January 4, 2012
Here is a link to a really scary read: 'A Run On The Global Banking System - How Close Are We?', on Gonzalolira.Blogspot.Com. I quote the article extensively below.
Why does this difference of a single subchapter matter? Because in a brokerage firm bankruptcy, the customers get their money first—because after all, it’s theirs—while in an equities firm bankruptcy, the customers are at the end of the line.
In the case of MF Global, what should have happened was for all the customers to get their money first. Then everyone else—including JPMorgan - would have picked over the remaining scraps. And the monies MF Global had already pledged to JPMorgan? They call it clawback for a reason.
The Chicago Mercantile Exchange, which handled the bankruptcy, should have done this - but instead, the Merc was more concerned with making JPMorgan whole than with protecting the money that rightfully belonged to MF Global's 40,000 customers.
...Now, what does this mean?
It means that nobod's money is safe. It means that regulators care more about protecting the so-called 'Systemically Important Financial Institutions' than about protecting Ordinary Joe investors. It means that, when crunchtime comes, central banks and government regulators will allow SIFI's to get better, and let the Ordinary Joes get fucked.
...As I write this, a lot of investors whom I know personally—who are sophisticated, wealthy, and not at all the paranoid type - are quietly pulling their money out of all brokerage firms, all banks, all equity firms. They are quietly trading out of their paper assets and going into the actual, physical asset.
Note that they're not trading into the asset—they’re simply exchanging their paper-asset for the real thing.
Why? MF Global.
'The MF Global scandal has made it clear that the integrity of the system has disappeared,' said a good friend of mine, Tuur Demeester, who runs Macrotrends, a Dutch-language newsletter out of Brugge. 'The banks are insolvent, the governments are insolvent, and all that's left is for the people to realize what's going on - and that will start a panic.'"
Here is a link to an equally scary read: '30 Statistics That Show That The Middle Class Is Dying Right In Front Of Our Eyes As We Enter 2012', on TheEconomicCollapseBlog.Com.
I subscribe to the Stansberry Newsletter. That is a 'doom and gloom' or 'dire in the mire' report. I like the Stansberry stock tips, but I can not buy into any theory that predicts a cataclysmic economic event...even though I take some steps to protect myself just in case. I am more of a believer in the theory that we will probably see in the future a lot of what we have seen in the past. Yes, we had a financial wave in the sea here in the USA. Yes, Europe is having one now. But, and this is important, the powers that be have kept the ships together. I just don't think the financial world will go out in a bang. It is much more likely that it will go out with a whimper. It is not a real-time train wreck we have to look forward to, but rather, a very slow-motion one.
I see, when I look around the internet pundits, an inability to absorb the idea of a slow-motion train wreck. This is not the 1920s. We live in a world with strong central banks, who will take action. That is the problem. The central banks will act. Their actions will distort markets big time. Their actions have and will drag out a recession and turn it into a depression.
January 3, 2012
I used to be webmaster for Trib.com, which is the online site for the Casper Star-Tribune, the local rag and only state-wide newspaper for Wyoming. Its sister paper, the Billings Gazette, has been doing a series of article on the development of the Bakken field which spans Montana and North Dakota. One of its articles recently appeared in the CST. Here is a link to 'Bakken oil fields creating energy: Boom in northeast Montana appears to have staying power', by Jan Falstad - The Billings Gazette. I quote the article below. It will give my readers outside of the oil patch a hint as to what is transpiring on the energy scene in the United States. We are well on our way to becoming the greatest oil exporting country the world has ever seen.
Here are links to three articles by Matt Taibbi on RollingStone.Com.
'Goldman's Latest Boiler-Room Stock: America'
'A Christmas Message From America's Rich'
Here also two other links.
'Storehouses for Solar Energy Can Step In When the Sun Goes Down', by Matthew L. Wald on NYTimes.Com.
'The Appearance of Golden Crosses in 2012 and What It Means', on EconomicPolicyJournal.Com
January 1, 2012
HAPPY NEW YEAR
Today I have some links for you.
'Fuel is top U.S. export for first time', by Chris Kahn - The Associated Press, on Star-Telegram.Com.
'Precious Metals: Lessons Learned in 2011 and Implications for 2012', by Jordan Roy-Byrne on Minyanville.Com.
