Tuesday, June 30, 2009

ACE LIQUIDITY RELATIONSHIPS


is the name of the FIRST LINK in my list, about 2/3's down the sidebar.

The first chart is Hi-Grade Corporate Bonds [ LQD ],
divided by Treasury Securities [ IEF ].

Like the Euro-YEN currency pair does in currencies, the LQD: IEF shows the willingness of Bond Holders to step outside their "Comfort Zone" towards RISK.

Generally speaking, this relationship addresses how much funds the Treasury is
injecting into subject market via REPO's, and other devices. Intervention trackers do a good job of sniffing them out.

Check the correlation against EQUITY MARKET Moves,
and IMO, the link is DIRECT. Viewed thru a shorter lens, it is not so glaringly apparent, as it is via the longer charts.

More to the point, there are always apparent "EXPLANATIONS" WHY, offered by TALKING HEADS and "Monetary Authorities" and 'Officials'. SMOKE & MIRRORS ! ! !

Gold does a good job sniffing certain moves, and Silver as the more volatile of both PM's vibrates incessantly when the Monetary Authorities play their games thru their "Dealers".

Watching a number of indicators MIGHT help, but in the end its the PUMP that matters, and as long as they are pumping Liquidty, the upward curve, ever increasingly subject to Gravity and the law of decreasing returns, will try, try, try
to climb THE HILL, and at some point will cease to be as effective as previous.

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Hints, Clues, Whispers or SHOUTS !

I WOULD PAY ATTENTION TO THIS -> THIS Might be the tip of the iceberg
EVENT
This may be a clue what might be taking place
as we move towards the middle of JULY , and the MAJOR BRADLEY TURN Date.

Please refer to a chart of any popular average from the winter of 2007 forward to get an idea of what might be going on.

In any case, simply recall what took place in the past and make sure you are protected. If this is the OTHER SHOE dropping, you will find liquidity draining away, and that will include all asset classes.


" On June 23, the European Central Bank (ECB) announced its first ever offer of UNLIMITED one-year funds!

The ECB has only done something like this once before, in a single ECB operation back in December 2007 when the world’s international payments system seized up. Then, Europe decided that this time, their internal payments system would not be allowed to freeze up as it did back in the early 1930s.

This Starts The Global Credit Crisis - AGAIN ! :

Across the Atlantic in the US, the FDIC was the first cab off the rank in response. The FDIC said it will be guaranteeing $US 700 Billion of the debt of about 7,100 US banks and institutions in its transaction account program. Banks, including the biggest US lenders, can now tap UNLIMITED coverage by
paying 10 cents per $US 100 on customers’ deposits. The FDIC has $US 13 Billion left of its own funds.

What the ECB did back in December 2007 was a reaction to financial events which made the world’s international payments system seize up. The ECB hammered 348 Billion ($US 485 Billion) straight into the European payments system so that all the other financial participants could make or receive payments. This was a “one-off”! But now, the ECB has done it, again - on a scale which vastly exceeds what it did back in December 2007. This is not a “one-off”. This time, it is supplying unlimited funds for a year!

The problem which the ECB sees rolling over the world horizon has to be of a near similar magnitude in size. Why otherwise open its doors again for unlimited funds? Further, why would the ECB keep its doors open for the issuance of these funds for a full year if the ECB did not expect this approaching world crisis to last for at least this length of time? Searching for answers to this, The Privateer can only use similar historical instances. The first of these has to be a gargantuan bankruptcy of a pillar of the western world’s huge “money center” banks. The second of historical instance has to be a debt default by one of the western world’s major governments! The third has to be a combined political and economic disaster. An example of this is when France refused to roll-over its loans to Austria’s Credit Anstalt in the late 1920s and then demanded repayment of its past loans. That demand brought the Credit Anstalt down. The Credit Anstalt, in a desperate attempt to get the funds and to repay France, called in its own loans to German commercial banks, in the process causing a fast sequence of bank failures across Germany.

In the early 1930s, western banks recoiled in horror from each other. They all started to recall their own short-term loans from each other while refusing to make any new loans. The entire western world’s international payments system broke down as the banks failed in their thousands all across the world. With this offer of unlimited funds, the ECB has acted to try to prevent a similar sequence, at least inside the Euro region. The European payment system will therefore survive - for at least another year.

But, if the crisis foreseen by the ECB is a debt default by a big government, then the global final outcome becomes extremely doubtful. It will be the present lenders to the default government which will take the full hit, their loans made to it all being worthless. Their finances and payments systems might not be able to handle that. If they can’t, then the whole world could face a sequence of national debt defaults, which will carry with it consequences we all will share."

