Tuesday, May 31, 2011

TNA...New Signal Today @ the Closing Bell

The trading range that we are in lately has caused whip saws in our signals and drawdowns...
When the market starts to trend again the signals will keep us in the trend and perform better...

Past performance is not indicative of future results.

Monday, May 30, 2011

Gold vs Gold Stocks

Excerpt from Uncommon Common Sense:
By Aubie Balton CFA, CTA, CFP, PhD.
Gold is up more than 50% in the past three years while Gold stocks are unchanged. Gold stocks are cheap. Just take a look at this chart, which compares the performance of GDX– with the performance of Gold. 
Archived reports can be seen at  www.gold-eagle.com

Past performance is not indicative of future results.

Wednesday, May 25, 2011

The U.S. fiscal solution – follow Canada’s lead...by David Rosenberg

David A. Rosenberg
Chief Economist & Strategist
Gluskin Sheff
Market Musings & Data Deciphering
A Special Report from Dave

May 25, 2011

As concerns over the mushrooming U.S. deficit and debt levels continue to mount, we are sending today our recent Special Report entitled The U.S. fiscal solution – follow Canada’s lead.
Focusing on Canada’s successful 1990s battle to rein in its deficit and debt and bring itself back to a good fiscal place, the report covers how the U.S. in particular could benefit from following Canada’s example as a way to get its balance sheet back in order.
As the report highlights, the U.S. will likely have years of painful retrenchment and tax increases, which will be contractionary in nature. The Canadian experience shows that fiscal recklessness can indeed morph into fiscal integrity, assuming that the political will is there.
We hope you enjoy the piece.

Should you wish to subscribe to my daily musings please visit www.gluskinsheff.com/research.aspx.
Best regards,
David Rosenberg

The full article   The U.S. fiscal solution – follow Canada’s lead  can be seen at:

Or just click on the name of the article...

Tuesday, May 24, 2011

Austerity Has Failed in the UK ?

See article on Business Insider here      http://read.bi/jO725F

Friday, May 20, 2011

SPX vs McClellan Summation...Update

McClellan Summation (top) vs SPX (bottom)

The last time these charts were posted was on April 20, 2011 and March 15,2011...
It would be a good idea to reread those posts before you look at these charts...

So far the McClellan Summation Index is still descending...On April 20th we mentioned that the Index had turned up...Since then it turned down again and did not breach the descending trend line...

We are still waiting to see if this Index is going to drop down as it did in 2001 (see 2001 chart on the April 20,2011 post)...

Past performance is not indicative of future results.

Is the Stock Market Getting Ready to Turn Soon?...Update

The last update was made on April 21,2011...
To better understand this post, please read that post first before reading this one for an explanation of the charts...

As of today, there is still negative divergence in these charts...In other words the JNK:TLT chart is not confirming the May high in the SPX with a corresponding high in the JNK:TLT chart...

Also if you haven't read the Astro Forecast for the S&P500 posted on May 13,2011, you should look at it...

Our belief is that we may try to rally into the end of this month +/- a week or so and then we should have a sell off into the Summer... 

Past performance is not indicative of future results.

China Is Now Top Gold Bug

China Is Now Top Gold Bug

by Carolyn Cui and Rhiannon Hoyle
Friday, May 20, 2011

provided by
Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.
China's investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India's modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of gold investment demand, compared with India's 23%.
The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country's soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.
"I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue," said Eily Ong, an investment research manager at the gold council.
[More from WSJ.com: LinkedIn IPO Soars, Feeding Web Boom]
Historically, India has been the largest investment market for gold. In 2007, just before investing in gold began to take off globally, India's physical gold demand accounted for 61% of the world's total. China's was 9%. In terms of total consumer demand, which also included jewelry, India is still a bigger consumer of gold than China, taking in 291.8 tons in the first quarter, compared with China's 233.8 tons.
Still, the voracious appetite shown by Chinese buyers prompted the gold council to increase its forecast for the nation's demand.
"In March 2010, we predicted that gold demand in China would double by 2020; however, we believe that this doubling may in fact be achieved sooner," said Albert Cheng, the World Gold Council 's managing director for the Far East. "Increasing prosperity in the world's most populous country coupled with their high affinity for gold will serve to drive demand in the long term."
Aside from having more money, Chinese investors are also focused on using gold as a protection against rising consumer prices. Unlike paper currencies, gold retains its value when prices increase. That has prompted many Chinese investors to flock to the precious metal.
[More from WSJ.com: Flood Off Fees Flows Into Bank Coffers]