'A 2012 Housing Rebound Can't Even Save Bank of America', by Shanthi Bharatwaj - The Street on Minyanville.Com.
'Ten years after the euro's launch: How could it have gone so wrong?', by Geert De Clercq - Reuters on TheGlobeAndMail.Com.
'U.S. Growth May Accelerate as Europe Shrinks', by Bob Willis and Timothy R. Homan on Bloomberg.Com.
'Even a Giant Can Learn to Run', by by Steve Lohr on NYTimes.Com.
December 30, 2011
Tobby Connor sends along this posting:
With the move below $1535 this morning gold has confirmed that it is still moving down into a D-Wave bottom. There has been some question as to whether or not the D-Wave had bottomed in September. The penetration of that intermediate low this morning confirms that the D-Wave did not end during the overnight selloff on September 26.
In the chart below I have marked with blue arrows the last several yearly cycle lows. As you can see they tend to occur in January or February. The timing band for the next cycle low should occur sometime in early to mid January. That should mark the bottom of this D-Wave decline with the slight possibility that there could be one more short daily cycle down, bottoming in early February. This will almost certainly be dependent on whether the dollar cycle has one or two more daily cycles higher before rolling over into an intermediate decline. Current sentiment levels on the dollar index are suggesting only one daily cycle higher, which should signal a final bottom in the gold market sometime in the next 2-3 weeks.
If gold can make it back to the 50% retracement in the next couple of weeks I would probably be inclined to call a yearly cycle low at that point. If however gold holds above $1500 at the next daily cycle low due in early to mid-January then I would be wary of one more daily cycle down to test the 2010 consolidation zone and 50% retracement ($1400) sometime in early February.
The combination of the dollar rally out of its three year cycle low, gold's yearly cycle low, and a D-Wave decline are going to produce a very sharp correction in the gold bull market. Before this is over most analysts will declare the gold bull dead. On the contrary, sometime early next year you are going to get the single best buying opportunity we will ever have to reenter the secular gold bull in preparation for the bubble phase that should top in late 2014 or early 2015.
As a matter of fact, now that we have confirmed that this is an ongoing D-Wave decline, once its bottom has formed it will generate a violent A-wave advance that should test the 1800 the $1900 level rather quickly later this spring.
Serious money will be made during the A-wave advance. One just needs the patience to wait for the D-Wave to bottom before jumping back into the pool."
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Yesterday I received a late Christmas present, it was ordered from and shipped from England. It is a dibber*. At work today I mentioned to Big Bob that I now owned a dibber. He asked me if I have been dabbling with my dibber. I reassured him that I had not. To do that I would need some dirt. However, I continued, if I had some dirt and a second dibber, I would then be a dirty double dibber dabbler.
* Dibber: a gardening device that is essentially a tapered stick, with gradations, that allow a gardener to plant seeds at precise depths.
December 24, 2011
MERRY CHRISTMAS
Here is a link to 'Headwinds for Housing' on EconomicPolicyJournal.Com. This is a must read for all Benders. I quote the article extensively below. Bolding is my own.
Millions of others bought homes with low down payments, while millions more added second mortgages or home equity lines of credit (HELOCs) to their existing first mortgages to extract equity.
As a result, 'owner equity as percentage of household real estate,' as measured by the Federal Reserve, has fallen from 60% in 2005 to a mere 38.6% in the third quarter of 2011. When we consider that roughly one-third (33%) of all homes in the US are owned free and clear (i.e., have no mortgage), then we can see that equity in the remaining two-thirds with mortgages is a razor-thin 5%-6%.
Interestingly, despite millions of foreclosures and write-downs, mortgage debt has actually risen from its 2006 level of $9.86 trillion to $9.93 trillion in the third quarter of 2011. (So much for deleveraging.) The “ForeclosureGate” MERS/robo-signing scandal is another systemic wild-card in the housing deck that is has created a legal logjam in the foreclosure pipeline. Since no one can predict the eventual resolution of this logjam, we will set it aside, noting it as an additional impediment to the clearing of the housing market.
With this dramatic contraction of equity in mind, it is understandable that 10.7 million (22%) of all homeowners with a mortgage are 'underwater' -- that is, they owe more on their mortgage than their home is worth, while another 5% have negligible equity.