The choice is clear: Balance the budgets and roll back the stimulus or die as the stimulus explodes....... Guess what's next.

DG

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Monday, June 29, 2009

it has that "FEEL" to it, reminescent of the HINDENBURG stuff

The market that is. Feels like it should be going down when its going up.

Part of that is considered the "WALL of WORRY" that Bull Market's climb.

For the masses, this looks to me more like the nice wide approach to the

"CLIFF's of EUPHORIA", wherefrom the masses make their leap into the Abyss.

The Big Buzz amongst all the small caps was the Russell Re-Balance with 427 changes

to the Russell 3000. The add-on's got volume bursts as money manager scrambled

to encompass all the new additions, somewhat distorting the Small Cap universe.

Likely, in the largest sense, if companies prospered, whether immediately reflected

in share price, they were added to the RUSSEL if they were Representative. Also,

for me the reverse is true.

Given some severe sell signals already in hand, IMO, none of the above invalidates

any of the flashing yellow caution lights showing, whether its Volume or Mr. Nasty,

the Schizophrenic UP HUGE, DOWN HUGE days and their Bi-Polar natures.

Today will no doubt provide plenty of information to work on, so we can see a

more clearly tomorrow.

Good Luck,

DG



Given the extreme need not to be left behind and be part of the crowd, we can

expect the lemming effect of managers and investors alike "following-on" the new

additions. Previous followers of the newly additions will now how to sift thru

all the lemmings surrounding those stocks and find what is real.

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Thursday, June 25, 2009

CHINA SYNDROME

Over time, the smoke and mirrors almost make you wonder how a market can manifest internal degrading and yet look so good on the surface. Just like the comments one could hear after a viewing of a deceased, "He Looked So Good", this story is just about as macabre. At a later date I will bore you with charts. For now its just a series of observations.

First, like Rome, this market is taking a very long time to fall. Falling so slowly that you almost dont see the "train wreck in slow motion".

My second observation is, that the pervasive intervention, so obvious under "W", is a bit more subtle here, as members of the NEW Team disagree with the Fed Head as to how to proceed. IMO, intervention can be seen in most all asset classes, in a seeming rotation, as triage is performed on which markets to act upon. You and I know its there, but dont bother trying to objectively prove it.

Third, the Latin for "Who Profits" pops into my head. Who has the most US Dollars and the most to loose, should the US pull a fast one, or engage in any funny business?
Would not that party be best off if they engaged an intermediary like a FUND or INSTITUTION, to acquire large positions is certain key firms, to preserve their purchasing power of their large store of excess US DOLLARS ? Spreading many dollars around equity markets while concentrating on specific firms could easily cause such a pattern of confusion as we have seen and are seeing.

Fourth, the US has a LOT of debt to sell and CANNOT afford the US Dollar to go south during its financing period, so it really doesnt want overseas DOLLAR Holders to sell the US willie-nillie whilst the financing is on-going, so anyone helping retard the fall of the Dollar is a FRIEND of some sort or another, unless control of YOUR company is passing into OTHERS Hands.

I personally think the CHINA COMMODITIES HOARD THEORY quite valid,and wonder out loud if such a mechanism is being applied to US Equity Markets.

My personal opinion is that the US Stock Market will NOT fall in an open, public and serious way, UNTIL the US Treasury is finished its debt financing for the current period, but good old MR. NASTY [ Nasdaq Summation INdex ] is ratting out the fact that capital is exfiltrating the equity markets, and such is masked by the rear guard covering fire, and dirty tricks of a massive pool of US DOLLARS exerting their influence thru covert liquidty injections, and acquisition of specific positions in specific firms.

Upon review of CNDX,TSX, AMEX, & NYSE scans for today, those are my thoughts.

CLEARLY, many of the PM stocks are smelling a rat here, but not all PM stocks are meeting scan and filter criteria. NEM, AEM, NG, and HL are a few that meet the test. Interestingly enuf, the GolDollar Index is also rising.
A comprehensive list will be posted in PEAK PERFORMANCE BLOG.

GOOD LUCK

DG



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Monday, June 22, 2009

ALLEY-OOP coming your way ! ! !



Lets see, Mr. Nasty been saying DOWN since last week. Seems to me this is an "IN YOUR FACE" Stuff block !! The TALKING HEADS say it was the WORLD BANK Report, like they had anything to say we did not already know 6 months ago ? ? ?

