Stock Market News and Thoughts

Topics: American Society and Culture

Thanks to Amazon and the rise of ebooks the publishing industry has been turned on its head. Many publishing companies are losing out or feel like they are under seige. Many books stores have closed. Borders went bust.

Individual writers though have benefited. No longer do they have to go to gatekeepers to reach their audience. Hundreds of thousands of new books that would never have been published before are now on Kindle. Of course many of them are crap, but there are also hundreds of stories of books that had been rejected by agents and publishing companies that have succeeded in reaching a mass audience by pleasing their readers.

It's hard to feel sorry for individual book publishing companies, because they have always treated all but just a few star authors as dirt with advances that are just pittances. A writer is lucky to get a $5,000 advance and a promise of royalties that never come from them. Most books published by the big corporate publishing companies that make it to the book stores just have a small window of time to catch on. If they don't sell big within thirty days most are just put aside. The publishers do nothing to promote them unless the author is already a star. Now with Amazon books aren't just given a thirty day test, but are on there forever with a much greater chance to find an audience if they deserve one. Now more than ever it is the readers that are deciding whether a book is a good or not and not some gatekeeper.

Self-published authors are benefiting from this. Someone who puts an Ebook on Amazon can make a 70% royalty - there are hundreds of midlist authors that are now able to make a living thanks to their ebook royalties.

But all of this is bringing turmoil to the traditional book publishing industry. In fact instead of being an industry in itself publishing books is becoming something that is just part of what a company does or an individual does.

I'm an example. I have written and self-published two books on Amazon in 2010. I didn't go through a traditional publisher. One of them - Strategic Stock Trading - floated around the top 100 Amazon best sellers list on there for a week. In one day it surpassed Tony Blair's sales ranking on Amazon when he published his biography even though his book was getting TV publicity all over the world as part of the news story of the week.

My investment book still sells well today. In fact it is currently outselling this Tony Blair book on Amazon - two years later.

It doesn't do this though because I am a big corporate publishing company. It does it, because I have a large following on my financial website and constantly put out content for people - whether it be a video or a blog post that attracts new people. Writing a book and publishing it on Amazon.com was just something I did.

This is what publishing is going to become. Yes the big publishing companies will continue to exist. What they will do is focus more and more of their efforts on pushing the books of celebrities and getting them distributed in places like Wal-Mart, Barnes and Noble, and other big box retail outlets.

But so much has changed in just the past year. I really had no idea of what was happening until recently. When I put out my two books in 2010 I had never read an ebook or used an ereading device. Now I have one of my own. I didn't even put out an ebook version of my books until a year ago, I thought I would hate ebooks myself and didn't want to be a part of that. But after using them I like them.

And now I see how they have changed the world of publishing and writing - all in just the past two years.

I have been paying close attention to this, because I plan on publishing another book this Fall. It's a history book about how the United States became a world superpower after World War II and how that changed the country itself.

I have no idea how it will do, but I do know that it is a book that I probably never would have written if my life had taken a different direction even though it is the type of book I want to write.

You see before I got into the investment world I was a history graduate student. I got an MA but, dropped out of the PhD. program. I just sent a draft of this new book to an editor and should have a test copy of it in six weeks or so. It's written for anyone to be able to read - it's written for the masses. That's why I say it is not the type of book I would have been able to write if I had stayed in the academic history world. You see professors tend to write for each other and not for the general public.

They write articles for academic journals and publish books for academic presses. These are small sized presses. For example in the history world the University of North Carolina Press is one of the most active academic publishers. Back in 1998 I was told that a good run for a book was 500 copies - most of which would be bought by university libraries and other professors.

500 copies. That's not very many.

Due to rising costs for paper and publishing in general now I notice that many of these academic publishing companies are raising their prices for books into the $50-$75 range. These are for paperback books 200-300 pages in length! For example a 330 page book titled The Republican Party and American Politics from Hoover to Reagan is being published by Cambridge University Press for $80.00. They are selling the Kindle version for $51.20.

The book has an Amazon sales rank over one million, which means that it is lucky to sale one copy a month.

Not all of the academic books are selling for these huge prices, but many are and it is becoming a trend. The high price is like the publisher shooting themselves and the author in the foot.

At first glance this sounds like a doomed industry.

