up to retest the old highs. It's not inconceivable that we could see a 30-45% gain in mining stocks over the next 2 1/2 months.

Sentiment in the mining index has reached the same levels of bearishness that were seen in the fall of 2008. That black pessimism drove a 300+ percent rally over the next two years. I have little doubt this time will be any different.

Now what we need to see is a change in character. We need the mining stocks to stop generating these sharp bear market rallies and transition into the wall of worry type rally that characterizes a bull market. So far that is exactly what is happening. The miners are rallying very hesitantly, and as long as this continues it will camouflage the move and keep sentiment depressed. That's exactly what we need to happen to drive a long sustained rally back up to the old highs.

The problem with the rocket launch type rallies we've seen over the last year and a half is that they swing sentiment very quickly to the bullish side and we run out of buyers.

As long as the bottoming process proceeds gradually I think there's a very good chance the HUI could break back above the 200 day moving average, and possibly test the 600 level by mid-July.



So far all of the pieces are starting to fall in place to initiate the very early stages of what I think will eventually become another huge momentum move similar to what happened in silver and gold last year. This scenario may well culminate in a parabolic blow-off top sometime in late 2014 as the dollar moves down into its next three year cycle low.



Now is the time to invest in this sector as it struggles to transition from a bear market back to the secular bull trend. The time to enter is at the very beginning when no one believes. This is when the really big money is made. If you wait till your emotions give you the all clear, half the move will be over.

Most traders are going to jump back into the general stock market, or tech stocks. You have to be smarter than that. The stock market, including tech, have already generated a massive move out of the October bottom. That kind of move usually leads to a multiweek, or month, consolidation. The odds of another 20 to 30% rally in the stock market are very slim.

The odds of a 20 to 30% rally as the mining stocks resume the secular bull trend are extremely high.

The combination of extreme downside momentum and irrational human nature has created the kind of oversold conditions and extreme undervaluation that generates an opportunity that only comes around once or twice a decade."

April 10, 2012

Tobby Connor sends along this posting:

STOCKS HAVE REACHED THE EUPHORIA STAGE

The last bull ended when the leading stock, GOOG, entered a parabolic 'bubble' phase. That was the signal that the bull had reached the euphoria stage. When the GOOG bubble popped it signaled the end of the bull market.



Two stocks, AAPL and PCLN, have been the leaders of this bull market. Both have entered the euphoric 'bubble' stage. When the Apple and Priceline parabolas break it will almost certainly signal the end of this bull market.



Apple is now stretched 49% above the 200 day moving average. Anything between 50 and 60% above the mean is extreme dangerous territory.

As I pointed out in my last article the dollar is beginning its second daily cycle up in what could very well be a cyclical bull market. This should correspond with the stock market topping and the next leg down in the secular bear market.

My best guess is that we will see a sharp sell off over the next 2 to 3 weeks, followed by a sharp rebound (QE3?) that may, or may not, move stocks to marginal new highs, similar to the 2007 top.




The poor employment report on Friday is the first warning shot across the bow that the economy is slowing in preparation for moving down into the next recession/depression.

Bernanke is in the same position he was in 2007. Printing more money won't stop the collapse. It will only continue to spike the price of energy and exacerbate the decline.



April 7, 2012

Mostly links today.

But first, here is a note from Rich Kolon>

"The NYSE McClellan Oscillator and Summation Index have been significantly diverging from the NYSE Composite Index.

http://stockcharts.com/freecharts/McSumNYSE.html

This suggests that the stock market has been rising somewhat artificially, as money goes into fewer leaders, but is being removed from other stocks to support that action. Basically the momentum has slowed.

Descriptions of the oscillator and index are located at these links:

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:mcclellan_oscillator

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:mcclellan_summation

The NYSE Advance-Decline chart shows that the stock market has slowed its gains, but has still not rolled over.

http://stockcharts.com/freecharts/gallery.html?$NYAD

It appears that the stock market may have been somewhat "juiced" this year by people expecting politicians to remain more jobs favorable in this election year, expecting more tax or credit breaks for businesses.

