Just a few thoughts on Gold here in Scribd format.
The bottom line is this: The patterns look pretty bearish, but there will be no technical breakdown until $1,168 is busted. There is an increasing chance that Gold has put in a major top at $1,265. It seems prudent to be placing bearish bets on the yellow metal with stops at 1228 and 1249.
Happy Fourth of July!
Fun Fact: Henry Ford helped build the first Kingsford Charcoal plant in the United States after he found out about turning wood chips from his factory floor into briquets.
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S&P 500:
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S&P 500:
I've added here some S&P thoughts. Page 10 probably "cuts to the chase" for the traders out there.
91 comments:
Thank you so much for doing this today! Happy 4th of July. Going to study it now.
http://money.cnn.com/2010/06/25/news/economy/stimulus_spending_cuts.fortune/index.htm?postversion=2010062516
The best stimulus? Spend less, borrow less
"So Thatcher summoned Meltzer, along with a group of trusted advisors, to explain why the experts were wrong. Even leaders of her own party advised Thatcher to make what they called a 'U-Turn,' and enact a big spending program to pull Britain out of recession. "Our job was to explain why lower deficits and spending discipline were the key to recovery," recalls Meltzer.
Thatcher was regally unamused by arcane jargon. "Being right on the economics wasn't enough," intones Meltzer. "She made it clear that our job was to explain it so she could understand it. If we didn't, she made it clear we were wasting her time. She'd say, 'You're not telling me what I need to know.'"
Thatcher stuck with draconian policies, invoking the battle chant "The Lady's Not for Turning." She launched Britain on years of balanced budgets, modest spending increases, falling joblessness, and extraordinary economic growth."
...Back from the river. Nice if there had been a world cup game today.
Thanks for the report Andy.
I had 1260 and 1310 as fibonacci targets for Gold.
Prechter article from Canadian TV - very bearish:
http://www.ctv.ca/generic/generated/static/business/article1627885.html
"A market forecaster that says 'take cover'". Robert Prechter article NYT.
www.nytimes.com/2010/07/04/your money strategies/
Prechter,"Winter is coming. Buy a coat".
Prechter is on CNBC too:
http://www.cnbc.com/id/38088826
Grasso has certainly changed his tune.
http://www.cnbc.com/id/38058478
When did futures turn positive? Can't even let the market correct on a day off. Arrgghh.
As a bear, I've wondered what it means that Prechter's suddenly all over the financial MSM.
Scala
Thx Andy, Thx Nic
"AmenRa said...
When did futures turn positive? Can't even let the market correct on a day off. Arrgghh."
AR - this ones for you
Anon
My response to al of the bulls out there: http://www.youtube.com/watch?v=8NdZ7m7jylc
BinT, I'm all for balancing the budget. But, North Sea oil production had a lot to do with England's turnaround.
...
Happy 4th, y'all!
Ra,
This may cause you to go in to cardiac arrest. Please take an aspirin before viewing.
http://market-ticker.denninger.net/archives/2474-Market-Manipulation-On-Display.html
"As a bear, I've wondered what it means that Prechter's suddenly all over the financial MSM."
He times it, it's not because he's popular, he did the same thing in 2007, and even right before CTC came out now nearly a decade ago he as all over the tv. He thinks we've topped, so he'll do a lot more tv to promote his ideas so if he's write it is good for the business (EWI) There is no contrarian indicator to be found here, it doesn't mean anything that a guy is on tv more often than normal when everyone he talks to still disagrees with him.
McHappy,
lol, thanks for the Grasso clip, "the market is going MUCH lower" and on 4/28 he told Prechter there was "MUCH more upside in THIS market" and that was all due to forward earnings at the time. Now, two months later after we've already gone down, he's worried about profit comparisons in the second half.
Tan Joe though really takes the cake, telling RP on 4/28 that we needed a "fundamental catalyst" in order to go lower and there was just nothing that was going to cause that, now he is going to tell us all the things that MUST happen in order for the recovery to take hold.