Another aspect of the Fed's failure to boost demand by lowering rates results from the Fed's misunderstanding of how risk is priced when interest rates are kept artificially low via official intervention and manipulation. If we place ourselves in the shoes of a mortgage issuer, we realize that artificially low rates deprive the lender of a means to price risk. In an open, transparent market, interest rates rise and fall according to the perceived risk that the borrower might default and/or the asset underlying the loan might decline substantially in value. ...The Federal Reserve and the Federal government have attempted to boost the housing market's demand and valuations by introducing moral hazard on a vast scale and by making it impossible for the open market to discover the price of housing, mortgages, and risk. Prudent lenders and buyers have been forced by this systemic risk to withdraw from the market, even as artificially low mortgage rates, near-zero down payments, and government-backed mortgages have created generous incentives for the most reckless buyers and lenders to take their chances. After all, if you can't lose more than 3% by buying a spot on the real estate roulette wheel, and all mortgage losses will be made good by the taxpayers, then why not gamble?"
December 17, 2011
Here is a link to 'Behind the Crash in Gold' on EconomicPolicyJournal.Com. I quote the article below.
There is one problem with this plan, however. Banks in the eyes of EU regulators are over-leveraged and need more capital, so under current rules it is going to be difficult for banks to leverage up their balance sheets.
...Got that? Germany has reopened its rescue fund which can supply the capital banks need, which will then allow them to buy the sovereign debt paper that can be discounted to the ECB.
Folks, the plan is in place. The eurozone inflation is coming.
Bottom line, the Germans, French and Brits will be back buying gold and other commodities in no time."
Red and White D sends these three links.
'Why Isn't Wall Street in Jail?' by Matt Taibbi on RollingStone.Com. I quote the article below.
'Traders Confounded as Volatility Extends Run' on Bloomberg.Com. I quote the article below.
Hedge funds overall declined an average 4.4 percent this year through November, according to Chicago-based Hedge Fund Research. The industry lost a record 19 percent in 2008. The S&P 500 returned 1.1 percent this year through November, including reinvested dividends."
'Krugman: It's a Depression, folks, really!' on NYTimes.Com. Regular readers know I have been calling it that for years.
December 16, 2011
Tobby Connor sends along this posting:
I know that during a correction of the magnitude we are seeing right now it seems more like the gold bull is dead than on the verge of moving into what I expect will be one of the greatest parabolic moves in history.
However, all of the conditions necessary to launch the bubble phase are now in place. Gold is in the process of putting in an intermediate degree bottom. That bottom, which is only days away if it didn't already happen today, is going to be the single greatest buying opportunity, probably of the decade.
Gold sentiment is at multiyear lows. Retail traders that bought at $1900 have gotten wiped out. The media is full of stories calling for the death of the gold bull. Institutional traders from John Paulson, George Soros, and Dennis Gartman have all gotten knocked off the bull.
Breadth in the universally hated mining sector is back down to levels that have only been exceeded during the crash in 2008.
This sector has consolidated for so long that no one believes in mining stocks anymore. This is exactly the same sentiment that was prevalent in the silver market in the fall of 2010.
All the conditions are in place to launch the next stage of the secular bull market.
Up until now my expectation has been that we would see gold consolidate for probably the better part of a year before the next C-wave breaks out to new highs.
However, the scenario that is unfolding in the CRB and dollar indexes has me wondering if the gold bull isn't going to start evolving much faster than I originally expected. Let's just say that if I am correct and the dollar is on the verge of topping then we are probably going to see a much shorter consolidation than originally expected. Gold could launch much more quickly out of the B-Wave bottom than I expected and move to new all-time highs as early as the next intermediate cycle.
As a matter of fact I'm pretty confident that if the dollar turns down it is going to trigger the beginning of the third and final, bubble phase, in the gold bull market.
The public is already starting to become aware of the gold bull. All we need at this point to start the flood is for gold to recover quickly from this selloff. If gold quickly shoots back up and tags, or penetrates that big psychological $2000 number I expect it will be the siren call that draws the public into the bull market. And it is the public coming into a market that triggers the bubble phase.
During this phase of the bull I expect we will see the normal ABCD wave pattern break down as gold starts to accelerate into what will almost certainly be the most incredible parabolic advance, maybe in history. By the fall of 2014 I expect we will see gold somewhere between $7,000 and $20,000 an ounce.