The reason I say juiced is the divergence between the market and the indicators is rather large, and ordinarily a correction should have happened. The easy money policy of the Fed may be one factor in this delay.

Rich"

Ben Smith sends these links.

'Egan-Jones Rings The Bell (Again)'

'Jim Rogers: Watch out for 2013 slump...3-26-12'

Red and White D sends this link.

'Retirement: 401(k) Fees Cost Americans $164 Million Every Day', on HuffingtonPost.Com.

Regular readers know that I think 401(k)s are the biggest financial rip-off and scandal of all time. If Congress had to use them, the rules surrounding them would change, literally, overnight.

The Growth Stock Wire site has had some really good writing of late. Here are some links.

'Conditions are Right for a Drop in Oil Prices'

'My Favorite Long-Term Bet on Oil'

And here is a really great article on the same site: 'Weekend Edition: Porter Stansberry: Keep this idea for yourself'. I quote the article below. The bolding is my own.

"You must understand that there's a flipside to the collapsing value of the U.S. dollar - rising asset prices. Thus, one of the best ways to protect yourself from a collapse in the exchange value of the U.S. dollar is to buy huge amounts of assets at heavily discounted prices - especially if you can find a way to add leverage to the mix. Bank of America holds $2.1 trillion in assets on its balance sheet - with only $152 billion of tangible equity. That's leverage of 14-to-1. The coming inflation will make the value of these assets (things like mortgages) go up. Meanwhile, as interest rates rise, every new loan the bank makes will begin to pay a higher rate. But these higher rates won't hurt the bank at all because the Fed will not allow the rates it pays to increase.

Do you see how this is a recipe for a huge increase in share price? Meanwhile, Bank of America still trades at less than half of book value. With all the big banks now free to increase their dividends, this wide discount from book value is going to be eliminated. Bank of America's shares are going to soar.

I think this idea is dead on. I am working on parallel ideas with other banks and with insurance companies. Both of these kinds of institutions use leverage. Both kinds have a lot of assets whose 'value' will soar with inflation.



April 5, 2012

Tobby Connor sends along this posting:

THE BEGINNING OF THE END

As convincing as this rally has been I am confident this is an ending phase and not the start a new secular bull market. Actually the bear market began last year in May but was temporarily aborted by massive Central Bank printing. Let me explain.

The last four year cycle that started in 2002 and bottomed in 2009 was the longest four year cycle in history. It was stretched to these extreme lengths by Bernanke's desperate strategy of debasing the currency to avoid the bear market that should have begun in 2006. Instead the stock market cycle stretched all the way into the spring of 2009.

I have mentioned before that often a long cycle will be followed by a short cycle. This being the case the current four year cycle should have bottomed in the fall of 2012. That process had begun last summer.



However, Central Banks around the world, in the futile attempt to avoid a global depression again cranked up the printing presses. The bear market that had begun in May was temporarily aborted. Amazingly I think we are going to see another stretched four year cycle. And this one is going to end just like the last one when the price of oil spiked far enough to collapse the global economy and create a market crash. The next economic downturn won't be a Great Recession, it will be a Great Depression.



At the moment the stock market is in a runaway move very similar to what unfolded out of the summer 2006 yearly cycle low. These runaway moves are characterized by uniform mild corrections all of similar magnitude and duration. For this particular rally the corrective size has been roughly 25-35 points. This could continue for weeks or months, but all runaway moves end in the same fashion, with a crash or semi crash that wipes out months of gains in a matter of days or even minutes.

Generally speaking, once a corrective move has run 20% beyond the normal correction size that is the signal that the move is over. Unfortunately, at that point you are usually already into the 'crash day'. This is why at some point one has to say enough is enough, and stand aside, or you risk getting caught in the crash.



When this runaway move comes to an end I'm pretty sure it will signal the beginning of the end for this cyclical bull market. That doesn't mean that we won't see a test or even a marginal break to new highs but I think we are clearly in the final phase of this liquidity driven rally that began in March of 2009.

