Posted July 28, 2008

•  The commodity bubble has not busted. We don’t even believe there is a commodity bubble!

•  Steel co’s have eased back to the bottom of their secular uptrend channel.

•  Crude Oil has corrected all the way to its short term uptrend. I don’t expect to see any further spectacular fall. Remember, we have peak oil. There is support between $ 123 and $ 114

•  Last weeks reaction hasn’t changed the technical picture for Gold. Technically, Gold is still in a secular uptrend and it is preparing its next upswing. A break through the € 610 level will signal further advance. Gold rose by a 25 fold as it rose from $ 35 to $ 850 in 1980. So far it has only risen by a 4 fold. In order to rise by a 25 fold as it did during its previous bull cycle, it would have to rise to $ 5,000! The odds are that we shall see $ 1,100 and even $ 1,200 before the end of this year.

•  A death cat bounce all the way up to a level of 12,000 for the Dow Jones is possible. However, the bear market action for stocks is far from over and we expect further downward pressure. All stock and bond markets have over the past years been crashing against Real Money (Gold). Ultimately the credit crunch will end in a massive deflation. However, we must brace for Hyperinflation first.

• The SEC needs to protect the Bank sector by working on the Short Selling rules. Expect they will do all within their power to protect their buddies. By doing this they really show something is astray.

•  European and Eastern Stock markets are also sitting in a secular bear market. Hence, investing into non Dollar denominated Stocks and Bonds will only solve the Dollar risk. 

•  The Secular Bear market trend for financials and banks ain’t over yet.

•  NOW is the time to get out of investment instruments that are Deflating and to get into those that are Inflating.

•  The Dow Jones Utilities (higher interest rates to be expected!?) is in a huge reversal formation which will be confirmed as the index breaks through the 470

• The Dow Jones Transportation keeps on building its double top/reversal/distribution formation

•  The Shanghai index is building a coil sits (like many other indexes are) squeezed between a Down and a Uptrend resistance line.

Posted July 25, 2008

Our views are based on both fundamental and technical analysis. Our published investment views which are the result of these are medium term to long term oriented. We consider short term markets too volatile, illogic and dangerous. 

When no real changes occur, there is no reason to alter the opinions and views published on this web site. Hence it will from time to time remain static. Our readers "might" use these periods to read or re-read unread parts of the site. We try to keep it all simple. As we don’t charge for questions, feel free to email us if something needs to be clarified.

Once our views have been published don’t expect us to come back each other day with the same stories. For example, we are bearish on Real Estate. We may comment it again from time to time only if worthwhile information can be added. The Real Estate Bubble is deflating all over the Western World and will keep doing so for some time. The same applies to most Stocks and Bonds. When a typical sector (ex. Banks, Automobiles) is in a secular bear market it is, unless mentioned in a secular bear market all over the Western world. Intermediate fluctuations should be used to re-orientate one’s portfolio: sell weak sectors and stocks in strength and buy strong ones on weakness.

Sometimes, because of the actions of the PPTeam, technical signals become unreliable. For this reason, one must also rely on the fundamentals. Examples are: Gold and Silver, Peak Oil, Junior gold stocks. Be aware that similar actions (The Gold pool) were seen before the Big Depression.

Additionally, as politicians and Banks have used almost all their arrows, one must be aware that they will, together with the Cavalry of the media try to scare people out of certain positions. Finance and Economics also follow the rules of Sociology and Psychology!

What we experience today and what we shall experience over the next months will end up in History books. Don’t keep standing on the side lines. Use common sense and good luck. 

Posted July 22, 2008

• The Dollar index has fallen out of a bear wedge but we still need confirmation. The € 1.60 level is still guarded by the PPteam.

• €Gold and $Gold keep on testing their breakout points and are hereby building a handle to the Cup and Handle formation.

• $Gold sits on its 23.6 % Fibonacci support level and a triple test of the €600 level would help Gold to burst through the $ 1,000.

