What We're Reading

The Iran conflict notwithstanding, Mr. Market will do it's best to reassure you that everything will be fine.  Only time will tell but I personally, would not want to enter any new positions here unless you're a daytrader.  Not at 20x forward earnings already baked in.  Watch the next plank of earning reports.  Hedge if you are long any name...........except gold that is.  I have a target of $1700 in a wave five count before a correction.

We’ll start with the obvious: the number one export for many countries here is crude oil or related petroleum products. Middle Eastern countries made up a significant portion of global oil export revenues during 2015 with shipments valued at $325 billion or 41.3% of global crude oil exports.

Saudi Arabia, Iraq, United Arab Emirates, Kuwait, Iran, and Oman were all among the top 15 exporters of crude oil in 2015. Russia and Kazakhstan, countries on the Central Asian part of the map, were also members of that same group.

Regimes in the region found that there were many other corollary benefits from this economic might. Unrest could be stifled by rising wealth, and these countries would also have more influence than they otherwise would in global affairs. Saudi Arabia is a good example in both cases, though a major driver of Saudi influence has been slipping in recent years.

Outside of Oil

Aside from exports of oil, there are some other interesting subtleties to this map. One of the most

This was the week Greece inched closest to chaos, as a bank holiday and a technical default caused markets around the world to erupt in turmoil. They recovered somewhat Tuesday, and futures looked stronger Wednesday morning, but on Monday, the NASDAQ Composite Index lost 2.4 percent, the Standard & Poor's 500 Index lost 2.09 percent and the Dow Jones Industrial Average fell 1.95 percent. Volatility exploded, as the Chicago Board Options Exchange Volatility Index surged 35 percent, its biggest increase in two years, to 18.85. 

One would imagine that such a scenario might be constructive for gold. It has been called the best measure of fear, the only real currency, a refuge for those who plan for panic. So how is it doing these days? Spot prices were soft on Monday, despite the wild volatility in equities, drifting down a few bucks from about $1,180 an ounce to about $1,176. They fell a few dollars more yesterday, and are soft Wednesday.

I thought gold was an investor’s best friend dur

Things rising now are for the most part due to those (few) who see better earnings ahead, an earnings beat or rising on the struggling dollar........while peers get a definitely smaller bid....or none.  It's a struggle.  You'll notice more losing trades recently as markets are searching out the "good".  Some are talking recession (I don't buy that) while others struggle to find a way to get "through" the soft patch; waiting for 2016.  

In futures, volume has dropped off the cliff overnight.  It's amazing (and worth noting).

One things that's stood out for me is the increase in dividends and buybacks.  Yes, there's been an increase and new ones begun while O&G cut theirs.  Isn't it interesting how the market will do whatever it can to keep people in stocks.  Just sayin'.

AMZN is leading the Nasdaq with AAPL reporting this week but MRVL just announced a much lower 2015 than previously believed so computers seem a weak area.  Spot plays remain such as SNE who just raised their guidance ag

Life has intervened of late however I felt I would post my random thoughts viewing my port yesterday:

• Russia is still working. RSX at it’s 100d today. I will add more if it comes back to the 50d http://screencast.com/t/Eh88iqLP   Long hold, definitely.  Throw it in a drawer and forget about it.

• Buffet lowered his XOM stake and bought DE.  DE Monthly sure looks like its coiled up for something. Buffet obviously thinks new all time highs http://screencast.com/t/rlyFa0yzLeb  DE earnings this Friday bmo. I'd be long common and get put protection.  Buy or add on any selloff.  Daily view, bouncing off that 50% fib (to me) equals good chance it wants to challenge/break the high http://screencast.com/t/oEgnCfo0SJg 

• I still like the consumer stapes sector here. XLP or one of its components. They come into seasonal demand next month thru Summer.   I'm already long PEP and KMB as mentioned here previously in Chat.  For a list of XLP components, visit http://etfinvestmentoutlook.com/etf_hold

I'm back from Illinois after "life intervened" and I rushed out the door and gold has done exactly what I felt it would do.  In this previous post I felt that the 100 week SMA would pose a resistance and if you think about it, it makes complete sense.

• From a season standpoint, gold doesn't have much demand until last Summer when Indian festival and wedding season kicks in followed by jewelry gift giving as the Winter holidays approach.  (see seasonal chart)
• Inflation is very low = no need to hedge with gold
• The stock market is challenging new highs.  When equities are doing well, not to mention the killer strong U.S. dollar, again there's no need to hedge risk with gold.

For all you gold bugs out there, dude, be a patient investor and wait for smart entries.

