On pull-backs you can use Fib levels to see which one has the greatest chance. I have annotated the charts from TC Platinum version. Be sure to use the close prices not the open unless you are day trading in which case you should use moving VWAP and perhaps MA's.
If you are looking to go long a continuing trend, try to wait for a correction that is short and sharp and forms a well delineated V! It should literally look like that and about the same angle or a little less! As the price nears and peaks above the 78.6 line, be careful and make sure to look at close or if you are buying intraday, the 78.6 is NOT the price trigger! The price trigger is when it gets above it and continues. I like to put my buy up near prior lows of the correction start....Have fun with the toys! I will write more on where to place your buy trigger later! For more on this technique see Derrik Hobbs's work. Dave Landry has dubbed this pattern the Gatekeeper as so many corrections fail here and turn south.
Feb. 28 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy for global stocks and commodities. Gold advanced, approaching a record, as tensions in the Middle East boosted oil prices, increasing demand for precious metals as a protector of wealth and hedge against inflation. Rogers also discusses his strategy for the U.S. dollar. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
The biggest Standard & Poor’s 500 Index rally in more than five decades is forcing stock market bears to abandon short sales, cutting them to the lowest level since 2007 last month.
Shares borrowed and sold to profit from declines dropped four straight months and represented 3.3 percent of all stock in January, according to data compiled by NYSE Euronext. Pessimists are giving up after missing the 95 percent rally in theS&P 500 spurred by the fastest earnings growth since 1994. The monthly decrease comes as individuals added $17.6 billion to U.S. mutual funds this year after withdrawing money since April.
While short sales rose 2.8 percent in the two weeks ended Feb. 15, January’s low may foreshadow slower gains in equities as the pool of new investors shrinks, according to Doug Burtnick of Aberdeen, Scotland-based Aberdeen Asset Management Plc. To Laszlo Birinyi of Birinyi Associates Inc. in Westport,Connecticut, levels haven’t fallen enough to reverse gains or stop equities from climbing as the economy expands.
“When everybody is leaning on the same side of the boat, then there’s a risk things may go in the other direction,” said Philadelphia-based Burtnick, the senior investment manager of a fund that seeks to profit from both rising and falling stocks at Aberdeen, which oversees about $287 billion. “The market’s liquidity-driven tailwind has made people very careful on how they want to position themselves.”
Building Bulls
There are about 12 times as many investors speculating on gains in U.S. shares as there are on declines, a three-year high, according to New York-based Data Explorers, which provides research on short sales and stock lending. The firm’s long-short ratio for U.S. equities rose to 12.4 on Feb. 1 from 6.5 in September 2008 when Lehman Brothers Holdings Inc. collapsed at the height of the financial crisis.
“The appetite to short has waned as the market has risen,” said Will Duff Gordon, a senior researcher at Data Explorers. Individual companies and industries may be overvalued, “but with most companies in robust health it is not a target-rich environment,” he said.
The S&P 500 slid 1.7 percent to 1,319.88 last week. Violence that left more than 1,000 people dead in Libya sent oil above $100 a barrel, spurring the S&P 500’s first weekly loss in a month. The slump cut the U.S. equity benchmark’s advance for 2011 to 5 percent, still the best start to a year since 1997.
Stocks Climb
Stocks rose today as billionaire investor Warren Buffett said he’s looking to make acquisitions and reports signaled a strengthening American economy. The S&P 500 climbed 0.6 percent to 1,327.22 at 4 p.m. in New York.
The 46 most-shorted companies in the S&P 500 have risen 32 percent since Aug. 26, the day before Federal Reserve Chairman Ben S. Bernanke signaled he was willing to buy Treasuries to stimulate the economy, data compiled by Citigroup Inc. in New York show. That compares with 26 percent for the index.
Netflix Inc. has rallied 69 percent since Aug. 26 to $212.44 while bearish bets climbed to 25 percent of shares available for trading, making the Los Gatos, California-based movie-rental service the third most-shorted stock in the S&P 500. AutoNation Inc., the largest U.S. car retailer, has the highest level in the index at 31 percent. The Fort Lauderdale, Florida-based company jumped 46 percent to $33.51 since Aug. 26.
