Monday July 30 2012
One way to judge the extent of an extreme is by using a ratio chart. Here is the ratio of GDXJ the junior miners to TLT, the big bond fund. This is basically risk versus Safe Harbor Investing. We have suggested that the extreme was finally reached this past Wednesday morning. The weekly parabolic has not generated a buy signal for GDXJ yet but it is closer.
The blue dots are beginning to flatten out at far right, I suggest we have seen five waves down but then I am biased. The close was .153 with SAR PAR at .159, close. The same chart but using the US Dollar gives us a ratio of .238 and a SAR PAR of .24, really close.
An alert MP reader points out that we are not covering popular stocks like Verizon, ATT, or WMT.
One can read bout Facebook nearly every day but the media has missed the big break out in telecom via VZ and T. This is incredibly ironic that the media would focus on the social media stock already down by one third since its IPO and ignore Ma Bell.
We will not be covering individual stocks for the simple reason that they do not offer sufficient diversification. Anything can go wrong with any one stock and it takes fundamental analysis to attempt to pick a winner. We will leave that to the brokerage firms. Indeed they have recommended traditional companies and money has flowed to them. VZ and T were winners, Sprint Nextel is a near bankrupt.
It may be that there are mutual funds that can take advnatage of moves like this just as gdxj allows one to purchase out of favor miners. We do believe the out of favor commodity group will be performing well the next couple of months I had mentioned my selection of Fidelity Funds for my retirement account but did not get a single e mail of interest so I have not commented. But we will take a look, just trying to get one's arms around the huge number of Fidelity Offerings is quite an undertaking.
What Could Go Wrong?
Here is the Tom Clancy Raytheon version of how our Navy would respond to multiple simultaneous threats in the Straits. Of course all these countermeasures have to work, if one missle gets through your boat is sunk, which of course is the Iranian strategy.