David- This should cheer you up. My brief foray into SLW had me reading about the gold market the past two days. In the midst of reading the below commentary, the sixth sense kicked in:
Does silver at 60/oz sound surreal? Going into the first half of 2012, I'm less bullish on the SPX than I am on GDX. The reverse scenario for the second half of 2012.
2nd - While you're looking at GDX, consider GDXJ b/c there are fewer clapped out mines in the jr section and the majors may be looking for new properties?
But in order to take advantage, you may have to actually pick from a specific list of candidates and cross reference that with GDXJ's basket?
Anyway, in terms of silver, supposedly current supply levels now exceed industrial and commercial demand, the deficit is in investment demand. Thus, silver could move considerably lower if investment demand shrank. That's kinds saying something though, that investment demand is absorbing the excess physical.
I wish Bill would spill his guts, he only repeats the same noise newsletter writers publish.
illini - yeah i noticed that too about mitk. looks like it has a date with destiny (6.5) hopefully on monday/tuesday just to get it out of the way. however there are too many things going for it and the story is too long term for the negativity to last. my guess is barring any buyout or crazy news, it tests 6.5 yet again and then does an absolute moonshot higher to 12. i think this all happens by feb 1 2012
I've been wondering recently why I was able to keep my mood up despite the relentless decline in AUMN. Probably because my cojones were really hardened by the 2008 experience with the miners. However, today was the first day when I actually felt desperation. In the past, however, my desperation was not enough to turn the market around. What was needed is for me to take action based on my feeling of desperation. I am not sure if my purchase of GDXJ puts today qualifies as that kind of an action. There is a pretty good chance that it does and that today was THE bottom for AUMN. But then, it may not be. The following article about the bank lending in Europe freezing up has me really worried:
I have a bad feeling that this whole shit won't be over until the markets puke like in October 2008 and the central banks announce some drastic measures. There is a small hope that the following quote from the above article qualifies as the drastic measures that will stop this madness:
"To avoid stress levels reaching those seen three years ago, the ECB plans to pump unlimited three-year liquidity into the banking system on Wednesday."
If the ECB is not pumping the liquidity into the system YET, then I can understand why the TED spread keeps climbing. Can someone please verify whether or not the ECB is doing something yet? If it really isn't, then Wednesday may be the judgement day which might turn around the PM market (we know the extent to which PMs like liquidity sloshing around the system).
HL - The accident this week at Hecla's Lucky mine illustrates quite well in my mind why the business of mining deserves more respect. It's not as if you can just take a shovel into your backyard and dig up some metal ore to smelt, there's considerably more risk involved in the process of obtaining these minerals than most people realize, yet they want/need a new car or laptop every so often while still refusing to respect these risks that someone took to make it all possible:
David, Did you mean this liquidity event? http://www.businessweek.com/news/2011-12-17/spanish-italian-notes-gain-as-ecb-stokes-demand-bunds-advance.html
My question is if this was known about doesn't the market price it in before the event takes place?
Thank you, RB! So now I have something to look forward to -- the actual start of unlimited liquidity on Wednesday! I am sure the market is not pricing it in fully, as no one knows WHO will decide to go and use that liquidity. So for now, just to be on the safe side, the banks are still not trusting each other.
NEW YORK – In an effort to strengthen its balance sheet, Bank of America in November and December sold 400 million common shares and issued $2.3 billion in debt to replace $5.8 billion of preferred stock.
The preferred stock was more expensive for Bank of America Corp.'s balance sheet because it paid investors annual dividends of 5.25 percent to 8.25 percent. The Charlotte, N.C., bank made the disclosure in a regulatory filing. The bank has been selling assets to meet stricter regulation that require banks to be better prepared to deal with economic downturn. Bank of America has working hard to fortify its balance sheet - last year it was the only one among the four largest banks that was denied an application with the Federal Reserve to pay dividends to its shareholders."
Guess what kids? I suspect that the panic has already spread from Europe to North America and the selling we are seeing in PM's is EXACTLY the same as we saw in 2007-2008. What do you sell when you need to raise cash?
As Landry preaches, when the markets reach a transition, it's the high fliers that get sold as a source of funds. That's what happened to MITK a while back. Of course it is still a fundamental story but traders trade, which means they take profits.
So there you have my two-fer for the weekend.
Drink of the weekend (yeah, it's early but I'm planning ahead) is Barbancourt Haitian Rum Reserve Speciale, aged 8 years in oak, mixed with a touch of the polar bear coke. Not as good as the Cruzan Private Reserve aged 12 years, but very good non-the-less. Not as sweet as the Pyrat or the Zaya Grand Reserve aged 12 years from Trinidad. Rum is much easier to manage than the source of today's post title. She lies like a rug.
The Kensian/Austerian debate is about wealth transfer and who first gets destroyed - the saver or the debtor? If you print, you try to inflate your way through the mess and destroy the saver. If you cut then you punish the debtor first. None of this is easy and their are consequences for doing both. However as we are seeing with wealth transfer comes corruption, the corruption will be the downfall of America?
93.65 tonnes, or 73.3% of registered gold(gold registered for sale) at Comex is standing for delivery, a new record.
Debt downgrades across Europe, I guess if you're not willing to pursue QE and steal from the savers, then you're saying you'd rather breach contract? Thus, debt downgrades.
John Mauldin has once again wrote a very thought-provoking article about the future of US economic growth. The issues he is mentioning there cannot be overlooked by anyone whose investments depend on future US economic growth. The article will soon appear at http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/default.aspx (I already got it in my e-mail). Here are some quotes from it:
"I think it likely that we will see that the US economy grew less than 2% in 2011, and probably closer to 1.5%. If there is a 2 times multiple on tax cuts, then the stimulus was worth anywhere from 1% to 1.6% of growth in 2011 (depending on your favorite academic paper), which is much of (and maybe most of) the growth we had in the US this last year."
"Whenever the payroll tax cut extension goes away, it will mean an effective tax increase of the same magnitude of the tax cut. In our example, about a 1% to 1.6% hit to GDP. Think the economy is strong enough to handle that without going back perilously close to recession? As states and local governments are raising taxes by about 1% of GDP? As Europe implodes?"
"That crisis will come to the shores of the US, and will reduce our GDP. I think it does so next year, pulling us into recession. That means revenues are down and costs are up. The deficit gets larger, not smaller. The costs of not dealing with the problem will mount with every passing month, here just as they do in Europe. Europe has kicked the can down the road, but it is coming to the end of that road. We are going down the same path unless we make the hard choices. The longer we wait, the harder the choices."
"The US has no easy choices. Our choices now are merely very difficult. If we delay much longer, past 2013, our choices go to bad or very bad. Different in kind from those of Europe but not in difficulty or the quality of outcomes."
"Once rates start to rise, the options faced by the US are not good. Real spending cuts and tax increases in the midst of a crisis? Allowing the Fed (or essentially forcing it) to monetize the debt? There will be no good choices if we do not act."
*******************************************
The key phrases from above, for PM investors, are: "The deficit gets larger, not smaller" and "Allowing the Fed (or essentially forcing it) to monetize the debt." So PMs *will* keep rising rapidly over the next few years, but that growth will be interrupted by frequent credit crunch panics...