‘No More Gasoline’
“When short interest hits an all-time low, you always get concerned that a momentum rally is nearing exhaustion,” said Andrew Baehr, head of North America structured sales at BNP Paribas SA in New York. “Capitulation of shorts helped fuel this rally from the start, and now there’s no more gasoline.”
Bears aren’t giving up fast enough to halt the bull market, according to Birinyi. His research and money-management firm was one of the first to tell investors to buy stocks before the S&P 500 rallied from a 12-year low of 676.53 on March 9, 2009.
“I don’t see a wholesale capitulation of the short sellers,” Birinyi said. “We’re still far from the 1 or 2 percent short interest which characterized most of the 1990s and the previous decade. The bears haven’t thrown in the towel.”
Shares sold short have made up 2.3 percent of the U.S. stock market on average since 1995, according to data compiled by NYSE. The level was 1.9 percent from 1995 to December 2007. The world’s largest economy shrank 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009, the most during any recession since the 1930s, according to the U.S. Department of Commerce. Short interest peaked at 4.9 percent in July 2008.
Positive Impact
Bearish bets have held steady when adjusted for lower stock trading. They amount to 2.9 times the average daily volume on U.S. exchanges this year, data compiled by Bloomberg show. The level compares with a median of 2.8 in the past three years.
“If the equity rally continues, we expect the positive impact of short covering to be the same,” said Pierre Lapointe, a strategist with Brockhouse & Cooper Inc. in Montreal.
Short selling started to decrease as stock gains accelerated at the end of August. Increased banking regulation and stricter collateral requirements also reduced bearish bets, said Michael Gordon, who oversees about $65 billion as chief investment officer of equities at BNP Paribas Investment Partners in London.
Goldman Sachs Group Inc. shut its Principal Strategies unit that made bets with the New York-based bank’s own capital to meet U.S. regulations curbing risk-taking, the company said Oct. 19. New York-based Morgan Stanley said last month that it plans to break off its largest proprietary-trading group as an independent advisory firm by the end of 2012.
‘Prop Trading’
“The fourth quarter effectively seemed to be the end of prop trading for the investment banks,” said Gordon, who was previously Fidelity International Ltd.’s global head of institutional investment.
Individuals have added $17.6 billion to U.S. mutual funds this year, following $94.7 billion in withdrawals during the last eight months of 2010, according to the Washington-basedInvestment Company Institute. The inflows this year are the first since April, when the S&P 500 began a 16 percent decline through July.
The S&P 500 has fallen 0.7 percent on average in the 60 days after mutual fund inflows were at least January’s level of $6.1 billion, based on 10 years of ICI data tracked by Bloomberg. The figures compare with a 0.9 percent advance in the two months following withdrawals of that much.
“Most short sellers are professional money managers and the trend right now is don’t be short, so they’re going to ride that trend,” said Michael Gibbs, the Memphis, Tennessee-based chief equity strategist at Morgan Keegan Inc. “It’s verifying what all the other sentiment indicators are saying, which is that retail investors are becoming more bullish. But these indicators only tell you that the seeds may have been sown for a pullback. They don’t tell you when.”
Equities are shooting higher overnight as the dollar plummets down and has landed directly upon long term support. Bonds are roughly flat, oil rose to the $100 mark and has since fallen back, gold is slightly higher, and most food commodities are slightly lower.
Below is a 60 minute chart showing how the dollar plummeted down to exactly touch long term support, bounced, and then collapsed again. This is a critical juncture for the dollar. Should it break this level, then massive pressure will mount on the “Fed” and our politicians to act. Should it fall rapidly we may see a melt-up of commodities which would further pressure those on the margins:
Personal Income and Outlays were reported for January. According to Bloomberg, “Purchases increased 0.2 percent, the smallest gain since June and half the median forecast of economists surveyed… Incomes climbed more than projected, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December, and inflation remained below the Federal Reserve’s long-term forecast.”
