Monday, December 21, 2009
Monday, September 14, 2009
Dialling in the breakout.... RIMM
We went long RIMM today, as it crossed the previous High of $80.59 and closed at the day's high... We are buying the breakout here as we like the setup of the risk-reward ....
We suspect the current breakout is going to get attention from the trading world and the media...and we hope to see RIMM test previous highs of 86, over the next few trading sessions... We would have loved to see some more volume on the breakout.... But we want to press ahead of the trade, keeping a close stop of $80.50, in case of any reversals.....
We suspect the current breakout is going to get attention from the trading world and the media...and we hope to see RIMM test previous highs of 86, over the next few trading sessions... We would have loved to see some more volume on the breakout.... But we want to press ahead of the trade, keeping a close stop of $80.50, in case of any reversals.....
Recovery.... comes as a cost......
While the mainstream media, analyst communities and govt authorities are cheering that we are out of the woods and we have averted a major depression, we want us to pay attention to the chart below....
This is a plot of S&P 500 v/s the USD Dollar with the dotted lines, classifying the time period since March 09. Ain't the two plots look a mirror image of each other....
The Equity markets got a big jolt up since the Federal Reserve declared its mega QE (Quantitative Easing) program after its March Meeting. As the Equity market have gained swiftly since, the recovery effort has primarily been at the cost of trashing the dollar. As the dollar has weakened, the wealth of anyone and everyone holding Dollar Assets has gone down. The burden of the weakening dollar is shared by the population at large, in terms of high commodity prices - such as Sugar, which is at an all time high, steadily climbing Copper prices (which has moved more than doubled to $2.8), Gold prices (currently around a High for 2009) and Oil prices (having moved from $32 per barrel to a nr term High of $75 per barrel)....with the fear of higher taxes, lesser public facilities and a confused healthcare environment running at the back of the mind.....
It goes to show time an again.... that there is really no free lunch.....
This is a plot of S&P 500 v/s the USD Dollar with the dotted lines, classifying the time period since March 09. Ain't the two plots look a mirror image of each other....
The Equity markets got a big jolt up since the Federal Reserve declared its mega QE (Quantitative Easing) program after its March Meeting. As the Equity market have gained swiftly since, the recovery effort has primarily been at the cost of trashing the dollar. As the dollar has weakened, the wealth of anyone and everyone holding Dollar Assets has gone down. The burden of the weakening dollar is shared by the population at large, in terms of high commodity prices - such as Sugar, which is at an all time high, steadily climbing Copper prices (which has moved more than doubled to $2.8), Gold prices (currently around a High for 2009) and Oil prices (having moved from $32 per barrel to a nr term High of $75 per barrel)....with the fear of higher taxes, lesser public facilities and a confused healthcare environment running at the back of the mind.....
It goes to show time an again.... that there is really no free lunch.....
Stopped out in Gold puts
We got stopped out in our gold puts position, as the precious metal did a U-turn after reaching 982 on the lower end and moving back to 1000. 'Prudent is the best part of valor' - As bulls and bears both make convincing cases for Gold, we want to move away from the counter to better opportunities for the time being and see the drama unfold from sidelines...
Wednesday, September 9, 2009
Closing Gold and Buying Puts
With Gold around $989, we are booking our last 20% position in gold. We feel gold has seen a near term top and we will see some profit taking here.
We are taking a small punt with a portion of our profits, buying Oct 95 puts in GLD - which will cost us $1.75 per contract. We are buying the October expiry as we are giving ourselves sometime for the move to mature. If gold rallies back to nr $1000, we will cover our puts.
We are taking a small punt with a portion of our profits, buying Oct 95 puts in GLD - which will cost us $1.75 per contract. We are buying the October expiry as we are giving ourselves sometime for the move to mature. If gold rallies back to nr $1000, we will cover our puts.
Tuesday, September 8, 2009
Booking another 45% in Gold
A weak close on NY markets doesnt bode too well for the bullion market. Asian investors will wakeup to see the Gold crossing 1000 and coming back in and the knee-jerk reaction would be to book profits.
