The neckline of the euro head and shoulders officially broke today, this is bad for stocks and commodities. Bonds are still recovering, but I dont think that there is that much more left to the upside on bonds.
Cash21
Monday, June 15, 2009
Friday, June 12, 2009
This rally is getting close to being over in equities.....
Here is some charts with some narratives that I thought that I would put together. All of these other instances we were told that things were turning around. The same people who are telling us that things are turning around are the ones that told all the other times. I keep seeing these stories about the skyrocketing foreclosures that are going on STILL going on and the coming commercial realestate foreclosers, skyrocketing delinquincies etc..... And I think to myself that this rally is coming to an end soon.
Cash21
Euro fixing to break down...treasuries get some relief...
The Euro is fixing to break down, a investors show signs of looking to seek out the dollar and treasuries for a safe haven, which is laughable, as if the dollar and treasuries is a safe haven, but nevertheless, this stock market is poised for a large sell off going into a triple witching expiration week, which should give treasuries a nice oversold rally, as well as the dollar. Cash21
Wednesday, June 10, 2009
Another end of the day rally BUT........
Here is what I am seeing on the Major indexes, the dow and the sp500. One of the major reasons the market is having a hard time going higher, is we are hitting a major trendline on both of the Indexes. There are other indicators that say we should go down right here as well, but nothing says it quite like it does on these charts. With the Bonds yielding twice as much as they were 6 months ago, it is a no brainer that the money has to come out of stocks and back into bonds. 
Bonds crashing! 10year yield nearing 4%!
This is not good. There is a ten year auction today on ten year bonds, and, well it is not going so well. The stock market is finally responding to the higher interest rates like you would expect it to. This is huge news. This is a major secular shift in the direction of treasuries, and this is extremely bearish for the "greenshoots" in our economy. All of the government and federal reserve's efforts to get the credit market's working again are for nought due to the rising tide of interest rates.
The wild card now is the dollars response to the rising interest rates. Right now the dollar is strengthening, which is helping the market to sell off, but if we go into a real bottomless crash in bonds, the dollar should come under pressure as well, bonds and the dollar could both go into freefall, which would be the perfect storm for hyper inflation.
Cash21
The wild card now is the dollars response to the rising interest rates. Right now the dollar is strengthening, which is helping the market to sell off, but if we go into a real bottomless crash in bonds, the dollar should come under pressure as well, bonds and the dollar could both go into freefall, which would be the perfect storm for hyper inflation.
Cash21
Tuesday, June 9, 2009
more treasury auctions, and watch the euro!
Greetings,
Well, what a boring last couple of days in the markets. Tomorrow should give us some spark. There is a 7-10 year auction of more of that crappy paper from our treasury. This should give the treasuries more downward pressure which could get us into the 4% yield range on the 10year bond. This would be a level that should start to draw money out of stocks and into bonds which would cause a rally in the bonds. This is what I am hoping for, I really think that it would be healthy for us to have a big sell off in the stock market. I personally don't think that this market can go much higher, but I know that there is money waiting on the side lines for opportunity to get into this "roaring bull market", and a sell off would give them the opportunity. I am looking at the SP 870 area as an area that the bulls would step back in with force.
All of the printing presses, and the government sponsored bailouts has given the banks the opportunity to appear like they have escaped the storm, but there is no doubt that the delinquincies on mortgages is sky rocketing right now, and there is clearly going to be more pain ahead. They may be able to make it through one more quarter before everything falls apart. We will see.
The main indicator that I am watching right now is the EUR/USD. If the Euro sells off vs. the dollor, then stocks and commodities will most certainly sell off as well. If you cant chart currencies on whatever platform you are using, then you can try the FXE which is an exchange traded fund that tracks the Euro vs. the Dollar.
Tomorrow should be the day that we get some direction.