Asian Indexes are off about 3% as I write this. Industrials down 200 today besides the best efforts of the Interventionists, after an entire WEEK of Mr. Nasty's clear and confirmed downward progress.
Note that I mentioned that much smoke and mirrors would be used to confuse the investors and observers alike. I think that is well born-out to date, and there is more coming no doubt.
How deep with this one go ? I dont really know, but know that Mr. Nasty will let us know when we have a change in momentum or a change of trend.

Tuesday, June 16, 2009

OOPS! ! !


That is a WRAP. MR. NASTY = 457, GREEN LINE 511. That is a definate OOPS ! !

I think I will be using all UP-SIDE Reactions to open some SHORTS. My current shorts held over from before are Unilever and THE GAP [ UN & GPS]. Certainly tonite as I scan and filter, my emphasis will be balanced btwn Shorts and Longs, some of which might make it into the PEAK PERFORMANCE REPORT, published to that blog.

No doubt we are going to be shaken, stirred, folded, spindled and mutilated until this shakeout is finished. Should the US Dollar try to make a run for an index high of 95, it likely go hand in hand with a serious decline in US Equity markets as well as a serious surpression of the gold price. Looking forward, from partial scans of mine, I like Auzion Mines Ltd, Dennison Mines Ltd, and Richmont Mines Inc.
Also on this list was Golden Star Resources, but they have consistently been able to snatch defeat from the jaws of victory, so I have them on hold until I see some positive reinforcement from them.



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Is it a wrap? LETS SEE

close-notation of gold in usdImage via Wikipedia



Well is it a WRAP or isnt it? Well Mr. Nasty dropped right dead thru its GREEN LINE, and seems to be sinking @ 508, below the GREEN LINE which is at 529, basically 4% below the GREEN LINE. Decisive? I'd say yes, further if the FEDS plan to save the dollar it is logical for the market to decline, which creates the seemingly odd situation of the market and gold declining together, more or less, or is it odd at all?

Basically if liquidity is a part of this play at all, it would not be all that unusual for, in this era, for the general market and gold stocks to decline hand in glove.

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Monday, June 15, 2009

OPPS



IT does look like mean old Mr. Nasty has declined by 4% under his GREEN LINE.

DECISIVE ? Good enuf for me to probably close most of my longs unless they are special situations, listed on my PEAK PERFORMANCE Blog. I'd say stay tuned and see what happens. Its really hard to call an upside breakout from this scene that we now view. The financial stocks show a lot of tampering so they are currently out of my picture for use as indicators.

Intervention can play a part, but so to time and gravity and they tend to me resistant to tampering so,again, be observant. Knowing all this, Financials are not my first choice for shorts, and in fact I am not opening any new shorts yet.

DG

Friday, June 12, 2009

YES we ARE having FUN, yet?0

Simply put, the inmates are in charge of the asylum or so it would seem.

A brief review of basic turn dates, Fibonacci and otherwise, leads me to conclude, that this craziness will carry on for a bit, reminiscent of past tops, where its "BREAD and CIRCUSES". Just like the craziness of the "quid pro quo" of foreign Central Banks buying US Treas Securities at our auctions. Kinda like the old "POLISH AXIOM" 'They pretend to pay us, so we pretend to work'. Not much different than the worlds Central Banks buying each other's country's Treasury Debt. You buy mine, I buy yours,and no one is the smarter, eh? Wink ! So they buy our debt with their DIGI-Money, and we buy theirs with our DIGI-Money, and not an honest cent changes hands

Keep your eye on Mr NASTY, keep your eye on the volumes, moving averages preferably,say 10 & 20 day averages. Compare the OEX stocks with the Russell small caps, that oughta tell the story.

You can play long if you like, as long as you keep the above in mind. GOLD?

This is NOT good for gold YET. HONEST money is hanging back, hiding. Therefore, physical is the way to go, also CEF, beyond that,its the merit of the individual stocks, and as you know, miners melt down with the market so be aware.

Last Long Pop Pick I liked today is SAKS 5th AVE, SKS. Might be fun, cant tell.
I like it under $4.50,and a stop in the high three's or just under $4.00. Wont try
to predict where it could go, yet. Nat Gas remains on my mind for longs.

Good Luck,

DG

Thursday, June 11, 2009

Ya Gotta Luv IT





AMAZING how long they can spin out this game. MR. NASTY stands at 532, and the GREEN LINE is @ 530 as of yesterdays close. Lets see what the shenanigans concerning the Bond Market do to the Advances and Declines. Raw Advances minus Declines are the fuel for this index and if the NET does not keep pace with the proportionate movement,
Mr NASTY diverges in the direction the market is most inclined to follow thru with.
Mr. Nasty himself is kinda long term and short term all rolled into one critter, so tis best used to So SLOOOWLY assess which way the market wants to roll.