We are taking another 45% off the table, leaving just 20% to run.
We wont be surprised to see gold in 980 range tommorrow AM EST.
We are taking another 45% off the table, leaving just 20% to run.
We wont be surprised to see gold in 980 range tommorrow AM EST.
Booking 35% position in Gold
1 pm EST
After a Higher open today, crossing the 4 digit mark in months, there has been selling in Gold over the last 2 hrs. We want to book 35% of our long position in Gold, to preserve our profits.
If gold closes below $995 for the day. We will book another 30-40% of our position.
After a Higher open today, crossing the 4 digit mark in months, there has been selling in Gold over the last 2 hrs. We want to book 35% of our long position in Gold, to preserve our profits.
If gold closes below $995 for the day. We will book another 30-40% of our position.
Sunday, September 6, 2009
Weekend Video Viewing - The Money Masters
Eye Opening (read: Popping) video -
THE MONEY MASTERS is a 3 1/2 hour non-fiction, historical documentary that traces the origins of the political power structure that rules our nation and the world today. The modern political power structure has its roots in the hidden manipulation and accumulation of gold and other forms of money. The development of fractional reserve banking practices in the 17th century brought to a cunning sophistication the secret techniques initially used by goldsmiths fraudulently to accumulate wealth. With the formation of the privately-owned Bank of England in 1694, the yoke of economic slavery to a privately-owned "central" bank was first forced upon the backs of an entire nation, not removed but only made heavier with the passing of the three centuries to our day.
For more information - check out
http://www.themoneymasters.com/
THE MONEY MASTERS is a 3 1/2 hour non-fiction, historical documentary that traces the origins of the political power structure that rules our nation and the world today. The modern political power structure has its roots in the hidden manipulation and accumulation of gold and other forms of money. The development of fractional reserve banking practices in the 17th century brought to a cunning sophistication the secret techniques initially used by goldsmiths fraudulently to accumulate wealth. With the formation of the privately-owned Bank of England in 1694, the yoke of economic slavery to a privately-owned "central" bank was first forced upon the backs of an entire nation, not removed but only made heavier with the passing of the three centuries to our day.
For more information - check out
http://www.themoneymasters.com/
Friday, September 4, 2009
TGIF ...not necessarily for FDIC
TGIF ... long weekend ahead, Labor day, Last Summer Event, US Open in NYC..... not necessarily for FDIC...
Four more banks closed today bringing the total to #89. Here's a summary of today's failures (courtesy - seekingalpha)
# First State Bank of Flagstaff, Ariz., becomes the 89th bank failure of '09, at an estimated cost to the Deposit Insurance Fund of $47M.
# Platinum Community Bank of Rolling Meadows, Ill., with $345.6M in assets, becomes the 88th bank to fail in '09 and the 15th in Illinois
# Banks in Illinois and Iowa become the 86th and 87th to fail this year, at a combined estimated cost to the Deposit Insurance Fund of $234M.
# First Bank of Kansas City becomes the 85th bank failure of the year, at an estimated cost to the Deposit Insurance Fund of just $6M.
For a complete list here's the link
http://www.fdic.gov/bank/individual/failed/banklist.html
FDIC's reserves are depleting at a faster pace than ice from the artics....Just a cautionary note to ensure your funds are spread across in safe banks ...pun totally intended...
Enjoy....
Four more banks closed today bringing the total to #89. Here's a summary of today's failures (courtesy - seekingalpha)
# First State Bank of Flagstaff, Ariz., becomes the 89th bank failure of '09, at an estimated cost to the Deposit Insurance Fund of $47M.
# Platinum Community Bank of Rolling Meadows, Ill., with $345.6M in assets, becomes the 88th bank to fail in '09 and the 15th in Illinois
# Banks in Illinois and Iowa become the 86th and 87th to fail this year, at a combined estimated cost to the Deposit Insurance Fund of $234M.
# First Bank of Kansas City becomes the 85th bank failure of the year, at an estimated cost to the Deposit Insurance Fund of just $6M.