The 20 December $5 calls on AUMN I bought a few weeks ago and 10 December $7.50 puts I shorted were all assigned to me today, increasing my AUMN position by 3000 shares. That didn't cause a margin call for me, however, since I sold all my TBT last week at a minor loss (not more than $1K after all the trading I've done). So if AUMN doesn't drop below $5, then I'll definitely avoid a margin call, and my strategy of steadily increasing my AUMN position as it goes lower will be rewarded handsomely. IF AUMN doesn't drop below $5...
The really interesting thing is that basically all of the returns on Gold Bullion for the last 200 years were made in the last 10 years and it is the highest is has been over this period. In 2000, when the gold bull market started, Gold was below it's 200 year trend other than the times when the price was government controlled (which was the cause of the underinvestment in gold mines and the seeds of the huge bull of the 2000's).
The other interesting thing is that equities are pretty much as far below long term trend as any time in the last 200 years meaning they are very undervalued.
If you are a reversion to the mean type investor (as I am), this strongly points you towards reducing PM investments and increasing equity investments. The other option is you have to believe that something is different this time (unmanageable US debt, coming hyper-inflation, etc.) and that this is a new trend which continues.
david i posted a link to an etrade research article a while ago that show returns relative to econ growth and they were almost inversely correlated as long as econ growth was positive.
has hussman mentioned anything about the potential for the housing mkt to pick up because its cheaper to own than rent and if that happens how it might impact econ growth?
If you ever want to read a Barron's article and they tell you that you need a subscription, just open up a new browser window, then search for the article and click on it and you can always read the full thing.
Kyle, I'm not really sure what th Q-ratio is, but the chart i am looking at is just a 200 year trend line for stock returns as calculated by Jeremy Siegel and popularized in his book "Stocks for the Long Run". It's an interesting read, although you have to be careful as he sometimes uses logarithmic scales and sometimes linear.
"david i posted a link to an etrade research article a while ago that show returns relative to econ growth and they were almost inversely correlated as long as econ growth was positive."
You are probably talking about equities, right? That is very possible, since a very low level of economic growth implies a high level of government stimulus, and stocks REALLY like stimulus. For gold, the long-term return is definitely inversely correlated with economic growth, since it is positively correlated with deficit growth and during a weak economy, tax receipts go down and stimulus spending goes up, implying that the deficit shoots up.
"Gold prices will fall below $1,500 an ounce over the next three months and are unlikely to retest September's all-time highs until later 2012 at the earliest, according to a Reuters poll of 20 hedge fund managers, economists and traders."
If traders have already sold their long gold positions in expectations that gold will fall in Q1, then who will be doing the selling from now on?
"You can either have cheap stocks or you can have good news, but you can't have both," says Jim Grant, quoting Joe Rosenberg, and explaining why he thinks there may be "terrific investment opportunities" despite today's ugly macro backdrop"
"While some believe the ECB's new collateral and loan rules amount to a backdoor QE, allowing banks massive firepower to purchase sovereign debt, the banks themselves think differently. "When investors are constantly asking what you have on your books, and the board is asking you to reduce your exposure, it doesn't really matter," says the treasurer of a major EU bank. "Am I going to buy Italian bonds? No.
Rather than use money raised via the ECB to buy government bonds, bankers say that they are more likely to use the funds to pay off their own debts."
Mark, don't copy the barrons link. Just copy the title of the article into Google and search for it (it will usually be the first one). Then click on the link from within google and you will be able to read it.
BB - we can agree on the 'not trusting the numbers' thing!!!
Another case with all kinds of different 'stories' is China...
8:06 AM A remarkable study from Bloomberg finds China's debt dwarfs what are already high official figures, and the slowdown in credit creation engineered by Beijing this year is a myth. With cash flows for many infrastructure projects coming nowhere near enough to service the debt, entities are completely reliant on being able to roll over loans to keep the ball rolling. China's "treadmill to hell," as described by Jim Chanos months ago.
Thanks again for mentioning the seekingalpha news source a few weeks ago
Kyle, what I can't wrap my head around is how everyone can have so much debt. As far as I know from my accounting course, every debt is someone else's asset as the first person had to borrow the money.
So if the US, Europe, China all have huge debts, who are the counter-parties to these transactions who are owed all this money? It can be all European banks and Middle-East princes...
" 10:08 AM As part of its aggressive 2012 capex plans, Samsung (SSNLF.PK) is looking to nearly triple the capacity of its chip foundry business, according to Digitimes Research, with a focus on expanding the production of high-margin logic chips such as Apple's A5 CPU. Samsung's efforts could lead to additional price and margin pressure for rivals such as TSM, UMC, SMI, and TSEM. [Tech] Comment! "
Might be good for NANO/AMAT, not sure if they use LAM and Nikon. Need a preferred vendor list but 10 yrs ago they were buying AMAT/NANO, everyone buys NANO and Rudolph.
JB - I'm long MITK from $7.8 average last week. I reloaded it. Not sure if you saw my post last week but I confirmed with the company that they will announce the mobile bill pay customer at the 1st quarter conference call...so it sounds like they signed someone on there. That means they're branching into two other markets now, aside from mobile deposit.
I tell you what...I think the best strategy right now is to just short anything related to China...even after their moves down. FXI looks like a great short.
CP - There are still a few things that make me stay on the bullish side:
(1) US econ reports have been solid lately, including jobs (2) Earnings are still solid (3) VIX continues to be low relative to the fear in the markets (4) High yield bonds are holding up very well and they usually are weak heading into a recession/downturn.
Operation Fast and Furious - "At least 300 people in Mexico were killed with Fast and Furious weapons, as was Border Patrol agent Brian Terry. The identities of the Mexican victims are unknown.
Hmmm, this was an ATF operation as opposed to an DEA operation. I thought the DEA was charged with enforcing illegal drug smuggling laws?
I tell ya what....CSTR looks good right here. I think it could have one final mini selloff just to piss off the bulls but this sucker is going to $60 again.
Aluminum LME Inventories Balloon to Record High – Part One by stuart on December 19, 2011
"LME aluminum inventories have been skyrocketing in recent days, leading some to speculate that falling demand is creating a massive surplus. They may be right; even Andy Home, Reuters columnist and usually a good interpreter of the workings of the LME and related physical trading, wrote an article this week seeking to explore the possible causes.
Firstly, what has been happening? Almost 300,000 metric tons of aluminum have been delivered into the London Metal Exchange warehousing system in the past four days. Registered tonnage is now at an all-time high of 4,826,275 metric tons, with more expected.
Detroit, always a key player in the LME aluminum financing game, was the main recipient of new material, receiving 100,000 tons of metal on Monday. It now holds 1,264,775 tons of aluminum, the largest concentration in the LME system."
Just for laughs, pull up a 3 yr chart of TLT. Is it just me or is that not a giant multi year cup and handle? Of course this parabolic move can crash or it could be a continuation off the cup and handle.
Velocity being what it is, (essentially zero with money supply filling the craters left by economic crash) it may be the later.
While it continues to rise it does look to be losing just a bit of steam. Thoughts?
One other thing that I think is a positive is the chart of pretty much every home builder. I don't know exactly what that means but what if we do get a housing recovery?
GMO - This seems like repeat news, the protest still has not been dropped but may depend only on approval of the 3M plan?
"General Moly Announces Receipt of Water Permits for Mt. Hope December 19, 2011 8:30 AM ET.
