Archive for August, 2006

Is the NYMEX Being Manipulated?

The question is not is the NYMEX being manipulated… The question is how much is the price of oil being manipulated?

We discussed the other day that the Commodities Futures Modernization Act took regulatory oversite of the oil markets away from every exchange but the NYMEX:
http://philstocks.blogspot.com/2006/08/oils-slick-moves-in-washington.html

On that basis, it is the NYMEX that is quoted on CNBC and pretty much everywhere else the price of oil is being discussed.

What you usually see quoted is the October Light Sweet Crude contract which peaked at $79.86 on 7/14, fell to $68.65 yesterday and made a spectacular recovery to $70.36 today. We rolled into October on the 25th where oil was held up to $72.50 and quickly fell off the table the next day.
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=1&dy=0&id=0

What you don’t see is the November contract which peaked at $79.25 on 8/6 and dropped to $71.23 with no magic bounce. Or the December contract which peaked at $79.75 on 8/6 and finished the day at $72 with no bounce or the January contract which peaked at $80.35 on 8/6 and finished the day at $73.02 with no bounce or the February contract which peaked at $80.20 and finished the day at $73.61 with no bounce or the March contracts which finished at $74.08.
http://www.nymex.com/lsco_fut_condet.aspx?product=CL&month=Jan&cmonth=H&year=7&currPrev=C

So, it doesn’t apparently doesn’t pay to manipulate the contracts the public can’t see! In fact, as you can see from this graph (sorry it’s not a good one) , it didn’t pay to pump up the October contract until the afternoon of the 25th, just as the contracts were rolling over.
http://www.nymex.com/lsco_fut_condet.aspx?product=CL&month=Oct&cmonth=V&year=6&currPrev=C

Aren’t you happy this huge show is being put on just for you? There is also an alarming lack of interest in the February and March contracts. Open interest in October is 220K, Nov-Jan about 100K, which is normal but Feb interest falls off its own cliff to 22K, even less than March’s 29K interest. This is less than 2 day’s worth of oil that is being ordered in Feb and March at $74 per barrel!

By the way, do you know how much you can buy oil for in Dec 2012? $67.38 for guaranteed delivery of as much oil as you want. Where is T. Boone Pickens? This is 5 years past his peak oil $200 prediction, he should have a Billion contracts at this price…
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Thursday Wrap-Up

I’m out!

You have to have rules and you have to follow those rules so I’m out of almost all my current month longs.

The Dow broke 11,400 early on and didn’t seem to like that one bit, came back in the afternoon, tried again and failed:
http://finance.yahoo.com/q/bc?s=%5EDJI&t=1d

The S&P did the same with 1,305, the Nasdaq didn’t even get near 2,200 while the NYA touched 8,400 at the end of the day and failed.
http://finance.yahoo.com/q/bc?t=1d&l=on&z=m&q=l&p=&a=&c=&s=%5Enya

I took advantage of the end of day spike to get out of pretty much everything…

Oil once again found a very excited buyer who showed up at 1:30 and just had to have as much oil as possible – driving the price up .75 in 40 minutes! Oil closed for the day up .23 at $70.36 and, as I said this morning, will probably hold $70 over the weekend.

Natural gas, down 60% from its highs, dropped another quarer to $6.05 yet somehow CKH is still in rally mode! Needless to say, I held on to that one…
http://stockcharts.com/gallery/?chk

Gold made another nice move today as the traders are thrilled to have a significant miner taken off the field. Even against a strong dollar, gold finished up $8 at $634 but until it breaks $650 again, we won’t be impressed. I was sure enough that this was a pointless move up that I took the ABX Oct $32.50 puts for $1 in comments.

======================================

One of the benefits of going to cash is that you have the ability to jump on news. At 3:55 this story crossed the wire:
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7b5C3E13FF-842C-4007-AB82-8A03F6DD33D8%7d&siteid=yhoo&dist=yhoo

I’m pretty sure it was a mistake to release it before the close because $8Bn is a market moving order! I jumped on the LMT $85s for .45 and got them right at the bell so wish me luck!