I keep an eye on what is going on in the academic history world and one thing that is very fascinating is how many in academia now feel threatened by the revolution in self-publishing. There is a tone in historical journals of worry about the future of scholarship and fear about the future of academic presses. Yes they may go away.

But scholarship will not. It will change though.
The best way to figure out what is happening to a group of people is to apply a rule Charles Hugh Smith mentions in one of his recent books - "the only useful way to analyze a system is to identify what behaviors and choices are rewarded and which ones are discouraged."

Before I get to that, let me show you what is being said by top academic historians about the changes going on. Even if you aren't interested in academic history it's interesting to see how the ebook and the internet is now changing the academy by threatening the university presses as an example of how things are changing.

You see what the academic publishers do is help sanction the authority of a professor. A university press typically will peer review a professor's work by getting two other professors to read it and provide their ok. This is to make sure everything they write is sourced and based on real information. By getting the approval of their peers and published as a result they get a stamp of authority that can get them a job if they are just starting out or the reward of tenure. It also makes it easy for university deans to make hiring and pay decisions - they just see who has a good publishing history, because that proves that they have the stamp of approval of the profession, making them a safe hire.

Academics take this system for granted as it gives them their authority and rarely see any negative impacts it may have. However, it also has the effect though of making academic professors want to write for other professors and get their approval - so they tend to engage in academic debates with kid gloves, not wanting to upset the apple cart too much. Academic fads and groupthink takes hold.

The American Historical Association is the largest organization for academic historians and those interested in academic history in the United States. I'm a member. It has about 15,000 other members. It holds an annual meeting every year and publishes a quarterly journal full of book reviews and a half dozen or so academic articles.

In the past year its President William Cronon has written a series of excellent essays about all of these changes with titles such as The Public Practice of Histry in and for a Digital Age, Scholarly Authority in a Wikified World, and How Long Will People Read History Books?

This past year he gave a Presidential address at the annual AHR convention on "storytelling" in which he talked about these changes in the academy.

Some of the things he said:

"I feel even more strongly that the discipline as a whole is facing greater threats and challenges than at any time in the past half-century."

"Public support and funding for history and other forms of academic inquiry are in decline, especially in the humanities and especially in public institutions."

"And then there is the Internet.... The printed books and articles on which we have long relied to communicate our findings are yet another example of the 'old media' that - like CDs, encyclopedias, and newspapers - have proven extraordinarily vulnerable to the liberation of content from its physical containers that digitization has made possible."

"It is not just that libraries are reducing purchases, that university presses are facing cutbacks, or that declining print runs and rising per-unit costs are pricing many specialized monographs beyond the reach of ordinary buyers. My deeper fear comes from watching my own students, many of whom no longer read books for pleasure."

"What is the future of history?"

"We need to remember the roots of our discipline and be sure to keep telling stories that matter as much to our students and to the public as they do to us. Although the shape and form of our stories will surely change to meet the expectations of this digital age, the human need for storytelling us not likely ever to go away. It is far too basic to the way people make sense of their lives - and among the most important stories they tell are those that seek to understand the past."

"How do we make the past come alive? By telling stories about it. Unfortunately, the craft of storytelling too often gets short shrift in the training of professional historians..."

History is not going to go away and neither are books. In fact people arereading more books now than they did before.

They may not be the type of high brow books the intellectual elites might wish people would read, but they are reading. Fifty Shades of Grey was last year's top seller and Bill O'Reilly's drivel Killing Kennedy book was the top history book of this year so far. It sold over a million copies proving that people are reading history books.

Now it is true that half of the people don't read a book all year long. About 1/4 of the population are avid readers and do most of the book buying. These people are in all income levels and there is very little correlation between wealth, status, money, and being an avid reader. The rich are just as less likely to read as everyone else.

I do think though that the self-publishing and ebook revolution is a threat to academic presses. Heck if I was a professor and wrote a book it would make me sick to think someone was going to sell it for over $50 and print just a few copies. I'd rather just publish it myself so anyone could afford it.

That's what I plan on doing with my new book this fall. I have no idea how many people will buy it. But I know that if it's good enough people will tell others about it and it will have a chance to catch on - and since I'm focused on writing it the best I can and using storytelling to do it - I have a much better chance to have it reach a large audience than it would if it was published by a university press that priced everyone in an academic ghetto.

