Welcome new reader!

Financial news I consider important, with my opinion, which is worth as much as you paid for it.
Please click HERE to read a synopsis of my view of the financial situation.

Monday, May 31, 2010

This Month in charts

This "week" in charts, I took a step back and pulled the charts to a longer view. Context of where the markets are in the longer view may help highlight where we are going. Upshot: Up or down from here, but LONGER term, still looking grim. We could be about to hit the final parabolic blowoff or that has already occurred and we are about to witness the final downturn. Who the heck knows. :) To the charts!

First up is the S&P 500. I changed the view to "Monthly candlesticks" instead of daily. Notice this past month as a really decent sized big red line. In an upward market in 95-2000, then 2003-2007, notice the only time a really large red line appeared was in the middle of 1998.

But in the down markets, there are plenty of large red lines. Although this isn't proof we are in a larger trend down market, it is in indicator.

Next up is US 30 year interest rates. Notice the yield has recently collapsed. When was the last time we saw a trend change like this? why 2007, near the market top. Back then the market moved higher after rates changed direction before the market started to retreat. So again, while this is not proof of any sort of overall market change, it is an indicator.

Last up is gold. Pretty much in a bull market for years. Does it mean gold can't have a huge collapse, of course not! But it has a pretty good track record since the world of fraudulent financing really took off to continue to advance.

Sunday, May 30, 2010

Keynes vs Austrian Economics Music Video

I am in the general camp of Austrian Economics.

Entertaining music video about Keynesian vs Austrian economics. Enjoy,

Saturday, May 29, 2010

Jim Rogers says next recession much worse

I agree with Mr. Rogers, each time the world plays kick the can, the result will be worse than before. I also agree what is being done will result in complete ruin for the US.

Friday, May 28, 2010

Market upswing

The market has rebounded, as expected. The question of course is will this upswing terminate before breaking the market high for the year.

Most of the bloggers I follow say it won't. The final collapse resulting in the market down 50% lower will finally begin. For now, I am long gold, minders, with very few shorts.

Wednesday, May 26, 2010

Market trend and US bond rates

There is plenty of risk in the world right now, North Korea is becoming more of a threat, still problems credit issues in Europe, and America still losing jobs at an alarming rate.

But Tuesday we may have seen the swing low in the market, and poised for market to go higher. This next leg up can last days or couple of months.
Also the government right now has plenty of "valid" reasons to announce more reckless debt creation, coupled with US treasury rates on the decline.

This government has shown it is capable of digging a much deeper hole, and I don't see any reason why the pattern we have seen since 2002 will change now. It is possible we will shortly see some new scheme to create public debt to "help private companies" to be announced. With rates on the downswing, the government now has more breathing room.

I really don't see the market collapsing until we see rates truly push higher, above 5%.
When that happens, the US government will need to chose between government insolvency or market devaluation. I suspect the second but anything is possible.

For now, two new charts. I am nibbling at buying gold/gold miners again.

Tuesday, May 25, 2010

Market Retrace?

Most of the "bear market" bloggers are all expecting a bounce in the market up before the next major decline. Since everyone seems to be in agreement, that makes me extremely nervous.

When everyone expects a certain outcome......then it usually doesn't happen.

For now, I am also on this wait mode to add shorts, fully aware I may miss a good entry. For now, my gold miners are up. Gold is going up. I'll take it one day at a time and I'd rather miss this next downleg than get infront of another pop up.

Monday, May 24, 2010

This Week in Charts

This week in charts, who knows direction, I am hoping for a pop up, everything is a little shaky from the recent correction. I am hoping for a correction longer term (July/August?) market completely comes apart for the final swan dive to begin over the next year. For now, its watch the charts, try to position.

I don't like gold (again) for now, I will when it breaks to new highs, or a "swing low" is apparent.

Low interest rates in 30 year is giving the government breathing room to add trillion + more debt in some sort of stimulus attempt. Obviously I am unaware of such foolhardy plans, but I suspect as this market gets scary, the final put-it-all-on-the-line move by the government will be announced. Once rates are pressing up instead of down, we will see the rug pulled hard out from under everyone. It is possible that decision was already made when the rates where pressing up. It's impossible to know.

