Bonds & Interest Rates

Europe’s Stress Scenarios And What Goldman Sees As Priced In

Posted by ZeroHedge

on Tuesday, 29 May 2012 15:26

The pan-European game of chicken continues and with each iteration of this game, the political cost to the two parties involved has increased. Goldman sees three key scenarios from this: Muddle Through, a Fast Exit, or a Slow Exit.

A Slow Exit with a modest 1% hit to Euro-area GDP appears to be priced in:

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….read more HERE


Should you follow Warren Buffett into newspapers?

on Tuesday, 29 May 2012 15:00

Newspaper businesses are under attack. In this context, Warren Buffett’s decision to buy Media General, which owns 63 local papers in the US, may seem odd. Does he know something that everyone else doesn’t?

In both the US and UK circulation continues to plunge while readers – and advertisers – keep moving online. Meanwhile legal judgments are making it easier to sue the press for “breaches of privacy”. No wonder embattled media mogul Rupert Murdoch thinks print papers will only survive for another twenty years. Indeed, one American study reckons that within five years there may be only four papers left in the US.

….read moreHERE (scroll down for Newspaper company recommendations)

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Talking about gold with Mark Leibovit, one of the country’s dogged and frequently controversial gold trackers, is never dull or boring. Unlike many of his peers, Leibovit, a long-term gold bull, has no qualms about shouting fire when he thinks the price of the metal is headed south. You never know what he’s going to say or when he’ll occasionally shock you with some seemingly strange, off-the-wall forecast. Here’s a case in point. During a chat we had in September of 2009, just a few days after the price of the precious metal had just topped $1,000 an ounce on inflation worries and a weakening dollar, he suddenly struck me with the kind of talk you might expect from the strait-jacket crowd. “We will never see gold again below $1,000 in our lifetime.” he told me.

….read more HERE

Another Big Bear Goes Bullish – Victor Adair & Current Market Psychology

Posted by Victor Adair

on Monday, 28 May 2012 23:01

I bought gold and the S+P in my short term trading accounts this past week. I had been short gold from Feb 8 until I covered the position May 14 (see May 21 commentary)…and several times during that three month period I recommended avoiding “The Mistake You Are Dying to Make – Buying Gold Shares Because They Were So Cheap.”

I thought gold was overdone to the downside when I covered my short position two weeks ago. It had fallen nearly $400 per ounce from its Sept 2011 highs (highs which I thought would be “The” highs for a long time) but I also thought that gold had been sold, particularly since late February, because it was perceived to be a “risk asset” and I thought it might morph into being seen (once again) as a “safe haven.”

Last week I thought that the “selling frenzy” that had hit asset markets since the beginning of May was getting overdone and since I was on the sidelines (with a clear mind) I wondered if there was money to be made by buying  “risk assets”…but the challenge was “which ones?”

I was tempted to buy the EuroYen (while the Euro had been falling against the USD the Yen had been rising against the USD)…it represented a great opportunity to profit from a “snap-back” rally…but when I looked at the charts the EuroYen was in a strong downtrend…to buy into a strong downtrend would mean that I was putting on a trade because I thought the market SHOULD be doing something that it wasn’t…rarely a good trading strategy…so I passed on that idea.

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.But the gold market was showing a “W” bottoming pattern…over a two week period…compared to the strong downtrend in the EuroYen… a much better signal of a change in trend…so I bought gold.

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I also bought the S+P. It had been hit hard since the beginning of May and I liked the chart action on May 22 + 23 that created a “W” bottom…although not as strong a “W” as gold. I won’t stick around long if the S+P takes out last week’s lows but I could see the decline from the April highs as a correction to the uptrend that began last October…so if a rally gets started here it could run for a while.

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Remember: these are short term speculative trades that I have made because I think I’ve seen a change in market psychology.

On the charts I see that gold has now bounced off the ~$1520 area three times…September and December of last year…and again two weeks ago. I had thought that if gold decisively broke below those levels it could set off a cascade of selling…and that may yet happen…so my initial long position is modest in size and I will take a small loss if it breaks those levels…remember…risk control…its only a trade.

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For the past several months I have advised against buying gold shares because they were in a strong downtrend. The gold share indices made a “V” low the week of May 14 and have outperformed gold to the upside since. I understand the argument that gold shares or gold share indices represent a “higher beta” way to play a rally in gold…I don’t often trade shares or ETFs (I prefer trading futures and options rather than individual equities) but since I’ve bought gold I would rescind my caution against buying gold shares.

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HUIMAY28

I was a gold bear for three months and now I’ve gone from bearish to bullish over a two week time period. That’s trading. And I may be stopped out of my long position tomorrow with a loss. That’s trading too. Or I may hold a long gold position (and/or a long S+P position) for the next few months.  That’s what happens in markets, PERCEPTIONS change. And as the villain we love to hate, Gordon Gekko says in the 1987 movie, Wall Street, ” Money isn’t lost or made, its simply transferred from one PERCEPTION to another!”

Best wishes for good health and good trading,

Victor

Be sure to read Victor’s Absolutely Essential Rules for Trading Success HERE

The Bottom Line & Richard Russell Comment

Posted by Don Vialoux - Timing the Market

on Monday, 28 May 2012 17:47

North American equity markets are set up technically for a short term recovery. The lows set by major equity indices on Friday May 18th likely will hold. Look for volatility to escalate. A base building period lasting until the middle of July, when second quarter earnings reports begin to be released, has started. Gains between now and mid-July will be sparse except for very short term trades.

U.S. and Canadian equity markets have a history of moving higher during the week after the U.S. Memorial Day holiday. Many U.S. traders take an extended holiday this week. Volume on U.S. exchanges are expected to be lower than average.

U.S. and Canadian equity markets have a history of moving through a bottoming process during a U.S. election year. The following chart indicates completion of the bottoming process by the end of July.

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….be sure to check out Don’s briliant 45 chart monday chart and comment compilation HERE


Ed Note: Long Term, Richard Russell declared on the Memorial Day Weeend that because the D-J industrial Average high of 13,279.32 on May 1, 2012 was not confirmed by the Transports, and then when the two averages turned down and broke below their April lows “This action confirmed that a primary bear market is in progress — it was a textbook bear signal.”

Russell further thinks that the Bear Signal indicates that its likely Greece, then Spain, will leave the Euro and then whole Eurozone will likely crumble. Also that although Gold will probably be under pressure or awhile, a major bull market/move is to follow.