Tuesday's Musing 03/26/2013

Good Morning America... 

Did you miss me over the weekend?  Sorry, I was not feeling well at all, but I went for a long walk yesterday, cleaned up some logs that fell on the property over the winter, and moved firewood. After that, while exhausted, I feel slightly better this morning.  I hope you feel terrrrrific...

There is really not much to write about.  You all know about Cyprus and the fiasco called Central Banking.  I hope you will join me in wishing the people of Cyprus well.  I do not like it when people suffer; nor am I of the mind to blame the individuals for the lunacy we call fiscal management in the Western World. 

And talk about Lunacy -- Russia is supplying arms and money to Syria's government, while the USA (and some of Europe) are funneling money to the Syrian Rebels.  And we learn that Russia has been using the Cypress banking system in order to funnel money to Syrian's government.  Now, gentle reader, what makes it our business to support Muslim radicals in overthrowing their governments?  How has that worked out in Libya, Egypt, Lebanon?  Boy, those Muslims governments in Libya, Lebanon, and Egypt have certainly shown they are friends of the USA, and then after the Muslim Brotherhood denounces the USA over and over, we send Egypt the most modern jets we have?  Wow... Lunacy at its height.

US Dollar -- US Economy

There is a great deal of important economic news today, and at 8:00 AM PDT, none of it has had any major effect on the stock market as the stock market hurriedly goes no where.  Even Google is going no-where.    

1. ·         US Consumer Confidence -- Don't look now, but something is wrong somewhere. The DOW and the S&P are continuing to make new highs, while US consumer confidence is making lows.  According to the Conference Board, consumer confidence plunged from 69.6 to 59.7.  That is ugly, and getting uglier.  This will assuredly be attributed to the impact of the sequestration.  The job market is lower but not uniformly negative.  Looking forward, people are reporting that jobs are getting easier to acquire.  Consumers are confident that with the government programs they can buy a house again.  Basically the report brings questions whether the consumer can help the economy any time soon.  Consumer spending in homes, autos and appliances have to hold up, or the economy is headed down. 
2. ·         Richmond Fed Manufacturing Index -- Missed expectations... The media is spinning this report as mostly positive, but has some negatives.  The news on all manufacturing in the US is mixed. 
3. ·         New Home Sales -- Missed Expectations.

All the mostly-semi-somewhat-otherwise rumors/news, is causing a pause.  Not a downturn - oh no.  Not an upturn -- except the market's were up overnight, and therefore, the DOW and so-on are up (but not up if you look at the prices since the opening.

So readers:  What does Barak Obama want at this point?  All the Whitehouse rhetoric in the last 2 weeks has been toward Immigration and then gun control.  Remember before the sequester when the President stumped the country speaking before every powerful Labor Union he could find: we will have Financial Armageddon?  I will leave it up to you.  The Bankers are in control, and they have huge huge huge piles of money that must be invested somewhere.  Can they prop up the market, and is that what President Obama wants them to do at this point?  I cannot help but think (correctly or incorrectly) that Mr. Obama now has skin in the game to make the economic situation look as bad as possible in order to justify his statements and bring the Republicans into line for budget negotiations.  

On the other side, the Republicans know this, but they are splintered and cannot really make a stand (apparently).  So, gentle reader, if you were the Democratic President, how would you set your strategy in order for the Democrats to look like the good guys, while continuing to put the US citizen into debt slavery while at the same time convincing the majority (52% approval rating of Obama at last count last week from Rassmussen) that it is in the citizen's best interest to go into debt slavery, back the banks, and put into debt bondage the their kids?

S&P 500 And DOW

The commitment of traders is showing the funds (hedge funds, ETFs, and Mutual Funds) are buying.  This is normally bullish, but the funds have reached an absolute historic long position.  The market is still positioned for a major correction.  Caution is advocated.  Long-term (2+ year) investments in excellent companies is appropriate (per my newsletter).  Anything else is highly speculative.

Commericals are selling the DOW.  If one is long in anything beside long term investment, protect your profits.  You can do that by selling, or you can buy insurance with PUT options.  But be sure to protect any short term and medium term profits in long positions. 

Gold and Silver

After the Cyprus crises was more or less resolved, Gold has gone down again.  However, last week, Funds are now buying Gold big time.  This indicates an uptrend acceleration for the near term.   Gold would have to close below 1527 on the futures markets to indicate a new bear leg was in place.  We are getting closer to a short term buy (but only short term).

Silver is in the same position.  US manufacturing must improve more than it has if Silver were to lead the way to a new bull-trend in front of Gold. 

Trends are mixed, and unless the global political world (or financial world) has a major catastrophe in the works, who knows -- bet on chop - not long term up-trend.

The Goldminers Index ($BPGDM) has given a buy signal.


http://stockcharts.com/h-sc/ui?s=%24BPGDM
 

Here is the wild card -- THE US DOLLAR!  You read rightly, and it restates my position that currencies are good indicators that something is going on.  The US dollar has surged in value over the past few months.  This is "HOT MONEY" flowing into the US dollar, and large funds have moved into extreme positions in dollars.  Also, the commercials have been buying dollars for 5 weeks, but last week Commercial selling surged.  This could indicate an end to the $$$ uptrend.
 

If the dollar falls, look for Gold (and likely silver) to increase substantially over 2-6 weeks. 

 

Well, it was difficult to dig out anything new, useful or even interesting that you did not already know.  The big picture is still muddled as the Central Planners (Central Banks) control (more or less) everything.  Fundamentals that can be interpreted by retail investors are minimally (or not at all) in effect. 

Have a great day.  Remember to hug your teenager.  My heart goes out to them as they struggle to become adults in a chaotic world.