Sunday, May 23, 2010

Welcome New Reader

This is my second attempt at consolidating a short and sweet intro to this blog.

This blog entry will be updated as needed, to revise my view of the US economy and the world economy. You will see text colored (blue). Click on these words to see a blog post or other material to provide detail of the basis of my view.

Welcome to my blog, my name is Mike Murphy, a Computer Consultant/Programmer turned arm-chair financial blogger, with help from
other bloggers and friends (John Chinnock). The goal of this blog is to serve two purposes, one is to help me continually focus and articulate current thoughts of the Financial Market & US economy for my own trading. A second is to hopefully help those who know me to safeguard their savings from buy and hold mentality in this historic economic problems the US faces.
Short take

The US Stock market and the US economy will see substantial pressure from a massive deflationary collapse that will not end until the US government enforces honest accounting and loses by US banks are realized. Current target for S&P500 and DJIA for a "bottom" is 550/5000 respectively
or lower either in USD cash or living standard degradation equivalents. For example, if cost of living doubles, in real terms a S&P 500 at 1,100 is at 550. The US economy will be in a recession/depression that will span 10-17 years from the initial downturn in Dec 2007. (updated from 5-10 based on US avoiding taking action 1-2011)

During the economic turmoil storage of wealth in stocks, bonds, cash, real estate, or natural resources (gold) all involve risk.

Therefore I strongly advise against keeping money in general stock funds, better off in natural resource investments and some US treasury notes (cash).
There will come a time where US cash will have turmoil (devaluation). However this is likely to happen after 2010, but it could be triggered at any moment due to US government actions. Please read the next section, my verbose view, to better support this view.

Top 3 blog entries worth reading

Click here to watch video series by Chris Martenson, explaining the economic forces the world faces.
The Secret of Oz, video on how gold is NOT The answer to monetary problems
ZeitGeist - Watch this in a dark room peeking out from under a blanket, with gold bars and a gun handy.

Additional Blog posts worth reading

Saturday, May 22, 2010

Slope of Hope

One of the blogs I am very fond of is Slope of Hope, by Tim Knight. Tim has been in-line my own general sentiment over the last 18 months. This video Tim made on Thursday, after decent sized market down continuation day. As of Friday noon, market was headed higher.

This video cover's Tim's longer term vision he made back in fall of 2008, with uncanny accuracy.
Part of my short covering on Friday was based on Tim's video, "A vision from god".

The blog post can be seen by clicking here, video below, enjoy.

Friday, May 21, 2010

Covered many shorts, some longs

Covered many shorts just a few minutes ago.
I can't take the chance of a major stick save is in the works and announced over the weekend. The market could have a major leg lower Monday, but today's market able to go positive shows some strength and not panic.

Also bought SOME gold miners, thinking if the market does gain some ground, gold miners may do well. Although this is pretty much a pure risk plan, no real sound logic here.

Saturday's video will show one vision, which I am trying to match for the final wiggles the next few weeks/months until the final draw down is in full force.

Good luck.

Market Decline, the cause?

NOTE: Posted Thursdays post very late, so check for last two posts.

The media chanting the huge decline a few weeks ago was due to a "fat-finger" is outright wrong, as viewed now. First, that decline showed there was not enough buying interest out there to prevent that decline.

I am hoping for a huge market rally Friday, so I can re-enter shorts. If we end the day down huge, I will probably cover shorts. Monday could be all out crash, but really, it isn't worth it to me to "let it ride'.

But by looking at the charts, that decline was the shift, from up to down. We are now in a full market CRASH possibility. Why? Because of what I have been saying since 2008. The losses MUST be recognized for the massive credit/fraud done from 2002-2010. Pretend accounting does not make problems go away. Giving trillions to companies does NOT fix root cause.

Fixing root cause requires.
1) All financial valuations are marked to value
2) All debts are brought onto balance sheets, no "off books accounting".
3) The LAW is enforced for finance across the board.
4) all "risk bets" are placed onto exchanges with risk ratio's enforced to avoid an AIG scenario.