For a complete list here's the link
http://www.fdic.gov/bank/individual/failed/banklist.html
FDIC's reserves are depleting at a faster pace than ice from the artics....Just a cautionary note to ensure your funds are spread across in safe banks ...pun totally intended...
Enjoy....
Thursday, September 3, 2009
Dow to Gold Ratio - Part Deux
Most mainstream media tend to focus on the primary index performance while analyzing and reporting the day's activity and trends. We like to look under the hood, to understand what's really happening.
One such ratio - we love to look at is the Dow to Gold ratio. The ratio tells us a lot about the investor appetite and preference. Dow30 represent a proxy for paper assets and the value investors are willing to pay for it, while Gold Price represents a class of hard real assets investors are valuing.
If the ratio is consistently moving lower (as was the case during the bear cycle Oct 2007 to March 2009), it shows the preference of investors is clearly towards hard assets, away from the paper world. After a brief 5 month bear bounce (during which investors were snapping value picks and then chasing momentum), we are of the opinion that the ratio has made a high for the year and is again headed lower (telling us that investors are again preferring real hard assets to the paper assets... and the tacit truth may be that they dont trust the underlying values of the paper assets...)
In Today's action,
1. Though DOW had a positive close, due to a super final hour, the DOW-GOLD ratio today was still lower than yesterday. (#chart 1 below)
2. Momentum in Gold, continued to take it closer to the elusive 4 digit mark. This despite a not so weaker dollar (#chart 2 below), which reflects the underlying strength in Gold momentum. We think Gold will surpass previous highs of 1007 to create new highs for the year. Whether previous highs of $1033 will be taken out depends on the momentum once the first highs of 1007 are taken out.
Smart money will be looking to see a day where gold gaps up at the open and sells into the day to close on the lows of the day; that will be a tell-tale sign to close your long positions, while the mainstream media will be going gaga with $1200 odd price targets for the yellow metal...
#chart 1
#chart 2
One such ratio - we love to look at is the Dow to Gold ratio. The ratio tells us a lot about the investor appetite and preference. Dow30 represent a proxy for paper assets and the value investors are willing to pay for it, while Gold Price represents a class of hard real assets investors are valuing.
If the ratio is consistently moving lower (as was the case during the bear cycle Oct 2007 to March 2009), it shows the preference of investors is clearly towards hard assets, away from the paper world. After a brief 5 month bear bounce (during which investors were snapping value picks and then chasing momentum), we are of the opinion that the ratio has made a high for the year and is again headed lower (telling us that investors are again preferring real hard assets to the paper assets... and the tacit truth may be that they dont trust the underlying values of the paper assets...)
In Today's action,
1. Though DOW had a positive close, due to a super final hour, the DOW-GOLD ratio today was still lower than yesterday. (#chart 1 below)
2. Momentum in Gold, continued to take it closer to the elusive 4 digit mark. This despite a not so weaker dollar (#chart 2 below), which reflects the underlying strength in Gold momentum. We think Gold will surpass previous highs of 1007 to create new highs for the year. Whether previous highs of $1033 will be taken out depends on the momentum once the first highs of 1007 are taken out.
Smart money will be looking to see a day where gold gaps up at the open and sells into the day to close on the lows of the day; that will be a tell-tale sign to close your long positions, while the mainstream media will be going gaga with $1200 odd price targets for the yellow metal...
#chart 1
#chart 2
Wednesday, September 2, 2009
Dow to Gold Ratio
Take a close look at the chart below. This is a chart of Dow Jones Industrial Average (DJIA - DOW30) to price of Gold in terms of Dollars per Oz.
Right through the bear market cycle from Oct 2007 to the bottom in March 2009, the ratio had fallen from a high of 21 odd levels to just below 7 (6.86 to be precise). In the 5 month bounce the ratio has moved back again to 10 odd levels... and over the course of last few days, has started the descent back down...the move down can be precisely monitored in the daily charts...