=======================================

There was no buy signal and, as I said, this was more of a day for getting out than in. I did pick up the MRVL’s, NOKs and some ABX puts but that was it (and so far I shouldn’t have done those either!).

We never got a shot at the HET October $60s as they opened way too high but the Jan $65s are almost in the money at $3.50 (up 95%). Resistance is at $64 and I’m ready to take it off the…
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Thursday Morning

My weekend starts as soon as we start pulling back.

We might not pull back (see earlier article), we should not pull back but if we do then I will take the money and run…

It’s been a good week, we have a lot of winners and there is no reason to push our luck into the long weekend. Also, options expiration (9/15) will be upon us quickly after the weekend so no sense in letting things deteriorate if we don’t have to!

Despite my earlier bearish article on gold and bullish article on the markets (below) I’m still concerned that we may be short-term overbought without more of a commodity pullback. The combination of $70 oil and $340 copper is not a recipie for a rally. We need another 10% pullback on each before I think the timing is right for a proper breakout.

The European economy is looking fairly strong but Japan is slowing slightly. Bernanke will break the tie today and I’ve already given him the go-ahead to use my “outsourcing is good for the global economy” speech in case he wants to get radical but he might wimp out and go with the “shifting global paradigm” we discussed last weekend.

So, needless to say, we will be watching our technicals very carefully. I’d rather wait to see what the big boys do when they get back from vacation on Tuesday than place heavy bets trying to guess next week’s direction.

Oil over $70 is as much a sell signal as any of our market technicals. Today is a day we want to see breakouts and, as I said, I will be getting out if we fail to do so:

  • The Dow is just under 11,400 and if my 12,000 call is going to come true by the year’s end, now would be a good time to break up!
  • I said on Tuesday that “the S&P will have a hard time breaking 1,305″ and it has been torture so far but we did get a little peak yesterday.
  • Also on Tuesday I said “The Nasdaq may top out at 2,200 on this run, anything above that is uber bullish.” http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=%5Eixic
  • The NYSE also bounced right off my 8,400 mark yesterday and, as I said before, the markets are just not strong enough to rally without breaking this level.

It’s going to come…
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Everything Old is New Again!

Here’s one for the Prof: Raymond James analyst Rick Murray said “Homebuilding stocks are currently trading at about 1.2 times book value, which is “far above where valuations have troughed in past cycles. During the housing crash of the late 1980s and early 1990s, valuations fell to 0.6 times book value.” Home construction did in fact fall 9.8% last quarter, the biggest decline since 1995, yet consumer spending, which is 65% of the economy, rose 5% over last month. This is another pin in the Consolation Prize Theory and another indicator that things may not be as dire as they seem. What else happened in 1995? Here is a chart from Jan 1993 to Sept 1994 when the housing boom of the early 90s was coming to an end: http://finance.yahoo.com/charts#chart30:symbol=^GSPC;range=19930106,19941005;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= Notice how TOL was a typical builder at the time, they had a great run (all the way to $5 a share!) and fell off a cliff that Spring: http://finance.yahoo.com/charts#chart32:symbol=tol;range=19930106,19941005;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= Look familiar? Yep, it’s almost exactly like TOL’s current chart (only x 10)! http://finance.yahoo.com/charts#chart3:symbol=tol;range=2y;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= So what about the S&P you may ask? Cue eerie music and reveal… THE SAME CHART: http://finance.yahoo.com/charts#chart5:symbol=^GSPC;range=2y;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= This cannot be you say! History cannot repeat itself to such an extent. Surely the commodity run we are now having is unique… Here is PD 1993-5: http://finance.yahoo.com/charts#chart36:symbol=pd;range=19930106,19941005;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= Here is PD 2004-6: http://finance.yahoo.com/charts#chart6:symbol=pd;range=2y;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= NEM ’94: http://finance.yahoo.com/charts#chart45:symbol=nem;range=19930106,19941005;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= NEM ’06: http://finance.yahoo.com/charts#chart15:symbol=nem;range=2y;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= Nope, apparently we’ve been there and done that too. How about the majors? KO ’94: http://finance.yahoo.com/charts#chart48:symbol=ko;range=19930106,19941005;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= KO ’06: http://finance.yahoo.com/charts#chart18:symbol=ko;range=2y;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= BA ’94: http://finance.yahoo.com/charts#chart51:symbol=ba;range=19930106,19941005;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= BA ’06: http://finance.yahoo.com/charts#chart21:symbol=ba;range=2y;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= CAT ’94: http://finance.yahoo.com/charts#chart52:symbol=cat;range=19930106,19941005;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= CAT ’06: http://finance.yahoo.com/charts#chart22:symbol=cat;range=2y;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= You get the idea. So everything old is new again. Will the housing slowdown kill the economy? Everything in 1995 looked pretty overbought and primed for a crash, home inventories were out of control and the Fed was just winding down a loose money cycle that had dropped prime rates from 10% in 1990 all the way down to 6% in 1992 where it remained until March of 1994. From March of 1994 through Feb of 1995 the Fed, determined to put the brakes on the housing market, raised rates 3% in just 6 moves, driving prime all the way to 9% in the summer of 1995. Rates remained between 8 and 9% through Jan of 2000. Well, that certainly sounds like a recipe for disaster doesn’t it? Runaway commodity pricing, home builders collapsing, high rates… What did the…
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Can Gold hold $600?