But academic types are worried that if the university presses go away who will publish them and how will they get the seal of approval from them that gives them a badge of authority?

Well, they can still get those sort of things from grants and foundations. Many do this already and if funding for colleges continues to decline these foundations will simply take on even more of a role than they do now.

I do see problems in this. For example - I don't want to name people and bash them - but suppose someone wrote history books extolling the virtues of American military power and supported more wars even though he himself dodged the draft. His books got thrown in books stores and he became a well known talking head on FOX News with specials on the History Channel?

Suppose past national security advisers who have kept their papers secret from the rest of the world in their own private hands now gave such a writer special access to them knowing that the result would probably be a glowing puff piece that would be promoted by the television media.

Now suppose this writer's primary source of income is a history foundation that gets the bulk of its funding from American corporations that are military contractors.

Could such a writer create unbiased history? LOL.

Well of course there is no such thing as unbiased history to start with. Everyone has a bias of some sorts and most likely they would not compromise themselves, they would just have the thoughts and viewpoints that their paymasters have too.

And here is the thing too - not a single person would ever speak out and criticize him for taking such money. Other academics would not want to be so mean and show such professional discourtesy, and besides they might want to get some of that foundation grub for themselves and get on the History Channel too.

To me this is the real danger for the future of real history - it isn't that history writing is going to go away - but that more of the money used to finance historical research and scholarship will come from private corporations and individuals with an agenda that doesn't necessarily have anything to do with finding the truth, but more one about benefiting their own interests.

Such foundations and potential conflicts of interest have always existed in academia. It just rarely comes to light. But in 2008 it became well known how so many academic economists were paid touts for the mortgage bubble and wall street:

History is not a science. The historian though must aim for the truth. But there have always been historians that have not done that or have bent the truth - or even made things up. One of the most famous talking head historians of the past thirty years plagiarized other authors and actually made stuff up - he wrote a biography of a President based on interviews with him that he never did. Another author who was hot on TV 20 years ago ruined himself by plagiarizing sources and making things up. When writers do such things they eventually get found out - it doesn't take an academic press and peer review by professors to police all of this -readers and other writers do.

Point is that history has always been twisted by some people. The problematic role of foundations is nothing new even if it is something that may become worse. It is something though that the general public won't know anything about and virtually no one will ever comment on.

All that said, I see the changes going on in publishing as a good thing - more books and more authors is a good thing. It means that even better things will be published and will rise to the top of the publishing heap. In the end the truth always wins out. As for books 7 of the 20 top selling ebooks on Amazon in the first quarter of 2013 were by people who published the books themselves on Amazon.com without a traditional publisher.

If you ever thought of writing a book yourself go for it.

Topics: Technical Analysis

This weekend I did an interview with the Canadian radio show This Week In Money. To listen to it go to the 15 minute mark at this link.

Topics: Stock Market News

Well we just saw two days of shaky stock market action. All the market did though was pull back off of its highs, but that is enough to get some Fed members to get on TV and proclaim that the Fed will not be ending QE anytime soon.

Federal Reserve St. Louis Branch head James Bullard made a statement to the press saying that he does not think QE should end until we see real inflation in the economy. He told a CNBC reporter today:

"Numbers have come in quite low. Inflation has been, by our preferred measures been about 1 percent over the last year - way below our target. Before I am in favor of tapering I would like to see some assurance that inflation is going to move back towards target."

In other words the Fed is not going to end QE until inflation creeps into the economy. Once that starts to happen the Fed members will start to tell us that they are going to slowly end QE and create a soft-landing. They will tell us that they are able to control the impact their monetary policy will have on the economy and the financial markets.

CNBC reporters like Steve Liesman will tell us they can do it. He will tell us to ignore the fact that the Fed created a disaster in the 2000's that led to the 2008 stock market crash and our current economic malaise, because it's impossible for the Fed to have a command and control over our economy like a surgeon. History proves they can't do it.

Yesterday going into the close Maria Bartiromo did a segment on CNBC to reassure viewers about the safety of investing in the stock market:

Maria proclaimed that the stock market is a "buy on a dip stock market" and got several Wall Street talking heads to agree.