Is that how you've made "Fast Money" over the last 2 months, listening to these guys?
b22-
what of you man's call for sub 1000 DJIA-
and the worst crash in 300 years-
I find his call rather intriguing as he is not hedging it w/ vagueness-
It appears his recommendation is cash/treasuries-
also the article indicated that RP was in a rock and roll band-
had to be something like Radio Head- definitely not top 40
ahab,
yeah prechter's call is just based on the wave pattern, he doesn't care how crazy the call sounds, he just goes with what he thinks is the best count, in the 70's people thought his bullish call for the DOW based on his wave count was "crazy" and then the DOW went much further than even that so maybe that's what happens on the downside.
the rock band thing is true, it's how he discovered e-wave in fact.
as for what I think about it, right now I just want to take things one step at a time, and I think we'll see 800's before the year is out on the S&P. I certainly do think there can be a P3 though, and we might already be in it.
hat tip to maxcherry over at Dan's site for this:
http://img687.imageshack.us/img687/9364/deathcrossdata.png
Actually Ben, I think Precter's call is way off too. 1000 on the DOW is not a possibility in my opinion. Technical analysis is a tool in financial planning, not THE tool.
While I am bearish on the near term, too, and think it is not really possible to repair a debt binge with more binging, I don't think the world is about to end, and that is what a DOW of 800 would be.
I am also skeptical of a DOW 1000, however, I will not rule it out.
If the DOW ever gets that low you can be sure it will not last long. The call may be outrageous only if the belief is it stays at 1000 for years. I don't think this will happen whether it is 1000, 2000, or 3000.
If you look at percentage declines with lower highs and lower lows and given the first leg down was 14198-6469 then we can start to make some ASS-umptions and estimations. 11258-5000 for P3? 6000-2500 for P5?
Using simple EW rules, it is not that far of a stretch. P3 was a little conservative above as well.
Also when you consider the great bull market from early 1980's-2000 and subsequent crash and bubble was built on credit and deficits, when one removes the outstanding debt from the system, we could easily be back at the levels from which we started pre-credit gorge. Early mid-1980's DOW valuations were 770-2700 (1982-1987). Of course, 1987 saw a brief dip to 1600.
$50 trillion dollars of USD debt in the world (most likely much more now) and only $2 trillion of actual USD cash.
All of a sudden I'm not so skeptical of a DOW 1000.
DOW to 1000?
then wouldn't that mean SPX to about 100?
(just guessing but the SPX P/E would be less than 1?)
If that happens then everyone would be scared shitless and buy GOLD, it would probably go to $10,000+, maybe even $36,000/oz
wow, my 9:29 response was a little scary, was still slightly tipsy when I wrote that I'm thinking, anyway, Prechter's media appearance during the initial stage of this bear didn't serve as a contrary indicator at all:
http://www.ritholtz.com/blog/2009/05/robert-prechter/
if earnings on the S&P go to $15-$20 then an S&P at 100-175 would simply show a p/e ratio that has been seen at historical deep bear market lows.
How big a deflation?
http://www.elliottwave.com/DeflationEssays/deflation_full.pdf
Earnings went negative on the S&P before, no reason why $15-20 could not happen - that may even be optimistic.
"If that happens then everyone would be scared shitless and buy GOLD, it would probably go to $10,000+, maybe even $36,000/oz "
I'm not too sure. I would think most people would have drastic changes in lifestyle and spending habits. Cash would be king. Many government/union jobs with excessive salary and benefits slashed. People would not take on debt. This would be what is left of the middle class, of course. The lower classes would struggle to eat and survive - much like today but with more struggle. The upper classes/elite may indeed buy gold and barbed wire.
@McF
Thanks for the link to that chart...
http://img687.imageshack.us/img687/9364/deathcrossdata.png
I have some thoughts on that (which I'll be back later to discuss)...
McFearless @ 10:17
I've found that those guys are EXCELLENT lagging indicators.