Tomorrow is a benchmark day for gold as traders have been counting on a crisis in Iran to maintain the fear premium (approximately $100) that has been slowly working its way out of the commodity since it peaked at $730 on May 12th.

This fear premium, skillfully maintained by oil traders as they pump their little commodity for all its worth, has been undeservedly bestowed upon gold even though there is no threat to the gold supply.

The fact of the matter is there is simply too much gold coming out of the ground and if speculators stop snapping it up, we will move quickly into a glut.

World Gold Council reports show that supply hit 1,045 tons in Q4, 15% more than in Q3 while demand decreased from 891 to 850 tons. Much like the USO ETF, had it not been for the GLD and similar funds, which took possession of over 158 tons of gold in Q4 alone, close to 300 tons of unwanted gold would be finding its way onto the spot market.
http://www.aemq.org/documents/or_q4_2005_an.pdf#search=%22gold%20surplus%22

Jewelry demand is down to 590 tons, the lowest since 2003 when gold was fetching just $350. Jewelry accounts for 71% of total global demand for gold! This is why strong GDP data trumped falling interest rates to give gold a small boost today, there are not enough speculators to support a lack of consumer interest.

As we expected, according to the AEMQ report, Central Banks liquidated 662 tons of gold in 2005, taking advantage of inflated prices to rebalance their holdings. .

2005 scrap recovery hit a record and this trend continued as gold climbed in Q106 but in the first quarter, supply was artificially reduced as miners used excess production to reduce hedged positions. A reverse of this process (more hedging) could drive supply suddenly up.
http://www.aemq.org/documents/or_q1_2006_anglais.pdf

In Q1O6 speculators snapped up 196 tons of gold at record prices, a situation that did not abate until mid-May, close to the end of the second quarter. While miners attempted to cut back production, 305 tons of scrap metal were turned in during Q1 alone forcing the Cental Banks to cut their selling by 50% in order to maintain market prices. The CBs have until September 26th before their sales quota resets and then it may be game on for gold bears!

According to the Quebec Mineral Exploration Association’s President:…
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Wednesday Wrap-Up