They had no discussion on this segment about market valuations. Their thought is simple - the market is going up and the Fed is doing a good job so you must buy all dips. Bernanke is a hero and will make you rich! One talking head told Maria that he thought the stock market would go up this morning. Right now though it looks like it is going to gap down.

Actually I agree with their outlook to a certain point. Right now we are not at the end of the current bull market and I do not think it will end this year. I do think we are probably starting a correction though and most corrections last for a few weeks and not just one day.

A correction is nothing to worry about.

What is fascinating is how just a little drop from the highs causes Fed members to come out and try to reassure people and for CNBC reporters to do the same. This is considered "journalism" in the TV world, but the masses eat it up.

Topics: Stock Trading Strategies

Yesterday I sold a few of my position and took a long position in SDS. This is an ultra-short leveraged ETF that trades against the S&P 500. It is designed to go up at twice the rate that the S&P 500 falls. That also means that if the S&P 500 goes up it will lose value too. I took this position as a way to put a hedge on the long positions in my account.

Right after I made these trades I made a post about them. I got a lot of emails question about them last night and will try to address them in this post.

A few people got angry about it. I don't think they really listened to my video or read in detail what I was doing and just assumed because I was selling a few positions and taking a short position that I was now a bear in the stock market - and that made them mad. I think a lot of people have just recently bought into the market the past few weeks and are highly emotional - not really knowing what they are doing. It is not to doubt the entire bull market or to be unpatriotic to think the stock market is likely to pullback! Even in bull markets you get corrections. We all have to manage our money to make money and not simply out of loyalty to the stock market, and the stock market is not the country. I get worried when I get crazed emails that we are getting people that just bought in - and those are the people that end up selling in panic.

Even though I bought SDS I am not really trying to make money by shorting - or betting against - the stock market. I am trying to lock in the bulk of my profits through a hedge. If the market corrects I will probably still lose a little bit of money - but it will only be 1/3 to 1/2 of what I would have lost. Instead of selling and realizing gains I rather hold and hedge. And I don't know I may be invested in positions that may go up anyway as I'm not in the US stock market but invested in European markets and gold. Gold may even go up while Europe will probably drop some too.

Gold and silver are not trading exactly in synch with the US stock market.

Gold crashed last month and is trying to bottom while Europe has not gone up as much as the US market did during the past few months and last year in December Europe went up when "fiscal cliff" worries hurt the US stock market for a few weeks. Looking at the charts I think Europe will correct, but not as much as the US can.

Gold is up today. That is interesting, because the US stock market is poised to gap down almost a percent. I think that is a sign that they are not going to trade in synch with one another either. Last year there was a correction in the US stock market associated with the Greek debt crisis on the TV news that shook a lot of people out of the market. Gold and gold stocks though actually put in a bottom almost a full month before the US stock market correction came to an end. The same thing could happen again - so I'm not really worried that a US stock market correction will make gold fall much more - it already crashed.

When there is a big market move the TV news will use a story to explain the reason behind it. So last year in the summer they claimed the Greek debt crisis caused the market to correct. In December they said "fiscal cliff" could ruin the economy. AS the market has gone up the past few weeks the TV news has come up with crazy explanations to expect it to continue - that stocks are somehow "cheap" because interest rates are low, which is nonsense economics. But Steve Liesman will say anything to praise the Federal Reserve actions and back up Wall Street and the masses eat it up, because they want to believe in the rally after they buy into it.

The Japanese stock market just lost 7% of its value today. It's economy is a basket case and central bankers there have pledged to go on a mad money printing operation. The country has a debt to GDP ratio over 200% which puts it at a high risk of defaulting on its debts if its bond yields go up.

It's bond yields have doubled over the past week and are up this morning.

My guess is that over the next few weeks we are going to see a 7-12% correction in the US stock market from here that the TV news will associate with worries over Japan and the end of QE in the United States(that's a laugh, it ain't ending). Gold will hold up. Once the correction is over gold and metals will enter a new bull market and leadership in the global stock market will shift for the rest of the year from the S&P 500 and into cheaper valued markets that are not as overextended such as those in Europe.

