Month: July 2013

By markettrendforecast.com

Ignore the pundits and pay attention to the action and what you see around you. Last time I walked down the cereal aisle I thought maybe I needed glasses, but no… the boxes keep shrinking. That’s inflation as seen in food being priced in via smaller servings at the same or higher prices. Gold has likely put in a massive cyclical bottom in the 1180′s with 1156 the likely support now for any further pullback and analysts continue to downgrade the better Gold miners right near the cycle bottom.

Copper has also bottomed in my opinion near $3 and will continue higher than most think as its cycle works back to the north. Coal stocks are looking like massive bottoms if you take a look at WLT, ANR, BTU and others. Freeport Mc-Moran is probably in the process of a bottom near $27 per share as well for another Oil-Gold sample.

Chips stocks remain strong as well and solar pricing is improving for the solar producers… all signs of stronger economies soon to emerge and inflation coming back into play.

Fortune will favor the Bold

Join us either at www.activetradingpartners.com for real time trades or www.markettrendforecast.com for Gold and SP 500 forecasts updated daily

By Chris Vermeulen – GoldAndOilGuy.com

US Equities opened higher this morning and are setting up for a sharp pullback based on technical analysis using trends, cycles, momentum, volume, market breadth and key resistance zones.

Take a look at the charts below for a quick flash of what I think.

Barchart Market Momentum Index

This chart I look at daily. In short if its price is at 101 or higher I expect the broad market to pause or pullback within the next day.  It tells me if stocks have moved to far in one direction on a daily basis and if so sellers (big money players) are likely to re-align stocks by taking profits or shorting during these times.

Stock Trading Above the 50 Day Moving Average

Here we can see that while the SP500 has been rising over the past 6 months less stocks are trading above their 50 day moving average. This means a smaller group of stocks is holding the market up and it’s just a matter of time before those stocks burn out and roll over also.

SPY Swing Trading Analysis – Daily Chart

With the SP500 breaking down from its trend channel and testing a short term resistance trend line. Odds favor sellers should become more active and pull the market down as they unload any remaining long positions and possibly get short the market. Both of these actions will put pressure on US Stocks.

Big Picture Outlook – Don’t Get Me Wrong!

This chart is just to show you what is possible. I am not a perma-bear nor do I want another bear market like this to happen. But knowing what is possible still has to be known. Major market tops are a lengthy process and tends to take several months. If this is the case then it could be a wild and choppy market for the rest of 2013 and a great way to play this is through writing options. Do not expect price to just collapse and free fall for 18 months… Dreams like that do not happen. Bear markets must be actively traded as they carry a lot of risk.

Flash Chart Analysis Conclusion:

This week is do or die for US stocks. We need sellers to step in here and pull stocks down. With the SP500 trading at resistance, stocks being overbought on a short term basis and the holiday week behind us which typically favors higher prices it is now time for sellers to become active once again.

Get more timely updates at: www.GoldAndOilGuy.com

Chris Vermeulen

By HY Markets Forex Blog

The European stocks were seen at green on Tuesday, supported by the release of Greece 3 billion euros ($3.9 billion) emergency aid by the euro zone finance ministers. The first installment of 2.5 billion euros will be made to Greece this month, while the rest will be made by October, according to reports.

The pan-European Euro Stoxx rose 0.80% to 2,672.00 as the market opened, while the French CAC 40 gained 0.73% to 3,852.10. In Germany, the DAX index advanced 1.08% to 8,054.30, while the UK FTSE 100 edged up 1.16% to 6,524.00.

The International Monetary Fund (IMF) will give 1.8 billion euros by August, while the central banks in the euro zone will give 1.5 billion in July and October.

“Greece is on the right track in many ways, but there have been delays in some areas,” German Finance Minister Wolfgang Schaeuble   said to reporters after the euro group meeting. “It is right to proceed on a cash-on-delivery basis and step by step and make the disbursements as Greece’s financing needs arise.”

Finance ministers from the EU are expected to meet at the Economic and financial affairs council in Brussels later today, to finalize whether Latvia will be a part of the euro zone by next year.