Cash21
Well, what a boring last couple of days in the markets. Tomorrow should give us some spark. There is a 7-10 year auction of more of that crappy paper from our treasury. This should give the treasuries more downward pressure which could get us into the 4% yield range on the 10year bond. This would be a level that should start to draw money out of stocks and into bonds which would cause a rally in the bonds. This is what I am hoping for, I really think that it would be healthy for us to have a big sell off in the stock market. I personally don't think that this market can go much higher, but I know that there is money waiting on the side lines for opportunity to get into this "roaring bull market", and a sell off would give them the opportunity. I am looking at the SP 870 area as an area that the bulls would step back in with force.
All of the printing presses, and the government sponsored bailouts has given the banks the opportunity to appear like they have escaped the storm, but there is no doubt that the delinquincies on mortgages is sky rocketing right now, and there is clearly going to be more pain ahead. They may be able to make it through one more quarter before everything falls apart. We will see.
The main indicator that I am watching right now is the EUR/USD. If the Euro sells off vs. the dollor, then stocks and commodities will most certainly sell off as well. If you cant chart currencies on whatever platform you are using, then you can try the FXE which is an exchange traded fund that tracks the Euro vs. the Dollar.
Tomorrow should be the day that we get some direction.
Cash21
Monday, June 8, 2009
a failed breakout on the indexes...
Friday was a good signal to begin shorting the equity markets again, atleast for the short term. The monthly jobs numbers came out far better than expected and the market closed flat on the day. For the previous 3-4 months the market has been scoffing at the worse than expected numbers and bidding the market higher. This is a good sign that this dead cat bounce rally has run its course. Now, although I am expecting a sell off in commodities and stocks over the next couple of weeks, I still think that the bulltards still have some umph left in them and there will be another rally attempt that could push the indexes up to the 9500-10000 level on the dow and the 1000 level on the sp500. I currently cannot see any reason for the markets to climb higher than that, unless....
Unless we have a dollar crisis. The dollar has been rallying over the last couple of days and that has been giving us the much needed correction in stocks and commodities, because when the buying power of the dollar becomes worth more, it takes less of them to buy stocks and commodities, but the dollar has appeared to have resumed its multi decade decline versus foriegn currencies. Now an overall longterm weakening currency is not anything to panic about, a dollar crisis is. In a dollar crisis, anybody who was a holder of cash or credit, would as quickly as possible, spend their dollars on whatever they thought was going to be worth something at the end of the day like gold,silver,oil futures, food, guns, bullets, stocks,...YES I said stocks.
Now, I had been pondering the thought of what would happen to the stock market if we were to enter a period of hyper inflation where people were trying to get out of dollars, and I had thought that it was entirely possible for a huge, massive stockmarket bubble to occur in that situation. Now last week, I read an article that the famous investor Jim Rogers was pondering the exact same thing. He said that he would not try to short this stock market for this very reason.
Now this would just further increase the confusion of this entire financial mess. There is so many unknowns about what is going to happen that if you cannot stay focused on these markets than you should probably get as diversified as possible. Here is what I recommend:
*Minimum of 10% of your wealth should be stored in precious metals until this crisis is passed us by. I would pick up Gold around the 900-935 level. I would recommend owning more Gold than that, but there is so much uncertainty in this market as well. In the 30's, the government made it illegal to own Gold. If this were to happen today, it would most certainly create a black market for the shiny metal, which would increase the value of it considerably, but I wouldn't want to be 100% dependent on it. The main goal here with precious metals is to offset the effects of out of control inflation.
*I would get some exposure to the short side U.S. Treasury bonds. There is an etf that is an ultra short 20year Bond. The major sell off in the U.S. Treasury bond market is only in the early stages, and as we saw the massive runups in the ultra short financial etf's during the credit crisis, this etf is sure to make you some nice returns. The symbol here is TBT, I would wait for a pull back here though before I pulled the trigger. I am not familiar with trading the bond market, but I am sure that there is exellent ways to make money there as well on the short side of bonds.
*I would get some exposure to some foriegn currencies, as I have said before, I like the Norwegian Krone and my new favorite is the Australian Dollar. The Krone is backed by the price of oil, and the Australian Dollar is backed by the strength of the mining industry. Whether we plunge into hyper inflation, or we have a normal recovery like others over the past 20years, commodities are poised to perform, so these currencies should perform well in either scenario.
