Help Please

Hi, can you let me know if you have had any problem opening the Dow chart in the previous post? It is doing something funny on my end when I open it and I just want to be sure all is well out there on your end. Thanks. Edit (11:39) Okay, it appears to be a blogger.com issue. I visited another blog and the same issue was going on (download prompt box opens up when loading image).

Edit (1:44) Well, blogger is aware of the issue and they rec'd a workaround which of course didn't work. I cannot fiddle with this any longer. Time is of the essence lately, especially now that jamming with a couple guys in a barn has morphed into a near full fledged band with songs that need to be written. You know I will upload files here or on the Commentary blog when ready. Meanwhile, I will try to keep up with markets and charting but it is not the priority it once was. There is always the TA onDemand link over there on the right if you want me to work up any particular charts. ;-)

Have a good weekend!

Dow - Status Update

Still not working. In fact I messed w/ the Dow chart code some more and now it is totally lost. Don't click on the sad face. You'll just get that download box again. Blogger is working on a fix and it is time to enjoy the weekend.

Gold - Weekly Chart

Edit (11:25) And here we see the continued reaction of the oil bulls. Gold was vulnerable to the majority who bought it because "high oil is causing inflation!" and this combined with its still over bought weekly chart, makes us vulnerable. It is annoying watching others' mis perceptions hold sway, but it is what it is; a market correcting itself of its excesses and purifying the investor base to ever-smarter money.

Separately, the SOX and tech stocks are right on track to our view. I will not pretend I did not have a couple white knuckle moments after making that bullish call. But this may be more than just short covering as the wild ups and downs of the last couple days imply we have seen the making of a pained, well fought bottom. I remain bullish on tech - for a swing trade if nothing else.

Edit (1:01) Adding an HUI-Gold ratio chart. As you know, gold stocks rising in tandem with one of their cost inputs (oil) made me uneasy. We are entering a phase that will ultimately be very bullish. Gold is being hit by weak oil and the slowing inflation pablum. Think about this though; what is hurting gold now is absolutely necessary for the next leg up to 900. The Fed must have the leeway to drop rates and add the next round of inflation policy that the stock market is currently celebrating. They cannot do that with gold @ 800 and oil @ 100. At least they can't do it without looking like total snake oil salesmen. The big picture remains gold positive as it is THE monetary inflation barometer. But first it needs to shake off its economically positively correlated commodity cousins. The gold miners, as leveraged plays on the metal will look to smash the upside of the ascending triangle in the ratio and then the party really gets going. Until then the name of the game is survive and know who and what you are and why you are doing what you are doing.

Huey

Big picture bullish? Yup. But sadly for anyone not mentally prepared, it can remain big picture bullish even if the noted target on this chart is hit. The downside of gold miners rising with mis perceptions in the general inflation trade is that they can fall with those mis perceptions as well. HUI has not lost the 400 area, so this is just theoretical at this point. But I try to show everything I see (when time allows, which it hasn't done much of late), good or bad.

A look at Copper from a CoT point of view

The commercials have been pretty good at being long for sizable rallies in this economically sensitive metal. 'Every bull market has a copper roof' and if indeed Santa comes to Wall Street, he may well ultimately bang his head on this dense, red, heavy metal ceiling. But copper may be readying a counter trend move at the least. Support areas are noted.

Nasdaq - Is it really that bad?

Yes, I realize that blood is running everywhere and daily charts look like bombed out cities. Very well respected analysts are calling it a bear market. The Dow and S&P look tragic and maybe this is it. But a look at the Nasdaq's big picture says it is not broken by any means. Not yet. Markets simply must reverse in the next couple days however because the damage being done on those daily charts will have longer term impact which of course will ultimately alter the big picture view after the fact. This is a very challenging market. If you do not fully understand what you are doing and why you are doing it, GET SAFE and don't worry about missing the pot of speculative gold at the end of the rainbow. It's the bottom of the 9th, but it ain't over just yet.