Gold also is favored by savvy investors as an alternative investment vehicle to assets like shares and real estate. Chinese stock markets have been a disappointment recently, and the government has pledged to clamp down on housing speculation.
Many banks and jewelry stores in China have added outlets to sell gold bars and coins in recent months.
"Those new outlets have not only created demand but also required a starting stock," which has an impact on total gold demand, said Philip Klapwijk, chairman of GFMS Ltd., a London-based metals consultancy that compiles the data for the gold council's report.
Investment demand is one part of a broader base of buying. Jewelry demand remains another large source of gold purchases, the segment that India continues to dominate. India's jewelry sector took in 206.2 tons in the quarter, well above China's 142.9 tons. Still, China is catching up there, too. Its jewelry demand rose 21% in the quarter, faster than the 12% rise in India.
Demand for gold in the Chinese technology sector is also buoyant, with the country becoming an increasingly important center for electronic-component manufacturing and assembly, the gold council said.
[More from WSJ.com: Cookie Crumbles for Girl Scouts]
The surge in overall buying came at a time when gold prices took a rare breather from their relentless march higher. Gold prices fell about 8% in late January to about $1,300 an ounce. Since then, prices have risen to $1,492.20 an ounce on Thursday and the metal is up 5% for the year so far.
Global gold investment demand increased by 52% to 366.4 tons in the first quarter, helping offset a 56-ton outflow from exchange-traded funds, which are popular investment tools in the West.
In developed countries, some investors have switched into physical gold holdings from ETFs. Demand in Germany and Switzerland both more than doubled, while the U.S. had a 54% jump to 22.5 tons during the quarter.
As the world's largest gold producer, China churned out 350.9 tons in 2010, but it wasn't enough to sate total demand— including bullion, jewelry and technology uses—of more than 700 tons, according to the gold council's report. As demand continues to outpace supply, analysts expect China to import more bullion.
Thursday's report covers only private-sector demand, but one wild card for the world's gold market is how much gold China has been adding to its foreign reserves. Governments tend to announce their purchases after they buy.

Thursday, May 19, 2011

Market Signal Update

So far...the sell signal of May 4th has not changed...

Our cycle work is forecasting a top around the end of May +/- with a sell off into the Summer...

Past performance is not indicative of future results.

Friday, May 13, 2011

Cycles Forecast for the S&P500

Due to a problem at  www.blogger.com  one of our posts was lost...
Below is the lost post...

The following information is based on limited data and limited back testing...
There are three sets of events below...
Each set of forecasted monthly Tops and monthly Bottoms is based on the same cycle events...
The index used was the S&P500...
For the highs we noted the SPX high for that month and for the lows we noted the SPX low for that month...

Top August 1987 – SPX high 337.89
Bottom December 1987 – SPX low 221.24
Bottom November 1990 – SPX low 301.61

Top July 1999 – SPX high 1420.33
Bottom October 1999 – SPX low 1233.66
Bottom September 2002 – SPX low 800.20

Top May 2011 – SPX high 1370.58
Bottom August 2011 – SPX low ?
Bottom July 2014 – SPX low ?

Note that in each set above the time between the top and the first bottom is 3-4 months and the time between the top and the second bottom is approximately 3 years.

Past performance is not indicative of future results.

Two Forecast Charts for 2011 vs the Actual Market YTD...Update

Last updated on Tuesday, April 26,2011...
Please go there to get an explanation of these charts...

Past performance is not indicative of future results.

Wednesday, May 11, 2011

Precious Metals Mutual Fund Market Cap vs GLD...Updated

Today on Bloomberg TV, Edel Tully from UBS, said Gold ownership is low...

Based on the chart below we would agree...

Turquiose line = Precious Metals Mutual Fund Market Cap
In the bottom chart there are 5 sets of up and down arrows.   Up arrows indicate a high in GLD accompanied by increased purchases in the PM Mutual Fund (Turquoise line in the top chart) and Down arrows indicate a low in GLD accompanied by increased sales in the PM Mutual Fund (Turquoise line in the top chart)...
This is shown in the first four sets of arrows...This is NOT the case for the last set of arrows...NOTE that the last Up arrow was not accompanied by increased purchases of the PM Mutual Fund...Investors did not chase PM's by buying the fund...But when PM's sold off that high additional sales of the PM Mutual Fund was seen...The market cap of this fund is now again in the area where PM's have had a bottom in the last two years...