DOW-GOLD - Weekly chart
DOW-GOLD - Daily chart
With Gold's breakout today and the headwinds in Dow entering the weary months of September / October, we believe we have seen the highs of the ratio for the year. Investors can position themselves to profit from the trade by going long gold and shorting DJIA - using any available and preferred channel - ETFs (Long GLD or DGP, Short DIA,DDM or Long DXD) Futures, Options etc.
This trade requires patience as the trade takes time to make itself profitable and the ratios may snap back for brief periods of time, but the patience will be truly rewarded and satisfying.
More on the ratio in upcoming posts...
Right through the bear market cycle from Oct 2007 to the bottom in March 2009, the ratio had fallen from a high of 21 odd levels to just below 7 (6.86 to be precise). In the 5 month bounce the ratio has moved back again to 10 odd levels... and over the course of last few days, has started the descent back down...the move down can be precisely monitored in the daily charts...
DOW-GOLD - Weekly chart
DOW-GOLD - Daily chart
With Gold's breakout today and the headwinds in Dow entering the weary months of September / October, we believe we have seen the highs of the ratio for the year. Investors can position themselves to profit from the trade by going long gold and shorting DJIA - using any available and preferred channel - ETFs (Long GLD or DGP, Short DIA,DDM or Long DXD) Futures, Options etc.
This trade requires patience as the trade takes time to make itself profitable and the ratios may snap back for brief periods of time, but the patience will be truly rewarded and satisfying.
More on the ratio in upcoming posts...
The movie is over.....
We were watching the battle in Gold with a bag of popcorn in our hand - waiting patiently for gold to move beyond the 940-950 zone.... We knew, once it breaks the zone the moves were going to be vicious...irrespective of the move...up or down....
And..it finally happened today...the wait was over...NY EST AM hours..Gold cracked past 960-965 and is sitting snuggly at 980 (Highs of the day on strong volume) within striking distance of the 4 digit mark....
People who are still not long can get long into Gold and Gold ETF complex - GLD, DGP. We would not recommend any miners, as we dont want to be exposed to vagaries of the mining business and want to leave that unsystemic risk out of our equation. Today's close can be used as a stop level.
And..it finally happened today...the wait was over...NY EST AM hours..Gold cracked past 960-965 and is sitting snuggly at 980 (Highs of the day on strong volume) within striking distance of the 4 digit mark....
People who are still not long can get long into Gold and Gold ETF complex - GLD, DGP. We would not recommend any miners, as we dont want to be exposed to vagaries of the mining business and want to leave that unsystemic risk out of our equation. Today's close can be used as a stop level.
Tuesday, September 1, 2009
A tale of two markets.....
China and US...
Experts worldwide have been beating the airwaves and stating that US mkt are aloof from the recent corrections in the Chinese mkt. Chinese mkt is small compared to its economy etc.... But the numbers dont lie....
Lets look at the chart below.... Chinese mkts have been leaders when bouncing off the lows before US took off in march.... as also Chinese mkts were first to start the correction when it started in 2007.....
As we enter September, US mkts seemed poised for a material correction getting into the month...
Experts worldwide have been beating the airwaves and stating that US mkt are aloof from the recent corrections in the Chinese mkt. Chinese mkt is small compared to its economy etc.... But the numbers dont lie....
Lets look at the chart below.... Chinese mkts have been leaders when bouncing off the lows before US took off in march.... as also Chinese mkts were first to start the correction when it started in 2007.....
As we enter September, US mkts seemed poised for a material correction getting into the month...
Thursday, August 27, 2009
Thursday, August 20, 2009
The Battle continues....now going for $10 ...from $20
Continued from the previous post.... the band for Gold is getting narrower... In the last three days prices have been moving in an extremely narrow range of 935-945.....
The move should resolve soon....We are watching patiently ...from sidelines..... popcorn bag..refilled... A lot will depend on how the USD moves from here ....
Tuesday, August 18, 2009
Would history repeat itself.....
After 5 months of a rebound move (of over 52% in S&P500), we are at the higher end of the range in the current cycle....
Here's a chart which compares the current move in S&P to previous bear markets ...as is evident the 1929-42 depression bear market, went through multiple waves of strong moves in either direction, till the final low which was 89% lower than the high....