VOLUME is also a good VALIDATOR.

No point using any more words here, as the pictures tell the story. Failure of the Volume and Net Advances to keep pace basically spell either DOOM or Stagnation for this market, IMO, and the only amazing part is how long they can spin it out.

Prudence would suggest caution and "field awareness" if not hard stops. Time and Gravity will prevail here.

Things are scary enuf I have NOT been able to find anything I like right now for longs.

To emphasize, the first chart on the list shows there are NO MORE STOCKS to Recruit into UPTRENDS........ hmmm, wonder that that portends. ? I think they are out of running room.........

DG



Good Luck

Saturday, June 6, 2009

Wild Weasels, Part Duex



Sort of a ragged imitation of the first of 2009's rally. Refer to "SON of Same Vs. Wild Weasels" Post and chart for reference. Basically volume is dropping which is an unhelpful development.

DG

Son of Sam meets WILD Weasels



BLUE Line = VOLUME; PURPLE Dashed = Small Cap Index;
RED = Summation Index[weighted breadth index]

BROWN = NYSE cumulative NET advances-declines

VOLUME is the fuel for advances. VOLUME = VALIDITY. True advances are accompanied by serious volume.

PRICE is valid when accompanied by price, or its a PINNOCHIO.

LONG TERM BREADTH HEALTH is reflected by the Summation Index, which is trying to work higher but seems as if it is mired in molasses.

NYAD is the shorter term of the Breadth, and measures what the market is doing.

RUT, the purple is the SMALL Cap Price Index, and it is a pace with short term breadth.

How much credibility will we assign to all the price moves and gyrations that are
NOT Validated by VOLUME?

How much credibilty will we assign to all the price moves and gyrations which are begrudging accompanied by breadth barely keeping pace and unable to move to new
highs with any serious conviction?

My view is that we are working towards the Second Surge, the Second Top, the Second Peak. I am so very guilty of being right way too early, so I am standing here LONG, on some of my pix, and short several others which are NOT participating in this rally.

Analyzing my tendencies, like Running a Play Action Pass on FIRST Down, teaching me to review my play calling. Review your tendencies. Evaluate this market.
Decide your plays by how long you think you have on the clock. First Half? THIRD Quarter? Would you settle for a 3 pt Field Goal here? Or merely running the clock out? Its your ball, your money.

DG

Wednesday, June 3, 2009

Beyond the Valley of the Wild Weasels



oh yes the Wild Weasels ride again, now Dan Sullivan of THE CHARTIST says he is getting Aggressively Bullish, dear Lord save me. Look at the DIVERGENCE above, carried on the STOCKSCHARTS BLOG section.

The link for that section is http://blogs.stockcharts.com/

That is on my plate for the rest of this week is:

http://stockcharts.com/scripts/php/candleglance.php?CPE,GNW,BZH,BZ,ALY,CNO,BQI,FTK,DEJ,CXZ|B|A12,26,9

Good luck, stay alert,

DG

Monday, June 1, 2009

WILD WEASELS RIDE AGAIN`




Familiar with the Exocet Missle ? Gyrfalcons & Ptarmigan ? POP-UP Maneuver? Wild Weasels of Vietnam Air War fame ?

While I meant to discuss the "SECOND SURGE" or "SECOND PEAK " Phenom when I was working with the Primary Volume Total for NYSE, and comparing that with the DJIA and the Summation Index, I was not able to cover it. Here, it also applies.
Simply, without the Second Peak or Surge in prices or breadth or volume, there could
be NO POP-UP MANEUVER. First made publicized by the fame of the WILD WEASELS of the USAF over North Vietnam, basically the Wild Weasel's fake out defenses. Essentially its a counter motion play then reversed, often known as a HalfBack Counter, say in Madden Football.

Note the peaks in Mr.Nasti's top moves. In the last two, clearly a fake out move.
Note that in the last two tops, both were double,and the last one was basically a fake out move,hence the WILD WEASEL's Pop-Up Maneuver. Several dates have been suggested for the end of this little game, which by my count has something like 15-20 market sessions before the tide recedes in very scary fashion.... Plenty of room for short range scalping, but very little time to dog down the hatches for the real storm, cause its gonna be a doozzy, often termed a "goose-drownder". Survival Suits are available for sale if ya know where to get em.

DG

THREE Things

TALKING HEAD[ S ] SPEAK WITH FORKED TONGUE [ S ].

GURU's KILL YOU WITH WORDS. [ TMI ]

ONE [1] picture clearer than 10K Words of guru or talking head -> see last post.

DG

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