Bad Iran, bad, bad! There, I have officially done more to reprimand Iran than the UN will tomorrow. Still, as expected, oil traders made that the story of the day (apparently the 45 day-old deadline was quite the surprise on the NYMEX floor at around 11:30) and got oil back above $70 at the close. They forgot to bring natural gas with them, possibly because it is virtual portfolio suicide ahead of the inventory, and it dropped back to $6.50 after spending 15 minutes above $7 yesterday. We are firing on all cylinders with the indices moving closer to my test marks in a nice, orderly fashion. The SOX punched through 450 with a big finish but the Transports provided the day’s biggest disappointment and that does worry me – more on that tomorrow. There is no more room to grow without testing our tops so tomorrow will be a very interesting day. Oil, as I mentioned, kissed the $68 level but got rescued by frenzied buying that came out of nowhere for no reason. It is taking a greater effort every day to pump up the price of oil. You can see from the 5 day chart how unnatural buying is not really good for a stock as USO was pumped from slightly oversold to massively overbought in just 4 hours. Notice what happened to them last Friday when it opened at this level! http://finance.yahoo.com/charts#chart9:symbol=uso;range=5d;indicator=ema(50,20,5)+stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= You can also see how the volume is increasing each day with heavy selling each morning followed by pump action buying to reel in the next round of suckers, or bagholders, to use the official jargon. XOM had the strongest volume in two weeks and did not follow oil back up as 24M shares were traded around $68, just 3 days after posting a new all-time high of $71 on 18M shares. This brings XOM below the 20 dma (now $69) for the first time since 6/29 when it traded at $61 and oil was at $74. Note the serious (20%) divergence of Exxon from the price of oil since 7/17 : http://finance.yahoo.com/q/bc?s=XOM&t=6m&l=on&z=m&q=l&c=uso So since topping out, just 100M of the 5Bn outstanding Exxon shareholders have gotten out. If funds want to lighten up just 5% on XOM, they have no choice but to sell into any strength as it would take 10 days of double average volume to work off 5% of the…
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What Will Happen Wednesday???

GDP day!

Is the economy in a hard landing, a soft landing or is it in my patent pending Bumpy Landing ™?

A bumpy landing means that we have flown too close to the sun on inflated housing and speculative commodity prices (see http://philstocks.blogspot.com/2006/08/oils-slick-moves-in-washington.html ) which are now losing their lift and we need our other engines to kick in before we lose too much altitude.

The other engines are strong: We deliver the world’s goods with our transports, dominate the Internet, have 95 of the world’s top 100 brand names, supply most of the planet’s junk food (sorry), and even Arabian MTC carries a version of The Simpsons (Al Shamsoon’s, where “Omar” avoids beer and hot dogs (banned) and eats cookies instead of donuts but he still yells at Badr and tries to strangle him (what no stoning?)).
http://abcnews.go.com/WNT/story?id=1227362&page=1

It is the flexibility of our culture (otherwise known as lack of artistic integrity) that allows us to export it around the world. We export $1.5T in goods and services around the world. The much publicized trade deficit of $700Bn is currently close to 50% oil and no one should be surprised that the richest country in the world (by a factor of 4) spends an extra 4% of their GDP on imports!

When you are the richest person in a bar (say with your college friends) do you worry about the drink deficit if you buy an extra round or two? Can you reasonably expect that you should benefit from a drink surplus as poorer friends struggle to keep you in Martinis? Of course not, the error should always be slightly against you or it is patently unfair.

Our trade imbalance with China of $200Bn a year is primarily made up of American goods that are produced in China for American companies who maintain high paying sales, management and distribution infrastructure here while “outsourcing” (boo!) low paying factory work (and the pollution that goes along with it).

Rather than paying 50,000,000 American workers (as if you could find them) minimum wage to sew dresses for Barbie, we pay Chinese workers half of that amount and our friends at Mattel can sell your kid a doll with 2 outfits, a brush, a purse and 3 pairs of shoes all for $9.99 delivered to your local store all the way from Taishan. I don’t care how many machines…
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Oil’s Slick Moves in Washington