The euro zone economy has minimized since the fourth quarter of 2011. Unemployment rates in Spain are at 26.9% high and lower in Austria with 4.7%.

The post Greece gets aid approval as Europe shares rises appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

Shares in the Asian market were seen climbing on Tuesday, recovering from the previous fall from the last session.

The broader Topix closed 2.1% higher at 1,196.89, while the Nikkei 225 gained 2.60% at 14,472.90.

The Hong Kong Hang Seng climbed 0.53% to 20,692.86, while the Chinese Shanghai Composite gained 0.31% at 1,963.71.

The S&P/ASX 200 rose 1.66% higher at 4,889.30, while in South Korea, the Kospi index closed 0.74% higher at 1,830.35 at the time of writing.

Aluminum company Alcoa, shifted earnings of ¢7 per share, while the revenue for the company dropped to $5.85 billion in the second quarter, compared to previous record of $5.96 billion last year.

In China, the Consumer Price Index (CPI) advanced by 2.7% in June year-on-year, increased by 2.1% from previous month, according to the reports released by the National Bureau of Statistics.  Although there have been a rise in prices, analysts predict China is not likely to attain its target of 3.5% for the year.

Yellow Metal in China advanced to $1,254.67 an ounce, highest since July 1 and exceeding yesterday’s 1.1% increase.  While silver rose 1.5% to $19.3874 an ounce.

The MSCI Market Index rose 0.5%, recovering from its 14 percent loss for the past two days.

Meanwhile, investors are looking forward to the outcome of the upcoming Fed mid-June meeting due on Wednesday. The meeting may possibly hint the next step the US Federal Reserve plan to take with the slowdown of its asset-purchase program.

The post Asian shares rises on Profit Outlook appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By Profit Confidential

As readers of Profit Confidential already know, I have been bullish on both gold bullion and silver prices. I believe these two precious metals have great futures ahead of them, in spite of all the negativity about them in the mainstream media and their recent price slump—especially silver.

According to the mainstream media, that’s because the Federal Reserve is about to stop pumping money into the economy. The U.S. economy is getting better, and the global economy isn’t doing as poorly as many thought it would. Under those conditions, metals like gold bullion and silver would not be wise investments.

But what many don’t realize is that those conditions are not prevailing. In fact, the fundamentals for increases in the value of gold bullion and silver are actually very strong. And that has reinforced my original belief that increases in silver prices will outperform gold bullion prices.

Here’s what you need to know: silver prices will see an uptick because of the most basic of economic reasons—demand will outstrip supply.

Take a look at the chart below. It shows the number of one-ounce silver coins sold at the U.S. Mint this year compared to the same period last year. Clearly, demand from investors appears to be robust and growing.

As silver prices declined, investors bought more than 25 million ounces of it in the first half of this year, compared to just 17.3 million ounces in the first half of 2012—an increase of almost 44%.

Keep in mind that the people who buy physical silver are generally not speculators looking for a quick buck. Instead, they buy when the silver prices are low and hold onto it for the long term.

And it’s not just investors who drive demand for silver.

Silver is also used for a wide variety of industrial purposes. According to a report from Thomson Reuters GFMS commissioned by the Silver Institute, the average demand for silver for industrial use is expected to be 483.3 million ounces each year from 2012 through 2014. (Source: Thomson Reuters GFMS, November 2012.)

Silver is also used in the health care sector, automobiles, and various different technologies—many of which are experiencing growth.

Also working to drive up the price is the fact that production of silver from U.S. mines continues to slow. From 2010 to 2012, silver production declined from 1,280 tons to 1,050 tons—a slide of almost 18%. (Source: U.S. Geological Survey, January 2013.)

And with silver prices taking a nosedive in the paper market lately, it’s likely that production will remain at the same level this year as in 2012, as producers slow or shut down their mines to cut costs.

These days, the bears seem to have forgotten that precious metals like gold bullion and silver have proven to be a store of value for thousands of years. And with silver demand staying staggeringly high, and supply expected to decline over the short term, investors are presented with the same kind of buying opportunity like the one we saw in early 2008.