General Moly, Inc. (the "Company") (NYSE Amex: GMO) (TSX: GMO) announced that as of December 14, 2011, the Nevada State Engineer issued the Company, through a subsidiary, all of its water permits - allowing the Mt. Hope project to utilize approximately 7,000 gallons per minute (gpm) of groundwater for mining purposes. The permits follow the Nevada State Engineer's July 2011 ruling granting the Company's water right applications for the use of 11,300 acre-feet annually (afa) of water for mining purposes.
The water will become available for consumptive use following the State Engineer's approval of the Company's Monitoring, Management and Mitigation Plan (3M Plan) that was developed in cooperation with Eureka County and submitted to the State Engineer for approval in October 2011. The Company continues to work with the State Engineer and Eureka County to finalize the 3M Plan and we anticipate the State Engineer to approve the 3M Plan in the first quarter of 2012."
Homebuilders: TLT means very low rates. Then there is this: http://www.bloomberg.com/news/2011-12-19/u-s-homebuilder-confidence-rises-a-third-month-to-highest-level-this-year.html
The powers that be could also be turning the knife a bit to juice the economy. don't forget, we are coming into an election year.
CP, the problem is I hate breakout patterns. The good part is that $125 is well defined. It needs to break that then correct above it for me to risk it. Then I would set my stop at just under $125. but laughingly, I agree. The way things have been going the C&H may be real, which is a bit unnerving. that previous $125 was the low of the S&P in 2008. What does that say for the markets today?
Aluminum - I don't know if you guys read any of the article, but one thesis is that the physical metal is for delivery on the unwinding of the short position around December 21st.
CC - SPPI is on my watchlist...I agree what a great chart. I think MITK makes a similar move to its move over the past 2 months, which is why I'm in MITK. I wouldn't be surprised to see it at $13 in January.
CC - I think these are the only types of plays in this market. Just keep an eye on the ones that were in a nice upswing but that get crushed when the market sells off. Then buy a basket of those. Look at FTK. I know several of us were following it and mentioned it, but none of us bought the crash in October, which would have been a 100%+ gain. MMYT and DXPE are two others. I think MITK does the same soon.
Kyle > I think you mentioned that the VIX was so low b/c it measures 30 days out and the holidays were in the mix but now that we only have 2 weeks until year end what gives with the VIX being so low?
2:57 PM The EU announces it has raised €150B (less than €200B hoped) from member states to lend to the IMF to lend back to needy member states. Notably absent from any contribution is the U.K. Also, Sweden, Poland, Denmark, and the Czech Republic indicated a willingness to take part but have to run it by their parliaments first. Yes, Spain and Italy are chipping in, to the tune of €38.3B.
TOF - well, 30 days also contains 2 Jan and 16 Jan as exchange holidays, but it also may be that put protection isn't as much in demand (maybe they're ALREADY back to cash or in Treasuries).
Dollar - The resistance zone for the dollar is between 80.75 and 81.50, in case the index breaks above this resistance zone it's next target is at the 83.25 area.
So now dollar is above 80.75 and tested that support successfully this morning between 08:00 and 09:00.
mark - i'm honestly surprised the banks don't force all people to deposit using mobile check deposit. the cost to a bank to deposit a check manually is something like $1.20 whereas it's $0.15 via mobile deposit. Multiply that by billions of checks per year and that is enough to make them extremely profitable.
It looks like the junior miners are trades exclusively by computers lately. Check this out: SLV is down more than 3% today, GDXJ is down almost 3%, but AUMN is green now! Who in their right mind would be buying AUMN now? All human investors probably ran out of money to invest into AUMN by now, because it was an AWESOME deal at $12. The only reason AUMN is up today is because it was down on Friday, when both SLV and GDXJ were up (which, by itself, was also an unreasonable behavior). It is the computers doing the StatArb rotations between the junior mining stocks...
"U.S. stocks Monday hit their lows of the day in the last 45 minutes of trading, after a statement from a meeting of European Union finance ministers said euro-currency members had agreed to provide an additional 150 billion euros to the International Monetary Fund for European rescue efforts but made no mention of contributions by some key EU members, such as the United Kingdom. The euro EURUSD -0.31% added to slight losses, slipping under $1.30. Treasurys strengthened, pushing yields lower. Stocks had been moderately lower after European Central Bank Chief Mario Draghi threw more cold water on hopes that the ECB could intervene more in bond markets to prevent sovereign debt defaults."
Focusing on the last part of the above news excerpt, could it be that Super Mario is just using rhetoric to defend itself against attacks on ECB that could follow after banks DO start to buy sovereign debt using the money they borrow from ECB? Mario wants to make it looks as something that "just happened" but was not planned by ECB in the first place, and hence ECB should not be blamed for breaking the EU treaties...
Since 1209 is one big level that people are watching, it makes perfect sense that we would close below it, get people to sell off their long positions, and then ramp the market higher. That's basically what has been happening all year long
Starting a positions in Canadian train and aircraft manufacturer Bombardier down here at $3.35.
Reasonable leverage to an improving economy, good cash on the books, profitable, 2.8% dividend.
Only buying half as we get some heavier tax-loss selling this week, but I think it is the type of stock you want to buy if you believe the economy gets better as I do.
think the banks want to move towards a fee-based model. Way less risky and steady income - if the other banks get on board, people will be forced to pay.
David - jr metals - I guess there are a number of folks waiting for more triangles to break out (both up and down respectively) and move on to the next, next pattern formation...
Fighting the tape becomes a futile effort at some point, as long as computers want to run the prices on down(using OPM rehypothicated multiple times, no doubt), I'll sit patiently on the sidelines and watch the show.
yeah USB is foolish. Not only will they save over $1 for every deposit but they also want to rape people by charging $0.50. they should be focusing entirely on getting as many mobile checks as possible because they will save a shit ton.
I honestly wouldn't be surprised if we have a +200 DJIA day tomorrow. Think about what happened today...much like what happened in the beginning of October: a close below what was perceived as a key holding point. Since the beginning of the year, almost every time this happened the market then immediately turned around and ripped higher. The only exception was in early August below 1,250.
That's very possible, TOF -- the market is traded by computers now, and they are taking a particular pleasure in shaking out human traders of their positions, then forcing them to chase prices, and then shaking them out again.
TBT: I think I understand the fascination with this...everyone wants to catch the top of the bond market. But even if you do and bonds pull back, the odds they pull back because of a US funding crisis are miniscule. More likely it will be because of strong economic growth. If that's the case then wouldn't buying high beta stocks like MITK or other stocks that are in strong growth phases but have been held down by a weak market the better way to make money? FTK is the perfect example of a stock that was momentarily held down over the summer because the market was weak but that just exploded higher....you can't get those returns in TBT no matter how well you time bonds.
One problem with a strong dollar is it renders US listings that much more expensive for foreigners to buy(perhaps this explains the selling?), and thus, foreign listings more competitive(When will these markets ever catch a bid?).
"wouldn't buying high beta stocks like MITK or other stocks that are in strong growth phases but have been held down by a weak market the better way to make money?"
That's been my observation, the potential reward seems much greater.
"you can't get those returns in TBT no matter how well you time bonds."
You are right, TOF. Buying TBT for me was a real risk diversification away from AUMN, and so I just parked my money there temporarily, and when AUMN dropped down a lot (and hence the expected return from buying AUMN increased greatly), I moved that money into AUMN.
Remember our favourite market poster, Dougie Kass, calling the bond short position the trade of the decade in September last year - just 14 months and down 30% and waiting on that one...