We are now at the mercy of oil and the commodity markets. Bernanke's plan to print our way to prosperity is destined to failure. Ultimately he is just going to spike inflation and collapse the global economy, resulting in a worse downturn than what we saw in 2008/09.

Whether that breaking point is at $120 oil or $160 oil is anyone's guess."

Toby is right about the source of this first quarter rally in the markets. I would expect a pullback here. But then we may see a resumption of the bull into June.



March 10, 2012

Here is a link to 'Why the Market Could Shed All Its 2012 Gains', by Jeff Clark on GrowthStockWire.Com.

Lar sends this link to http://www.theblaze.com/stories/former-reagan-budget-director-despairs-i-wouldnt-touch-the-stock-market-with-a-100-foot-pole/

Ben Smith sends this link to 'Buffett's Bursting Bubble', on 321Gold.Com.

Here is a link to 'The U.S. is ramping up production for this energy megatrend', on GrowthStockWire.Com.



March 6, 2012

Tobby Connor sends along this posting:

HAS THE CORRECTION FINALLY BEGUN?

Today is a classic example of why I have been warning traders not to push the long side of the stock market. When these creeper trends finally break they often generate a crash or semi crash type of profit-taking event.

The last 2 1/2 months were a classic example of why I have been warning traders not to short the stock market. These creeper trends can go on much longer than many people expect and shorts just end up getting whipsawed out multiple times until they're so shell shocked that they can't hold on when they finally do catch the top.

All in all the correct strategy was to remain in cash until the profit-taking event occurred and then buy as close to the bottom as possible.

If I had to guess I would say this will probably turn into a two step down affair followed by a two-month volatile consolidation as the dollar rally progresses.

You might recall in my last post I mentioned that the dollar would need to get on the upside of an intermediate cycle before stocks had any realistic chance of correcting. I outlined the conditions that would confirm that the dollar had formed an intermediate cycle low. Those conditions have now been met and it appears that the stock market is ready to deliver the much anticipated profit-taking event.



During this period gold should drift generally downward over the next couple of months as the dollar rallies.



There will be plenty of false rallies (just like last Thursday) to sucker traders back in. But I really doubt gold will put in a lasting bottom until the dollar's intermediate cycle tops. Barring a public announcement of QE3, that is unlikely to happen until sentiment reaches extremes again. That almost always requires a move to new highs and usually takes a minimum of one and a half to two months to generate that kind of bullish sentiment.

As I have been warning traders for months the dollar's rally out of its three year cycle low almost certainly isn't done yet. The rally out of a three year cycle low usually lasts at least a year, and that's the norm in a secular bear market. Since the three year cycle low bottomed in May of 2011 it's unlikely that we would see a final top until at least May of this year. And since the three year cycle low in 2011 held above the three year cycle low that occurred in 2008, there is even a case to be made that the dollar has now entered a secular bull market.



This would imply that despite Bernanke's best efforts the forces of deflation may be overwhelming the central bank's efforts to reflate. However I'm confident that if 10 trillion isn't enough Bernanke will not hesitate to print 50 trillion. I have little doubt that no matter how this progresses it is going to end in a massive inflationary currency crisis."

Toby's article above implies a fairily sharp correction. I agree with that. But, in this election year, and with Helicopter Ben at the wheel, the overall bias this year for stocks is going to be up, not down. Remember that. With that in mind, here is a link to 'Why I'll Never Worry About What the Government's Going to Do Next', by Dan Ferris, on DailyWealth.Com. I quote the article below.

"People will continue to drink Coke, use computers, and buy necessary household goods at a reasonable price. Buffett knows this as well as anyone. That's why he owns big stakes in Coke, IBM, and Procter & Gamble, among others, in his holding company, Berkshire Hathaway. (And Berkshire itself happens to be a great buy at these levels.)