Michael’s Personal Notes:

Suddenly, the automotive sector is red hot. According to Autodata Corporation, 1.4 million cars and light trucks were sold in the U.S. economy in the month of June. In fact, auto sales in the U.S. economy have increased 9.2% over the same period a year ago, and they are on pace to have their best year since 2007. (Source: Wall Street Journal, July 2, 2013.)

Since the beginning of the year, 7.7 million cars and light trucks have been sold in the U.S. economy.

But is that proof there’s real economic growth? Should we break out our “Dow to 20,000” party hats?

Based on our opinion, those numbers represent a good step in the right direction for the U.S. economy. Traditionally, auto sales figures are a strong indicator of consumer spending. The current trend indicates that Americans are spending money again. But there are a few reasons why I remain skeptical about any real economic growth in the U.S. economy.

The first reason is that according to TransUnion Corp., a credit information company, in the first quarter of 2013, the delinquency rate on auto loans 60 days or more past due increased from 0.82% a year ago to 0.88%.

Even more troubling is the fact that sub-prime borrowers—individuals with lower credit ratings—made up 15% of all auto loans made during the first quarter of 2013. (Source: MarketWatch, June 25, 2013.)

Could we see a sub-prime auto loan crisis in the U.S. economy? It’s not impossible. Over the last two years, balances in accounts from sub-prime auto loans borrowers have increased 11%.

The second reason is that consumer spending, aside from autos, is still very much suppressed in the U.S. economy. And the jobs market report from June showed that the number of people working part-time increased, with the majority of the jobs created in the low-wage sectors. That’s not likely to be a force that drives the U.S. economy towards economic growth.

And finally, while we have already heard enough about how the Federal Reserve will be stepping away from its quantitative easing, it will have a profound effect on interest rates. As I have said many times in these pages, the housing market in the U.S. economy will suffer as lower-wage earners will be faced with higher mortgage costs. And auto sales will be no different; just as it will become more expensive to buy a home, it will become expensive to buy a car.

In the short term, I expect automakers in the U.S. economy to continue to profit from this increased demand created by easy monetary policy; but in the long run, their troubles will become more evident. For example, the eurozone is still a mess, and China’s economic growth continues to become less stable.

Of course, basing your opinion on economic growth on one number—like auto sales—is not advisable when other indicators are suggesting the opposite.

Article by profitconfidential.com

By Profit Confidential

Suddenly, the automotive sector is red hot. According to Autodata Corporation, 1.4 million cars and light trucks were sold in the U.S. economy in the month of June. In fact, auto sales in the U.S. economy have increased 9.2% over the same period a year ago, and they are on pace to have their best year since 2007. (Source: Wall Street Journal, July 2, 2013.)

Since the beginning of the year, 7.7 million cars and light trucks have been sold in the U.S. economy.

But is that proof there’s real economic growth? Should we break out our “Dow to 20,000” party hats?

Based on our opinion, those numbers represent a good step in the right direction for the U.S. economy. Traditionally, auto sales figures are a strong indicator of consumer spending. The current trend indicates that Americans are spending money again. But there are a few reasons why I remain skeptical about any real economic growth in the U.S. economy.

The first reason is that according to TransUnion Corp., a credit information company, in the first quarter of 2013, the delinquency rate on auto loans 60 days or more past due increased from 0.82% a year ago to 0.88%.

Even more troubling is the fact that sub-prime borrowers—individuals with lower credit ratings—made up 15% of all auto loans made during the first quarter of 2013. (Source: MarketWatch, June 25, 2013.)

Could we see a sub-prime auto loan crisis in the U.S. economy? It’s not impossible. Over the last two years, balances in accounts from sub-prime auto loans borrowers have increased 11%.

The second reason is that consumer spending, aside from autos, is still very much suppressed in the U.S. economy. And the jobs market report from June showed that the number of people working part-time increased, with the majority of the jobs created in the low-wage sectors. That’s not likely to be a force that drives the U.S. economy towards economic growth.

And finally, while we have already heard enough about how the Federal Reserve will be stepping away from its quantitative easing, it will have a profound effect on interest rates. As I have said many times in these pages, the housing market in the U.S. economy will suffer as lower-wage earners will be faced with higher mortgage costs. And auto sales will be no different; just as it will become more expensive to buy a home, it will become expensive to buy a car.