Interesting times

I read something somewhere today where the writer was talking about two pals - one an equities trader and one a bond trader - in their 70's. They've seen 'em come and they've seen 'em go. One of them said [paraphrasing] "it's not every day you get to see a 90 year trend come to an end" and with the parameters we have laid out (see Dow chart on Biiwii.com's front page), I wholeheartedly agree that we could be on the precipice of a new bear market. As an aside, I read a piece by Richard Russell today where he has already declared a cyclical bear. But what is interesting about the above quote is that it appears these men are prepping for the end of the century long fiat magic show, where all we have had to do is ride a wave of seemingly endless inflation policy and the good times just kept right on rolling - seemingly. Can they pull out another one for the Gipper? Is this just simply the deflation scare that was needed before a return to the inflation bull? Are Robert Prechter and EWI finally right? Stay tuned.

Last week I put up the previous post with a fairly bullish stance but also the willingness to admit I was wrong. I am not there yet, but I see a bright red neon sign that says EXIT and I am keeping my eye on it. This is not a market for the faint of heart, not with cash and S/T treasuries still providing return and bullion of course being bullion (ie, enduring, invaluable). Here is an interesting chart comparision of how the Dow & XAU have gone on very different paths (Dow threatening to fail those levels & XAU above important support and not even in the same time zone as the Aug. lows) since the first dunk of the 2007 angst-o-rama began in August.

Back to the SOX again...

Because I am holding gold & silver miners with a firm hand, I do not find the need to write about them if nothing has changed, and given that the precious metals indexes and gold itself have held to our downside targets, nothing has changed.

But things have changed in the Semiconductors which, in hitting 401.86 earlier this week have satisfied the goal of getting to "something near my target of 400" which has been noted here on the blog for several weeks now off of that clear Head & Shoulders top. Also, the weekly chart shows what 'could' one day be viewed in the rear view mirror as a buying opportunity. We shall see.


With the outright bearishness evident in various market sentiment indicators and with the idea that Central Banks' liquidity policies - in response to the various mortgage and credit market meltdowns - are equal opportunity pumpers, I have begun adding some household names in semiconductors and big tech. You know the names. I either own or am watching closely the likes of Intel (INTC), Texas Instruments (TXN), Broadcom (BRCM), Microsoft (MSFT), QLogic (QLGC) and Cisco (CSCO). I am also keeping an eye on the beaten up semiconductor equipment stocks. These big techs and semi's, generally sporting healthy balance sheets and global market reach, are benefiting from the easy monetary policy of a Fed trapped in a box. Where will the next bubble be? Big tech fits the bill on the short list of possibilities. Think about the implications of financially sound global companies receiving monetary stimulus (and a beneficial weak USD) that they don't really need.

Let me say that with all of the dramatic goings on in the markets, it is quite pleasing to note how rampant fear and angst have become, from professional Wall Street to retail Main Street. I am on Jim Sinclair's email list and I tell you I read some extremely frightening input from this seasoned gold market veteran - and I do not take it lightly. But short of a leveraged, derivative ignited financial domino accident, things are shaping up bullish folks. I am getting bullish, I don't know how else to put it. In a recent post, A-B-C or H-O-P-E the marvelous up day last week was seen for what it was, short covering and hope. But now, after further downside, the path may be cleared for a rally with more longevity.

But I always manage risk and readers should as well. When you start from a base of caution and prudence then you can take steps to potentially profit from the fear and herd mentality of others. That is what I am currently doing; potentially setting up to benefit from fear riddled markets that have been pounded down to support. One must be selective and ultimately willing to be wrong and admit it. But you don't make money buying Wall Street's bullish touts. You make it by being brave when others are... Bueller? FEARFUL. You make it when others are fearful. Cash and equivalent levels remain healthy and continue to generate return in the safest short term Treasury vehicles. This helps in the effort to "be brave".

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Johnny Yen: Will he or won't he?