I think after the correction the US stock market will likely enter a period of sideways movement into the Fall and maybe even into the end of the year...and then rally again once that sideways phase is over. Markets that get as overextended as the US stock market has lose their momentum. TV news will scare a lot of people out and those that bought at a top in fear of missing out will sell as their losses cause stress to build up inside of their brains and their body.

If the markets correct people will get frightened and sell out. But the world won't end and the correction will end up being a great opportunity to buy the right stuff. You just have to keep a level head and take prepare for it. That's what I did by selling three positions yesterday and putting on a hedge. This is how markets work.

And no again I do not think this is the start of a bear market. I'm not going to get bearish on the stock market until I see real evidence that we are in one.

Here is one sign - the resignation of Ben Bernanke. Back in 2005 or 2006 Alan Greenspan left the Federal Reserve. He did it right as the real estate market topped out and the the banks crashed in 2008. He got out before he could become a target for the blame - and his policies were to blame. Ben Bernanke's policies have created a new bubble in the bond market, which once it bursts will eventually cause another stock market collapse and harm to the economy. I don't think this will happen for a few years - but he will leave his post as Fed Chairman before it starts.

So as long as he is Fed chairman we can know to stay bullish. Once he leaves the post we can start to worry.

Mark my words he will leave his post so he won't be around to take the blame. Everything about this man's life and his character points to him doing that. And the day he leaves his post I expect we'll see Obama give a speech praising his "leadership" at the Fed and even see reporters on CNBC run a marathon honoring. Steve Liesman will be the first on TV to do it. That's the TV news for you.

Part of the reason the country is in the economic straights it is in, is because the US TV media failed to report on the 2008 crisis. It failed to explain to the American people why it happened. It said nothing about the bank bailouts and Fed money printing and simply accepted statements from the Treasury Department and Ben Bernanke at face value. It investigated nothing. It failed us.

It is failing us again as Ben Bernanke creates more distortions in the economy with his QE money printing operations and creates a new dangerous bubble. The bubble policies must end!

Just a few weeks ago Ben Bernanke received an internal Fed report that told him that his policies are creating new bubbles that could put the economy at risk all over again if he does not stop his QE money printing operation. He is ignoring the report and besides Bloomberg's website, the US media is too.

But no on cares either and they won't until they have a reason to... and right now there isn't one...and probably won't be for sometime... I say all this not to be bearish on the stock market. I think the correction will be worth buying into - but to tell you that one day the bull market will end and we will have to keep our eye out for signs that it is ending, although I don't think they will start to appear for another year or two.

Topics: Open Portfolio

The stock market has been going straight up now for days after going up for months. At some point it is going to have a correction and it could happen at any moment. Today the DOW went up 100 points and is now almost even - it looks like a potential reversal day. This morning the Investors Intelligence survey showed that 55% of the people are bullish on the stock market - a level not seen in years.

I don't think a crash is coming or a bear market, but a correction can begin at any moment in the US stock market.

When you hold positions and the market rallies week after week it becomes time to take some money off the table and/or put on a hedge. I'm doing that today. I just sold three of my positions and went long the ultra-short SDS ETF, which is designed to trade against the S&P 500 and go up when it goes down, as a hedge on my other positions.

This way if the market does correct I won't lose much and will be in a position to keep most of my profits and then get rid of this hedge and happily buy.

By buying SDS I am actually on about 20% margin in my account, however it is a short position(ultra short so about 214k) against my long positions(excluding SDS 273k) so I'm really about 20% long in my account.

I think the S&P 500 is likely to fall down to its 50-day moving average, around the 1600 area. That would be about a 1,000 point drop in the DOW and likely take 4-8 weeks to play out.

I'm not sure what markets outside of the US will do as most of Europe has not gone up as much as the US has the past few weeks. They look like they could pullback about as half as much as the US stock market. Gold and silver probably just float around and build a base like it did last year from June-August. US Nasdaq tech stocks actually look most vulnerable to me...

Trades
Sold ISNPY 500 @ 11.12
Sold NILSY 270 @ 15.24
Sold PT 2K @ 4.54
Bought 3K SDS @ 38.15

For the most recent spread sheet file with portfolio positions click here.

For the most recent spread sheet file listing all portfolio trades click here.

Topics: Gold and Gold Stocks

I just did this podcast with David Bannister of www.activetradingpartners.com.