I hope everyone who has been reading this has stop for all longs. If you don't set them now.
This market in my longer term view is bottoming at 50% LOWER or more from here. This decline could stop now, but I am hoping it stops at 925ish.

Thursday, May 20, 2010

Time to buy GOLD, part 2

I am gun-shy of trying to catch a falling knife after my trading experiences in the last 6 months. Gold could rocket to new heights, or break the back of the price and see a major decline. I am leaning towards much higher, but timing can be painful.

So I am going to load up on gold IF/WHEN gold breaks above recent highs. Any break higher to me indicates gold is going to make HUGE gains. In effect gold has double topped, and in trading, people say there is no such thing as tripple tops.

I have a huge, long ranting post soon, may be broken across posts, to explain why Long term, I am jittery on gold.

Anyway the charts

From WebSufinMurfs FinancialBlog2

Wednesday, May 19, 2010

USD Rise going Parabolic?

I hope the US dollar valuation has a bit of a pullback, at the rate it is gaining value, it could turn parabolic. And anything that goes parabolic up, doesn't have a pretty ending.

Quite a change from a few months ago where the demise of the USD was in the public news. Anyway I figured I would post this entry to mark that the USD has risen dramatically, and it is starting to look a little scary how fast it is rising.

And this is happening with US interest rates falling! With Obama spending TRILLIONS in debt. Imagine how ridiculous the USD would have risen if the budget was balanced? That would have caused some issues with US international businesses.

Well, thank goodness for US government is spending at such a break-neck speed in 2010 Trillions into debt. (thats good?)

Three charts below, first is most recent chart, the other two are charts from 2009 with me questioning if the USD would find a bottom around 74, well, it did.

From WebSufinMurfs FinancialBlog2

From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

Monday, May 17, 2010

This Week in Charts

rket continues to look weak. It better close higher this week or I think quite a few market watchers may throw in the towel for another leg down. SPX 950, which would be ironic, since I started shorting it there back in August 2009!.

Anyway, this week in charts. Use the charts to gauge for yourself the likely future trend.

Sunday, May 16, 2010

Pyramid Valuation Scheme

I have been thinking greatly on the concept of wealth or savings for months now. All objects are worth something relative to each other. Any one object is not "magically" somehow tied to absolute wealth. Everything is in effect a barter value system, including currencies, precious metals, energy, food, real estate, and labor.

The other valuation of wealth is the social power a person or group possesses. In the business world this usually translates into earning power through a complicated relationship with power/influence. In government it is military and command-and-control over people. I will concentrate purely on financial and not power based wealth.

Once the concept of all items have financial worth to humans, based on a relative trade value is accepted, then the next question rises, well, how does "stuff" become more valuable than other stuff?

If I own 100 US dollars today, then how much Gold, real estate, food, labor, chewing gum, can I buy with it? Also if I have 1 ounce of gold, 100 lbs of bananas, 100 people in slave labor, how does the value of these items change relative to 100 dollars?

The answer is clear to me, everything is based on the concept of demand. But what exactly is demand? Well, lets say we have 1 million people that doubles in population every x years, what is created is in effect a valuation system that is ever increasing as "limited resources" become more valuable over time.

A "limited resource" is boils down to one simple concept: More demand than supply.

In effect, increasing value is demand is greater than the supply, OR the value of the item which has plentiful demand is PERCEIVED to have greater value than the supply would indicate. This second item can be seen in parabolic valuations, such as beanie babies. Clearly there was no true shortage of beanie babies, or real estate condominiums in Florida.

That means all items, change in valuation relative to each other, based upon supply and demand (real or perceived). Yea, that was quite a bit of blog typing to come to a 101 economics mantra over valuation.

But what most people don't truly comprehend is EVERYTHING based upon this valuation system is in effect a pyramid scheme. From Wikipedia:

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without any product or service being delivered. Pyramid schemes are a form of fraud[1]
Notice what is crucial a non-sustainable business model, without any product or service being delivered.