Risk increasing for bears

This does not mean there will not be a capitulation spike lower, it just means that the market is very over sold and the public is scared. Not generally a bearish formula.

HUI & XAU now much healthier

In my opinion the precious metals indexes are now much healthier as they are getting a good shake out and gold is getting to our targets shown in this chart. I am not your paid guru and you are totally free to disagree and go running for the hills - along with so many of those spec momo's who don't seem to know why they do what they do. I will hang out here however, where I am comfortable; with shrapnel flying all around and emotion getting out of hand. This correction could drag on a bit but weekly charts are by no means anything but bullish. Monthlies even more so.

Awaiting capitulation in Semi's

Semiconductor holders (pun intended) are fighting it, but it appears a final capitulation is needed here, not unlike what happened in the airlines which as you know, hurt but was not allowed to decimate me. I am considering a couple household names but that decision will only come when I see blood running and something near my target of 400.

You recall my post from April illustrating a 'blow off' to the 530 area? It over shot, but the big picture was bearish and still is. Anything I buy will/would be for a trade pending ongoing evaluation. PS: Here is a follow up chart from July. The point I am trying to make is that perspective is everything. Fortunately for sober traders, there are many more who get drunk on the thrill of the moment and lose perspective. They are the people whose shares I am considering buying when they capitulate soon.

Paranoia?

A note posted here. Will we clear out the rest of the hangers on today?

Miner activity thus far normal (to these eyes)

Would you rather be in the UPtrending market or the DOWNtrending one?

With all the hysterics of the last couple weeks, Huey remains in an uptrend and the broad stock market is in a downtrend. This could change, but what's the old adage? Oh yes, stay with relative strength and avoid relative weakness... or something like that.

A-B-C or H-O-P-E?

Hi. Remember me... the guy who was speculating on the possibility that the recent pain might merely be an ABC correction before higher prices? Well I have seen that theory in a couple other places now but not so fast I say. First off, people should consider the amazingly sharp rallies that tend to happen in bear markets, especially in the beginning when denial is still part of the dynamic. The dippers are dutifully jumping in here with oil declining (finally!!) but I will not join them. I don't like the way this smells. Hold and add beaten gold/silver miners? Yep. Pick up a bludgeoned airline here or u3o8 miner there? Yep. Buy the pig? Nope. Not now.

You saw the VIX ramping. You saw the Yen explode (up to resistance). You saw silly bulls stampeding all over the countryside. It was a deeply over sold stock market. Will this 3rd bearish event of 2007 work out the same as March & August before it and clear the way for a manic rise? As I wrote previously, maybe. But all that is happening as of this writing is an over sold market is bouncing (yey WalMart! yey tanking oil!) and I don't buy it. I have lower targets for a couple semiconductor and tech stocks but as always, if the bullish stance proves itself, I will not fight it and may even join it. I noted the 1st objective on the chart.

The Stock Market and the Yen

Steve Saville has a nice technical look at the markets and the Yen. In light of the red on trading screens worldwide, I think this is a timely piece.

AUY, etc.

If we are going note upside breaks, we may as well note downside ones. Yamana Gold is failing at the neckline and if this is not a head fake then by definition our target of 17+ is scrapped. AUY can snap back here and close above the NL in the next couple days or it can stay down and keep us holders in "why didn't I sell... DOHHHHH!!!" mode. Actually, I traded and sold plenty of other stuff that was non core and this is why. So I can hold stocks like AUY and not feel like I didn't take advantage of profit opportunities. I will likely hold AUY regardless of technicals if nothing major bubbles to the surface fundamentally and as long as the gold sector holds certain levels technically.

I have a good cash level ready and plan to deploy it. But I am not going to blab to the blog about it in detail because these events are for each of us to weigh on our own and buying & selling in difficult markets is best left to the individual so that he or she feels 100% responsible for his or her actions. I hold a core of gold stocks and this 'event' is being looked at as an opportunity by me at this point. Nuff said.