In this podcast David and I talked about the recent action in gold and his trade in MUX.

Last Thursday Dave wrote an article saying that it was time to be brave and get into gold stocks. He listed ten reasons why he was bullish. You can read them here.

For more from David go to www.activetradingpartners.com.

You can also download the mp3 audio file for this interview on your computer by clicking here WITH A RIGHT BUTTON CLICK and selecting SAVE FILE AS from the drop down menu.

If you have an itunes, ipod, or rss reader you can subscribe to the podcast by clicking here.

Topics: American Society and Culture

As a people we have lost a sense of narrative understanding of our times. We seem to live in chaos and the media constantly reports a stream of horrible events with no connection to them. As a result the world seems senseless and frightening. Younger people have lost a sense of history and their place in time:

That is an Adam Curtis interview about the use of stories in culture and how the telling of stories has changed overtime.

I saw this interview a year ago, but got to thinking about it today after reading a blog post by Charles Hugh Smith titled Present Shock and the Loss of History and Context.

In this post he reviews what sounds like an interesting book titled Present Shock: When Everything Happens Now.

Smith writes:

In his new book, Rushkoff examines the telescoping of time and context wrought by ubiquitous digital technologies. We're always accessible, always connected and every channel is always on; this overload affects not just our ability to process information but our culture and the way media and marketing are designed and delivered.

The title consciously plays off the influential 1970 book by Alvin Toffler, Future Shock, which posited that our innate ability to process change was limited even as the rate of change in our post-industrial world increased. That rate of change would soon overwhelm our capacity to process new inputs and adapt to them.

The internet is a great resource for finding information, but has not been a useful tool for increasing people's understanding of the world and has not empowered people. You can see that in the stock market. Despite living through the crash of 2008 the masses have no understanding of why it happened and once again are piling into stocks with no game plan seemingly having learned nothing from their experiences. They live only in the here and now - and right now the market is going up so that is all that matters to them. CNBC reporters and the mainstream media cater to the Fed and Wall Street and never tried to expose the reasons for the crash or demand reforms. They demanded no change. They had no outrage and sit there as a new dangerous bubble in bonds forms in front of our eyes.

People have no understanding of the outside world and history. As Curtis explains TV news does not bring understanding and nor does 99% of what is on the internet. Much of it is simple rumor mongering. It takes deep reading, learning from experiences, and disconnecting from the confusing mass culture for periods of time to bring understanding and wisdom.

Interesting stuff.

See Charles's whole post here.

Topics: Greece Debt Crisis

Greek banks stock have surged in the past few weeks ahead of their recapitalization financing that should be completed in the next three weeks.

NBG is one of the Greek bank stocks I have been watching. It rallied from almost 60 cents a share to $2.40. But I didn't buy it.

Yesterday it fell over 33% and today is trading down 8% before the open.

NBG announced in a press release that as part of its recapitalization it is going to do a secondary offering at 50 cents a share at current trading prices. Once the offering is done it will then do a 10-1 reverse stock split.

The news of such a low offering price caused the stock to drop hard. I'm sure there is big money financing it that is simply shorting the stock to lock in a big return.

Long-term I still think NBG and the other Greek banks will do well, just like US banks did after their 2008 crisis and others such as IRE have done lately. However, it take time for the Greek banks to digest this offering. They will have their big up and down moves for traders to play, but I doubt we'll see a real sustainable bull move until the Greek banks consolidate for a period of time after they close their offerings. This consolidation process could take weeks or months, but it is a situation I will be keeping my eye on.

Topics: Gold and Gold Stocks

This could turn out to be a key day for gold. After last month's gold crash I thought that gold and mining stocks would rally back up for a week or so and then come back down to test their lows. After that I thought they would go back up and consolidate to put themselves in a position to breakout into a new bull market. I wrote about this scenario right after the gold crash here.

What made me think this is that I found that historically after a market crashes like we saw in gold and silver it goes sideways for eight weeks and builds a base to launch a new bull market off of. My plan was to average into a metals and mining position after the crash.

I have stayed consistent with this scenario. After the crash the market rallied(with gold going close to 1400) and I told people not to buy into the rally - to wait for a pullback and retest of the lows. On 05/05/2013 I said this in this post.