I'm sure there are folks out there – perhaps even readers of this publication – who are out of U.S. stocks permanently because they believe the U.S. is going straight to hell in a handbasket. It's not true. Yes, we have problems, many caused by goofy politics... But they're no match for the vigor of the marketplace. Shopping trumps politics. Business trumps politics."

Here is a link to an interview with Marc Faber on CNBC. I quote it below.

'If the [Standard & Poor's 500 stock index] drops 100-200 points, then yes, for sure we will have QE3," Faber said. "But if the S&P stays here or even goes up, the likelihood of QE3 diminishes.'

And here is a note from Rich Kolon:

"The NYSE McClellan Oscillator and Summation Index

http://stockcharts.com/freecharts/McSumNYSE.html

These indicators are still dropping and pointing to a correction in the stock market.

The divergence between these indicators and the NYSE Composite Index has occurred in the last month. The coming correction should be significant.

Note the biggest drops in the NYSE Composite Index occurred simultaneously with the biggest drops in these indicators during the last year.

Rich"

Indeed, Rich. I too am nibbling at the ETFs that profit from a general downward move.



March 1, 2012

Tobby Connor sends along this posting:

WILL IT EVER CORRECT?

That seems to be the question that everyone has been asking themselves for two months now. Analysts have been trying to pick a top in this market for weeks. All the while I've been telling, actually begging, people not to sell short. Until the dollar puts in an intermediate bottom there is just little chance that the stock market is going to suffer any meaningful correction.

There was the possibility that occurred in early February as the dollar rallied enough to form a weekly swing. However that rally quickly failed and rolled over into another left translated cycle. That gave the market enough impetus to push through the July and May 2011 highs.

Yesterday the dollar printed a strong reversal which again has the possibility of marking a daily and intermediate degree bottom. If it does then we are about to embark on the upside of another intermediate cycle, and that is one essential event that absolutely must transpire before the stock market can correct.



We will need to wait for a weekly swing and a penetration of the intermediate downtrend line before we have confirmation that a major bottom has formed.



If the dollar has indeed formed an intermediate bottom then gold probably formed an A-wave top yesterday. It did confirm a left translated and failed daily cycle, which more often than not means that an intermediate degree decline has begun.



As this is only the ninth week in the current intermediate cycle, that would imply that gold should drift generally south for the next 8 to 10 weeks as the B-Wave decline runs its course.

I expect this will continue to unfold as a volatile whipsawing nightmare. Welcome to life after a C-wave top.

The unfortunate truth is that as long as the dollar continues to rally out of its three year cycle low trading conditions are going to remain difficult.



It's unlikely we will see any sustained trends until the dollar gets back on the downside of the next intermediate cycle. Or if this intermediate cycle still has further to decline we may see a continued grind higher by the stock market. However it is so late in the intermediate cycle and the markets are so stretched above the 200 day moving average that it's just not safe to play the long side any further."

..."it's just not safe to play the long side any further."

Boy howdy. The risk/reward factor here is extreme right now, with risk very very high. Beware. Here is a link to ponder:

http://www.sentimentrader.com

Ben Smith sends along this note:

"QE 3 Is Already Taking Place, Look At The Federal Reserve`s Balance Sheet

"We already have QE 3. Get out the Federal Reserve‘s balance sheet. You’ll see that they’ve been pumping up - you can see unadjusted M2 is going through the roof. Look at their balance sheet.

All sorts of assets are suddenly appearing on their balance sheet. Where did they come from? They didn’t come from the Tooth Fairy; they came because they’re in there buying in the market as fast as they can. There Is QE 3 already. They don’t call it that but it’s there. – in ReuterS"

http://jimrogers-investments.blogspot.com/2012/02/qe-3-is-already-taking-place-look-at.html"

Rich Kolon sends this note:

"As a followup to this post on Bessemer Bend Stocks:

'How to Cash in on America's Natural Gas Highway' http://www.growthstockwire.com/2974/How-to-Cash-in-on-America-s-Natural-Gas-Highway

I found a presentation on the company mentioned in the article above. Here it is:

http://www.westport.com/investors/analyst-day/

The presentation is about 5 months old. Still the idea is very compelling. I know natural gas vehicles exist in other countries, and I always wondered why the car manufacturers didn't make them here in any quantity.