Bonds this year are kind of like tech stocks in 1999. Everyone know they are overvalued and they will come down, but there is so much money being made staying long them that people can't force themselves to sell. I suspect that once the selling does start, it will become a tidal wave.
TBT, I think it will be both. It will be to raise funds for equities/the economy AND that will lead to higher yields/lower prices for bonds because of the demand for funding the real economy. (Putting on my geezer hat and old voice) Back in the 70's that was what happened...sonny. yields and interest rates when up because there was a shortage of funds due to government demand, equity/private funding demands and the Fed trying to pull liquidity out of the system to fight inflation. That will happen again and it likely won't be just one cause, it will be multiple causes.
Online payments may be easier to make than their offline counterparts in general, but there’s still at least some pain involved in entering account numbers and other informa- tion. Aiming to push up the convenience another notch, Mitek System’s application now lets bank customers snap a photo of their bill and then simply click to pay. Danske Bank is one bank using the App. Customers begin by download- ing the bank’s mobile app, which is available for Android, iPhone, iPod Touch and iPad. (AU)
" CSTR is starting to get some mentions re- coffee machines. Man, I really want back in the baby."
Mark - CSTR is going to $60 in a heart beat if this market settles down. I really like it here. Do you know if they own the Seattle's Best machines? This is what I was mentioning a while ago as a potential added bonus...if they own all of the Seattle's Best then that is huge. I have seen lots of them around me.
MITK - Has not entered oversold territory yet. RSI 7 over 34.
ReplyDeleteDavid- This should cheer you up. My brief foray into SLW had me reading about the gold market the past two days. In the midst of reading the below commentary, the sixth sense kicked in:
ReplyDeletehttp://www.marketwatch.com/story/silvers-a-bargain-under-30-but-watch-volatility-2011-12-16?pagenumber=2
Does silver at 60/oz sound surreal? Going into the first half of 2012, I'm less bullish on the SPX than I am on GDX. The reverse scenario for the second half of 2012.
I expect to hear from CB by June.
ReplyDeleteWhy? B/c I've seen this scenario in the metals too many times to bet against it.
ReplyDeleteMore than any other sector, it's all about capitulation followed by parabolic moves. Blame it on the psyche of the commodities trader.
SD - Would MOG approve of this one?
ReplyDelete2nd - While you're looking at GDX, consider GDXJ b/c there are fewer clapped out mines in the jr section and the majors may be looking for new properties?
ReplyDeleteBut in order to take advantage, you may have to actually pick from a specific list of candidates and cross reference that with GDXJ's basket?
Anyway, in terms of silver, supposedly current supply levels now exceed industrial and commercial demand, the deficit is in investment demand. Thus, silver could move considerably lower if investment demand shrank. That's kinds saying something though, that investment demand is absorbing the excess physical.
I wish Bill would spill his guts, he only repeats the same noise newsletter writers publish.
CP- As a straight play on the POO., yes :)
ReplyDeleteillini - yeah i noticed that too about mitk. looks like it has a date with destiny (6.5) hopefully on monday/tuesday just to get it out of the way. however there are too many things going for it and the story is too long term for the negativity to last. my guess is barring any buyout or crazy news, it tests 6.5 yet again and then does an absolute moonshot higher to 12. i think this all happens by feb 1 2012
ReplyDelete"David- This should cheer you up."
ReplyDeleteThanks, 2nd_ave...
I've been wondering recently why I was able to keep my mood up despite the relentless decline in AUMN. Probably because my cojones were really hardened by the 2008 experience with the miners. However, today was the first day when I actually felt desperation. In the past, however, my desperation was not enough to turn the market around. What was needed is for me to take action based on my feeling of desperation. I am not sure if my purchase of GDXJ puts today qualifies as that kind of an action. There is a pretty good chance that it does and that today was THE bottom for AUMN. But then, it may not be. The following article about the bank lending in Europe freezing up has me really worried:
http://finance.yahoo.com/news/analysis-more-euro-zone-banks-200513393.html;_ylt=AkZ9Px1PR14uNAHwN5lKBDuiuYdG;_ylu=X3oDMTQ0cjZiNTYyBG1pdANGaW5hbmNlIEZQIFRvcCBTdG9yeSBSaWdodARwa2cDNzkzNDBiZDgtOTZmZC0zYzlhLTg4ZjEtNGIyZDllZjBkNTRjBHBvcwM2BHNlYwN0b3Bfc3RvcnkEdmVyAzYzNjMyN2UwLTI4MjEtMTFlMS1hZmZmLWFjOTY1NWY3OGY1OA--;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3
I have a bad feeling that this whole shit won't be over until the markets puke like in October 2008 and the central banks announce some drastic measures. There is a small hope that the following quote from the above article qualifies as the drastic measures that will stop this madness:
"To avoid stress levels reaching those seen three years ago, the ECB plans to pump unlimited three-year liquidity into the banking system on Wednesday."
If the ECB is not pumping the liquidity into the system YET, then I can understand why the TED spread keeps climbing. Can someone please verify whether or not the ECB is doing something yet? If it really isn't, then Wednesday may be the judgement day which might turn around the PM market (we know the extent to which PMs like liquidity sloshing around the system).
Looks like AONE is going the way of Solyndra. When will we ever learn...
ReplyDeleteHL - The accident this week at Hecla's Lucky mine illustrates quite well in my mind why the business of mining deserves more respect. It's not as if you can just take a shovel into your backyard and dig up some metal ore to smelt, there's considerably more risk involved in the process of obtaining these minerals than most people realize, yet they want/need a new car or laptop every so often while still refusing to respect these risks that someone took to make it all possible:
ReplyDeletehttp://finance.yahoo.com/news/Idaho-closed-7-miners-injured-apf-1247803757.html?x=0
David,
ReplyDeleteDid you mean this liquidity event?
http://www.businessweek.com/news/2011-12-17/spanish-italian-notes-gain-as-ecb-stokes-demand-bunds-advance.html
My question is if this was known about doesn't the market price it in before the event takes place?
SVM - This one has already experienced a gain of 1600% from the 2008 crisis peak, far outperforming silver miner gains during the great depression.
ReplyDelete"AONE is going the way of Solyndra."
ReplyDeleteTrue but does this change the perception that the world needs an energy source other carbon-based fossil fuels?
Here is why I believe rocks (it's not just all about PM's, thus rocks, okay?) are an economic "tell" for the market going forward:
http://www.gold-eagle.com/editorials_08/ciovacco121411.html
CP- No, my comment was about the government picking winners and losers.
ReplyDeleteThank you, RB! So now I have something to look forward to -- the actual start of unlimited liquidity on Wednesday! I am sure the market is not pricing it in fully, as no one knows WHO will decide to go and use that liquidity. So for now, just to be on the safe side, the banks are still not trusting each other.
ReplyDeleteIn today's local newspaper....
ReplyDelete"Bank of America sells 400M shares, $2.3B in debt
NEW YORK – In an effort to strengthen its balance sheet, Bank of America in November and December sold 400 million common shares and issued $2.3 billion in debt to replace $5.8 billion of preferred stock.
The preferred stock was more expensive for Bank of America Corp.'s balance sheet because it paid investors annual dividends of 5.25 percent to 8.25 percent.
The Charlotte, N.C., bank made the disclosure in a regulatory filing.
The bank has been selling assets to meet stricter regulation that require banks to be better prepared to deal with economic downturn. Bank of America has working hard to fortify its balance sheet - last year it was the only one among the four largest banks that was denied an application with the Federal Reserve to pay dividends to its shareholders."