Although spending is not accelerating as expected, according to this report, “real” wages increased a whopping 1.0% in January, and are now up 4.6% year over year. That is simply astonishing and complete, dare I say, bullshit. Just like GDP and many other statistics, they take a dollar figure and adjust it for inflation (calculated their way) to make it “real.”
This report claims that the “core” price index rose by only .1% in January, .8% year over year, which of course is complete fantasy. To say that the data is disconnecting from reality is quite the understatement. And speaking of disconnected from reality, here’s Econoday parroting the consumer centric spin:
Highlights Income growth jumped in January but spending slowed considerably. Inflation remains on two tracks with headline numbers outpacing the core. Personal income in January increased 1.0 percent, following a 0.4 percent gain the month before. The latest figure came in higher than the consensus estimate of 0.4 percent. Wages & salaries, however, grew a moderate 0.3 percent after gaining at the same pace in December.
As in December, consumer spending for the latest month was led by auto sales and higher gasoline prices. Personal consumption expenditures increased a modest 0.2 percent, following a 0.5 percent advance in December.
For January, strength was led by nondurables, up 0.9 percent (including gasoline), with durables advancing 0.4 percent. Services spending was flat for the latest month. Notably, inflation eroded the gain in overall spending as chained dollar purchases fell 0.1 percent in January after a 0.3 percent boost the month before.
On the inflation front, the PCE price index posted a 0.3 percent rise, matching the gain in December. The core rate was not as strong but still warmed up a bit with a 0.1 percent rise, compared to no change in December. On a year-ago basis, headline PCE prices are up 1.2 percent in January-the same rate as in December. Core inflation held steady at 0.8 percent year-on-year versus in December.
Year on year, personal income for January was up 4.6 percent, compared to 3.8 percent in December. PCEs growth improved to 4.0 percent from 3.9 percent in December.
Income is up, which is good, but spending has slowed. To date, the easing in spending growth is not worrisome given that it is coming off strong months. However, moving forward, healthier gains in wages & salaries are going to be needed to keep spending ahead of what appears to be building headline inflation.
Again, bad data leads to massive misallocations, and this report is a giant pool of disinformation.
And speaking of disinformation, the Chicago “Fed” releases the PMI Index at 9:45 Eastern this morning.
While the data is disconnected from reality our “Fed” continues to buy up debt – print money from nothing. Doing so lessens the burden placed on the member banks, and thus frees them up to leverage up. And leverage up they have, to new Mark-to-Fantasy wild extremes. Indeed, their hot money rotation has run up food and energy like there is no tomorrow, and this has set off riots and revolutions around the globe. Historic and quite the sight to see. What is most amazing is our failure as a nation to accept our role in creating the havoc, and in starving those whose incomes go substantially to obtaining food.
This violence has now spread to Oman where oil refineries are under pressure. Of course Saudi Arabia jumps forth once again and claims that they can make up for their oil production too, no problem. This is yet another outright lie and more disinformation.
In Ireland Fine Gael toppled decades of central banker controlled politicians. Enda Kenny, the newly elected Prime Minister, is already calling on the central banks to renegotiate the terms of recent central banker money from nothing never ending enslavement rob the people blind loans.
Mr. Kenny, with all due respect, this is the wrong approach. There should be no negotiating and there should simply be no loans. Tell the central bankers to pound sand, leave the Euro, and produce your own sovereign money! You will never be a free nation until you do so. No, holding elections does not make you free.
The end of month and beginning of month is a time that typically sees buying in equities that produces an upwards bias. This is more true with the daily billions being pumped into the system. But we’re at an inflection point in the markets with the dollar at long term support. Continued pumping may cause the dollar to break down further – the fallout will get even more dangerous if it does.
The math is impossible and it is now pressuring all levels of government in the U.S., and despot regimes the world over. The correlation between the money pumping and mispriced markets is clear and can be seen in the chart below comparing the size of the "Fed's" balance sheet to the S&P:
Welcome to the modern "fundamental" condition of the market. It's a fairly heavy week for economic disinformation reports, the Employment Situation comes this Friday.