With oil prices skyrocketing on the threat of sanctions on Iran and by Iran, it makes sense to consider an alternative fuel readily available with in the US, natural gas. (Electric cars are very expensive and thus more limited towards true consumer savings.)

Natural gas is now about half the price of gasoline as a fuel. Natural gas prices have dropped significantly in recent years. Some years ago, yield from gas wells was declining. But then tapping shale gas became feasible, and natural gas supplies have grown tremendously in the US. This put downward pressure on prices, and changed what was an Liquid Natural Gas import need to an export need instead.

(One problem with LNG exports is that Asia is the growth target, but LNG ports are on the east side of the US.)

As this company Westport Innovations (WPRT) is not yet profitable, it is reasonable to put this stock in the speculative category. Their vision sounds sensible to me, joint venturing with other partners to create the vehicles and supply points that can use natural gas.

The price was as high as $47 a a share last week, but came off the high after they announced a secondary offering:

http://www.westport.com/news/2012/westport-innovations-inc.-prices-offering-of-common-shares

The stock is now selling for just change above the offering price of $43.25 a share. It would not have such a high stock price without a strong belief in the concept behind this company to get profitable in the next few years. I think it's a good long term speculation. Not for the risk-averse. The concept is not only for America, but it's really global in nature, as a number of different countries have good natural gas supplies already.

This fits in with my strategy to invest in good long term themes. The secondary allows a cheaper entry point.

I will purchase some shares soon.

Here is a weekly chart of WPRT:

http://stockcharts.com/h-sc/ui?s=WPRT&p=W&yr=1&mn=6&dy=0&id=p34905773669

Rich"

I should comment here. At the ripe old age of 15 (1965) I had a beautiful girlfriend whose father was the president of a small drilling company here in Casper, Wyoming. He traveled extensively across the Rocky Mountain area. His car was equiped to run on either gasoline or on Propane. He had a long thick-walled tank for the propane mounted in the trunk of his Buick. He could switch from one to the other by way of a toggle switch under his dashboard.



February 26, 2012

Rich Kolon sends along these three notes.

"The Investors Intelligence chart shows that bullish sentiment for stocks is now at its highest level since April 2011.

http://www.schaeffersresearch.com/streetools/market_tools/investors_intelligence.aspx

Bring up the 1-year chart at the link.

Using the SPY as a proxy for the stock market, we see that the market made a triple top within two months of the last I.I. Bullish high.

http://stockcharts.com/h-sc/ui?s=SPY&p=W&yr=1&mn=6&dy=0&id=p34905773669

The suggestion is that further gains in the stock market may be limited, compared to the potential downside risk.

Any war with Iran would probably kill the stock market in general, making oil prices less affordable, and allowing our government to become more militaristic and paranoic about terrorism toward all people inside America. Prices may rise simply due to scarcity for the war effort.

The McClellan Oscillator recently dipped below 0, another indicator that a downside move may be forthcoming. Note how the last two major dips in stocks coincided with a meltdowns in this oscillator.

http://stockcharts.com/freecharts/McSumNYSE.html

The NASDAQ has been performing well so far this year, but it too is looking long in the tooth.

http://stockcharts.com/h-sc/ui?s=$NAA50R&p=W&yr=0&mn=11&dy=0&id=p81356515368

The percentage of NASDAQ stocks above their 50-day moving average recently topped 80%. That is a contrarian signal. The buy small caps in January angle played out well this year, aided by the general fall in the stocks that started near mid-year 2011. You can bet many of these traders are just following the momo, and when that momo breaks, there is the potential for a big setback.

So while the stock market has yet to capitulate, it may be wise to start warming up your trigger finger, if you are going to survive the potential collapse later this year.