JBLU

Because I just can't get enough, I bought back JBLU this morning at a significant discount to where it was unloaded once the XAL broke down. Will watch this trade like a hawk, but that capitulation JBLU (and the XAL) made last week looks interesting and this sector remains a 'bearish on oil' play. But it's just a trade... again. Separately, the gold miners are getting clobbered and gold is doing what our over bought charts (& CoTs) said it might. Worried? Not me.

Buy, trade, bag hold or avoid the US market?

Gold nominal (USD) & in ratios...

Noted supports being harpooned

The Dow & SPX have had large red candles stabbed right through the noted support levels and toward (dow) and through (spx) the 200 dma's. But is it all bad? Maybe. But maybe this is an A-B-C type correction that will end above the August lows. We'll just have to wait and see. Bears well in control for now.

I was traveling this afternoon and missed the festivities. Will be out of commission for all or most of tomorrow as well. Good luck.

Oh Look! There goes AUY

Captain Yamana vaults up to blue sky territory (unlike those accursed airlines) toward our target. Edit (4:59) What's this? Loudmouth blogger crowing about something? This is how we deal with loudmouth bloggers; AUY shot out of blue sky like a clay pigeon. :-(

XAU massive cup w/ handle - again

As the handle was forming this was a chart that, along with other indicators kept me 'in' and bag holding the precious metals miners. Then as the pattern started playing out resolve firmed all the more. Now we have a bonafide event on our hands and the question becomes 'where will the XAU ultimately go off this massive breakout?' and to that my answer is the measured move is - gulp - 270. I should make clear that this C w/ H is one of my home grown things as for example stockcharts.com states that the pattern is ideally up to 6 mos. in duration. But rigid rules in TA are not what I am interested in. Also, they make no mention of it but one thing I have found w/ potential C w/ H's is that it is highly preferable for the extension on the right side of the cup to fail at a HIGHER level than the left side. As for the decade long duration, I see this as - pardon the expression - hyper bullish in the big picture. As I wrote, 270 would be the target but you know this will not come easy. You can just feel the herd starting to sniff around the gold & silver stocks can't you? They haven't even begun to buy yet. When they do you know we'll get our correction but good on the way to 270 somewhere on down the line.

Separately, a blog reader named Doug had given me a 'tip' on a silver miner called Silver Dragon last year. It ran into some financing issues and listing issues among other things and it dropped off my radar. A couple days ago I saw it spammed somewhere and decided to have a look. This is of course after the fact reporting but I bought it at .60 & .63 after doing a bit of research and checking the chart (bottom feedus extrordinaireous) and am up 40% & 33% in 2 or 3 days. Why do I bring this up? 1) Because I am psyched! But also 2) because this is what starts happening to the deep juniors after the major PM indices have broken out. Bottle rockets all around... wheeee!!! Edit (11/7 @ 10:48) SDRG sold in trading for 60% and held in other ports currently 58%. Nothing like silver stocks when they get a bit in their mouth.

MGN hits target

Now it is up to the individual to decide 'am I a trader or am I an investor?' The target for silver off that ascending triangle is $20+ in what now appears to be a break down of the gold/silver ratio as the poor man's gold assumes the lead in the hyper sweepstakes.

Dow 15,600 & SPX 1720

Quick note to present these 'potential' targets on the major indices. Of course they should continue to underperform the precious metals in this lurch toward an ahem, more pronounced inflation. But something may be forming on the charts that targets Dow 15,600+ & SPX 1720+ in the not too distant term. That is only if the bears fail to seize this opportunity here and now and break the pig below support. Very busy now but I will illustrate this over the weekend if it remains viable.

Quick OT from the casino...

As you may know, I wrote A Value Proposition last weekend in an effort to put out some simple thoughts on value amid the exciting atmosphere that seems to be whipping up in the precious metals right now. Adrian Ash of BullionVault wrote this and it is along the same lines and recommended reading... Gold: A Different Asset Class.