That rally fizzled out and gold stocks went down to their lows and so did gold.

I did some buying on Thursday with the idea that if the action stays consistent with my post crash scenario then the metals and the miners should go back up and then consolidate for a few weeks before starting a new bull run.

So I decided to use the drop to average in on Thursday. If all works out I'll add on to this position in a few weeks. You can see the buys here.

Well on Friday gold stocks made a new low and gold went down too. Last night gold dropped down to its crash lows by falling to 1340 an ounce. It has been rallying so far this morning since it dropped to that point.

We are essentially looking for action that suggests a reversal(a market down in the morning after falling for a period of time and then up one the close) in the metals markets. If gold can trade up big today that would be a good sign. It would suggest to me that what we saw Friday was just a fake breakdown - which happens often in these situations - and my post crash scenario still holds.

However, if we don't see a reversal here than there is a good chance we will see continued selling in the metals markets for a few weeks.

Sentiment for the metals is incredibly bearish and they have been falling now for since the Fall of 2011, that's a long time. When bear markets end money is made. The question is are we forming that bottom base now or is the projection I have been working off of since the crash too early? Today's action will be an important clue to figuring out how gold and the mining stocks will play out in the next few weeks.

Topics: Stock Market News

According to this Bloomberg report:

Gold has the worst 12-month outlook among commodities and will trade below $1,400 an ounce in a year, according to an investor poll by Credit Suisse Group AG. (CSGN)

Sixty percent of respondents named bullion as having the worst outlook, 18 percent picked copper and 16 percent selected corn, the bank said in an e-mailed report today. Fifty-one percent predicted gold will fall under $1,400 in 12 months, it said. The bank polled 185 investors including hedge funds, pension funds and family offices on May 15 in London.

“Bearishness for gold was a very clear consensus,” said Kamal Naqvi, the head of commodities sales for Europe, Middle East and Africa at Credit Suisse. “It’s not about just not buying gold, it’s about shorting it,” or wagering on a drop.

Check out this must read Bloomberg poll of all world markets here.

Topics: Commodities

I just did this podcast with David Morgan of www.silver-investor.com.

In this podcast David and I talked about the crash in gold and silver. We talked about why they crashed and is likely to happen now.

You can also download the mp3 audio file for this interview on your computer by clicking here WITH A RIGHT BUTTON CLICK and selecting SAVE FILE AS from the drop down menu.

If you have an itunes, ipod, or rss reader you can subscribe to the podcast by clicking here.

Topics: Open Portfolio

If you are new to this site I do something different than you'll see anywhere else - I show you exactly what I buy and when I sell it.

I made the following buys today:

GDXJ 500 @ 11.02
NEM 160 @ 31.64
KGC 900 @ 5.45
PAAS 400 @ 12.13
HL 1500 @ 3.21.

I told you a month ago in this post that I thought gold and silver would stabilize for about 8 weeks in a consolidation range and then breakout afterwards to begin a new bull market. Most of the time during a post-crash consolidation a market will rally quickly for a week or two and then retest its lows, bounce back up, pause and breakout. The whole process usually takes about two months.

Since then the HUI mining stock index rallied quickly up to the 293 level and then over the past two weeks has fallen to retest its lows. Yesterday it closed right on them and this morning it opened below them and had huge selling volume in the first hour of trading - in fact it was the most volume seen in a single hour since a the big down post-crash day.

After that hour of trading gold stocks went in the green. If they close up today it will appear to me that they have made a false breakdown today and will likely have completed a retest of their lows. We'll have to see what happens of course, but if they then go up tomorrow it will appear to me that the HUI will play out something like I have drawn in this chart as a potential projection:

So I put about 10% of my money into these positions today. I hope to put a little bit more money into my account and buy MORE in another 3-6 weeks. I was already about 5% invested in gold and silver so am now about 15% invested. My account is about 90% invested and 10% in cash - with the bulk of the money invested in European markets, with Greece and Ireland being the ones most invested in now.

Now I could be wrong. We'll see what happens tomorrow. I have bought a small enough position that a drop tomorrow wouldn't be a big deal to me. That's what I like buying small bits at a time. But if gold and silver stocks go up from here over the next few days I would take that as a VERY encouraging sign.

