Friday, February 27, 2015

Elephant's Fighting





When elephants fight, it is the grass that suffers. This ancient proverb of the Kikuyu people, a tribal group in Kenya, Africa, is as true today as when the words were first spoken, perhaps thousands of years ago.

This is why I use technical analysis of markets. A close and sustained look at price and volume and how they can provide insight into the formation of trends, consolidations, and trend changes keeps this blade of grass from getting trampled by the elephants.

Here is a report on Bridgewater and how they supposedly plan to use Artificial Intelligence to trade more effectively.  They are chasing the holy grail. They all do. The problem that the successful hedge fund managers have is that they are too successful, meaning that they get too big. They are the elephant in the china shop. When they move they cause things to rattle. They have so much money to put to work that they cannot help but move nearly any market they get into. And if one of them finds a successful strategy it will immediately be copied by other large players and will cease to work.

This is where the tape reader and trend follower has an advantage. Watch the prices move, and watch the volume that happens as they move. Size creates volume. As the elephant moves into the water the water moves in waves.

Dalio and Bridgewater


Thursday, February 26, 2015

First Solar, Long Term

Here is a technical look at First Solar (FSLR) from a long perspective, and thus a potential long term "investment".....  Trade to me, but....

The chart notations pretty much tell the story. FSLR has been much higher in years past. But the credit contraction combined with the recent cheap fossil fuel energy has combined to depress the price of this stock dramatically. But the volume tells me of renewed interest. The news is of AAPL wanting to contract with First Solar to power an industrial plant of some sort. But the volume seems to say that this is the start of something big. And it is only a matter of time.

So I am doing this as a long term trade.  And a bet on a trend change. I have pretty good position, from about the date of the last time I mentioned FSLR, but if the "trade" or this investment starts costing me money I will abandon it. But it seems like a bottom is in. (I hate to jinx myself by saying that)

The intent of this post is to educate on the importance of paying attention to the volume that makes a price in technical charting, aka the interpreting of buying and selling interest in a security.


For right now I can't make the chart thing work......

try again,

there we go!

Control risk,
gh

Thursday, February 19, 2015

Copper Bottom

Copper looks like the price is bottoming. It hasn't been long since the recent lows, but price looks set to go up.
The decline in copper coincides with the strength in the US Dollar.

I think the dollar is set to decline.

Anecdotally, I was talking to a family member who is employed in the woods products industry as a log truck driver. He says that the lumber mills are buying all of the logs they can get, and working 24 hour shifts. He quoted a record number of log trucks unloaded at one of the local large sawmills very recently. 

If the economy IS stronger than expected and the Fed keeps rates lower than warranted, the USD should decline.

The housing stocks have been doing well.




gh

Tuesday, February 17, 2015

Market Update 2/17/15

The broad indexes are drifting up. A long as nothing drastic comes to pass.

I am 50% committed to the Emerging markets. Waiting for confirmation to go 100%.

That is how I roll.

gh

Tuesday, February 10, 2015

SSRI

What's up with Silver Standard?

I see lots of buying in SSRI today as the price of gold and silver languish.

But there has been quite a lot of buying in the silver and gold miners for the last couple months, and the buying does not seem to closely tied to the daily fluctuations in the prices of the underlying commodity.

This is bullish for the whole sector.

But, unusual activity in SSRI, so far today...........

The daily chart is making a bottom pattern and a move above $7.25 will probably be a big move.

The stock averages in general are asleep as they drift up.
A sharp drop will wake them up.

I am getting the feeling that we are not out of the woods on the oil thing. Oil must work off supply. That will take time. I can see producers hedging sales here. I suppose it all depends on how flexible they are, meaning how much debt is overhanging the operations. My guess is there is lots of debt. That means lots of hedging. (Selling)

I almost forgot to mention that Coeur Mining (CDE) has been strong lately also. Look at the chart, but intraday is where the story has been.

gh

Saturday, February 7, 2015

"Strong" U.S. Economy

The U.S. economy is making jobs, and some think wages are set to rise. The rest of the world seems to be having problems. Europe is still having problems, but the latest moves by the ECB seem to have at least temporarily changed the investor outlook on the region. I try to anticipate the money flows when considering a strategic outlook. The recent move in the Eurozone to more monetary stimulus by the ECB, and the market reaction to the Greek situation, (a dismissive reaction) leads me to believe that the flows of money will move toward Europe and away from the U.S., specifically out of U.S. Treasury bonds, which have been a save haven and have caused much head scratching as to why interest rates kept going lower despite the apparently improving U.S. economy. I found confirmation of my suspicions regarding money flows Here.

If money continues to flow out of US treasuries and into the lagging economies interest rates will rise of their own accord in the U.S., just as they have continued to decline of their own accord even after the efforts by the Federal Reserve to keep them low were discontinued. The U.S. dollar has seen a run of strength that has been historic, oil has plummeted in a historic fashion due to oversupply and lack of demand from China. And the U.S. economy has not improved for the exporters due to the strength of the dollar.

