Market Sells Off as Dollar Rallies...As Usual

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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The U.S. dollar is rallying today for a change. Yesterday DXY, the ETF that represents it, fell as low as 75.83, below key support at 76.00. As of this moment DXY is 76.73. There is strong resistance at 78.00. The key breakdown level is 78.33, which was the multi year low made during the dollar sell off in the late 1980s and early 1990s. For the last two years the U.S. dollar has usually illogically rallied the day after the Fed meeting. There is also danger that some statement will come out of today's G20 meeting about the desire for a stronger dollar. If this happens, the talk is unlikely to be met with any action.

Gold was strong first thing in the morning, but sank to below a $1000 as trading progressed. Silver was selling off even more and may have resolved its overbought condition. The key breakout level for gold is $1003.50. It has closed above this level eight days in a row. So far, it doesn't look like today will be the ninth.

A number of gold and silver stocks have gaps made approximately ten trading days ago. These gaps may have to be filled. Nova Gold (NG) filled this gap four days ago. It was trying to test it today. It is not unusual for a stock's price to fall somewhat below the bottom of a gap. This is frequently a very profitable buy point. Nova Gold has made a cup and looks like it is making a handle. Many gold and silver miners' charts have similar patterns.

About the only thing up in today's market is UNG. The Natural Gas report seemed bearish this morning. GAZ is down. Both UNG and GAZ should move together, but they don't. HZBBF, introduced in this blog 2 weeks ago now trades under another ticker symbol: HNUZF (special thanks to New York Investing member Joyce K. for first reporting the change). The new trading symbol can't be found on Big Charts yet. The symbol changed after a 5 to 1 reverse split. This split and the symbol change make no sense whatsoever. Both have made it much harder for the individual investor to trade natural gas. Perhaps that the idea.

NEXT: So Much for That Recovery

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21


This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Oil Inventory Report Super Bullish; Watch Silver and Gold

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

Nymex oil was as high as $60.08 a barrel yesterday, another six month high. The oft quoted 'experts' are still bearish as they have been all the way up from $33 a barrel. While it has received little attention, silver has been rallying nicely and is approaching resistance around $14.40. It is likely to get sticky around that level before a breakout can take place. Gold has been trading above, but close to its 50-day moving average for the last four days and the moving average pattern is trying to become bullish. Nova gold (NG) mentioned in this blog yesterday was up 15%. It has strong resistance only 20 cents higher, so it's not likely to be at a great entry point at the moment.

Oil is a very seasonal commodity and on average the price peaks the first week of August. The peak can actually take place anywhere between June and September. If you wish to be as conservative as possible, there is at least another month left to the oil rally. There could be two or three. Points of strong resistance include $70, the high during hurricane Katrina; the $76-$78 range, which includes the 38% Fibonacci retracement of the sell off and oil's last major breakout point before it went to $147 a barrel (this combo makes this resistance area particularly formidable); and $90, which is the 50% Fibonacci retracement of the sell off. You might need a hurricane heading toward the Gulf of Mexico to get to that level on this go around.

The EIA storage report just came out and blew the bears out of the water. Oil analysts had predicted oil in U.S. storage would increase by 1.4 million barrels. Instead, oil in storage decreased by 4.7 million barrels. Gasoline supplies were supposed to be up 400,000 barrels, but dropped 4.1 million barrels. While there was an immediate market response on the upside for oil and oil companies, I suspect a bigger rally will not show up for a couple of more days (this has happened before).

It is my belief that as the stock market fades, and this should be happening within a month or so, that gold and silver will start to shine. While there are people who are predicting gold will fall to $600, there have been a number of supposed oil 'experts' that have remained bearish during the entire oil rally. You can expect the gold bears to remain vocal all the way up as well. Watch the charts if you want to know what is really going on. Moves to higher levels and breaking above resistance are bullish signs that will tell you that gold and silver want to continue to rally. For gold, 1000 is the key level and when that is broken, a significant move up should follow shortly thereafter.

NEXT: Market Pull Back or Top?

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Hards Assets - the Good, the Bad and the Sleazy

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

Like all other market information, you could find valuable investing advice at the New York Hard Assets Conference as long as you sifted through the material carefully. The Aden Sisters, who have a 30-year history of accurate gold forecasts, were cautiously bullish on gold in the short term and have now raised their long term price target to $6000 an ounce. Elliot Wave guru, Robert Prechter, considered by many to be part of the lunatic fringe (with the emphasis on the first word) because of his early 2000's prediction that the Dow would fall to 400, thinks gold will go to $600 and ounce. Peter Schiff, essentially a one-note Johnny, is bullish in the long term and thinks the short term is irrelevant. He got a lot of his clients in at the top of the commodities market and they are now sitting with massive losses, but he still has the hefty fees he collected, so in typical Wall Street fashion he makes money no matter what happens. Why indeed should he care what happens in the short term?

At last year's 2008 Hard Assets Conference the Aden sisters had a long term price target of $2000 an ounce for gold. I personally spoke to Pamela Aden and mentioned to her that the New York Investing meetup had forecast that gold would be going to $5,000 to $10,000 an ounce at our March meeting. It is my opinion that she was far more bullish than the $2000 figure indicated, but the sisters like to gradually raise their price targets so as to avoid a backlash from the public (something the New York Investing meetup understands quite well, although it has not prevented us from making bold predictions - we always get negative flack when we do). The Aden sisters became famous when they predicted gold would go to $800 an ounce in 1980. Almost everyone scoffed at their prediction until gold peaked out at $850 an ounce that year. According to the Aden sisters long-term price channel for gold prices, gold should hit $2,000 an ounce some time in 2010. They now see the peak of the current bull cycle around $6000. Pamela told me that it was certainly possible that that number could be raised in the future.

In contrast to the reliable and bullish Aden sisters, Robert Prechter was bearish on gold. Unlike the Aden sisters, Prechter has made some spectacularly bad predictions and you easily have lost all of you money more than once if you listened to him. Why he is still given a public forum is beyond me. Peter Schiff on the other hand is bullish in the long term. He has been consistently bullish even as some small cap gold stocks have lost 90% or more of their value. He reminds me of the people who predicted a major stock market and economic crash in 1928. Sure, they were eventually completely correct. However, they unfortunately shorted the market in 1928 and had lost of all their money before it actually crashed in 1929. Long-term predictions without proper timing can be as destructive to your wealth as the ravings of any Elliot Wave practitioner. A lot of Peter Schiff's clients are hurting, but he's living it up with the fat fees he collected from them even if he lost most of their money.

There was more important information that could be gleaned from the conference than what was stated in the talks. There were only about a third as many exhibitors as there had been in 2008 and maybe a third as many attendees as well. Lack of interest in an investment category is a classical contrary buy signal. The opposite is true as well. The huge Real Estate Expo that packed the Javits Center with 10,000s of attendees in the mid 2000's took place at the top of the housing market. As for the exhibitors at this years Hard Assets Conference, only one caught my eye - Nova Gold (NG). I bought some this morning.

NEXT: Oil Inventory Report Super Bullish; Watch Gold and Silver

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.