Guess what kids? I suspect that the panic has already spread from Europe to North America and the selling we are seeing in PM's is EXACTLY the same as we saw in 2007-2008. What do you sell when you need to raise cash?
As Landry preaches, when the markets reach a transition, it's the high fliers that get sold as a source of funds. That's what happened to MITK a while back. Of course it is still a fundamental story but traders trade, which means they take profits.
So there you have my two-fer for the weekend.
Drink of the weekend (yeah, it's early but I'm planning ahead) is Barbancourt Haitian Rum Reserve Speciale, aged 8 years in oak, mixed with a touch of the polar bear coke. Not as good as the Cruzan Private Reserve aged 12 years, but very good non-the-less. Not as sweet as the Pyrat or the Zaya Grand Reserve aged 12 years from Trinidad.
Rum is much easier to manage than the source of today's post title. She lies like a rug.
All of a sudden I'm thirsty.
ReplyDelete"government picking winners and losers. "
ReplyDeleteTrue, Solyndra's "investors" are welfare recipients, just as Buffett will be on his BAC wager.
CSCO - I see the inverse H&S with head in August, completed last month...
ReplyDeleteThe Kensian/Austerian debate is about wealth transfer and who first gets destroyed - the saver or the debtor? If you print, you try to inflate your way through the mess and destroy the saver. If you cut then you punish the debtor first. None of this is easy and their are consequences for doing both. However as we are seeing with wealth transfer comes corruption, the corruption will be the downfall of America?
ReplyDelete93.65 tonnes, or 73.3% of registered gold(gold registered for sale) at Comex is standing for delivery, a new record.
ReplyDeleteDebt downgrades across Europe, I guess if you're not willing to pursue QE and steal from the savers, then you're saying you'd rather breach contract? Thus, debt downgrades.
CP- Can you please explain that last comment further? No QE which screws the savers, thus no happy happy for Pm's, is that it?
ReplyDeleteMark - QE(currency devaluation) screws the savers, wealth confiscation rewards the debtors.
ReplyDeletehttp://www.theglobeandmail.com/globe-investor/investment-ideas/experts-podium/holiday-season-is-a-great-time-to-find-small-cap-bargains/article2269905/
ReplyDeletenews you can use:
ReplyDeletehttp://beernews.org/
yo jb - u still holding mitk from earlier in the year?
ReplyDeleteJohn Mauldin has once again wrote a very thought-provoking article about the future of US economic growth. The issues he is mentioning there cannot be overlooked by anyone whose investments depend on future US economic growth. The article will soon appear at http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/default.aspx (I already got it in my e-mail). Here are some quotes from it:
ReplyDelete"I think it likely that we will see that the US economy grew less than 2% in 2011, and probably closer to 1.5%. If there is a 2 times multiple on tax cuts, then the stimulus was worth anywhere from 1% to 1.6% of growth in 2011 (depending on your favorite academic paper), which is much of (and maybe most of) the growth we had in the US this last year."
"Whenever the payroll tax cut extension goes away, it will mean an effective tax increase of the same magnitude of the tax cut. In our example, about a 1% to 1.6% hit to GDP. Think the economy is strong enough to handle that without going back perilously close to recession? As states and local governments are raising taxes by about 1% of GDP? As Europe implodes?"
"That crisis will come to the shores of the US, and will reduce our GDP. I think it does so next year, pulling us into recession. That means revenues are down and costs are up. The deficit gets larger, not smaller. The costs of not dealing with the problem will mount with every passing month, here just as they do in Europe. Europe has kicked the can down the road, but it is coming to the end of that road. We are going down the same path unless we make the hard choices. The longer we wait, the harder the choices."
"The US has no easy choices. Our choices now are merely very difficult. If we delay much longer, past 2013, our choices go to bad or very bad. Different in kind from those of Europe but not in difficulty or the quality of outcomes."
"Once rates start to rise, the options faced by the US are not good. Real spending cuts and tax increases in the midst of a crisis? Allowing the Fed (or essentially forcing it) to monetize the debt? There will be no good choices if we do not act."
*******************************************
The key phrases from above, for PM investors, are: "The deficit gets larger, not smaller" and "Allowing the Fed (or essentially forcing it) to monetize the debt." So PMs *will* keep rising rapidly over the next few years, but that growth will be interrupted by frequent credit crunch panics...
The 20 December $5 calls on AUMN I bought a few weeks ago and 10 December $7.50 puts I shorted were all assigned to me today, increasing my AUMN position by 3000 shares. That didn't cause a margin call for me, however, since I sold all my TBT last week at a minor loss (not more than $1K after all the trading I've done). So if AUMN doesn't drop below $5, then I'll definitely avoid a margin call, and my strategy of steadily increasing my AUMN position as it goes lower will be rewarded handsomely. IF AUMN doesn't drop below $5...
ReplyDeleteHere is a very interesting chart update the 200 year returns for asset classes based on Jeremy Siegel's work:
ReplyDeletehttp://www.investorsgroup.com/english/_ns/client/ic/ic_03.shtml
The chart is after inflation returns.
The really interesting thing is that basically all of the returns on Gold Bullion for the last 200 years were made in the last 10 years and it is the highest is has been over this period. In 2000, when the gold bull market started, Gold was below it's 200 year trend other than the times when the price was government controlled (which was the cause of the underinvestment in gold mines and the seeds of the huge bull of the 2000's).
The other interesting thing is that equities are pretty much as far below long term trend as any time in the last 200 years meaning they are very undervalued.
If you are a reversion to the mean type investor (as I am), this strongly points you towards reducing PM investments and increasing equity investments. The other option is you have to believe that something is different this time (unmanageable US debt, coming hyper-inflation, etc.) and that this is a new trend which continues.
david i posted a link to an etrade research article a while ago that show returns relative to econ growth and they were almost inversely correlated as long as econ growth was positive.
ReplyDeletehas hussman mentioned anything about the potential for the housing mkt to pick up because its cheaper to own than rent and if that happens how it might impact econ growth?
BB - what reversion line are you looking at????
ReplyDeletehttp://advisorperspectives.com/dshort/charts/valuation/Q-ratio-overview.html?Q-Ratio-and-the-SP-Composite.gif
http://online.barrons.com/article/SB50001424052748704619804577096433073626176.html?mod=BOL_twm_fs
ReplyDeleteCSTR.
Shoot..The whole article came up for me on a GOOG search.
ReplyDeleteIf you ever want to read a Barron's article and they tell you that you need a subscription, just open up a new browser window, then search for the article and click on it and you can always read the full thing.
ReplyDeleteKyle, I'm not really sure what th Q-ratio is, but the chart i am looking at is just a 200 year trend line for stock returns as calculated by Jeremy Siegel and popularized in his book "Stocks for the Long Run". It's an interesting read, although you have to be careful as he sometimes uses logarithmic scales and sometimes linear.
BB- Yeah, that's what I did. The copied link didn't work that way though. Bastards!
ReplyDelete"david i posted a link to an etrade research article a while ago that show returns relative to econ growth and they were almost inversely correlated as long as econ growth was positive."
ReplyDeleteYou are probably talking about equities, right? That is very possible, since a very low level of economic growth implies a high level of government stimulus, and stocks REALLY like stimulus. For gold, the long-term return is definitely inversely correlated with economic growth, since it is positively correlated with deficit growth and during a weak economy, tax receipts go down and stimulus spending goes up, implying that the deficit shoots up.