For this blog entry, I will create my own version of Pyramid scheme, what I will refer to a pyramid valuation scheme and define it as:
A pyramid valuation scheme involves the exchange of money primarily for enrolling other people into a system of increasing demand, with or without any product or service being delivered. Pyramid valuation schemes will fall when demand inverts.

Using this definition, everything in human society is based upon a "pyramid valuation scheme", meaning the greater the demand relative to supply, the greater the valuation. If/when the demand declines, the valuation will devalue until it matches the demand value.

Assuming you accept this definition as appropriate, and the argument applies to all items being valued in society, it is critical then to jump the conclusion that everything you own has a valuation that is not absolute, and ever changing, including pure USD cash.

Therefore, all your assets are at risk, but the risk of different asset classes varies based upon historical precedence. Historic valuation stability is not a guarantee against future risk, but is the best society can do for conveying "wealth safety".

All Wealth is a pyramid valuation scheme
Since all wealth is a pyramid valuation scheme, what we have seen in the last 10 years is multiple large schemes orchestrated. There was first loose credit around the .com bubble, creating unsustainable valuation. Then there was the US real estate bubble, based yet again around loose credit causing yet another Pyramid Valuation Scheme. We just saw the government pump huge sums of money and credit to prop up the US financial industry, creating NOT a sound economic recovery, but yet another Pyramid Valuation Scheme. When this scheme blows, and it looks like it started, there will be the final bubble to end all bubbles. People since 2008 have been and will once again run sovereign debt (Government bonds) and/or gold as a safety play, creating what is amounting to the Final of all currency Pyramid Valuation Schemes.

This bubble is likely to blow sky high as currency become the only place to be....then once the pyramid over extends it self....it will be the LAST place you want to be. This final play includes US Dollars/bonds as well as gold. I am not stating run away from US dollar/bonds and somewhat more risky, precious metals. Quite the contrary, run toward them. But be ready to be early to leave. Both safety plays should be the place to be as the market falls, gold may be quite a bit more volatile.

Safest storage of wealth to me is: undeveloped/farming land, food, international corporations based on food, basic energy, and innovators of new technology.

The message is there is NO place that is safe to store wealth over long durations of time, keep in mind always, everything is a Pyramid Valuation Scheme.

One final thought, since the creation of man kind, humans have been on a trajectory of increasing population. I am ignoring calamities that last years such as an ice age, black plague, WW I, etc. Human kind has decided as a race to procreate less. 1962 +2.2%, 2010 +1.1%, 2044 +0.55% or may go NEGATIVE. If humans start to invert, will everything continue to increase in value? Houses? Gold? Why? I can only see "new tech", new capability continue to rise in value, but I can't see objects to hold wealth through this inversion. Call me a pessimist, but the "high" UN Valuation was probably extra high, to ensure the median didn't show to peak soon. I therefore lean to reality between the low and median.

Saturday, May 15, 2010

Max Kaiser on Alex Jones Show

Max takes my pontification this past Sunday a step further. Since the cost of trading is billed by the market makers, the net cost for trading stocks is zero. This allows computer trading to control the marketplace with the 70% of the volume.

Max mixes this capability on how the banks may be using this power to call the shots with congress breaking the banks up.

In any case, this show is pretty fringe, watch with a grain of salt, but worth watching.

Thursday, May 13, 2010

Market Concern

Everyone is bullish the market is doing better after the dump last week. But I voiced concern if the market can break above the old bull trend line. And the market hasn't. I am getting very skittish that this rally will now fail.

Advice is same mantra as it has been for 8 months, have stops on longs to protect yourself.
For your digestion S&P 500 charts.

NOTE: Longer term, 1+ year, market will fail and go lower. I am undecided for near future.

Wednesday, May 12, 2010

Time to buy GOLD

Gold has broken out above highs, and may pull back from here. A break below 110 from current 120 would be a decent stop-loss.

I suspect gold will do better than gold miners in the near future, but can't hurt to buy both with proper stops. It doesn't matter if you believe in gold as a storage of wealth, what matters is others do. Gold may go parabolic, crazy valuations are possible from here.

If you want to buy gold miners, click here for my gold miner stock list.