My thought is this. What if the worlds central banks have created so much money over the last decades with their stimulus programs and easy money policies, and that money has made it's way through the capitalist mechanisms and has been concentrated in fewer and fewer hands who use the money in a rentier fashion, meaning they don't take chances with the money, they don't invest in production but rent the money out to the highest bidder, and the price of money declines as more and more is concentrated in fewer hands and all want to lend safely. The "chasing yield" phenomenon of the last years. What if the central banks have lost control of the system? Each central bank wants to control their own destiny, but seem to be buffeted by the flows of money moving around the world in search of the best deal. And the concentration of money at the top, and the lack of wage power at the middle and bottom of the socio-economic pyramid contributes to a lack of demand for actual goods.

 Combined with technology making the means of production more efficient, "efficiency" nearly always meaning "less labor cost" and we have a system that is all about money. The system is very efficient at making money and very efficient at weeding out the losers. This continues the concentration of money in a global economy.

Global is the key phrase. The flow has been to the U.S. lately. The flow will change. The rise in the dollar makes the U.S. less competitive on the world stage. And competition is all about exports and making things the world wants to buy and is able to buy. Our balance of payments is getting worse. The country is living on debt again.  It seems that the powers at the top, (and I don't mean politicians, they are just the product of the system we are in) want to stimulate the system by increasing debt at the bottom, so as to stimulate demand for goods, and the money created ends up as profits for the multinational corporations.

 Leaving money in the hands of consumers is one reason for the decades long war on governments. It plays well to main street but the net effect is a hollowed out infrastructure, and a populace deep in debt, including their government.

 This latest pick up in the U.S. economy may be only a temporary phenomenon due to the lack of safety in the rest of the economic world. The money will go where the profits are, and the profits won't be in the U.S. if wages rise, and our currency continues to rise. Actually, if the flows move to the rest of the world the US Dollar should get weak again, oil will rise, interest rates in the U.S. will rise.......
That may be a game changer for jobs. And the cycle will repeat.

For now in the stock averages we may move sideways. The public is feeling good and the economy seems to be improving and these are the signs the public looks for to get involved with investing. Always "value" investors, they wait until all the signs are right. And things always look the best after the easy money has been made. We'll see. I think the public may buy the top, as the momentum shifts overseas.

Rambling,
gh

I/ve been sidelined due to a pesky virus, but improving.

Tuesday, February 3, 2015

Re/Auto Sales

Auto sales surge.
HERE

CNBC actually had someone on a couple days ago talking about the bundling of auto loans, with some warnings. I wrote a couple days ago about this.

Auto stocks surge this morning, naturally. Watch for the next week or so. Some short sellers will have to cover, and there will be strong volume. Sit and watch what happens with the strong volume. Will some big sellers sell, or will the stocks continue to be strong?

This may give some indications for the direction of the markets for the next weeks or months.

gh

Monday, February 2, 2015

Yen/Gold

I watch the charts and try to match the stories in the financial news to what the charts tell me. There are lots of stories and only one set of charts. The interrelationship between markets is endlessly fascinating, and often tell or foretell the direction of other markets.

I have for some time noticed a strong intraday correlation between the Japanese Yen as represented by the ETF FXY, and the intraday action in GLD (gold). On the daily chart there is really not much correlation except on the sharp spike days. But the Yen looks to be bottoming, or trying to. I see a large increase in volume in FXY with sideways movement after a long decline. That to me is a sign of bottoming and a possible change of trend. There are lots of problems for the world if the Japanese loose control of their interest rates, meaning if Japanese interest rates rise uncontrollably it will have the potential to bankrupt the Japanese government. Perhaps the next chapter in sovereign debt crises that are working their way around the world. What goes around, indeed seems to come around. Time will tell, of  course, and timing is very valuable. (This is why I prefer charting, it is "real time".)

So I am watching for a rally in the yen and thinking it will be supportive for further strength in gold and the PM's in general. Copper is another story as it is an industrial metal, but it IS priced in US Dollars, so....


The stock averages weak at the open. We will have to see another attempt at a rally/bottom picking here. If the "rally" is during the middle of the day I expect a sell at the close. Looking for a weak week in stocks, but I am always mindful of "the company I keep".

Control risk,
gh

Friday, January 30, 2015

Watch the Car Sales

I ate dinner last night in the company of Lithia Auto Dealers employee. Among other things, I asked him about that program of not negotiating on the sticker price that I had heard of a couple years ago. He said that didn't work out. I asked him what made Lithia so profitable in the auto industry. He also didn't know why they might be. This man did not work in management, but I was interested in the culture of Lithia and how much a person in sales would know about the corporate situation. We were in Medford, in S. Oregon. As I left town I noticed brand new Lithia facilities, some so new and shiny they hadn't moved in the vehicles to sell.

Today on CNBC there was an interview with a man, Ivan, who is a retired Air Force engineer. He related the story of going to buy a car, I didn't hear where, and the dealership offered him a zero interest loan on the car and $1000 cash back. They needed him to buy the car so much that they offered him a free loan, and paid him to take the loan.

I know, the car is probably overpriced. But that would mean the price of the car needs to come down to be affordable without an interest free loan and the $1000 bribe.

I recall hearing a couple years back that we may be seeing a dangerous rise in CDOs in the bundling of auto loans. I found this article.

I glanced at the Lithia Auto Dealer stock (LAD). The stock topped back in June of last year, has rebounded on lower volume. Not a particularly inspiring chart. It is reminiscent of the housing stocks about eight years ago.

Be careful out there.
gh