Looks like tax receipts are headed in the toilet for 2012...
ReplyDeleteKim Jong-Il has died.
ReplyDeleteKimba...Remember that photo of him with Clinton? That was crazy.
ReplyDelete"Gold prices will fall below $1,500 an ounce over the next three months and are unlikely to retest September's all-time highs until later 2012 at the earliest, according to a Reuters poll of 20 hedge fund managers, economists and traders."
ReplyDeleteIf traders have already sold their long gold positions in expectations that gold will fall in Q1, then who will be doing the selling from now on?
Here is a nice quote in the news today:
ReplyDelete"You can either have cheap stocks or you can have good news, but you can't have both," says Jim Grant, quoting Joe Rosenberg, and explaining why he thinks there may be "terrific investment opportunities" despite today's ugly macro backdrop"
"While some believe the ECB's new collateral and loan rules amount to a backdoor QE, allowing banks massive firepower to purchase sovereign debt, the banks themselves think differently. "When investors are constantly asking what you have on your books, and the board is asking you to reduce your exposure, it doesn't really matter," says the treasurer of a major EU bank. "Am I going to buy Italian bonds? No.
ReplyDeleteRather than use money raised via the ECB to buy government bonds, bankers say that they are more likely to use the funds to pay off their own debts."
http://www.zerohedge.com/news/mf-global-trade-not-coming-european-town-why-ecbs-3-year-ltro-latest-bailout-flop
Well, an extra pile of cash that can be used to pay off debts should at least stop the forced selling of PM miners by the EU banks, right? :)
If I were paying off debt in euros, I'd try to capture a currency spread if possible, before doing it, and pay that debt off in a cheapened currency?
ReplyDeleteSomething like: sell my euros for dollars, wait till the euro bottoms, then pay off the debt?
BB - I was referring to the top part of the chart (inflation adjusted SPX log-scale w/ the exponential regression line)
ReplyDeleteMark, don't copy the barrons link. Just copy the title of the article into Google and search for it (it will usually be the first one). Then click on the link from within google and you will be able to read it.
ReplyDeleteYou can also put "site:barrons.com" within your search if you are having trouble finding the article.
ReplyDeleteKyle, interesting that your chart shows stocks as being expensive relative to the 100 year trend and Siegel's show as being undervalued.
ReplyDeleteGuess it shows you can't trust these types of analysis if the numbers can be made to show either answer.
BB - we can agree on the 'not trusting the numbers' thing!!!
ReplyDeleteAnother case with all kinds of different 'stories' is China...
8:06 AM A remarkable study from Bloomberg finds China's debt dwarfs what are already high official figures, and the slowdown in credit creation engineered by Beijing this year is a myth. With cash flows for many infrastructure projects coming nowhere near enough to service the debt, entities are completely reliant on being able to roll over loans to keep the ball rolling. China's "treadmill to hell," as described by Jim Chanos months ago.
Thanks again for mentioning the seekingalpha news source a few weeks ago
Kyle, what I can't wrap my head around is how everyone can have so much debt. As far as I know from my accounting course, every debt is someone else's asset as the first person had to borrow the money.
ReplyDeleteSo if the US, Europe, China all have huge debts, who are the counter-parties to these transactions who are owed all this money? It can be all European banks and Middle-East princes...
"So if the US, Europe, China all have huge debts, who are the counter-parties to these transactions who are owed all this money?"
ReplyDeleteI don't know, but if all this debt defaults, what does that entail, what's the plan to keep it from happening, and what if the plan fails?
Samsung needs to buy some capital equipment?
ReplyDelete" 10:08 AM As part of its aggressive 2012 capex plans, Samsung (SSNLF.PK) is looking to nearly triple the capacity of its chip foundry business, according to Digitimes Research, with a focus on expanding the production of high-margin logic chips such as Apple's A5 CPU. Samsung's efforts could lead to additional price and margin pressure for rivals such as TSM, UMC, SMI, and TSEM. [Tech] Comment! "
Might be good for NANO/AMAT, not sure if they use LAM and Nikon. Need a preferred vendor list but 10 yrs ago they were buying AMAT/NANO, everyone buys NANO and Rudolph.
Catch you guys at either BAC=4.99 or the close...Which ever one comes first!
ReplyDeleteToo funny, shameless euro-pumper ratings agencies always arrive to shoot the dead, isn't that how it always works?
ReplyDeletetof - still long and strong MITK, I added some at $6.72....to infinity!
ReplyDeletehow about you?
JB - I'm long MITK from $7.8 average last week. I reloaded it. Not sure if you saw my post last week but I confirmed with the company that they will announce the mobile bill pay customer at the 1st quarter conference call...so it sounds like they signed someone on there. That means they're branching into two other markets now, aside from mobile deposit.
ReplyDeleteWhen did you buy? Back in the spring/summer?
Mortgage REIT's - My understanding is MREIT's perform well with a steep treasury curve, using FLAT ETF as a proxy, it seems the curve has steepened.
ReplyDeleteStill wondering why CIM can't seem to form any rally momentum, while NLY looks "decent".
I tell you what...I think the best strategy right now is to just short anything related to China...even after their moves down. FXI looks like a great short.
ReplyDeleteToday's action is quite depressing to me. I think there's a good chance we're going down hard just like the bears are screaming about.
ReplyDeleteThe market needs to make a stand very soon or else when we get through this slow low volume holiday period we could see some intense selling pressure.
ReplyDeleteSWHC - Major resistance, increasing volume?
ReplyDeleteTOF - You're right, it doesn't feel too good... S&P 1200 is the trend line off the October low.
ReplyDeleteCP - There are still a few things that make me stay on the bullish side:
ReplyDelete(1) US econ reports have been solid lately, including jobs
(2) Earnings are still solid
(3) VIX continues to be low relative to the fear in the markets
(4) High yield bonds are holding up very well and they usually are weak heading into a recession/downturn.
Operation Fast and Furious - "At least 300 people in Mexico were killed with Fast and Furious weapons, as was Border Patrol agent Brian Terry. The identities of the Mexican victims are unknown.
ReplyDeleteHmmm, this was an ATF operation as opposed to an DEA operation. I thought the DEA was charged with enforcing illegal drug smuggling laws?
Shock and Awe...
I tell ya what....CSTR looks good right here. I think it could have one final mini selloff just to piss off the bulls but this sucker is going to $60 again.
ReplyDeleteAluminum LME Inventories Balloon to Record High – Part One
ReplyDeleteby stuart on December 19, 2011
"LME aluminum inventories have been skyrocketing in recent days, leading some to speculate that falling demand is creating a massive surplus. They may be right; even Andy Home, Reuters columnist and usually a good interpreter of the workings of the LME and related physical trading, wrote an article this week seeking to explore the possible causes.
Firstly, what has been happening? Almost 300,000 metric tons of aluminum have been delivered into the London Metal Exchange warehousing system in the past four days. Registered tonnage is now at an all-time high of 4,826,275 metric tons, with more expected.
Detroit, always a key player in the LME aluminum financing game, was the main recipient of new material, receiving 100,000 tons of metal on Monday. It now holds 1,264,775 tons of aluminum, the largest concentration in the LME system."
http://agmetalminer.com/2011/12/19/aluminum-lme-inventories-balloon-to-record-high-part-one/
Just for laughs, pull up a 3 yr chart of TLT.