*Stocks- I would have some exposure to stocks. Again, the Federal Reserve is not going to allow us to go through a long bout with deflation, so they are going to continue to ramp up the printing pressed until things start to turn around. Now, it is either going to be a normal recovery, or it is going to be a hyper inflation recovery (which I am strongly leaning towards). In either scenario, there is going to be inflation and the commidity based names are going to be the place to be, and this would include metals and miners, oil and oil services, agricultural, infrastructure, and bulk shipping. There was an opportunity to get into these names at unbelievable prices and I don't think that we will see that opportunity again. So I would wait for a pull back over the next couple of weeks and than I would pick some of these companies up.
I'll give some further thoughts later.
Cash21
Unless we have a dollar crisis. The dollar has been rallying over the last couple of days and that has been giving us the much needed correction in stocks and commodities, because when the buying power of the dollar becomes worth more, it takes less of them to buy stocks and commodities, but the dollar has appeared to have resumed its multi decade decline versus foriegn currencies. Now an overall longterm weakening currency is not anything to panic about, a dollar crisis is. In a dollar crisis, anybody who was a holder of cash or credit, would as quickly as possible, spend their dollars on whatever they thought was going to be worth something at the end of the day like gold,silver,oil futures, food, guns, bullets, stocks,...YES I said stocks.
Now, I had been pondering the thought of what would happen to the stock market if we were to enter a period of hyper inflation where people were trying to get out of dollars, and I had thought that it was entirely possible for a huge, massive stockmarket bubble to occur in that situation. Now last week, I read an article that the famous investor Jim Rogers was pondering the exact same thing. He said that he would not try to short this stock market for this very reason.
Now this would just further increase the confusion of this entire financial mess. There is so many unknowns about what is going to happen that if you cannot stay focused on these markets than you should probably get as diversified as possible. Here is what I recommend:
*Minimum of 10% of your wealth should be stored in precious metals until this crisis is passed us by. I would pick up Gold around the 900-935 level. I would recommend owning more Gold than that, but there is so much uncertainty in this market as well. In the 30's, the government made it illegal to own Gold. If this were to happen today, it would most certainly create a black market for the shiny metal, which would increase the value of it considerably, but I wouldn't want to be 100% dependent on it. The main goal here with precious metals is to offset the effects of out of control inflation.
*I would get some exposure to the short side U.S. Treasury bonds. There is an etf that is an ultra short 20year Bond. The major sell off in the U.S. Treasury bond market is only in the early stages, and as we saw the massive runups in the ultra short financial etf's during the credit crisis, this etf is sure to make you some nice returns. The symbol here is TBT, I would wait for a pull back here though before I pulled the trigger. I am not familiar with trading the bond market, but I am sure that there is exellent ways to make money there as well on the short side of bonds.
*I would get some exposure to some foriegn currencies, as I have said before, I like the Norwegian Krone and my new favorite is the Australian Dollar. The Krone is backed by the price of oil, and the Australian Dollar is backed by the strength of the mining industry. Whether we plunge into hyper inflation, or we have a normal recovery like others over the past 20years, commodities are poised to perform, so these currencies should perform well in either scenario.
*Stocks- I would have some exposure to stocks. Again, the Federal Reserve is not going to allow us to go through a long bout with deflation, so they are going to continue to ramp up the printing pressed until things start to turn around. Now, it is either going to be a normal recovery, or it is going to be a hyper inflation recovery (which I am strongly leaning towards). In either scenario, there is going to be inflation and the commidity based names are going to be the place to be, and this would include metals and miners, oil and oil services, agricultural, infrastructure, and bulk shipping. There was an opportunity to get into these names at unbelievable prices and I don't think that we will see that opportunity again. So I would wait for a pull back over the next couple of weeks and than I would pick some of these companies up.
I'll give some further thoughts later.
Cash21
Wednesday, June 3, 2009
Things are starting to crack.
Gold, oil, oil services, silver, agricultural stocks, etc....., they all started to roll over today. This should cause money to flow back into treasuries for a week or two. This run has ran its course in my opinion. Also, the dollar rebounded sharply today, its chart is turning up as well.