Good luck

Tuesday, May 11, 2010

Death of the Western World Economy

Over the weekend, the European Union announced a 1 trillion dollar package to defend the Euro. That is what drove the markets much higher today. I have only one question. Can ANYONE reading this blog show me an example in history when countries that are running a deficit, after propped up by short term finances, it working out well?

These actions by Europe and US are actions taken by politicians backed by the financial industry trying to take short term answers to problems that are not solvable by creating larger debt. The key to watch is what FUNDAMENTALLY is changing with the MECHANICS of the situation?

The answer is not a thing. Therefore there is only one result, the resume of a depressed economy which will lead either to an market collapse or explosion upwards as a result of currency devaluation.

What I am most amazed with today is how the market was stopped DEAD in it's tracks by the previous bull trend line, but now from the "underside".

If the market cannot close above this line, I am going to flip quite quickly to the final decline has begun, which may last for year(s) to it's final destination. Hopefully the market closes above this line in short order, so I can use it to flip in the future for a downward view.

If the market can move substantially higher, I think it will be the last time. The US already "doubled down" with the Fed and US government trillion(s) of dollar infusion. Now the European Union has done the same. Japan has already kicked all of it's assets in and no longer has the credit it used to.

That only leaves China. They are the wild card here. They could do something nutz like decouple the yuan from the USD. Assuming China keeps status quote as they focus on their own issues, there really is no body left on the planet to help kick the can further.

The next kick the can by the US or the Euro may trigger mass selling of their bonds, and therefore some severe issues in those countries. The bond market can only absorb so much before bonds flip from a saftey play, to another high risk play like Greece.

I haven't changed my positions much, but I am now once again watching the markets closer than I have for months. The market needs to close above the greed bull line for me to get a little more at ease.

Monday, May 10, 2010

This Week in Charts

Today is a very important day to review your positions and put them into the longer term context. The market has has a severe jolt, that may be a temporary setback before the bull resumes, or the start of the breakdown I was expecting since August 2009. I fully expect the market to recover, and may reach new highs, before this is over.

Anyway to the charts.

Sunday, May 9, 2010

Fixing Markets and Taxing Wall Street

General Rant on market issues manifesting on Thursday
Anyone who has the attitude the way to fix wall street is to tax the heck out of them doesn't understand free markets. The JOB of the government (people) is to ensure rules are put into place to create a market place where business is facilitated to not benefit the minority, but yet allow the majority to compete.

There are many things wrong with wall street, but these calls for taxing wall street is just knee jerk reaction by those who are not looking at what is wrong with the "system". To fix anything, the key is to look at the MECHANICS of the system.

The problem that happened Thursday was caused by many things, no one thing is to blame. But it was apparent that the computer trading exasperated what should have been a notable market blip into a out-of-control roller coaster ride.

Specifically about 2% of the market investors account for 60+% of all trading volume. This is done through computers at lightening speed, reacting to information.

This technology needs better definition and process to ensure their participation is not to the benefit of the minority, where the majority have no possible way to compete.

What these computers are doing are placing large volumes of orders, one of the purposes is to detect, or infer, price levels in stocks. By placing large orders "out of the money" and small orders "at the money", the computers can learn at any given second, across the entire marketplace, the strength of the market. Also find out for any given stock more information about price resistance levels.

The goal shouldn't be add taxes and somehow, magically, this will fix wall street issues. All it will do is either be punitive punishment crushing sectors of the financial industry, or drive those participants to new trading techniques.

What happened is the computers started to sell, and in the process discovered there is not enough purchasing volume to hold the market up. This and many other blogs have been saying this for months, that the market is not healthy, and eventually will correct downwards, perhaps for year(s) to come.

What was also discovered is these computers didn't wait to find the best possible price for a security, they instead opted to trade on secondary exchanges to trade shares. They did this since the main trading exchange, (NYSE) started to slow down order transactions to try to gain sanity in the marketplace.
The computers where STARVED for shares to sell to. When their orders where not getting filled by NYSE, they took matters into their own hands and proceeded to trade on the remaining exchanges still responding to orders.

