Daily Archives: March 12, 2013

What Did That Two Points Cost?

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Well, your federal government spent several billion more dollars today propping up the market, and for their money (actually, your great-grandchildren's tax dollars), they got two points on the Dow. I just calculated what that is in percent terms, but the result is shown using negative exponents, and I don't want to bother figuring out the value. Suffice it to say, the nimrods at the Fed are willing to pay any price to get a new record on the Dow, day after day.

I have little or nothing new to say about the market, but I feel compelled to say something, particularly with the dearth of non-Tim content, so here we go:

First, here's the Dow. The picture speaks for itself, and today's spinning top doesn't exactly suggest lots of underlying strength.

0312-dow

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Yin & Yang, Dow & Gold

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As human beings we try to intellectualize and get to the bottom of
things.  We seek to find meaning in everything.  There must be a reason for what is happening at any given time.

Take for example the Dow’s stellar performance and gold’s lousy
performance even as monetary policy has gone reckless on a global
scale.  This goes against everything that humans who deal with the
financial markets think they know.  But what if we are just getting back
into symmetry?

dow.gold

Dow & Gold, daily chart

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The Bland Leading the Blind

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I am, more than ever, vox clamantis in deserto.

The Jim Cramers of the world are saying two things now: (a) buy, buy, buy; (b) we all know this is going to end badly, but you might as well make money now.

Part (a) they've said all along. After the market collapsed in 2008, and the Cramers of the world all looked like completely inept assholes, they realized they needed some insurance. So they added (b). This way, whether the market has topped out today, or it tops out three years from now, they can always jab their chubby little fingers at the past and say, "See? See? I told you this would end badly! I told you so!"

You can't have it both ways. You are either buying, selling, or on the sidelines. The Cramers and Roubinis and CNBCs and USA Todays of the world are saying "buy." And that is what they need to defend in the months and years to come. As for myself, chart after chart after chart tells me that anyone buying equities these days is utterly oblivious to history and, for the eight billionth instance, believes that this time it really is different.

0312-SPX

China’s About to Screw Us Again

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China
is about to outmaneuver the world – again…

And
we’ll all pay for that dearly…

Years
ago, China realized there was value in rare earth metals.  So they invested heavily and took control of
the very metals that were in short supply.

They
were smart…

Unfortunately,
we find ourselves in an even deeper, dire situation again today.

China
– which already controls 95% of the rare earth market – may go after
Greenland’s rare earth supply.

While
the European Union has urged Greenland to restrict Chinese development of rare
earth projects, Greenland has no plans to restrict them.

In
fact, according to Reuters:

“Greenland's prime minister warned the
European Union he could scrap a preliminary deal intended to safeguard the
bloc's access to his country's huge mineral resources, saying Brussels has
failed to follow through.”

If
China gains the upper hand in the area – reserving rare earth supply for its
own – the rest of the world will be let scrambling to meet future rare earth
needs.

For
us, that’s a nightmare situation.

Without
enough supply, we’re screwed.  Technological
advancements are history; the world in which we have become accustomed to
living in and the way in which we work, communicate, and progress will change.

Drastically.

When
you think of where your iPods, cell phones, computers, and electronic motors
come from, consider this: China holds 95% of the materials that allow these
products to function.

All
China has to do is takeover Greenland’s supply and halt the export of rare
earth materials  — again—and we’re out
of luck…

Electronics
would disappear from the shelves and products that depend on these materials
would see prices skyrocket, possibly bankrupting the very companies that depend
on these sales.

Our
last hope would be for Molycorp (MCP) to get its US mine up and running.

How Do You Profit from the
Greenland-China speculation?

You
can always buy into the rare earth ETF (REMX) or even Molycorp (MCP) at 52-week
lows. 

But
I have my eye on two Greenland-related stocks that could attract heavy investor
interest in the near-term.  Fast Money
Trader is currently doing its due diligence on these two explosive stocks, as
we speak… and looking to issue buys on them in days.

Stay
tuned for news on rare earths and profit opportunities in Fast Money Trader.

Ian
L. Cooper
Fast Money Trader

Candidate Double Bottoms (by Springheel Jack)

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SPX closed at the daily upper bollinger band for the fifth straight day yesterday. There hasn't been as much intraday movement as I expected and a series like this is relatively unusual. I have marked four previous instances on the daily chart below and it's worth noting two things about these. Firstly none of these led to a major high straight afterwards. Secondly all of the previous instances were followed by periods of consolidation or retracement after four to six days:

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