Andy, your 1:03 from previous thread just inspired me to make a Bloody Mary, thank you : )
I'm gonna look at your charts.. but there better be one of $gold:$usd.. or the comparables of your choosing! Also, sure, short gold all you want for 15 minutes.. I've got the Sept 1979 to April 1980 printed out as a reminder of what gold can do.. and Ben, have you ever heard RR on gold from those days? he got out cuz he couldn't take it..
Anyway, I'm DYING for a move under $1k.. but i won't be betting on it.. only buying it.. your favorite goldbug, i hope : )
I've added in some S&P here now.
Karen, I've been known to drive many women to drink....love Bloody Marys.
Had the typical wild 4th of July at Brian the Brokers house. He died the friggin' pool RED and the spa BLUE. It was nuts.
Lots of kids, food and fireworks. It was a blast...wish I could remember more of it!
Nic, look at the new Virgin America fares! as low as $193 each way, YYZ to LAX.. you could come the week of July 12.. altho i can't promise you sun : (
For Ben, I address the EWI count on the DJIA, fwiw. Maybe you'll find it interesting. I don't see how he gets to 1,000, even assuming his count is correct.
Andy, you are too funny! I had a rather pyrogenic fourth myself.. despite not seeing a single pyrotechnic display..
i'm afraid to look at your S&P.. maybe after a Stella : )
Thanks, Andy. I've been waiting since Friday for this. Short term I remain skeptical about extended loses and bitter about missing the majority thus far. Only made about 4% but much better than the alternative (the worse alternative).
It seems most EW sites are looking for much continued weakness and even FastMOney are looking for weakness. That is a red flag.
Going to have to watch those levels - 1040/44 and 1075. For some other possible counts, 1067 is important as well.
FWIW, I had been working off something similar to slide 9 but thinking that may be out now and doubting very much.
Thanks again.
I read the posts here and I had to go and make a bloody Caesar with horseradish. (clamato instead of tomato juice).
Karen ... that is a really nice offer, thanks, I am going to take a peek. Don't care about sun but ocean and no humidity would be just fine.
The heat and humidity in the North East is fugly this week
http://www.accuweather.com/blogs/news/story/33551/dangerous-eastern-heat-wave-co-1.asp
I read that oil made it into Lake Pontchartrain today. Very sad, I love New Orleans.
@Nic...
CLAMATO...
No comment... Just THINK ABOUT IT (as the concept applies to Western Civilization)...
In case you forgot...
CLAMATO (clam & tomato juice)...
For perspective, I'm certain that it was the ELISIR OF THE GODS back in Mesopotamia... :-)
Nic, I almost bot the clamato this morning.. but grabbed the "spicy hot v8 as it was on special : ) and, oh yes, on the horseradish!
CV, per 4:11, perhaps it is good that i can't think!
anyway, i'm in a cleaning frenzy until the sun comes out.. apparently, so cal is having the coolest summer in 20 years while the northeast experiences its hottest..
Fantastic charts and commentary Andy!! No dissension from me for a change : )
CV,
What do you have against Clamato?
I actually prefer a Caesar to a Bloody Mary on most occasions. Think the drink originated in Calgary. So, the Canadians just keep finding ways to give back to society.
I just had the weirdest sensation to google my license plate (wholly or in part from CV's mention of Mesopotamia.) The first link was:
http://www.ubastibengalcats.com/
"We selected the name "Ubasti " from the egyptian god Bastet or Ubasti . The egyptians held the cats in very high regards and so I felt that it was a catchy name. Thier godess Bastet was supposedly part god and part cat and was the godess of fertility, love and music. "
Finished! Got in a run too.
Guys, I hope you know I think the world of all of your opinions, and I love the thinking that goes on in here. I just don't think things are going to come together in such a way as to produce a DOW of 800. But I am in the "more weakness to come" camp, and I imagine we'll have a considerably lower DOW.
This market, with its chronic government intervention, is very hard. Very hard. We are seeing people work less in my area, even though they are not classified as part time. Subtle, but seems to be more of it.