I think tonight's premium report is important enough that I'm going to reopen the $1 trial subscription for two days. You will have access to the entire site for the next two days for the price of one George Washington. You can either keep your subscription and it will convert to a monthly at the end of the trial period or cancel it and you won't be charged another dime. Either way you will get access to a report that I think is important for every gold investor to read.
If you decide to cancel do so by following the directions on the home page of the website. Please allow one day to process your one dollar payment before canceling. Click on the link above to go to the premium website and then click the subscribe link on the upper right side to link to the subscription page."
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I am looking at the charts today, and it looks to me as if all the suckers have been driven out of the gold/silver markets. I have been buying more. It looks like a bottom to me. Whatever you read about the markets...don't believe there is any trend out there, EXCEPT FOR VOLITILITY. Volitility is the one factor that has been, and will continue to be consistent. So, go forth and buy low and sell high.
December 5, 2011
Willem Weytjens sends along this posting:
First of all, let's look at the Commitment Of Traders reports. Commercials have yet again reduced their Net Short position in Silver, which is now close to the low of 2003 at the beginning of the Bull Market. Commercials are generally seen as the “smart money”, so if they reduce their Net Short Position, they expext price to rise (or at least not drop substantially).
The reason why Commercials are the “Smart Money”, is that - unlike the millions of small investors who burn their hands by buying high and selling low ' they tend to 'Buy' low (reduce short positions as price declines) and 'Sell' high (increase short positions as price rises).
This can be seen in the following chart. There seems to be a very high correlation between the Sentiment charts of Sentimentrader.com and the Net Short Positions of Commercials:
The fact that one should 'Buy Low and 'Sell High' is the best way to invest can be seen in the following chart.
As Sentiment (or Commercials Net Short Positions) climbes into the orange area, it’s time to become cautious. It sure can rise (substantially) higher, but cautiousness is the first step in detecting tops. The second step is to look at perspective. Sentimentrader indicators are overlaid with standard deviation bands that show you how extreme the current reading is compared to its recent history. So if sentiment rises above the red standard deviation band, we know that this is an unsustainable situation, and that sentiment has to reverse (decline) over time. On the other hand, when sentiment drops below the green standard deviation band, we know that this is also an unsustainable situation, and that sentiment has to reverse (rise) over time. The red circles on the chart below show that good Exit points occured when sentiment was above the red standard deviation bands. The green circles on the chart below shows that good Entry points occured when sentiment was below the green standard deviation bands. However, the best entry point of the last 5 years was in 2008. This was a time when both Sentiment and Commercials Net Short positions reached extreme lows. Currently, we are in a similar situation, which could mean that silver is at or at least very close to a bottom, and that it could take off pretty soon...
In fact, when we look at the chart below, we might be in an even BETTER position now than in 2008. As price declined in 2008, the Accumulation/Distribution index declined as well. Unlike 2008, the Accumulation/Distribution index has made brand new highs recently, despite the fact that Silver is off about 35% from its all-time high... Another bullish factor now is that, as price declined, volume declined as well, which was not the case in 2008.
It looks like the massive drop a couple of weeks ago - which took silver down to $26 - was the 'perfect' entry point, price wise. However, in my opinion there are 'better' entry points at levels slightly higher than today. Let me explain why. If you would have bought when silver hit $26, you would have done an AMAZING Job. Congratulations to those who did. However, if you did, you were catching a falling knife. There was a huge risk that silver would drop even lower, maybe as low as $20, which is about the breakout point of the autumn of 2010. I personally always look at Risk to Potential Reward. At $26, the risk of Silver dropping another $6.5 was too high for the potential $6.5 I could make. That's a 1-1 ratio, since you can loose just as much in case you are wrong as you can gain in case you are right. I like better those kind of situations where you get a risk-reward ratio of 2 -3 (you can gain twice or 3 times as much as you can loose), and I don't have to think twice when I get a situation that gives me a Risk-Reward ratio of 5.
Look at 2008. As long as price was below the 50EMA, you shouldn't have bought. The best time to buy in my opinion was early December 2008, when price broke above this 50EMA and both the RSI and MACD broke out above the red resistance lines. At that point you had a BUY point. You wouldn't have bought at the extreme lows, but taking this 50EMA as a stoploss, would have minimized your losses, while you could have let your profits run. In fact, this 50EMA was at that point at the same level as the horizontal resistance line underneath the lows of 2006 and September 2008. A breakout above that level was extremely important going forward.