My guess is that gold will take out the low which has been tested three times and we'll see lower pricing.  For those who want to place bets on gold falling, I would recommend $GLL or $DGZ however beware; they are thinl

As polls continue to swing around ahead of the Swiss gold referendum on 30^th November, we expect increased volatility in the FX and gold market.  After the implementation of the EURCHF floor, gold’s share of the SNB balance sheet has fallen to 7.5% from around 30% in 2007 (top chart).  The SNB has already pointed out the untenable nature of the peg should the referendum pass, but the impact on the gold market would also be significant.  Taking the current balance sheet of 522bn CHF and spot gold prices, the requirement to hold at least 20% of assets in gold would necessitate buying 1,800 tonnes of gold over 5 years.  Total global production in 2013 was 2,982 tonnes, thus the SNB would need to buy at least 10% of the annual production every year for the next 5 years.

The bottom chart shows the latest composition of the SNB’s FX reserves.  The requirement to buy gold will necessitate selling reserves, mainly EUR (which makes up 45% of all reserves).  Should these euro selling flows come

I can’t tell you that gold is a bad investment. Even after the recent plunge, if you bought gold in 2004, your investment would have earned you an annualized rate of about 10.4 percent, after accounting for inflation. That is darned impressive. If you bought in 1994, it would have earned about 3.9 percent per year -- not too shabby. Even if you bought all the way back in 1984, you would have earned 1.8 percent in real terms. (Of course, this assumes that shadowstats.com is wrong, and that inflation hasn’t been massively understated.)

In addition to delivering decent long-term returns, gold has been a way to spread or offset investment risk. As my co-blogger Yichuan Wang showed last year, gold’s return is somewhat negatively correlated with interest rates, so that a bet on gold is to some degree a bet on lower rates. This is actually the prediction of some old economic models, which also indicate that gold should have a positive rate of return over the long term. But a lot of the varia

For all you doubters out there, yes I have out my pompoms on the move in gold and silver this week.  You scoffed in March when I said a right shoulder could be formed.  Then again chuckled in April and May 3rd but I ask you who's laughing now?  Already I'm seeing tweets of a possible H&SB and I'm comfortably long SLV calls, enjoying the sunshine.  Scoff all you wish you financial gurus.  Charts don't lie; people do.

This daily for GLD and SLV is intriguing, showing both breaking out of falling wedges (they should test support which would be great to get in or add more shares or calls).

Gold seasonal demand doesn't actually kick in until late Summer for festival season in India, unless you're a believer of getting in early.  Silver does see some season demand in the Summer due to coin manufacturing BUT these two could also be signalling some fear in the equity market topping.  Of course this could also be nothing more than short covering (inflation hedge?) but it is what it is  Bull

Seasonal demand is just what it sounds like.  What seasons certain things see higher demand such as natural gas for A/C and heating or gold for jewelry manufacturing and sales.  With that in mind I thought I'd flip through our Seasonal Charts for hints of possible trades here and in the months approaching.  My unscientific belief has been that larger players begin to buy long futures contracts before the season hits so I begin to watch for divergences and support in charts.  Click on the charts below for a better view.  Let's take a look:

Consumer Staples Which can be traded via $XLP or one of it's components are items which consumers feel they cannot do without.  They're considered non-cyclical, meaning that they are always in demand, no matter how well the economy is performing (or not performing).  Think diapers $KMB, personal hygiene $PG, discounters like $WMT, beverages such as $KO, cigarettes $MO and $PM, pharmacies such as $WAG and $CVS.  There are many other names, b

• Stocktwits: "investor say the bottom is in for gold"
• Hey, wait a minute.  Didn't StockBuz say watch for a gold (GLD) weekly right shoulder to form back in March and early April?  Even posting on the gold miners here.  We're ahead of the herd once again......maybe.   (click image to enlarge)  At least risk is minimal; stop below $120
• SINA pre-announced an earnings beat but also announced it has received two notices from Chinese regulators stating its "License for Online Transmission of Audio-Visual Programs would be revoked due to certain unhealthy and indecent content from third-parties or by users" on Sina.com and its affiliated online literature site.  Ouch!
• JPMorgan becomes the first to warn on trading revenues in Q2, expecting markets revenue to slip 20% after declining 17% in Q1.
• AAPL wins a Federal jury decision again Samsung on smart phone patients but it's a victory for Samsung with less than 10% sought, actually being awarded ($120m vs. $2bil).  The jury rejected Ap

It may not be a popular view but then again, when everyone's on one side, doesn't the market tend to do the opposite of what's expected?  It seems the Elliott Wavers of the blogisphere are calling for gold to head lower here but I stand by my call of last week that the low will hold and we'll see a head-and-shoulders bottom (right shoulder) forming here.  Silver and all of the miners reflect a similar pattern, as posted here at StockBuz last week.  The weekly even resembles a possible double bottom.  Wouldn't that be sweet!  At the very least, down side risk is defined (last weeks low) but with fear in the market and heavy selling continued after the first of the month, utilities (safe haven) are already hitting a new high and I believe flight to precious metals will continue as well.  At least in the near term.  Not a long/hold.