A very good day, even though our group took Friday off and I had to work today.
Funny that I never heard of that breeder before.. but i can't have any more of those beauties with the coyotes : (
Not to mention that I need a life and they are 24/7!
Bruce, I'm with you except for one concept: Japan's $nikk
Well, Karen, the high for the Nikkei was about 40,000, Now it is about 9k. If our 13-14k DOW droped by 3/4 as the Nikkei did, you are talking about 3250 as the low. If you look at the 1928 Dow and the all time low of 41 during the great depression....280 to 41 is roughly 2000 as the low if we follow the Great Depression.
I would frankly be surprised if we go below 6000. That would still be an enormous correction from here. I just don't think our mindset should be this gloomy. I have told you the tale of friends of mine who in the tech bubble lost anywhere from 3 million to 14 million, and it was due to mindset only. These were very bright people who just got overcome with what they thought the future would bring.
Germany-again?
Bruce.. i struggle with the concept believe me.. but have to imagine the $nikk was easier to manipulate than the dow or spx..
The tech bubble was comparable to Germany's hypeinflation in my mind. On paper some of us were worth "fabulous" millions and even billions.. the key word is paper : )
AT,
Great charts as always man, thanks. I see the EWI count in there, as for the sub 1000 count, probably shouldn't be high up on the list of concerns right now, I read somewhere once that Prechter was a big fan of Joe Granville when he was younger and one thing he picked up from him was this thing where he made "big" calls, we've got a long long way to go just to get back to the March 09 lows and the summer ahead should be difficult enough to deal.
The near term trading is going to be very exciting, likely a lot of money on either side of that neckline to be taken from home gamers.
The banks offered untold ways to cash in on your options prior to vesting! It was literally hyper-credit-flation.. we still haven't recovered..
Well, thank you all for sharing.. gotta run.. surf's up and sun is "trying" to break thru, not. but, it s the biggest swell of the summer.. over 80 out at my break alone.. all I ask is that crude oil continues to sell off ; )
..."locals rule"
@Andy & (4:44)
Cv re-iterates... CLAMATO
- tomato juice EXTRACT
- essence of clam broth
- "unnamed" spices (the secret sauce)
- MONOSODIUM GLUTAMATE
To be fair... I'm sure the alcohol in the VODKA absolutely KILLS everything else...
Cin! Cin! :-)
@karen
"ubastibengalcats"
I'm glad you cleared that up...
For a minute there I thot that was just going to be an EGYPTIAN version of a COUGAR...
@Andy
Further... I'm absolutely certain CALGARY natives know everything there is to know about CLAMS...
@karen
Also...
You're right...
Cat lady = DON'T BECOME ONE...
cats make good ammo-
http://www.youtube.com/watch?v=GkMvKeX7erI
Clamato = very bad
Bob Janjuah Leaves RBS
http://www.businessinsider.com/bob-janjuah-leaves-rbs-2010-7
Shackles Free - Let's hope to God he comes over here and graces us with some wisdom...
Yes Bob if you're reading, that's an invitation...
UNCOMMERCIALIZED...
Around here, you just say what's on your mind...
Thanks for the warning CV.
I managed to use enough vodka to kill the MSG.
Toronto stocks dropped almost 1% today, anticipating a rough open in NY tomorrow
http://www.theglobeandmail.com/globe-investor/markets/markets-blog/tsx-closes-at-lowest-level-of-the-year/article1629271/
FTSE and DAX had pretty flat days.
BinT
I tend to agree with you. When everyone is expecting a big drop it rarely happens. A little bounce, make people think that it is safe to put their toe in the water and then down we go.
@Nic
I found your TRUE IDENTITY in a video clip I'm using for tomorrows thread...
So no more "clandestine Nic"... You've been revealed... :-)
Uh oh. Are you sure its me? I don't like the sound of this
For some reason the futures are shanking ... not sure what the news is
BTW...
CV spent the day yesterday TUBING down the Potomac with sister, BIL, niece, nephew, & friends...
Ended up...