This caused several stocks to go to one penny. The company "Accenture" (ACN) which is normally a 41 dollar stock traded down to a penny on Thursday.

This is not a reflection of the value of the company, nor a reflection on the price demand. It is a reflection that on SECONDARY exchanges there wasn't enough purchasing power to keep the price up. But there may have been huge purchasing power for ACN on the NYSE, that the computers decided it wouldn't wait to sell to.

Most, if not all of these trades where broken starting on Friday, since the trades where not realistic to the marketplace. Therefore no one actually was allowed to "keep" their ACN stock purchased at one penny a share.

In summary,
The Problems
1) Computer involved in "high frequency trading" are buying/selling shares at a huge rate trying to discover price points to gain an advantage in trading. Many of the orders are placed with NO intent on getting executed, but are placed to bully around market participants.

2) Computers decided to not wait to find out pricing from NYSE and traded on secondary exchanges. This caused pricing to fluctuate wildly , not representing the value of the stock.

The Solutions
1) Trades have cost, but currently all cost is when a trade is executed, and none when a trade is placed. If 1/2 the cost was charged when a trade was placed, and 1/2 when executed, this should have a huge impact on High Frequency Trading. Since many orders are placed to "see" price, these market participants are taking advantage of the "free information" for the purpose of financial gain. This is really a loophole in the MECHANICS of trading, and not a "feature" of capitalistic systems to detect fair market value. Placing a billion trades in a week with no intention to get executed will now cost 10+ million dollars. If those companies want to "know" where the stock price has resistance, they should pay for that information for the advantage it gives them.

2) The stock exchanges should have a general status indicator that when flipped, prevent all trading without first checking on the primary exchange. This is just one of I am sure dozen's of ideas on how to ensure secondary exchanges don't replace the primary when the primary exchange isn't trading as fast as the computers would like.

Another idea is you can't trade more than +/- 5% from the last known price from the primary exchange. This would allow secondary exchanges to trade in the even the primary exchange is not responding, but to prevent stocks from varying wildly from their last known price under normal trading conditions.

Both of these suggestions are fixes to the MECHANICS of trading, and that should be the goal in fixing any business or business process. Throwing a tax as if to say "your industry is too greedy and inept, here is your punishment" does not correct the original fault. That is for the general public (government) to ensure the MECHANICS of business benefits everyone. It is an outright failure of the rule setters and will only allow the problems to grow worse, and to dampen overall business where everyone loses.

Saturday, May 8, 2010

David Walker

David Walker was the U.S. Comptroller General from 1998 to 2008. And in January 2008, he started a country tour trying to get the message out that the US lifestyle is unsustainable. Well, that year, Sept 2008 was the second worst stock market decline and a wakeup call to the world that finances aren't solid.

This video i thought I had posted before, but I couldn't find it. It was about Mr. Walker in 2008. The message still holds today, more than ever. The question is, is the US government's obligations better or worse off then?

Friday, May 7, 2010

Market Volatility returns

I got quite a few emails/comments from people on the market volatility. I didn't get too excited about the market actions today. It was a bit surprising to see the market plunge so suddenly.

The markets are fragile, there is not a huge demand to buy stocks at these prices. Anything goes wrong and the floor evaporates causing a freefall. Todays market action was blamed on problems in Greece and computer trading.

Start of LAST year, and re-iterated this year, that we should see countries start to collapse, following Iceland's example. I fully expect as America deepens the debt it has to face, that other smaller countries will be thrown under the bus. In the process the US looks better as can been seen in the US dollar valuation skyrocketing recently. But in the end, the US is in a similar position, it's just that I expect the US to have violence and political turmoil closer to 2012-2013. In my opinion Marshall law in some of the poor areas of the US is all but certain to happen.

For now, who knows where the market goes. I expect actually the markets to rally back starting sometime in the few days or week back towards S&P500 at 1,200. Then the media will pat America on it's back that the US is better off than every one else. Once we start patting ourselves on the back, I am going to get ready to re-enter shorts with the next major fall.

Today could be start of downturn, no one knows, but I actually think the market will hold here and rally.