In the short term, I expect automakers in the U.S. economy to continue to profit from this increased demand created by easy monetary policy; but in the long run, their troubles will become more evident. For example, the eurozone is still a mess, and China’s economic growth continues to become less stable.

Of course, basing your opinion on economic growth on one number—like auto sales—is not advisable when other indicators are suggesting the opposite.

Article by profitconfidential.com

By Profit Confidential

After the stock market closes today, benchmark stock Alcoa Inc. (AA) is set to report. Expected consensus-adjusted earnings are $0.06 a share, with revenues averaging $5.86 billion. That’s about flat with the comparable quarter.

Like many other benchmarks, Alcoa’s position has been drifting lower lately on slowing economic news, especially from China.

Also reporting is WD-40 Company (WDFC)—you probably have more than one of this company’s products in your garage. This dividend-paying lubricant company has been doing very well on the stock market since 2010 as investors sought earnings safety and yield. Earnings are expected to be flat with the comparable quarter on only a slight gain in revenues.

There isn’t a lot of double-digit growth out there, especially with large-cap, multinational corporations. So when the numbers get close, the stock market chases the positions. Johnson & Johnson (JNJ) is the perfect example of this.

I have to say that the stock market is holding itself together very well, considering the lack of earnings growth over the last several quarters. The system is very much a leading indicator—or perhaps, a leading gambler—on the prospect of earnings.

Institutional investors are still buying in this market and, at the same time, there have been plenty of withdrawals from the bond market. The stock market can still move higher from its current level if corporations provide an outlook of either earnings growth or stability, peppered with the expectation of improving revenues.

Companies are naturally very reluctant to make bold predictions regarding operations, since they want to avoid missing expectations. Instead, earnings forecasting is very much a game between corporations and the stock market.

Both Oracle Corporation (ORCL) and Apple Inc. (AAPL) tried to sweeten the attractiveness of their shares with big dividend increases. So far, it hasn’t worked.

The bottom half of the year (particularly the fourth quarter) is always the time when companies post their strongest quarters. The last few months have kind of been a “sell in May and go away” scenario—the stock market turned lower at the beginning of the last week of May.

If I had to guess, I’d say the stock market is likely to tread water until the end of the summer. Without question, Federal Reserve policy holds the keys to any trend. (See “Little Gain Now for Lots of Pain Later: Fed Policies Will Hold the Economy Down.”)

Clearly, the stock market is due for an extended break. A natural period of consolidation or correction would be a healthy development. If speculation regarding the end of quantitative easing was the reason for the market’s latest retrenchment, flat earnings and revenues could easily be the next reason.

This earnings season, I have very little in the way of expectations for outperformance. Global economic news has definitely provided weakness abroad in the second quarter, especially in China. That should be reflected in earnings.

Since the stock market remains a big hold, I have to reiterate my view that utilities are becoming more attractive for new positions.

Article by profitconfidential.com

By MoneyMorning.com.au

What a quarter that was for the gold bugs. Most would rather forget it ever happened.

The metal fell 23% in the last three months, which was an all-time record. Failing a miracle, gold will be down this year for the first time in over a decade.

Gold stocks fared worse still. The Aussie gold stock index is down 55%, while smaller stocks fell further. It has been nothing less than a train wreck on par with the end of the uranium boom.

The question is where does the market go from here? Is this the end of an era, or is a huge opportunity brewing?

A few weeks ago, I advised Diggers and Drillers subscribers to sell our silver position, and also that I was selling my own.

I had to axe a number of gold stocks too as they had fallen unacceptably far. After being a major precious metals bull, there were plenty of emails using words like ‘unacceptable’, ‘major U-turn’, and ‘lost the plot’.

The bottom line was that the market has changed.

As conditions change, views have to change. Right now, the driving force for much of the market, not least in precious metals, is the action in the US bond market.

Yields on US 10-years have jumped from 1.6% to 2.7% in just two months.

Let me tell you, this is a massive jump.