- Getting burnt to a crisp (sunwise)
- Gashing my hand to the point that I had to put in the stitches myself...
- Drinking a few beers (while floating down the river thru the rapids)
- Having the time of my life
My hand will live... So will the memories... (or, Dr. Bruce can fix me up)
Really - Things can't get much better... :-)
@Nic
It's all good... You'll get a kick out of it...
@Nic
FUTURES?
Frankly - I'm not looking for any NEWS at the moment, I'm looking for EXCUSES...
TPTB held this market up last week going into the holiday weekend... It should have been in the 9's, but they held it up artificially...
I hope it dips to 990's tomorrow...
I'll actually go LONG there...
DARK CROSS coming tomorrow... It'll be all over the news... I'd like to BUY Johnny's panic...
@BinT
Actually - I didn't really need to thread stitches...
SUPER GLUE worked fine :-)
CV:
If its been 10 years or so since you had a tetanus booster, go get one if the cut was deep.
..just sayin..
Ok this is funny: http://www.youtube.com/watch?v=colt4C2zGIA
@Doc
Seriously... It was pretty deep... But I was able to treat it by drowning it in hydrogen peroxide (a first aid kit I have in the truck)... and NEO-SPORIN...
It seems to be doing ok... I was thinking a PROBLEM sign would be if it started to swell & get red around the cut (but I'm good there so far)...
But I haven't had a tetanus in about 15 years, so do you think if it doesn't get real red I might be OK...
I already know what ur going to say... GET A TETANUS TO BE SAFE... :-)
@Doc
And FYI... Even tho CV never talks about it... My basic FIRST AID supplies are ON PAR with the food supplies I've described before... :-)
So... If TSHTF... You could always come my way and I'd have a MASH unit set up for you to hold court...
Not that I doubt you're set up in the same way over there in Tn...
The problem is that the tetanus bacterium is anaerobic. If cuts are superficial there is enough o2 to keep them from multiplying. A deep cut, though, cuts off the oxygen, and anaerobic bacteria like tetanus grow. Were it me, and it was a fairly deep cut, and 15 years...a booster.
Red don't matter, that usually is staph, and pretty easy to treat. Lockjaw however, might ruin your entire week...
I think the internet ate my post CV, but if it did, and it has been 15 years, time for a booster.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7873792/Europes-toothless-bank-tests-making-matters-worse.html
Europe’s ‘toothless’ bank tests making matters worse
RBS and other City institutions have warned that Europe’s stress tests for banks are almost useless and may further damage confidence if they fail to cover the risk of large losses on sovereign defaults by Greece and other Club Med states.
By Ambrose Evans-Pritchard
Published: 9:55PM BST 05 Jul 2010
“I don’t think it is going to work,” said Jacques Cailloux, Europe economist at RBS. “These stress tests are not rigorous enough. Investors are already pricing in a 50pc “haircut” on some Greek bonds so this has to be included, and perhaps 30pc for Spain.”
“We have had a complete failure of communication by the eurozone over recent months with 16 countries all saying different things, and there is a very high chance of another failure this time.”
Mr Cailloux, who has issued a “double dip alert” for Europe, said it would be unwise for EU policy-makers to go holiday this summer. Markets are no longer willing to take on exposure to some €2 trillion of household and company debt in Spain, and this gap cannot be plugged for much longer by three-month loans from the European Central Bank.
“If by the end of the summer we have not had much more aggressive policy action, we’re back to contagion. This time it is no longer just a peripheral story. It is starting to infect the core eurozone as well, France in particular. I cannot understand why the ECB is not buying Spanish corporate bonds,” he said.
Christine Lagarde, French finance minister, said the result of tests would be published on July 23. Details will emerge over coming days on “the exact criteria we apply and of how heavily we stress the system”.
The tests will cover up to 100 banks, including many of the Spanish cajas and German savings banks at the eye of the storm. A report by CreditSights said some cajas have disguised the true scale of losses from the housing bust by propping up mortgage securities through purchases of delinquent loans from mortgage pools. The share prices of Allied Irish, Bank of Ireland, Dexia, and Credit Agricole have all fallen hard recently.
