Weekend August 18, 2012
To the Reader
For some reason I keep spacing the paragraphs apart but after saving my work typepad runs them together. This looks bad and is difficult tor ead, not my fault, sorry bout that. I have tired several times but always get the run together look.
GDXJ and XME for example have both flashed buy signals on the weekly parabolic indicator. There is little else to say about specific recommendations other than to ask new readers to review the last few weeks of posts. My holdings include
CEF - mvoing out to more aggressive positions like XME
COPX - COPPER MINERS
EWI - ITALY
EWZ - BRAZIL
FCG - NAT GAS PRODUCERS
GDXJ - JR GOLD MINERS
GM - GENERAL MOTORS, SEE POSTS THIS PAST WEEK, SOMETHING IS UP
GSB - SAN ANTONIO BASED SECURITY SOFTWARE
KOL - COAL PRODUCERS
PBT - PERMIAN BASIN ROYALTY TRUST
RAX - RACKSAPCE SAN ANTONIO BASED SERVER
REMX - RARE EARTH METALS
SIL - SILVER MINERS
TLT - 122, 125 PUTS
XES - ENERGY SERVICE
XME - METALS AND MINING
Overall we look for commodities to top last as they did in 2000 and 2008. Various indexes should begin topping after Labor Day.
Notice how the weekly High Low pulled back this week, tested the MAs, and the pink uptrend line, and now is heading higher. I believe we will regain 2250 which supports my idea of SPX 1500 or thereabouts.
NASD Summation Index
An alert reader asks about the low level registered by the VIX, one of the lowest in years. A great question, here is my take.
CAT recently buit an engine plant in nearby Sequin, TX.
about the economy. This will be enough positive mood to push the SPX higher, yes I am still focused on a potential 1500. The Ferrari F 12 at left is the most powerful model ever built at $330 K per copy. Such excess takes place prior to market tops. Note the bright positive colors in both photos, but then 40% of Ferrari production is in Italian Red.
Our take on the article, Six Investment Moves to Make Now on page B7. the article recommends buying all these. TMP does not. OUr comments after the dash
Dividend Paying Stocks - These stocks are topping now, the article is way behind the curve.
Cyclical Stocks - They mention energy and tech, I like energy metals gold silver
Municipal Bonds - New high prices make these a sale. With three cities in CA recently taking Chapter 9, there is a potential floodgate waiting. We have mentioned this numerous times, the cities will default in kind either to dwellers, bond holders, or employees or probably to all three before this is done by 2015.These chapter 9s are not getting much attention now, just wait a year.
Mortgage Backed Securities - Just four years ago no one could figure out how backed what, why on earth get into that risk basket again?
Emerging Market Bonds --We are long EWI and EWZ and Fidelity's Emergin Market Fund, but the bonds will no doubt be heavily marked down in two years, that will be the time to buy. We expect to exit our positions in a few months.
High Yield Bonds - No way, Jose, these typically top along with stocks, a junk bond is a stock hoping you will believe Mike Milken was right after all
Below that is an article on Where to Find the Next Crop of Dividend Paying Stocks. This is typical Wall Street linear regression thinking, the trend never ends. The trend is ending, those stocks are turning down, as we showed a few days back, commodities topped last in 2008 and 2000. These stocks already have or will soon top, period. Stay tuned for an article in the WSJ titled, Time to Buy Miners now, after the group has advanced 40% or so.
We have consistently highlighted the next Big Bust - the College Loan Meltdown, first cousin to the sub prime bust of 2008. My weekly newspaper column outlines a new plan for college, I will put it up tomorrow when it will appear in the papers that run it. When the Kids Return Home notes that three of ten parents say one adult child has returned home. The article suggests counselling, budgeting, and networking but, as I noted earlier, some social actions lag mood more than others. Today there is this article about college graduate children right back in the bedroom where they started. Earlier this week the same paper featured an article on Marketing Pros, Big Brand on Campus. Rather than coming up with affordable alternatives and cutting bloated staffs, the fixed cost of college goes up to convince the other seven of ten parnets that an expensive college degree is still a great deal. Eventually mood will catch up with reality. When it does, there will be a trillion reasons for a meltdown.
While this has nothing to do with investing, on page D7 Burrata, a cream filled ball of mozzrella, with roasted nectarines and pistachio heb oil, would surely require one to hit the Jack in the Box Drive in Window on the way back home....
So What Could Go Wrong
Quite a bit if Israel Attacks Iran. Trouble in Iran ended Carter's Presidency. Then it was the failure of an attemepted hostage resuce not to mention the hostage situation in the first place. Now, such an attack would spike the price of oil. I have no idea where the Administration would be on such an issue and suspect they don't either.
We look for TLT to continue its melt down, the Aussie and Loonie have rallied nicely, the Euro will do a bit better, commodity stocks are just beginning a strong run back to at least the highs of earlier this year, and gold should make yet another multi-year high by Christmas. Stay long our recommendations and suggest TMP to a friend.
Thanks for reading The Market Perspective
The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance ands no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks. Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned. Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital. No guarantee can be made to the accuracy of text or charts.