We are currently in a similar position, as there is resistance at $34 which acted as support in the first half of 2011. The 50EMA is now at the same level as this red resistance line, and both the MACD and RSI look set to brake out above their red resistance lines...Combine that with the severely depressed sentiment in Silver and the low Net Short Positions of Commercials, and we have the ideal cocktail for a nice rally in silver prices...
Silver tends to follow Gold, so we should also look at sentiment in Gold. Once again, we can see that the Standard Deviation Bands provide good Entry and Exit points. Sentiment in gold is now pretty bearish, and is close to the green standard deviation band.
When we look at the Gold:Silver ratio, we can see that the ratio is now facing strong resistance at the 38.20% Fibonacci Level. IF the ratio would take out this resistance, it looks headed towards 60, which is the 50% Fibonacci Retracement level. However, if that were to happen, both the RSI and MACD will most likely make a lower high, causing negative divergence, meaning this 'rally' should be 'sold' (which means one should BUY silver in favor of Gold in my opinion). The MACD looks set to roll over, which means the ratio looks ready to drop.
Silver is ready for take-off. The question is, ARE YOU?
If you are interested in similar analyses, trading updates, or if you would like to know how to trade options, make technical and fundamental analyses, please visit www.profitimes.com and feel free to sign up for our services!
Charts above Courtesy Stockcharts.com and Sentimentrader.com"
December 2, 2011
Here is a note from the Orange Section.
A minor thought on your comment regarding the Fed dipping into their unconventional tool kit as in indicator of global meltdown in banking. An alternative point of view might be that they are dipping into unconventional tools because they do not have any other tools to use.
I still think higher interest rates will not have the negative impacts on consumer spending that is traditionally believed, as consumers are in balance sheet rehab mood and won't be borrowing anytime soon. The positive is that such rates will help savers and those on incomes based on portfolio returns, which will probably pay dividends in the long run. These interest rates and the lack of safe returns is another way of kicking the can down the road, IMO. We are sacrificing returns for the perception of monetary stimulus. Given the current results of Bernanke's regime, I really am not of the opinion that such a tradeoff is fair or productive.
Of course that is the rub. The rates aren't about consumers, they about political perception and large lobbying interests.
What a sham..."
Here are links to two articles of interest.
'Taken To Task: Capt. Cronyism, Hank Paulson', on Yahoo.Com.
'Why Yesterday's Stock Market Rally Is a Head Fake', on Minyanville.Com.
December 1, 2011
Here is a link to a MUST READ article for all BENDERS: 'Why Everyone Is Wrong About the American Oil Boom', by Porter Stansberry on DailyWealth.Com. I quote the article below. Bolding is my own.
My bet is U.S. production at least triples over the next 10 years... which will create an enormous amount of wealth for investors.
...Last month, Anadarko announced it had discovered what it believes will be a 1 billion-2 billion-barrel resource in the Niobrara shale that sits under the Wattenberg field in northeast Colorado. That's the largest new discovery in the U.S. in more than 40 years. Anadarko drilled 11 horizontal wells to make this discovery. Next year, it will drill 160 more. And in the future, it will drill 1,200-2,700 horizontal wells in the Wattenberg field. My bet is, the resource estimate continues to get bigger.
Now, consider this. The Wattenberg field has been in production since 1901. Yes, that's correct. It's not a typo. The field has already produced 4 trillion cubic feet of natural gas and hosts 14,000 wells. In 2007, it produced 11 million barrels of oil.
The geology of Wattenberg is well understood. This was an old field - something that had been picked over by every major oil company in the U.S. for decades. The accepted wisdom said nothing new was to be found there... until Anadarko found another 1 billion barrels of oil... or maybe 2 billion."
I have been trying to stay on top of the above story. I recently added EOG, STO, and CHK to my Interesting Longs list, as they are all going to do well in the oil shales discoveries.
Here are links to two interesting articles.
'Bank of America Continues to Bleed Customers', on Minyanville.Com.
Regular readers know that I have been shorting BAC on a continuing basis in the Bender Paper Portfolio.