.............

Google Caught Violating Browser Privacy Settings to Track Users

http://www.infowars.com/google-caught-violating-browser-privacy-settings-to-track-users/

"is Google circumventing the privacy preferences of Internet Explorer users too? We've discovered the answer is yes: Google is employing similar methods to get around the default privacy protections in IE and track IE users with cookies," reports Microsoft on their IEblog."

"Charges that Google is merely the private arm of U.S. intelligence outfits stretch back years. As we reported in late 2006, ex-CIA agent Robert David Steele claimed sources told him that CIA seed money helped get the company off the ground."

You may want to seriously reconsider the pros and cons of dealing with a company who would engage in this type of unethical behavior.

.............

According to Meg Whitman, CEO of Hewlett Packard, ink supply sellthru (consumer and small office and home office) has been a good indicator that correlates to consumer confidence and GDP growth over the last 30 years.

The latest readings do not suggest any recovery for the economy.

She discusses this indicator about 10 minutes 35 seconds to 11 minutes and 45 seconds into the interview with David Faber in the small video contained within this link.

http://www.cnbc.com/id/46496360

Rich"

Rich also sends this link.

'Are Central Banks Moving the Gold Market?'

Ben Smith sends this link.

'While You Were Sleeping, Central Banks Flooded The World In Liquidity'

And here are two more links.

'How and Why China Came to Dominate the Market for Gold', on Yoluhub.com.

'How to Cash in on America's Natural Gas Highway', on GrowthStockWire.Com.



February 16, 2012

Ben Smith sends this link to:

'Illusion of Recovery, Feelings and Facts', on FinancialSense.Com. I quote the article below.

"The governing elite spend their time spinning stories about recovery and manipulating public opinion so people will feel good and spend money. Facts are inconvenient to their storyline. The truth is for suckers. They know what is best for us and will tell us what to do and when to do it."

Red and White D sends these links:

'Greek Statistician Is Caught in Limelight', on NYTimes.Com.

'Andreas Georgiou, Greek Statistics Chief, Accused Of Falsifying Data To Make Crisis Look Worse', on HuffingtonPost.Com.

Here is a link to 'How I Plan to Trade Silver in 2012', on GrowthStockWire.Com. I quote the article below.

"While it's too early to say for sure, this chart could develop into an inverse head and shoulders (H&S) pattern. This is a bullish pattern that often leads to an upside breakout.

The left "shoulder" formed when the silver price collapsed last October. The bounce that followed ran into resistance at about $35 and established the "neckline" of the pattern. Then, silver dropped to a lower low in late December and the pattern formed a "head" at about $27."

Here is a link to 'A Major Concern for Traders Right Now', on GrowthStockWire.Com. I quote the article below.

"As you can see, the stock market's RSI reading is as high as it has been in almost a year. Each time stocks have gotten to this "overbought" level, they've suffered sharp short-term selloffs.

Realize... this is a trader's concern, not an investor's concern. It's no cause to sell any long-term investment like a good dividend-paying stock."



Guide to Past Postings:

News 08, from January 16, 2012 to ?

News 08, from November 27, 2011 to January 12, 2012

News 07, from September 26, 2011 to November 23, 2011

News 06, from August 06, 2011 to September 26, 2011

News 05, from June 22, 2011 to August 4, 2011

News 04, from April 19, 2011 to June 19, 2011

News 03, from March 15, 2011 to April 18, 2011

News 02, from February 11, 2011 to March 14, 2011

News 01, from January 24, 2011 to February 10, 2011

News 00, from December 21, 2010 to January 11, 2011

News 99, from October 4, 2010 to December 19, 2010

News 98, from September 8, 2010 to October 3, 2010

News 97, from July 27, 2010 to September 7, 2010

News 96, from July 4, 2010 to July 25, 2010

News 95, from May 20, 2010 to June 28, 2010

News 94, from April 23, 2010 to May 19, 2010

News 93, from March 3, 2010 to April 22, 2010