After a huge move from Oct 07-March 09 (i.e High of 1561 to low of 666 on S&P - a fall of 57%), the rebound has swiftly retraced 52% of the move..... We think the current move is overdone and its time for the market to take a breather... We are entering one of the most bearish period of the year - Sept & Oct. If the past record is something to go by, we expect the correction coming in early fall to be sharp and advise caution as markets enter this period....
Monday, August 17, 2009
As the Cross goes.... so does the market.....
The EUR-JPY cross has been a leading indicator of the risk appetite in the markets for months now.... As investors & speculators warm up to Risk, Euro has been rising smoothly and swiftly against the yen.... and as the risk appetite moves out, risk aversion sets it the cross declines equally in a smooth fashion....
Lets look at the two charts.... At the end of first week in June and Aug, as the correction in EUR-JPY has set in, the stock markets have followed the cross lower....and example of S&P500 to demonstration purposes....
So where do we go from here... how deep is going to be the correction now....How long is the correlation going to be valid.... These are all million dollar questions....and the cross deserves huge attention as this juncture.... as a break of previous intermediate lows around 126-128....would trigger a reversal of the big move the markets have experienced since the march lows...
Saturday, August 15, 2009
Dollar Wise .......
US Dollar has been on a decline ever since the Fed declared its QE program in March sparking a huge rally in Equities.....For Months now... the short dollar, long commodities - Copper, Oil, Aluminium, Steel, Aussie Dollar, Canadian Dollar trade has been working wonders.... Is it time now that the party is coming to an end now....
After a five wave decline in US Dollar, we think the Dollar is poised for a reversal....As everyone and their brother convinced that the Dollar is doomed and can give five good reasons they should be selling dollars now, is the boat too tilted in one direction.... What happens when everyone in the boat turn to one side...it topples over....
We want to do the hard trade here...as the hard trade is the right trade.....
Long USD with the dollar index at 78.81 keeping a stop of 77.00. and lets monitor the trade....
Friday, August 14, 2009
Watch a battle - $20 only...
Battlelines have been drawn .... months and years of preparations....it all comes down to this.... $20 ....
We are talking GOLD - the yellow metal....
Just look at the two charts below... after months of grinding in a wide range, the band has shrunk to $20.... Its going to be a battlefield now.... a war will be fought...fiercely....one side will lose...one side will win.... the gains will be huge for one... the losses will be huge for another....
Sir, What do you do now.... take a bag of popcorn and watch the tussle.... when the results becomes clear ...join that side....We preserve our capital - both mental and physical and put it to use, joining the winning team.....
Classic Triangle formations....
We are talking GOLD - the yellow metal....
Just look at the two charts below... after months of grinding in a wide range, the band has shrunk to $20.... Its going to be a battlefield now.... a war will be fought...fiercely....one side will lose...one side will win.... the gains will be huge for one... the losses will be huge for another....
Sir, What do you do now.... take a bag of popcorn and watch the tussle.... when the results becomes clear ...join that side....We preserve our capital - both mental and physical and put it to use, joining the winning team.....
Classic Triangle formations....
Sweet ! Sweet !! .... ahh... Too Sweet !!!
We am talking Sugar folks.....
Sugar has seen a parabolic rise this week. The media is gung ho with articles that this is the perfect setup for Sugar to go higher - below average rains in India, while Brazil seems maxed out on capacity.... Seems to be the perfect setup for higher prices..... and roping the crowd into the Long Sugar trade....A hedge fund manager, Michael Coleman was quoted Bloomberg - Sugar may climb 80 percent to as high as 40 cents a pound on global supply shortages.
We think its a perfect setup to take profits in Sugar if you were already long..... Else go short on Sugar Futures.... We think Sugar has seen the top and its time to take profits and move on to another table..... and seek a better risk-reward....
Trade Calls
Short SGG - Sugar ETN - @ 66.25, Stop @ 67.50
Buy Put Options - IPSU - Imperial Sugar - with $10 Strike, Sept09
We'll review this trade in the next few days....
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaiyLiFv.LM0
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