Oil’s Slick Moves in Washington

My thanks to soccer_F1 for sending me this article: http://www.billcara.com/archives/Role%20of%20spec%20in%20energy%20market%20Senate%20Report.pdf It’s a report, compiled by Senators Coleman and Levin of the Permanent Subcommittee on Investigations (scary music please) entitled: "THE ROLE OF MARKET SPECULATION IN RISING OIL AND GAS PRICES: A NEED TO PUT THE COP BACK ON THE BEAT" This is no joke, these guys are part of Homeland Security and the Republican’s have made a huge mistake putting Coleman at the head of this committee. They thought they were getting a nice little yes man from Minnesota because he uses words like "fella" in his campaign literature but they must not have read his energy platform or realized he founded the Biofuel Caucus with (gasp) 2 Democrats: http://coleman.senate.gov/index.cfm?FuseAction=Issues.Detail&Issue_id=5 Possibly the Republicans figured any guy interested in Biofuels from an agricultural state must be looking to pump oil prices up to $100 so he can get his cut, but it turns out Coleman isn’t from Minnesota at all – he’s from (revealing music) Brooklyn! Now anyone from New York can tell you we have two parties here, the New York Democrats, what America calls far left radicals, and the No-So Democrats, who we nickname Republicans. A New York Republican would be shot by Dick Cheney before they even got near the quails (because that man can smell a Democrat a mile away!) and I’m sure the VP is cursing up a storm after reading this report. Coleman was actually a Democrat until 2002 and even chaired the great Paul Wellstone’s 1996 campaign. For whatever reason he switched parties (also a tenuous thing in the Gov. Jessie Ventura State) and because he is a firm right-to-lifer the Republicans just assumed, even though he was new, that he would become one of their mindless automatons who would toe the party line. Here’s a picture of Coleman in college (no joke): http://en.wikipedia.org/wiki/Image:ColemanHangsFlag.jpg Even then he was interested in politics – here’s Coleman campaigning for Class President: http://en.wikipedia.org/wiki/Image:ColemanBullhorn.jpg So the logic that people who are anti-abortion must also be in favor of screwing the American people, destroying the environment and distributing automatic weapons at Wal-Mart may not be panning out here… This is the same committee that freaked out the party when they investigated FEMA’s actions (or inactions) after Hurricane Katrina. Coleman said to "Brownie:" "You didn’t provide the leadership, even with structural infirmities……
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Tempermental Tuesday Wrap-Up

Whee! That was fun! Can’t say we didn’t get any action today… We had a larger than expected decline in consumer confidence (99.6) which drove stocks down along with a lame bond auction in the early afternoon but the Fed minutes, along with tough talk on inflation by Dallas Prez Fisher got the markets back on track at the end of the day. http://www.washingtonpost.com/wp-dyn/content/article/2006/08/29/AR2006082900789.html Lucky for us we caught his comments as he made them and dumped out of our oil and gold puts as it is clear the Fed, although on inflation watch, is also bending over backwards to keep the economy rolling along. Can they really have it both ways? Stay tuned! Apparently Fisher is a reader as he restated my advice from last week which Bernanke used to address the Governors: “We need to continue to push the envelope in order to fully understand how to make monetary policy in the world that is and will be, rather than the world that was. Our tool kit needs to continue expanding to deal with today’s rapidly changing manifestation of globalization.” If this column can help just one FOMC see the light, then I feel as though I’ve done my job! We never really tested our lows, which was nice, but we did get a nice bearish sell-off that burned some of the worry out of the markets. The recovery was pretty spectacular at the end of the day on a fairly heavy uptick in volume. We will still be looking for a test to the upside tomorrow but the GDP data will determine the day – look for 2.5%-3% to be the “Goldilocks” range we need. Any less and the Fed may have overtightened, any more and the Fed may have to jump back in (also commodities will head back up on unabated demand). Oil broke $70 and finished down at $69.71 despite the best efforts of the pumpers who put in a heroic effort to get oil back over $70 at noon (Europe’s close) and again at 2pm but the sellers would have none of it and took advantage of the pumpers generosity by dumping everything they would buy near $70. There are a lot of funds holding a lot of oil (remember that $40T number this morning) who have some very hard decisions to make this week. With tomorrow’s inventory report at 10:30, we are looking…
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Terrific Tuesday?

I’m already happy today!