PS: I added a link over there on the right, just under the BV banner where you can check the spot price in real time. It's really neat, especially this morning looking at $819/oz.

MGN

Target just over head. I have taken a 15% profit in the trading account. Holding still in other accounts. Maybe not for long. MGN not core to my miner holdings, but a heck of a trade. Edit (2:50) Too funny. No sooner did I finish this post then this PR showed up in my mailbox. Funny how the charts often tend to know these things. If MGN is good enough for SLW, maybe I will consider adding it to the core. Will have to go over this later, but for the blog's purposes, let's consider this a 2 day trade closed out @ 15% off a chart triggered trade. Silver Wheaton Acquires 11% Interest in Mines Management and Right of First Refusal Over Silver Stream.

Vancouver, British Columbia – Silver Wheaton Corp. (“Silver Wheaton”) (TSX,NYSE:SLW) is pleased to announce that it has acquired 2,500,000 common shares of Mines Management, Inc. (“Mines Management”) (AMEX:MGN,TSX:MGT) at a price of US$4.00 per share for a total purchase price of US$10,000,000. The proceeds of the offering are primarily intended for use on further development of Mines Management’s Montanore silver-copper project (the “Montanore Project”), one of the world’s 30 largest silver deposits.

As a result of this transaction, Silver Wheaton owns 11.2% of the outstanding shares of Mines Management and has been granted a right of first refusal over any silver stream sales by Mines Management from any of its projects in Montana.

Mines Management’s 100%-owned Montanore Project is located in northwestern Montana. The Montanore Project is reported by Mines Management to host mineral resources of 166 million ounces of silver and 1.2 billion pounds of copper in the measured and indicated categories and a further 65 million ounces of silver and 500 million pounds of copper in the inferred category (refer to the table at the end of this news release for further details).

“With this investment, Silver Wheaton now has a significant stake in six of the top 30 largest known silver deposits in the world,” said Peter Barnes, President and Chief Executive Officer of Silver Wheaton. “Of these six projects, Silver Wheaton has silver stream agreements in place with two, Peñasquito and San Dimas, and is the largest shareholder in companies owning a further four, being Revett Minerals Inc., Sabina Silver Corporation, Bear Creek Mining Corporation and now Mines Management. In addition, we have rights of first refusal over future silver stream sales with both Mines Management and Sabina Silver Corporation. This demonstrates the strength of Silver Wheaton in the silver sector, and our potential for significant further growth.”

Silver Wheaton has acquired the Mines Management shares for investment purposes and may acquire additional securities or dispose of its beneficial ownership, control or direction over securities through market transactions, private placements, treasury issuances or otherwise as circumstances or market conditions warrant or arise.

Mines Management has reported that, as of October 14, 2005, the Montanore Project had the following measured, indicated and inferred mineral resources:

MONTANORE PROJECT^(1,2)

Category	Tons	Silver Grade	Copper Grade	True Thickness	Contained Silver
		(Ounces per ton)	(%)	(feet)	(Million Ounces)
Measured	4,026,000	1.85	0.74	39	7.4
Indicated	77,480,000	2.05	0.75	34	158.8
Inferred	35,080,000	1.85	0.71	32	65.06

1. The estimate above, which is prepared in accordance with Canadian National Instrument 43-101, was prepared by Mine Development Associates for Mines Management. The technical report, which includes metal pricing and other parameters, was filed by Mines Management on March 6, 2006 and can be found at www.sedar.com.
2. The above resources are reported using a cut-off of 1.0 silver ounce per ton.

Mr. Steven Ristorcelli, R.P. Geo., C.P.G. of Mine Development Associates, Inc. and David C. Fitch, C.P.G., associate of Mine Development Associates, who are “qualified persons” as such term is defined under National Instrument 43-101, have reviewed and approved the mineral resource estimates for the Montanore Project contained in this news release.

Silver Wheaton is the largest public mining company with 100% of its operating revenue from silver production. The Company expects to have silver sales of approximately 13 million ounces for the year ended December 31, 2007, increasing to 28 million ounces by 2012. Silver Wheaton is unhedged and well positioned for further growth.