• Most Stock markets indexes have fallen in the bottom of their bear trend channel and are reacting as oversold markets do.

• The Dow Jones Utility average still sits in what seems to be a top formation/distribution pattern.

• Both the Shanghai and the Nikkei have fallen upon a support level.

• The Austrian Index has fallen out of its top/distribution pattern

• The 3 month US-Treasury yield shows similar actions as earlier this year. It abruptly came down from 2.0 to 1.5%

• Important is that the Retail Index has fallen out of a distribution zone and is herby confirming the recession of the consumer. With repayments becoming more onerous, rising inflation and sharp reversals in the housing and equity markets, consumers are under increasing pressure.

• Bank shares have bounced off their lows into resistance levels. However they still sit in a Secular Bear market trend.

• Gold and Silver shares are lazy and could be offering a last opportunity to buy them at interesting levels.

• The fact that Boeing and Northrop have broken its secular uptrend and Lockheed probably sits in a top/distribution pattern doesn’t spell a lot of good for the oil price.

• Siemens sits in a secular bear market

• Crude Oil expressed in Dollar has fallen out of a Rising Wedge. A correction to $ 123 is possible, however far from not sure.

Posted July 18, 2008

UBS (not an ISI Class 1-rated inst.) to shut down Swiss based services to Americans

Politicians and people fail to understand Rome and the Roman Empire was built on a marsh by delivering advantages to the new immigrants, not by trying to use them as slaves. Is it not ironic that those countries which are performing best (Russia, China) have extremely low tax rates (16% to 17%)?!

 “Client advisors based in Switzerland will no longer be allowed to travel to the United States for the purpose of meeting with U.S. clients.” The same was applicable in the USSR and the satellite countries as long as the Iron curtain was in place. We all know which results such policies have. Hopefully American Capitalism (what is in a definition) is not to become the same as the old days’ Russian Communism. However, I fear we are to see a lot of similar situations.

 I have no doubt other Swiss banks will follow. After all, who likes to be arrested on arrival in the US? Worse however, is that the Americans have lost the constitutional right to deposit their funds where they want in the way they have decided. As the financial and economic situation in the US gets worse, this kind of increased control will without doubt increase. I would not at all be amazed that some day we could see a financial and convertible Forex market for the dollar in a way we have seen it in Belgium and South-Africa. All done to preserve the security of the American citizen and close down on money transfers from potential terrorists and drug dealers. 

At the same time, Wachovia Securities’ headquarters was investigated by government officials and hundreds of Missouri investors were unable to access their money. This doesn’t come as a surprise to me. I remember issuing warnings about Wachovia (the share plunged 75%) not later than last year.

Posted on July 16, 2008

Markets in a nutshell- July 15, 2008 

• Gold shares have confirmed their breakout and some are showing a run away gap (short covering?). More and more gold mines are closing their hedge position.

• No relief yet for Bank and Financial Shares. Charts look very, very bad…

• Today, it is clear again the PPT (plunge protection team) has intervened in the Forex, Gold and Stock markets using paper money.

• Markets are still coming down, but have landed in oversold territory. Hopefully, we will start to see a ‘B’ up- correction. Use it wisely.

• Luckily, so far the Dow Jones has not broken through 10,750 level.

• Our long term expectations for the World markets remain negative. We expect to see another bear leg (C) later this year.

• The dollar index is on the verge of falling out of a bear flag but the Euro has still not succeeded to break through the 1.60 level.

• Euro Gold and euro Silver have now also broken out of its formation. 

• Quality junior gold shares are reaching a point from which an expectation of 1000% or more on the upside is not out of the question.

Posted on July 15, 2008

French published inflation figures:

Inflation in France is only 2 % and  2,50 % is expected for 2009! ? What a joke. Even worse is that the media accepts to run this kind of circus and are prepared to publish this kind of nonsense.