• Schwab says HFT is a "Cancer" that must be addressed.  "The primary principle behind our markets has always  been that no one should carry an unfair advantage. That simple but fundamental principle is being broken." When big players such as Schwab begin to speak out, one must wonder if this will gain attention now.
• GT sold some AMZN 360/365 bear call spreads.  Still feel that's a HST
• Citibank $C reports$400M in fraudulent loans out of their Mexico subsidiary; lowered profit forecast. 
• Kos is calling bearish head-and-shoulder tops in a few ETFs.  Find out which in our charts section.
• Corporate profits continue to show strength - this for the long term investor Califia Beach Pundit
• Using California as a proxy, enrollment in ACA has been good with the exception of Latinos and to a lesser extent young (healthy) Americans.
• After the close, CME lowered margin rqmts. on crude oil, gold, silver and coal..  Seriously?  As if we need higher gasoline to jeopardize the recovery?  Well, inflation

• For all the worrying about weather impacting job creation, Trim Tabs say real time tax receipt data (allegedly more reliable than BLS data) suggests that the economy has been picking up steam.  24/7WallStreet
• A 8.2% magnitude earthquake overnight off the coast of Chile with a 2 meter tsunami.  Supposedly mining operations have not been affected buy you try to tell that to silver and gold this morning.  They're not buying it (so far)
• Interesting metrics from Flurry on mobile usage today.  GOOG accounts for 18% of time spent by consumers which includes YouTube, while FB is 17%.   Android web browsing is losing market share, going from 20% or usage down to 14%
• Facebook apps continue to hold strength ahead of Google according to Comscore data..  Twitter's app was only used by 22.8% of U.S. smartphone users in January. 77.6% used Facebook's core app, and 27.5% Instagram. Five different Google apps were used by over 40% of users.
• The Affordable Care Act (Obamacare) met it's targ

• With the increase in US oil (hello Bakken), shipping black gold by rail has caused backlog in shipments of other goods across all industries forcing rail companies to scramble to expand.  The biggest loser: shippers.  Sounds like more promo for Keystone to be approved WSJ
• Are you guilty or have you been there, done that?  Take a different view of those around you in the service industry and how you/we view and interact with them.  An open letter to Paul Ryan on poverty Salon
• Last night after the close, CME lowered margin requirements for Brent and WTI crude oil futures.
• Members here at StockBuz have been playing precious metals and miners; gold, silver, GDXJ (junior miners).  Investing.com has noticed the move off of the lows as well.
• The "death spiral states" talk of Democratic states leading in number of Welfare recipients (shockingly) distorts the full truth.  What else will the Koch brothers come up with next?  Factcheck.org
• China slowing is the biggest threat to growth currently,

• The argument to lift the ban on crude oil exports Bloomberg
• How big oil (and Senators) are positioning at the Senate Energy and Natural Resources Committee Bloomberg
• A 3pm gold "fix"?  This study says it began in 2004. Bloomberg
• That's what I've been saying.  Fed may have to let inflation run hot to meet goals. Reuters
• Markets spooked as confirmation came of Russian troops taking over two airports in the Crimean area of the Ukraine.  UN to hold closed-door session this weekend to discuss situation. Reuters

Today was a typical Saturday.  I began to scan my watchlist, ran through the indexes and flipped through my favorite web pages for tidbits of stockmarket insight.   At one point I noticed that in wake of yesterdays selloff in gold/silver, suddenly people were posting seasonal charts for gold and silver.....as if they had just been discovered.  Helllllo McFly.   No, there is no seasonal demand for  the shiny stuff here.  Hasn't been; move along.  Economies are healing; meaning there's less of a need to hedge yourself with gold and bonds.  With no demand and less of a flight to safety,the big boys are taking profits.  Again, nothing there, move along.

I think some people just stopped paying attention but world economies are less bad, period.  While we're not out of the woods, unemployment is stabilizing.  Jobs are coming back, albeit slowly and low paying...but things are no longer deteriorating.  Maybe the gurus out there just didn't want their subscribers to know the secret to their a

RJ Insights.pdf

Mining stock recommendations, observations on Dollar/Gold rallies.