Yesterday I turned my Norwegian Krones back into dollars for a 5% return on my money. I plan on waiting for a rebound in the dollar, and then I am looking at the Australian dollar to invest my money. Fundamentally, I think that the N. Krone is the best long term place to store your wealth, if you have to be in a currency, but short term, the return on the Australian Dollar looks like it will be better.
Gold should pull back into the 925-930 range were it will be attractive again. I believe that after this pull back that we will then push through the 1000$ mark, maybe by September.
Treasuries is the one investment that changes everything. If the rest of the world gets really concerned about our currency, and our ability to repay our debt, there will be a massive sell off in treasuries, the dollar, and U.S. Stocks. I do believe the this will be the ultimate out come, and I am watching it like a hawk. Until then, there is plenty of money to be made trading this market.
Looking forward to Friday's jobs numbers for a direction for the markets. If there is a large improvement on the number than we could surge to the 10000 dow mark and 1050 on the SP. I dont see it happening though. I think that the poor numbers are going to persist.
Cash21
Yesterday I turned my Norwegian Krones back into dollars for a 5% return on my money. I plan on waiting for a rebound in the dollar, and then I am looking at the Australian dollar to invest my money. Fundamentally, I think that the N. Krone is the best long term place to store your wealth, if you have to be in a currency, but short term, the return on the Australian Dollar looks like it will be better.
Gold should pull back into the 925-930 range were it will be attractive again. I believe that after this pull back that we will then push through the 1000$ mark, maybe by September.
Treasuries is the one investment that changes everything. If the rest of the world gets really concerned about our currency, and our ability to repay our debt, there will be a massive sell off in treasuries, the dollar, and U.S. Stocks. I do believe the this will be the ultimate out come, and I am watching it like a hawk. Until then, there is plenty of money to be made trading this market.
Looking forward to Friday's jobs numbers for a direction for the markets. If there is a large improvement on the number than we could surge to the 10000 dow mark and 1050 on the SP. I dont see it happening though. I think that the poor numbers are going to persist.
Cash21
Monday, June 1, 2009
Money searching for a place to go....
Bond market capitulation may be further away than I thought. Today, the Bond market sold off big time today, retesting the lows of last week, both on the 10year and the 30year. All of the pundits are saying that investors are thinking that the recession is over, and that they are getting their money invested into stocks. I have a different perspective: I believe that Bond holders are acknowledging the fact that the Federal reserve is assisting the U.S. Treasury by monetizing their debt, or basically making the currency and the debt worthless via the printing presses. Therefore, stocks and commodities are going up by default, because there is not other better option. This rally today was widely led by commodity based companies. Oil was higher as well as soft commodities. Precious metals were weak today, which was surprising to me.
If the Bond market continues its slide, there could be skyrocketing inflation and interest rates ahead of us. It would be prudent for any investor to have some hard assets in this environment. The level to watch now is the 4% mark on the 10 year note. If we break that level than we are in for some major trouble.
Banks did not participate in todays rally as much as you would expect, that to me suggests that this rally is getting weaker. You have to have the banks, as well as the consumer discetionary stocks participating. The XLF (financials etf) and XLY(consumer discretionary etf) failed to take out the previous highs from a couple of weeks ago, so I see this as a sign that we are near a top for the short term. But if Bond investors continue to flee those "safer"investments, there is no telling what might happen.
Cash21
If the Bond market continues its slide, there could be skyrocketing inflation and interest rates ahead of us. It would be prudent for any investor to have some hard assets in this environment. The level to watch now is the 4% mark on the 10 year note. If we break that level than we are in for some major trouble.
Banks did not participate in todays rally as much as you would expect, that to me suggests that this rally is getting weaker. You have to have the banks, as well as the consumer discetionary stocks participating. The XLF (financials etf) and XLY(consumer discretionary etf) failed to take out the previous highs from a couple of weeks ago, so I see this as a sign that we are near a top for the short term. But if Bond investors continue to flee those "safer"investments, there is no telling what might happen.
Cash21
Subscribe to:
Posts (Atom)