The following link is to the London Bullion Market Association where there is a Download for a Forecast for 2011...Also on the web page is a forecast for Gold for 2011 made by several analysts...


Past performance is not indicative of future results.

Monday, May 9, 2011

Homeowners Drowning in Negative Equity

1)Thursday, April 28,2011...Wal-Mart: Our shoppers are 'running out of money'
2)$4.00+ for a gallon of regular gasoline
3)Homeowners Drowning in Negative Equity
4)9% Unemployment
5)Large Government Deficits
6)Debasing the Dollar
7)Day to Day items are costing more and more each day

* All of the above does not paint a pretty picture...Is the Stock Market going to continue climbing a "Wall of Worry" as some are suggesting or will the Stock Market adjust to the above mentioned fundamentals? ...See Thursday, April 21,2011...Is the Stock Market Getting Ready to Turn Soon...As of this weekend, this chart has not changed much...

Past performance is not indicative of future results.


Homeowners Drowning in Negative Equity

Published: Monday, 9 May 2011 | 10:55 AM ET
By: Diana Olick
CNBC Real Estate Reporter

If you have no desire or need to sell your home, then falling home prices are just on paper and likely temporary, right? Depends on how you look at it.
Tooga | Stone | Getty Images

Falling home prices put more borrowers in a negative equity position, that is owing more on their mortgage(s) than their homes are worth. We call that "underwater," and for good reason, because for some borrowers that sense of drowning in debt has profound implications.
Today Zillow.com reported a new high in negative equity: 28.4 percent of single family homes with a mortgage (remember, 32 percent of all homeowners do not have a mortgage).
That's a national average, but the numbers are far worse in some of the nation's big metros. Atlanta, for example, has a 55.7 percent negative equity rate. Denver, 41 percent, Chicago nearly 46 percent. This is on top of all the foreclosure hot spots like Phoenix, where close to three quarters of all borrowers are underwater.
Why should we care if it's all on paper?
"Higher rates of negative equity are creating a lot of latent vulnerability in the housing stock, where if the household then encounters some economic shock, like the loss of a job or divorce or death, then that household is much, much more likely to go into foreclosure," notes Zillow's Stan Humphries. "So it just means that higher rates of negative equity, we’re going to see elevated rates of foreclosure for the next two to three years."
But higher rates of foreclosure put increasing pressure on home prices, causing them to fall further, which in turn puts even more borrowers underwater. One begets the other begets the other. Humphries thinks this is a bigger deal than the "walkaway" issue (or strategic default); that's where borrowers see no chance of ever having equity in their homes, so they walk away rather than becoming permanent pseudo-renters, responsible for the high cost of the home's upkeep but reaping no equity benefit.
"The best research that’s been done right now seems to suggest that negative equity impact on strategic defaults really kicks in at very high rates of value to loan ratio, so that means when people are more like 30-40 percent underwater does it start to create proactive behavior where they want to walk away from the mortgage. And even at those rates of loan to values, you’re still seeing strategic defaults be a relative…not a majority behavior," says Humphries.

30 yr fixed4.61%4.51%
30 yr fixed jumbo5.19%5.27%
15 yr fixed3.83%3.87%
15 yr fixed jumbo4.46%4.62%
5/1 ARM3.17%2.93%
5/1 jumbo ARM3.52%3.22%
Find personalized rates:

Well there are certainly plenty of large metro markets, as I cited previously, where negative equity is that high. And here's a little more food for thought: What about mobility? As the economy improves, and we see those jobs numbers rise, as we did last Friday, we have to consider the fact that many people taking these jobs may be required to move for said jobs. Those same borrowers may not be able to take the loss on the home that's required to sell it. What then?
What is the fate of the nation's credit quality. It's already tough enough to get a good mortgage when you have good credit. Home buyer confidence and demand are the only remedies right now for the housing/foreclosure crisis.
Sadly, we have neither.

Past performance is not indicative of future results.

Wednesday, May 4, 2011

New Intraday Sell Signal

Past performance is not indicative of future results.