'Another Confirmation of the Solvency Crisis Masquerading as a Liquidity Problem', on Minyanville.Com. I quote from this article below.
November 29, 2011
Yesterday and today I was a bit sheepish. You see there was a sharp move up in the markets on Monday and, while I did figure out that it was about to happen, I did so way too late to do anything about it until after the fact. Then I had to chase it. Of all people I should have known that a lot of traders would have eased out of their positions going into a long holiday, and then rush back into them on Monday. Of course they would! I was asleep at the wheel. I had a list of longs I liked ready to be used (see above). But I did not use it until Monday, when I should have been covering my shorts and going long on Wednesday before Thanksgiving. Well, we don't win them all. We're not even awake for them all.
Here is a related link to 'A Year-End Rally In Stocks Starts Now', by Jeff Clark on GrowthStockwire.Com. So even if I wasn't the first guest to arrive at the party, there's likely to be a lot of party left to enjoy.
When markets are rallying, we traders should be looking at possible shorts. In that light, here are some links to recent articles on the views of Jim Chanos:
Here is a related link to 'Chanos: China's hard landing has already begun'
Here is a related link to 'Is Jim Chanos right about solar energy?'
Here is a related link to 'Jim Chanos: Five value traps to avoid and 5 stocks that fit the mold'
Red and White D sends this link:
'London Banks Seen Rigging Rates Losing Credibility With Markets', on Bloomberg.Com.
November 27, 2011
Tobby Connor sends along this posting:
I have decided to post the weekend premium report to the blog this week. In this report I'm going to take a look at what has transpired and what is likely to come, as the third leg down in the secular bear market begins to intensify.
Back in April of this year I warned investors to get out of stocks in their 401(k) accounts. At the time the dollar was moving into the timing band for a major three year cycle low. It has always been my expectation that the rally out of that major bottom would correspond with the stock market moving down into the third bear market leg of the secular trend that has been in place since 2000. As we now know the dollar did bottom in May of this year and that did correspond with the top of the cyclical bull market that began in March of 2009. It has also been my expectation that the next four year cycle low would occur in the fall of 2012, and that 2012 would be one of the worst economic years in human history.
This is already starting to unfold across the globe as social unrest that began in the Middle East has spread to Europe and now the United States. Economic data has been steadily eroding for months now. We should expect this trend to continue and intensify as we get into 2012.
As most of you know I use cycles and sentiment analysis to determine likely timing bands for major turns in the stock market, gold and the dollar. This is what allowed me to anticipate a bottom in the dollar cycle at a time when everyone was expecting the dollar to collapse, and a top in the stock market when everyone was bullish and expecting a move back to new highs.
An interesting development in the yearly cycle for the stock market has now emerged. Generally speaking most yearly cycles run about 12 months, trough to trough. However, the Fed's quantitative easing programs have stretched the yearly cycles from March 2009 into June of 2010, and this year the yearly cycle has stretched again to arrive in October. The market is now set up for the next yearly cycle low to occur in the fall of 2012 which, not surprisingly, is exactly when I have been expecting the next four year cycle low in stocks to bottom.
I have also indicated the expected timing bands for the next three intermediate degree cycle lows. For reasons explained in the nightly reports I don't think the current decline is going to move below the October low. I expect we will find a bottom sometime in the next 1-4 days followed by a Santa Claus rally into the middle of December.
If the market avoids making a lower low it will embolden the Bulls to continue holding long positions. Their hope for a miracle will be misplaced though as the market will almost certainly begin to roll over before making higher highs and by the next intermediate degree bottom in February/March we will see the October lows broken, and the summer 2010 lows tested.
The recent rally out of the October low will undoubtedly prove to have been the most powerful countertrend rally of this bear market. Any further countertrend rallies (and there will be several) are likely to be short-lived and weak. The window of opportunity for these long side trades is probably going to be too brief for the average investor/trader to successfully trade. From this point on investors should keep 401(k) accounts solely in money market funds until we reach the bottom sometime in the fall of 2012.
This brings us to the topic of gold. Despite what is happening in the stock market gold is clearly still in a secular bull market. That being said the days of easy money from the gold bull are probably over for the next year as stocks move down into their four year cycle low. In the chart below you can clearly see the affects QE1 & 2 had on the gold bull.