A little housekeeping...

I am still holding JBLU & LUV. The only good news here is that I should know within hours if I am going to take the loss and move on. I look forward to not posting on this pathetic trade in a sector I care not whit about. On the plus side, the MGN trade highlighted last week is working out in superlative fashion as is the bottom fishing excursion into USU and of course the gold & silver miners are strong. Ya lose some and win some. Ending up with significantly more of the latter is all that matters. Edit (7:10) LUV was ejected for a loss of around 6%. Can't remember (or don't want to) the exact figure. Still holding JBLU as I just could not admit total failure -- yet. Edit (11/6 @ 9:53) JBLU joins LUV in the hanger. The loss here is an uncharacteristic 10%. At the least I hope displaying this poor trade in the airlines was educational for a few people. Now I can move on. XAL can sky now for all I care. Moving on...

Are we leaving the summer of angst behind?

Recall that our worst case scenario included the potential for rising long term treasury rates and a rising gold/silver ratio. Everybody but everybody is concerned and on alert about the troubles in the credit markets. But Bernanke's Fed is systematically following the bond market's lead and papering things over. This is of course big picture bearish for the USD and bullish for gold. But think about this; while the system attempts to bail out the over leveraged financials, productive enterprise is receiving a shot in the arm that it really didn't need at this point. This can only be bullish for the right companies in the right industries. Unless there is an accident along the way, which in the world of leverage is always possible, the response to the 'credit crisis' is going to prove very bullish for the economy, stock market and of course the precious metals. The TYX has already broken below our uptrend line and the next clue would reside in the gold/silver ratio. If by some chance silver takes over the leadership in the inflation sweepstakes I would not want to be nominally short the markets. But first we need the current market correction to complete without the August lows being broken.

New article

A Value Proposition

XAL

Will you JUST BREAK DOWN ALREADY so I can puke and move on to things I am actually interested in? This has got to be the most annoying trade I have ever done. I need a drink. Have a good weekend!

800 Gold anyone? Do I hear 900?

Gold, silver, oil, Euro... they're all vehicles for people who look at Uncle Buck - slumped and hung over with a mess in his shorts - and scream 'RUN AWAY!!!'. This is quite sad and a little bit scary folks. At what point does the US stock market start to realize that it is a merely a vehicle (denominated in USD) for the hopes, dreams and Wall St. enabled assumptions that have been carried forward from a more productive time. Do I buy oil or the Euro fundamentally? You know I don't in the short term. But if the people get a whiff of Weimar here, it is more than precious commodities like oil that are going to sky. The Fed is in danger of losing control. You know, the man behind the curtain and all...

Reader Paul M... ATTN: USU

Paul,

USU Q3 profit more than triples & Centrifuge still on track
This goes nicely with the Korean Utility contract

This blogger would like to thank you for the email that alerted me to this opportunity to buy other people's angst at near rock bottom prices.

Edit (10:06) On the flip side of the ledger, I am in some pain here with JBLU & LUV and have a psychological dynamic working where I am actually hoping the XAL will break down and the two stocks will lose the last vestiges of support so I can be done with them (ah market psych, you gotta love it). Dow & SPX appear to be in a 'C' leg down of an ABC correction, which in itself could ultimately prove healthy. But I am ready to manage risk and raise more cash here if need be as the profits of the last several weeks are not going back. Good luck.

XAL

Markets are falling apart all around and he's back with that cursed airline index again! XAL has not made a lower low and has been an ongoing bearish divergence for oil. Let's see if it keeps up.

NDX - ouch

You have no idea how pleased I am that I could publicly capitulate for you into this whipsaw, just as I am about to go live with the chart service. Right idea (support, resistance and then further drop) and poor execution. It's not meant to be an excuse, but I had a rule set and I stuck to it. A wrong headed rule but a rule none the less, which is what traders must live by.