Mrs Lagarde said the tests will show that Europe’s banks are “solid and healthy”, but it is this tone of certainty that is causing markets to ask whether this is really a “stress test without stress” – as dubbed in Germany’s media.
@Doc
THANKS DOC... (for the explanation - which makes total sense - as CV wasn't aware of the anaerobic behavior of the tetanus bacterium)...
Much appreciated... :-)
@Doc
& It's deep enough...
At minimum, it gives me an EXCUSE to go get a booster shot...
I mean hell, maybe a SKUNK will bite me in the ass next week, who knows?...
In any case... Even if I get LOCK JAW... None of you SURVIVOR CAPITAL crowd will EVER be spared of my constant blabbering because my fingers are working fine on the keyboards...
@Amen
Re: RBS
You know about my (6:38) above, right?
CV
RBS' Chief Markets Economist Kevin Gaynor has also left the firm.
This is what happens to people who don't get their tetanus booster shot:
http://upload.wikimedia.org/wikipedia/commons/2/23/CBell1809.jpg
Japan down big early...and the European markets all closed down at the very end of the trading day. Losses weren't bad, but there seemed to be no conviction as the day wore on, and sure enough, just like the DOW, they failed at the end.
Again, I am bearish both about the markets, and most of the way the Obama has tackled the recession. I think we could go lower here...quite a bit. And I do think after November things will change to more of a common sense method of approaching unemployment, etc. But I am not a fan of either party...they both seem to run morons on the national tickets. But I do think Obama takes the prize..
@DL
Thanks DL...
So anyway - I have that going for me...
Futures down big.
Wow.
I wish we'd bottom and bounce already. I feel like I'm in school again and grounded while the biggest party of the year is going on at CV's house while hjs parents are away.
CV WILL SAY IT NOW (which isn't much different than I've been saying for the past 3 weeks...
SPX hits a temporary LOW on the Tuesday NEW YORK open...
Cover shorts... Then, a relief rally will ensue...
990'ish tomorrow... We'll be back at karens top within the end of the month (before the REAL cratering begins)...
Doc,
Great explanation. I worked with a woman once who got a bad cut over the weekend on her hand. On monday she showed me her arm. There was a bright red streak running up it past the bicep. I physically put her in the car and drove her to the hospital. She didn't think it was anything to worry about.
The doctors were as worried as I was, she was in the ER very quickly. She was fine, but the doctors said that if she had gone to bed again, she would have been in a world of hurt.
AUDUSD close to breaking through recent low at .8314. None of the other currencies are showing much movement now.
Rogoff says Chinese property market is starting to collapse which will hit Chinese banks / lending.
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aA9Y5VxWh9lw
"CV said...
I mean hell, maybe a SKUNK will bite me in the ass next week, who knows?..."
Let's just hope a BEAR doesn't bite you in the ass next week...
London has started a face ripper rally. Let's see if it has some legs.
July 6 (Bloomberg) -- Office vacancies in the U.S. rose to the highest level since 1993 in the second quarter as the sluggish economic recovery damps demand from corporate tenants, Reis Inc. said in a report.
The vacancy rate climbed to 17.4 percent from 16 percent a year earlier and 17.3 percent in the first quarter, the New York-based research company said today in a statement. Effective rents, the amount tenants actually pay landlords, fell 5.7 percent from a year earlier and 0.9 percent from the previous three months, according to Reis.
Private employers made fewer hires in June than economists had forecast, reinforcing concerns the recovery will weaken, the Labor Department said July 2. The report capped a month of data signaling weakness in housing and a slowdown in manufacturing. Including government, payrolls fell for the first time this year because of a drop in federal census workers. The jobless rate declined to 9.5 percent from 9.7 percent in May as the labor force shrank.
NEW THREAD UP
NEW THREAD UP
I don't know what's going on but my comments on the new thread are all disappearing...
CV
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