Posted on July 8, 2008

Markets in a nutshell

• We increasingly see global markets. What happens in the USA also happens in Europe.

• The Plunge Protection Team has its hands full in trying to keep the key stock market indexes above their critical levels. As a result many technical chart patterns become increasingly unreliable. Once a pilot looses his GPS and Navigation radios, it is back to the watch and compass of the fundamental analysis.

• Markets keep on coming down. Becoming more and more oversold, we will hopefully see some upward reaction soon. As most markets have now confirmed that they are in a secular bear market, any upward reaction has to be used to realign one’s portfolio.

• Gold shares are slightly weaker in the wake of the sliding world markets (garage sale) and some are testing the upper limit of the triangle. Others move sideward hereby increasing the size of their consolidation pattern.

• Oil shares are also slightly weaker. We decided to take profit on Conoco @ $ 91,64 and Total @ $ 82. with a gold price of $ 920, the action adds 18,88 onz. of Gold to our cash position.

• Gold in Euro has failed to break out of the accumulation zone (€ 600 - € 560). Such an action only makes the accumulation formation bigger and the subsequent post-breakout upsurge bigger.

• The Dow Jones Transportation has definitely left its double top and has also fallen back in a potential reversed Head and Shoulder formation. A bad omen for what is to come.

• The Shanghai Composite has momentarily landed on his support zone. However, the actual 2,600 level is still 600 points away of the 2000 objective.

• The FTSE has confirmed its  fall out of a top reversal formation and broke through a double bottom.

• The French CAC has fallen through a double bottom and confirms his secular down trend.

•  Financials continue to slide and better insurance co’s like Aetna are now also falling in a downtrend.

• The Bank of New York has fallen out of a huge distribution zone. Chase has broken its uptrend. Fannie and Freddy have once more fallen through a double bottom. Credit Suisse has fallen through a multiple bottom formation. Remarkable is that most financials came down from their tops without any significant correction! A warning for all those still sitting on European financial/bank shares. 

• In the USA, even BA (Boeing) and Macy's have confirmed their secular bear trend. UPS has fallen out of a majestic top-distribution formation.

•  The upward breakout of Copper through of its' top formation was aborted.

Posted on July 2, 2008

Will Trichet increase the basic interest rate?..or how to make a depression out of a recession!

In a traditional European way of secretive banking, one can only guess whether Trichet is willing to risk the side effects of higher EU interest rates and a stronger Euro in order to bring down the price of energy and imported goods.

The answer to this question has been puzzling me for over a week. It got worse last week when Germany joined other countries like Spain and France as opponents to a possible rate hike. Europe is like the USA sitting between the same hard rock and plate (welcome to the club). Most economies of a lot of EU members are in serious trouble. Financials and Stock markets are collapsing.  The Real Estate markets have dried up and prices on the continent are sliding silently. 

The temptation however, is that an increase in interest rate discrepancy between the Dollar and the Euro will further push down the dollar and make the inflated price of imports cheaper. In other words, such an action will momentarily bring down the price of Oil and Food commodities expressed in Euro and the inflation pressure. At the same time, it will break the back of the European economic camel. All by all it would give the impression the ECB is fighting the very inflation she is responsible for by printing Euros out of thin air.

Tomorrow, Trichet could end with the same Oracle talk Bernanke used last month. Doing nothing…but talking. However it looks like he will give it a try and rise the interest rates just to check out whether the EU economy would benefit and at the same time make a lot of enemies.

There is a down flag formation in the make on the chart of the Dollar index and the Full Stochastics show a sell signal (see currencies) . A break through the 1.60 will signal a deeper bottom for the Dollar. To be continued...

According to Ambrose of the Telegraph, Trichet will by this action push the EU and the world over the cliff. He will do exactly what all politicians normally do: "make a depression out of recession". Exactly the same scenario happened in the 1930's. Some people never learn! .click here for more....

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