ReplyDeleteIs it just me or is that not a giant multi year cup and handle?
Of course this parabolic move can crash or it could be a continuation off the cup and handle.
Velocity being what it is, (essentially zero with money supply filling the craters left by economic crash) it may be the later.
While it continues to rise it does look to be losing just a bit of steam.
Thoughts?
One other thing that I think is a positive is the chart of pretty much every home builder. I don't know exactly what that means but what if we do get a housing recovery?
ReplyDeleteGMO - This seems like repeat news, the protest still has not been dropped but may depend only on approval of the 3M plan?
ReplyDelete"General Moly Announces Receipt of Water Permits for Mt. Hope
December 19, 2011 8:30 AM ET.
General Moly, Inc. (the "Company") (NYSE Amex: GMO) (TSX: GMO) announced that as of December 14, 2011, the Nevada State Engineer issued the Company, through a subsidiary, all of its water permits - allowing the Mt. Hope project to utilize approximately 7,000 gallons per minute (gpm) of groundwater for mining purposes. The permits follow the Nevada State Engineer's July 2011 ruling granting the Company's water right applications for the use of 11,300 acre-feet annually (afa) of water for mining purposes.
The water will become available for consumptive use following the State Engineer's approval of the Company's Monitoring, Management and Mitigation Plan (3M Plan) that was developed in cooperation with Eureka County and submitted to the State Engineer for approval in October 2011. The Company continues to work with the State Engineer and Eureka County to finalize the 3M Plan and we anticipate the State Engineer to approve the 3M Plan in the first quarter of 2012."
http://money.msn.com/business-news/article.aspx?feed=BW&date=20111219&id=14632718
Homebuilders:
ReplyDeleteTLT means very low rates.
Then there is this:
http://www.bloomberg.com/news/2011-12-19/u-s-homebuilder-confidence-rises-a-third-month-to-highest-level-this-year.html
The powers that be could also be turning the knife a bit to juice the economy.
don't forget, we are coming into an election year.
CC - With the way things have been going this year, I'd go with the C&H, LOL!
ReplyDeleteOne I'm following that looks good technically.
ReplyDeleteSPPI.
CP, the problem is I hate breakout patterns.
ReplyDeleteThe good part is that $125 is well defined.
It needs to break that then correct above it for me to risk it. Then I would set my stop at just under $125. but laughingly, I agree. The way things have been going the C&H may be real, which is a bit unnerving. that previous $125 was the low of the S&P in 2008. What does that say for the markets today?
Aluminum - I don't know if you guys read any of the article, but one thesis is that the physical metal is for delivery on the unwinding of the short position around December 21st.
ReplyDeleteCC - SPPI is on my watchlist...I agree what a great chart. I think MITK makes a similar move to its move over the past 2 months, which is why I'm in MITK. I wouldn't be surprised to see it at $13 in January.
ReplyDeleteCC - I think these are the only types of plays in this market. Just keep an eye on the ones that were in a nice upswing but that get crushed when the market sells off. Then buy a basket of those. Look at FTK. I know several of us were following it and mentioned it, but none of us bought the crash in October, which would have been a 100%+ gain. MMYT and DXPE are two others. I think MITK does the same soon.
ReplyDeleteGMO- Saw that this morning and thought the same thing.
ReplyDeleteHEK- Man, how much attention can that one get.
jeez now it looks like the market is a buy. i'm so glad i don't day trade this nonsense.
ReplyDeleteJeff Saut is watching 1209 I think as a stop out point:
http://www.raymondjames.com/inv_strat.htm
Whoa...there goes the mkt.
ReplyDeleteKyle > I think you mentioned that the VIX was so low b/c it measures 30 days out and the holidays were in the mix but now that we only have 2 weeks until year end what gives with the VIX being so low?
Not sure if this is what did it...
ReplyDelete2:57 PM The EU announces it has raised €150B (less than €200B hoped) from member states to lend to the IMF to lend back to needy member states. Notably absent from any contribution is the U.K. Also, Sweden, Poland, Denmark, and the Czech Republic indicated a willingness to take part but have to run it by their parliaments first. Yes, Spain and Italy are chipping in, to the tune of €38.3B.
funny comment i just read:
ReplyDelete"BAC downgraded from zombie, to gum on zombie's shoe"
TOF - well, 30 days also contains 2 Jan and 16 Jan as exchange holidays, but it also may be that put protection isn't as much in demand (maybe they're ALREADY back to cash or in Treasuries).
ReplyDeleteTOF- I just had a panic attack. What if MITK announces a bill pay plan with BAC!!?? The horror!
ReplyDeleteDollar - The resistance zone for the dollar is between 80.75 and 81.50, in case the index breaks above this resistance zone it's next target is at the 83.25 area.
ReplyDeleteSo now dollar is above 80.75 and tested that support successfully this morning between 08:00 and 09:00.
http://finviz.com/fut_chart.ashx?p=m5&t=dx
TOF - in both '09 & '10, it looks like $VIX was near the lows of those years. Perhaps a 'closing of the books' near EOY has this effect????
ReplyDeleteSPX - well, we're at the sma100 (1203.80), so let's see if that holds.
ReplyDeleteBAC - Plop-plop, fizzle-fizzle.....
ReplyDeletemark - i'm honestly surprised the banks don't force all people to deposit using mobile check deposit. the cost to a bank to deposit a check manually is something like $1.20 whereas it's $0.15 via mobile deposit. Multiply that by billions of checks per year and that is enough to make them extremely profitable.
ReplyDeleteIt looks like the junior miners are trades exclusively by computers lately. Check this out: SLV is down more than 3% today, GDXJ is down almost 3%, but AUMN is green now! Who in their right mind would be buying AUMN now? All human investors probably ran out of money to invest into AUMN by now, because it was an AWESOME deal at $12. The only reason AUMN is up today is because it was down on Friday, when both SLV and GDXJ were up (which, by itself, was also an unreasonable behavior). It is the computers doing the StatArb rotations between the junior mining stocks...
ReplyDeleteS&P futures are down to 1197 already:
ReplyDeletehttp://www.forexpros.com/indices/us-spx-500-futures-advanced-chart
This doesn't bode well for 1200 holding on S&P itself...
"U.S. stocks Monday hit their lows of the day in the last 45 minutes of trading, after a statement from a meeting of European Union finance ministers said euro-currency members had agreed to provide an additional 150 billion euros to the International Monetary Fund for European rescue efforts but made no mention of contributions by some key EU members, such as the United Kingdom. The euro EURUSD -0.31% added to slight losses, slipping under $1.30. Treasurys strengthened, pushing yields lower. Stocks had been moderately lower after European Central Bank Chief Mario Draghi threw more cold water on hopes that the ECB could intervene more in bond markets to prevent sovereign debt defaults."
ReplyDeleteFocusing on the last part of the above news excerpt, could it be that Super Mario is just using rhetoric to defend itself against attacks on ECB that could follow after banks DO start to buy sovereign debt using the money they borrow from ECB? Mario wants to make it looks as something that "just happened" but was not planned by ECB in the first place, and hence ECB should not be blamed for breaking the EU treaties...
Since 1209 is one big level that people are watching, it makes perfect sense that we would close below it, get people to sell off their long positions, and then ramp the market higher. That's basically what has been happening all year long
ReplyDeleteIf we can get a little puke into the close, I'll take 1000 SSO over night.