Not so much about the market but about BP being investigated for additonal manipulation of the oil and gas markets.
http://online.wsj.com/article/SB115681475561347994.html?mod=home_whats_news_us

Just remember, you heard it here first last Summer when everyone said I was a crazy conspiracy theorist! Now watch what happens, much like the options scandal, this thing can spread, causing investors to question the true value of the commodity! There is a stunning number in this article – $40 Trillion, that’s the amount of oil traded every year

I’m not going to go off on oil again as it’s only Tuesday but natural gas was trading at $6 in 2004, spiked to $13 (up 115%) between last October and January and is now back to $6. Crude traded at $30 in 2004, spiked to $75 (up 150%) in May and is now in its 4th month of a possible peak as well. Check out the last chart (monthly oil prices) and tell me if you would buy a stock that spiked up like this:
http://www.oilnergy.com/1obrent.htm

It took gas just 5 months to revert to its mean – let’s hope oil is half as kind to us!

The Asian markets seem enthusiastic with nice gains across the board today. China’s CB will again tighten currency reserve reqirements, this has the dual effect of slowing growth and helping the dollar which is just super nice of them!

Speaking of Asia, there is a rumor that Sony will be coming out with an 8GB flash player to attack the Nano (hence Apple’s drop yesterday). Forget betting on Apple or Sony – unless there’s been a breaktrough I missed, that means 2 chips per player which means chip shortage in Q4 which means SNDK should be in play but it just made a 30% move so let’s just keep an eye on that one but I like MU at $16.55 or even the Jan $20s for .45.

Europe is also in good spirits this morning and looks ready to rally (as do we). Bayer came in with an 11% profit increase and Brent is down another $1.55, hopefully NYMEX will follow suit when it opens.

Our markets will be waiting on Consumer Confidence at 10 am, which was way up at 106 last month. Later today we will see the Fed minutes but the big news is tomorrows GDP report (was 2.5%, should…
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Zero Hedge

WeWork Board, Softbank Officials Push For CEO Neumann's Ouster

Courtesy of ZeroHedge View original post here.

The odds of WeWork co-founder and CEO Adam Neumann becoming "the world's first trillionaire"  maybe about to take another major hit.

In what appears to be the latest attempt to salvage the farce that is the WeWork IPO (and the massive hole it will leave in Masayoshi Son's balance sheet and credibility), ...



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Insider Scoop

Notable Insider Buys In The Past Week: AbbVie, Kraft Heinz And More

Courtesy of Benzinga

Insider buying can be an encouraging signal for potential investors.

A packaged food giant and two drugmakers saw notable insider buying activity this past week.

Some of this insider buying occurred alongside insider sales.

Conventional wisdom says that insiders and 10% owners really only buy shares of a company for one reason — they believe the stock price will rise and they want to profit. So insider...



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Phil's Favorites

Peloton IPO Guide... And Why It Makes No Sense

Courtesy of ZeroHedge

By Scott Willis via Grizzle.com

BOTTOM LINE

At the end of the day, Peloton is a gym membership pretending to be a tech company.

We fully admit the product is exciting and unique in the market, but Peloton still faces the same problem...



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Digital Currencies

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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The Technical Traders

Is A Price Revaluation Event About To Happen?

Courtesy of Technical Traders

Skilled technical traders must be aware that price is setting up for a breakout or breakdown event with recent Doji, Hammer
and other narrow range price bars.  These types of Japanese Candlestick patterns are warnings that price is coiling into
a tight range and the more we see them in a series, the more likely price is building up some type of explosive price breakout/breakdown move in the near future.  The ES (S&P 500 E-mini futures) chart is a perfect example of these types of price bars on the Daily chart (see below).

Tri-Star Tops, Three River Evening Star patterns, Hammers/Hangmen and Dojis are all very common near extreme price peaks and troughs.  The rea...



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Kimble Charting Solutions

India About To Experience Major Strength? Possible Says Joe Friday

Courtesy of Chris Kimble

If one invested in the India ETF (INDA) back in January of 2012, your total 7-year return would be 24%. During the same time frame, the S&P 500 made 124%. The 7-year spread between the two is a large 100%!

Are things about to improve for the INDA ETF and could it be time for the relative weakness to change? Possible!

This chart looks at the INDA/SPX ratio since early 2012. The ratio continues to be in a major downtrend.

The ratio hit a 7-year low a few months ago and this week it kissed those lows again at (1). The ratio near weeks end is attempting to...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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