But why is this jump such a big deal. And why has this forced me to reluctantly change my tune, and sell the family silver?

The direction of gold has a lot to do with bond yields; specifically real bond yields, which are now very comfortably into positive territory.

Gold pays no yield. This isn’t an issue when bonds don’t either, but for some investors at least, gold looks less attractive when bonds have real yield.

US Ten-Year Bond Yield Soaring

Source: Bloomberg

The Federal Reserve previously warned of bond yields creeping up, and possibly getting to the current level sometime in late 2014. It only took just a few months and this surge has happened much faster than even they expected.

The bottom line is that it looks as though they have lost their grip on the bond market.

It won’t be just precious metals holders watching these bond yields, because the whole global market is underpinned by the bond market.

Even just talk of tapering has caused rates to soar, so what happens when they actually do it? It looks likely that rates could rise further as the bond market gets out of control, and this would put more pressure on metal prices.

But this brings us to…

A Conundrum for the Gold Producers

At the moment, gold is now trading around its cost of production.

In other words, at the current price of US$1,230 /ounce, about half of the global gold mining industry is losing money.

They have to cut costs just to survive, and we are now seeing many gold producers announce layoffs, pay-cuts, drops in production, and in some cases close their doors. It’s brutal, and from what I’ve heard on the grapevine, more is on the way.

For many Aussie midcap gold stocks, companies’ ‘all in costs’, are generally around the $1,100-$1,200 level.

This chart is from an Argonaut Securities presentation at the Mines and Money conference I spoke at in Hong Kong earlier this year. It shows their estimates of the ‘all in costs’ for some ASX gold producers. You can see that most of them will be having a tough time at current price levels:

Gold Now Trading Around the All-In Cost of Production

Source: Argonaut Securities

We’ll probably see supply of mined gold fall in the coming quarters, and years as the medicine works through the system.

And I’ve heard the supply of scrap gold (the cash-for-gold stalls in your local shopping centre) has dried up as well – because it’s not considered worth selling at these low prices.

And as a year twelve economics student will tell you: falling supply feeds through to higher prices.

And so the merry go round starts all over again.

So, although the current market hardly feels like it, it will lay the foundations for, and ultimately lead to, the next bull market.

The only question is how long will we have to wait for a full recovery?

I suspect…

It May Take a While

If you look back to the three major corrections in the last ten years and also the epic 45% fall in the 1970′s bull market, in each case the recovery took longer than the correction.

Seeing as this current correction is almost two years long already, it could take two years or more to reclaim lost ground.

But that doesn’t mean there isn’t opportunity out there today.

The last time the turnaround was triggered, and then sustained, by the Fed’s Quantitative Easing programs.

What could trigger a turnaround this time? A black swan event like war in the Middle East? A new version/scale of QE thanks to a new Fed President? In these markets, anything can and will happen. 

The lower prices go, the bigger the opportunity brewing in precious metals for the brave and the patient investor.

In the meantime, I’ll be exploring the rubble of the resource sector for other opportunities. After thirty months of falls for the small resource sector, prices are the lowest I’ve seen them. Some deserve to be cheap, but many others don’t. This situation is giving investors an incredible opportunity to buy quality companies at fire-sale prices.

Energy stocks are lining up to be the next big thing, with oil prices bucking the bearish trend in commodities today. It’s a diverse sector with some good short-term, and long-term, opportunities out there.

One small-cap energy stock I tipped recently with projects in the East African Rift System, the most sought after energy ‘post code’ today, has side-stepped the market carnage to quietly notch up 24% in a month.

While we wait for precious metals to find their feet again, and industrial commodities to see what China will do next, energy is one sector we can be more confident punting on: oil, gas, and don’t forget uranium too…

Dr Alex Cowie+
Editor, Diggers & Drillers

From the Port Phillip Publishing Library

Special Report: Panic of 2013

Daily Reckoning: The End of a Share Market Correction… or the Beginning?

Money Morning: Time to Plan for the Year-End Stock Rally?

Pursuit of Happiness: Make Sure You’re Not a Property Investing ‘Loser’

Diggers and Drillers:
Why You Should Invest in Junior Mining Stocks Now

By MoneyMorning.com.au

We get plenty of criticism for banging on about China.