ReplyDeleteStarting a positions in Canadian train and aircraft manufacturer Bombardier down here at $3.35.
ReplyDeleteReasonable leverage to an improving economy, good cash on the books, profitable, 2.8% dividend.
Only buying half as we get some heavier tax-loss selling this week, but I think it is the type of stock you want to buy if you believe the economy gets better as I do.
TOF- Banks are Fing stupid. Why else would USB charge .50 per mobile deposit?
ReplyDeleteI love this from one of the people I follow on Twitter:
ReplyDelete"Im seeing some panicky tweets $$"
So now Twitter has become a sentiment-defining tool as well.
Mark,
ReplyDeletethink the banks want to move towards a fee-based model. Way less risky and steady income - if the other banks get on board, people will be forced to pay.
2000 more MITK @ 7.15.
ReplyDeleteSPX - Some levels Down...
ReplyDelete1201 - Weekly S1
1191 - Weekly Demark S1
1182 - Weekly S2
1177 - Yearly PP
BB- I'm sure your right, but this is new and I'd try to sucker as many people into the fold before slamming the gate.
ReplyDeleteDavid - jr metals - I guess there are a number of folks waiting for more triangles to break out (both up and down respectively) and move on to the next, next pattern formation...
ReplyDeleteFighting the tape becomes a futile effort at some point, as long as computers want to run the prices on down(using OPM rehypothicated multiple times, no doubt), I'll sit patiently on the sidelines and watch the show.
2000 more @ 7.06. OK, that's a good position size for me over 3 accounts. Let's see where this goes.
ReplyDeleteyeah USB is foolish. Not only will they save over $1 for every deposit but they also want to rape people by charging $0.50. they should be focusing entirely on getting as many mobile checks as possible because they will save a shit ton.
ReplyDeleteSWHC - That panic has now worsened to the point that moneyflow is out of weaponry and into government bonds! ;)
ReplyDeleteI honestly wouldn't be surprised if we have a +200 DJIA day tomorrow. Think about what happened today...much like what happened in the beginning of October: a close below what was perceived as a key holding point. Since the beginning of the year, almost every time this happened the market then immediately turned around and ripped higher. The only exception was in early August below 1,250.
ReplyDeleteThat's very possible, TOF -- the market is traded by computers now, and they are taking a particular pleasure in shaking out human traders of their positions, then forcing them to chase prices, and then shaking them out again.
ReplyDeleteThe futures are already ripping higher. :)
ReplyDeleteTBT...Juuuuuuuuuuust around the corner..
ReplyDeleteAnybody have the impression yet, there will be no QE?
ReplyDeleteTBT > A double inverse ETF going against the grain with compounding returns = ouch.
ReplyDeleteTBT: I think I understand the fascination with this...everyone wants to catch the top of the bond market. But even if you do and bonds pull back, the odds they pull back because of a US funding crisis are miniscule. More likely it will be because of strong economic growth. If that's the case then wouldn't buying high beta stocks like MITK or other stocks that are in strong growth phases but have been held down by a weak market the better way to make money? FTK is the perfect example of a stock that was momentarily held down over the summer because the market was weak but that just exploded higher....you can't get those returns in TBT no matter how well you time bonds.
ReplyDeleteOne problem with a strong dollar is it renders US listings that much more expensive for foreigners to buy(perhaps this explains the selling?), and thus, foreign listings more competitive(When will these markets ever catch a bid?).
ReplyDeleteI see JJG had a nice day.
101 Reasons to support Ron Paul:
http://israelfinancialexpert.blogspot.com/2010/01/101-reasons-to-support-ron-paul.html
"wouldn't buying high beta stocks like MITK or other stocks that are in strong growth phases but have been held down by a weak market the better way to make money?"
ReplyDeleteThat's been my observation, the potential reward seems much greater.
"you can't get those returns in TBT no matter how well you time bonds."
ReplyDeleteYou are right, TOF. Buying TBT for me was a real risk diversification away from AUMN, and so I just parked my money there temporarily, and when AUMN dropped down a lot (and hence the expected return from buying AUMN increased greatly), I moved that money into AUMN.
Man check out UNG. friggin A. One would think that is a ultra ETF as well.
ReplyDeleteCHK is hurting too huh?
Remember our favourite market poster, Dougie Kass, calling the bond short position the trade of the decade in September last year - just 14 months and down 30% and waiting on that one...
ReplyDeleteBonds this year are kind of like tech stocks in 1999. Everyone know they are overvalued and they will come down, but there is so much money being made staying long them that people can't force themselves to sell. I suspect that once the selling does start, it will become a tidal wave.
UNG - It seems anywhere you look in the US, everyone and his bro has gas.
ReplyDeleteCVV got killed today. Couldn't find anything.
ReplyDeleteHow cool to watch a MNF game with the 9ers and it means something.
ReplyDeletewtf...someone named Nikki on SOH has this as their website on their profile:
ReplyDeletehttp://nikkiking2011.weebly.com/nikki-fights.html
TOF- Readership is down. You do what you got to do man.
ReplyDeletemark - u get any of those jobs? u still mostly in cash? this market is starting to piss me off as a long.
ReplyDeleteTBT, I think it will be both. It will be to raise funds for equities/the economy AND that will lead to higher yields/lower prices for bonds because of the demand for funding the real economy.
ReplyDelete(Putting on my geezer hat and old voice) Back in the 70's that was what happened...sonny. yields and interest rates when up because there was a shortage of funds due to government demand, equity/private funding demands and the Fed trying to pull liquidity out of the system to fight inflation. That will happen again and it likely won't be just one cause, it will be multiple causes.
OPEN - Got Balls?
ReplyDeleteS&P - 1180 - Well, there's an open gap there.... We're going back to fill it, I'm sure.
ReplyDeleteTOF- Only position is MITK. About 20K shares. I actually like the price action. We'll see.
ReplyDeleteYes, we started the little 250K remodel and I found out yesterday I got the 2.5M new house.
sick man! congrats!
ReplyDeletehttp://ncsc.se/files/publications/eCN_13_2011.pdf
go to p.6...confirms bill pay from MITK at Danske Bank, which is a huge Danish bank. As of Q3 2011 Danske had $591 Billion in assets.
Dude- Where the Fuck did you find that!!
ReplyDeleteCSTR is starting to get some mentions re- coffee machines. Man, I really want back in the baby.
ReplyDeleteOnline payments may be easier to make than their offline
ReplyDeletecounterparts in general, but there’s still at least some pain
involved in entering account numbers and other informa-
tion. Aiming to push up the convenience another notch,
Mitek System’s application now lets bank customers snap a
photo of their bill and then simply click to pay. Danske Bank
is one bank using the App. Customers begin by download-
ing the bank’s mobile app, which is available for Android,
iPhone, iPod Touch and iPad. (AU)
Oh yeah, my good friend Nikki the topless fighter.
ReplyDeleteDoesn't everyone live like that?
There's some crazy shit out there.....
" CSTR is starting to get some mentions re- coffee machines. Man, I really want back in the baby."
ReplyDeleteMark - CSTR is going to $60 in a heart beat if this market settles down. I really like it here. Do you know if they own the Seattle's Best machines? This is what I was mentioning a while ago as a potential added bonus...if they own all of the Seattle's Best then that is huge. I have seen lots of them around me.
ECB LTRO? http://ftalphaville.ft.com/blog/2011/12/19/806091/the-carry-trade-and-the-goldilocks-ltro/
ReplyDelete