For now, here are the charts of today's action, and it isn't good. From a charting perspective the market looks like it is falling apart here and now. And it may be. But for now, I'll hold my shorts, hold my gold miners and wait. As I stated so many times in the last few weeks, make sure you have stops in, and cash in the near term is king.

Keep in mind, people are still being fired at a rate of 100K-400K every two weeks, states are insolvent and shutting schools early this year. Countries are failing, such as Greece, Iceland, and eventually Spain, Italy, etc. This is not an ideal time to invest in the market. Not a bad time to buy land, stock in food companies, etc. Be nimble, and read my post on long term investing.

At the end is Peter Schiff making somewhat similar comments as to this entry. I listened to him AFTER I wrote above. Good to see Mr. Schiff and me on the same page. :)

Thursday, May 6, 2010

When to Buy, When to sell, 30+ year proven indicator

When I started this blog initially, I posted about a great market timing indicator as documented by Karl of the MarketTicker.

It is probably the best piece of data you can learn for trading.

Unfortunately, back when this indicator stated to buy the stock market, around August 2009, I didn't listen. Well lesson learned. On my chart of indicators to NOT ignore, this one is now top of my list.

Below is an image of the DJIA since 2000, and as clearly shown, each time the orange line crosses above the bluish line, its is time to buy, and vice-versa. This simple mechanism needs only checking once a week.

So read my old post, watch the video, and refer to the image below. I didn't listen to my own post, learn from my mistake. This indicator has extremely high reliability for timing the market longer term.

Wednesday, May 5, 2010

Market Update

Tuesday, 5/4, was a decent sized down market day. Nothing earth shattering, but significant.
I have persistently urged that stops be put in for long and short positions.
After today's action, here are a few charts to update the view of the markets.

Tuesday, May 4, 2010

Super Taxes Coming, Australia leads the way

I was talking to my brother this past Sunday, and I explained how gold and other natural resource plays won't make you super rich, nor how owning physical gold will.
Why? Because the power of all governments is based upon an oligopoly of creating wealth. If I have 1 billion gallon of oil below my house, I can't use it to buy a car, or a 99 cent burger. It's as useful as a rock for day to day purchases.

But if gold was to regain luster as a medium for wealth, instead of cash, the very solvency of every government would occur. Therefore, logically speaking, this cannot happen.

So how can the oligopoly of money printers stop from losing their power? In 1933 Roosevelt ordered police to go into banks and take all gold from it's citizens, replacing the taken items with paper money. This time around, the protection actions taken will be in the form of taxation.

What will happen is physical metal sales will be assigned a sales tax of 25, 50, even 99% if needed. This will in effect rout the "other" form of wealth storage, and protect money printing. But that is the final step, not the first.

Australia is taking the first step, by raising a tax on resource profits to 40 percent . Bah, 40%, why not just jump to 90%? Oh well, I guess we need to wait for time to pass to get there. Of course Australia is paving the way for what I suspect will be a wave of similar taxes across the globe, and the article complaining about the uncompetitive effect will be relatively short lived.

But taxing mining companies instead of adding a heavy sales tax will raise resource prices, not suppress them. The cost of mining gold goes up, the price of gold goes up. Also the heavier the taxation, the less incentive to add mining capacity.

The bottom line, investing against the currency oligopoly may be a great hedge, but don't think for a minute your wealth will explode as world currencies become more volatile. The oligopolies won't allow it.

Monday, May 3, 2010

This Week in Charts

Wow, I got to tell ya, a little surprising reviewing the charts this week. Gold breaking up, and long term US interest rates pushing down. Pretty crazy stuff. Rates go any lower and I will have to consider it a trend change, even if only for a short period.

Placing trades on gold up, rates further down (or reverse up) are all decent trades, but need reasonable tight stops. In any event, here are the charts for your digestion:

Sunday, May 2, 2010


Pretty much a blatant post theft from Mish (click to see his post).
Video from Patrick.net on real estate, a web site with 20,000 daily reads.
The web site owner is a computer programmer, so of course I like his views. :) (Like Mish)