But don’t mistake our China bashing for anything more than concern for the enormity of the problems there and the potential impact on Australia. Because the impact will be huge. It’s just that we’ve had it so good for so long, the Australian commentariat have no imagination when it comes to the potential economic problems we face.

We’re not trying to fear-monger or drop a bucket of faeces on the place. We’re trying to dig deep into the morass created by a credit boom and trying to work out what it means for you.

The rise of China began around 2003. Ultra-low interest rates in the US kick-started the boom. Because China pegged its currency to the US dollar, it effectively imported easy US monetary policy.

The World Has Never Seen This Before

You can see the effect of this in China’s accumulation of foreign exchange reserves (mostly US dollars, and euros too). China began 2003 with reserves of around $US350 billion. In the space of just 10 years, those reserves have ballooned to around US$3.5 trillion – a 10-fold increase.

Click to enlarge

These reserves, purchased with newly printed yuan in order to keep the exchange rate low, provided the fuel for China to engineer its own credit boom in response to the 2008 credit crisis.

The boom got underway in 2009 and is still going. Fitch ratings agency says it’s ‘unprecedented in modern world history‘.

Credit bubbles can continue for longer than nearly anyone expects them too. And they go on so long that most observers simply cannot see a catalyst to end the boom. But Federal Reserve tapering, or simply threats to taper, could be the catalyst that sends the China boom bust.

That’s because the threat of tighter monetary policy, or, to be more precise, the threat of ‘less loose’ monetary policy, causes a reversal in speculative capital flows. Such a reversal puts pressure on the most fragile parts of the financial sector.

And you’re seeing evidence of that pressure in China’s economy right now. A key measure of banking sector liquidity, the interbank lending rate known as SHIBOR, has surged in recent weeks. That tells you that cash is tight, and no one really wants to lend to each other at low rates. The higher lending rates reflect the higher perceived risk in the system.

And it’s not just perceived risk. A few weeks ago, there was a technical default in the banking system as China Everbright Bank couldn’t come up with the cash to repay a loan on time.

These are warning signs, in the same way that the failure of various sub-prime lending vehicles in 2007 was a warning sign of the looming credit crisis. If it follows the same path China’s economy will have a very hard landing and Australia will feel the full brunt of it.

For better or worse, we’ve hitched our iron ore wagon onto the tail of the red dragon. What happens in China’s economy will matter here…big time.

That’s not fear-mongering. That’s reality. If you think China can manage the fallout you’re not thinking. The US, with the most sophisticated capital markets in the world and a huge amount of self-interested parties trying to save the system, only just managed to pull it off. How is it that China will avert a similar fate?

We don’t know how events will pan out from here. We just know it’s better to have your eyes wide open than eyes wide shut. Ignorance is bliss while the going is good…but it can be a wealth destroyer when things change.
 
Greg Canavan+
Editor, The Daily Reckoning Australia

[Ed Note: To read more of Greg’s in depth macro-economic analysis, click here to subscribe to the free daily e-letter The Daily Reckoning.]

From the Archives…

The Power of Low Interest Rates Coming to the Aussie Market
5-07-2013 – Kris Sayce

S+P 500 Downtrend Looms? Counting Down The Days…
4-07-2013 – Murray Dawes

Here’s Your Six-Point Stock Buying Checklist
3-07-2013 – Kris Sayce

Are the Credit Rating Agencies at it Again?
2-07-2013 – Kris Sayce

Why This Could be Another Great Year for Australian Stocks…
1-07-2013 – Kris Sayce

AUDUSD moves sideways in a narrow range between 0.9037 and 0.9180. The price action in the range is likely consolidation of the downtrend from 0.9344. Another fall to test 0.9037 support could be expected, a break down below this level will signal resumption of the downtrend, then next target would be at 0.8950 area. On the upside, a break above 0.9180 resistance will suggest that lengthier consolidation of the longer term downtrend from 1.0582 (Apr 11 high) is underway, then further rally to 0.9270 area could be seen.

Provided by ForexCycle.com