24/7 Wall St. has decided to investigate where inflation has the greatest potential to damage the economy. There is plenty of ground to cover. It is clear that the cost of agriculturalcommodities, metals, and oil have risen substantially over the last six months, but many of those increases have not yet reached the consumer. “If raw material costs have yet to translate into consumer inflation, it is partly because high unemployment in developed markets makes it hard to raise prices,” said Oliver Pursche, co-manager of the GMG Defensive Beta Fund, on Newsmax.com. It is unfortunate that joblessness has a prophylactic effect on consumer price levels.
While inflation may lurk in some sectors of the economy, there are products and services that Americans use, like Google’s (NASDAQ: GOOG) search features and Citigroup’s retail banks, which are unlikely to be affected by inflation at all. The prices of these are not likely to rise because there are no major costs of goods to pass on.
Inflation in the United States has not approached the level that it did in the mid 1970s and early 1980s when interest rates rose to 20%. Most economists believe that the Federal Reserve today has the foresight and tools to prevent a repeat of the price bubble of that period. That may be so, but the Fed cannot protect consumers from rising oil prices when they fill up their gas tanks or buy an airline ticket.
24/7 Wall St. took into account two effects that inflation has on an industry. The first is what the higher cost of goods means to their expenses. The other is whether companies in the industry can pass these costs along to consumers – either individuals or other businesses.
Rising prices are hurting many industries including retailers. Shoppers may reject higher prices and cut back spending to preserve their household budgets. Retailers will face margin compression if that happens. Earnings in the industry will be hurt, and in some cases this will be enough to cause layoffs.
The challenge is not unlike the one that the air freight industry faces. FedEx (NYSE: FDX) and UPS (NYSE: UPS) have raised rates to offset higher fuel prices. Each company has been able to increase shipping rates without alienating customers. The impact of this decision will not be clear until the companies announce second quarter earnings.
One advantage that many businesses have is that the effect of inflation on costs consumers must pay often lags. Large retailers probably have inventory which was made a number of months ago. Temporary price increases in cotton and wool may not affect earnings if the period of inflation does not last long. Go to the link above for the whole story.
Hecla Mining reports record revenues in 2010
By NICHOLAS K. GERANIOS ASSOCIATED PRESS
SPOKANE, Wash. -- The Coeur d'Alene, Idaho, company reported income of $35 million for the year. It produced 10.6 million ounces of silver and its silver reserves increased to 142 million ounces.
The company also said it had enough money to meet its financial obligations to help clean up a century of mining pollution in Idaho's Silver Valley. The company is currently negotiating with the Environmental Protection Agency for a settlement.
The company said it has set aside $262 million toward a potential settlement with the federal government, the Coeur d'Alene tribe and the state of Idaho. The parties have agreed on financial terms, but other points remain, Hecla said.
"Determining the financial terms of any settlement of this longstanding litigation is an important step forward in finally resolving this dispute," Hecla President and CEO Phil Baker said. "We hope a final settlement can be achieved by the end of the second quarter."
On Feb 18, a federal judge gave the parties an April 15 deadline to inform the court on the status of settlement negotiations. If a settlement is reached, Hecla has agreed to pay $102 million in cash and $55.5 million in cash or stock 30 days after entry of the consent decree. The company would pay an additional $25 million in cash 30 days after the first anniversary of the decree, $15 million in cash 30 days after the second anniversary, and $65.9 million by August 2014.
The historic mining district surrounding the Bunker Hill smelter was declared a Superfund site - one of the nation's most polluted areas - in 1983 after decades of mining activities left waterways and surrounding land polluted with heavy metals. Numerous mining companies have since settled with the government to help pay for costs of cleanup. The most recent was Atlantic Richfield Co., which earlier this month agreed to pay $6.8 million.
Meanwhile, Hecla Mining continues work to expand its historic Lucky Friday Mine in the Silver Valley. The company is spending $200 million to increase silver production by about 60 percent and extend the mine life beyond 2030. The expansion should be completed by 2014, the company said.
Established in 1891, Hecla is the largest silver producer in the U.S. The company has two operating mines and exploration properties in four mining districts in the U.S. and Mexico.