The QE programs drove the largest C-wave advance of gold's entire secular bull market. However, and for reasons I will explain below, I think the C-wave topped in September and gold is now going to enter an extended consolidation phase for the next year.
That begs the question if the C-wave has topped then where was the D-wave? Well, I think we just saw it in September. Let me explain.
Because of the massive liquidity floating around the world I now think the D-wave terminated with the overnight spike down to $1535 on September 26. I'm now seriously considering that the last D-wave was exceptionally mild because of the extreme global liquidity. If that is the case then gold has now entered an A-wave advance. As most of you know A-waves don't tend to make new highs. So my best guess is that gold will test the $1900 level sometime in the next three weeks followed by an extended corrective move down into an intermediate degree bottom in February (B-wave). That bottom should hold above the $1535 level. What should then follow will be a year-long frustrating and whipsawing consolidation that should terminate slightly before the stock market bottoms in the fall of 2012.
At that point gold will start to sniff out the next round of massive quantitative easing as the Fed and central banks around the world go into full panic mode and begin printing unimaginable amounts of money in the attempt to halt the global sovereign debt implosions and economic depression that will have developed.
As usual central planners will not account for the unintended consequences of their actions. This time quantitative easing is going to have the opposite affect that it did in 2009. Yes, it will put a bottom in stocks, at least temporarily, but it is also going accelerate the cancer that has now infected currency markets. And as currencies start to collapse so will global bond markets. This is the recipe for the final bubble phase in the gold bull market.
While gold is in this long consolidation phase/bear market phase for stocks, trading strategies will be vastly different than they were during QE1 and QE2. Trades are going to be shorter and there will be long periods of time where the correct strategy is to just sit in cash. I started to make the transition to this new trading strategy back in July. The recent breakdown in stocks has now eliminated any reservations I had about the bear market. With that confirmed, there is little doubt that gold has now entered an extended consolidation and that new trading strategies are called for.
Make no mistake; we are now entering what will be one of the toughest markets ever to make money in. So far the model portfolio is performing admirably even in these tough conditions.
For anyone who would like to sample the nightly premium newsletter, I have opened a $10 one week trial subscription. You will have full access to the SMT premium website including all historical archives, model portfolio, and terminology documentation for a full week. If during the week you decide the subscription is not for you, or the shorter term trading strategies don't suit you emotionally, then simply cancel your subscription by following the directions on the homepage prior to your week expiring. If you do enjoy the newsletter then simply do nothing and your subscription will convert to a yearly membership at the end of the one week trial. Click here to link to the premium website. You will find the subscribe link on the upper right-hand side of the home page."
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Here is a link to 'Why Investors Should Ignore the Latest Retail Sales Data', by Frank Curzio, editor, Penny Stock Specialist, on GrowthStockWire.Com. This would seem to confirm what Toby Connor is saying above. I quote the article below.
Here are two more links to articles by Tyler Durden, who is also known as Toby Connor from ZeroHedge.Com.
'Print, Rally, Then What?'. I quote the article below.
...What will the world look like after the printing press has been turned on? How will investors respond? Is it really all positive, or are there consequences, and is it possible that these consequences are far worse than not printing in the first place?
...What will the Fed do? Will we have to embark on our own printing program to ensure that we can keep the exchange rate with Europe from getting too low? How will we export our way out, if the Euro is cheap? Oil is already above $100, where will it go if we embark on our own printing program? QE worked really well for stocks in the US. The Fed created money which found its way from the treasury market into risky assets and made the dollar weaker, helping exports and making our risky assets look cheap to foreigners. Will EU QE be good for US stocks? The consensus is that stocks in the US will rally if Europe embarks on a massive printing program. I'm not as convinced.
...What will the BRIC's do? If inflation starts to hit and Europe devalues, and the US rushes to keep pace with the devaluation on a global scale, what happens to the developing countries, where daily poverty is still a real problem? How much inflation could China or India sustain? Do they retaliate in some way we haven’t thought about? Do we see problems in the commodity world? Does this heighten the tensions in the mid-east? Does China take steps to secure supplies beyond the land and resource purchases they have already made in other countries? There is a reason Germany is so worried about printing."
Red and White D sends this link to 'Federal Judge: Credit Ratings Not Always Protected Under First Amendment'. Oh those poor Rating Agencies, boohoo.