Oh - here is a link to the money manager poll I mentioned in the video - Bloomberg Global Poll.

This is a poll of pros using Bloomberg Terminals. They are mostly bullish on the US stock market and hate gold and Europe right now - LOL!!!!!

So in my investing I'm essentially going completely against the Wall Street empty suits.

You can see a list of my transactions and current positions by going here.

Topics: Technical Analysis

I just did this podcast with Jeff Pierce of www.zentrader.ca.

In this podcast Jeff and I talked about the rally in the DOW, Nasdaq and strong trending stocks and sectors in Japan, solar stocks, and chemical stocks that are making for good short-term trades. We also talked about gold.

This is the posts on Jeff's site about Japan - click here - Japan Looking Very Bubbly (In A Good Way).

You can also download the mp3 audio file for this interview on your computer by clicking here WITH A RIGHT BUTTON CLICK and selecting SAVE FILE AS from the drop down menu.

If you have an itunes, ipod, or rss reader you can subscribe to the podcast by clicking here.

Topics: Stock Market News

Japanese bond yields have tripled in price in the past week. Reuters reports:

A three-day rout in the bond market has raised concerns that the Bank of Japan is getting more than it bargained for, by prodding investors to shift money out of the safety of government bonds faster than the government expected.

As prices have slid, the yield on the benchmark 10-year bond has jumped to an eight-month high. While still very low by historical standards, the interest rate is almost triple the record low it briefly plumbed in April after the BOJ unleashed an enormous monetary easing aimed at ending 15 years of deflation and getting the sluggish economy moving.

The Japanese government bond market has defied decades of predictions that it was a bubble waiting to burst. Most strategists believe JGBs will continue to avoid the worst case -- a rush for the exits that could send the government's borrowing costs so high it could no longer service a debt that, at some 230 percent of GDP, is the worst among industrial economies.

Hedge fund manager Kyle Bass has been pushing a short Japanese bond trade for years, eventually he may be right:

Topics: American Society and Culture

An Interview with James C. Scott - Time with a Creative Mind.

Topics: Stock Trading Strategies

I just did this podcast with Dave Skarica of addictedtoprofits.net.

In this podcast Dave and I talked about the recent bullish moves in the S&P 500 and the US stock market and investor sentiment.

You can also download the mp3 audio file for this interview on your computer by clicking here WITH A RIGHT BUTTON CLICK and selecting SAVE FILE AS from the drop down menu.

If you have an itunes, ipod, or rss reader you can subscribe to the podcast by clicking here.

Topics: Stock Market News

This is probably going to be a ho-hum week in the markets. I really doubt much will happen.

Here are some stories today that caught my eye:

Elliott's Singer On Bernanke Destroying "The Value Of Money" And "Uprooting The Basic Stability Of Society"

Student Debt Slows Growth as Young Spend Less

Has shipbuilding industry hit bottom?

Is the real US unemployment rate 11.3% or 7.5%? A new Goldman Sachs study offers an answer.

Rally Matches 1990s Gains With Valuations 28% Lower - when compared to bubble 1990's tech valuations - lol

Topics: Technical Analysis

I just did this fascinating interview with Ike Iossif of marketviews.tv.

Ike interviews many people each week for his Marketviews.tv website, including myself, and has them categorized by methodology. These people are many of the top thinkers and traders when it comes to the financial markets, such as people like Frank Barbera and Dan Zanger who turned less than $30,000 into millions in less than a year.

Ike has been trading in the markets starting as an options specialist for over 20 years now and has developed his own models to gauge market trends.

In this interview Ike talked with me about what his models are saying about the market now and gold. He explains why he thinks a big turning point in gold will occur in a few weeks.

This is a link to the charts we talked about in this interview - click here.

I also got Ike to agree to a 50% discount for a membership to Marketviews.tv until Sunday to get you a deal. I'll be watching Ike's signals myself over the next few weoeks, particularly in regards to gold, so recommend that you sign up to get them to. Just go here.

You can also download the mp3 audio file for this interview on your computer by clicking here WITH A RIGHT BUTTON CLICK and selecting SAVE FILE AS from the drop down menu.

If you have an itunes, ipod, or rss reader you can subscribe to the podcast by clicking here.

Topics: Federal Reserve

This is a video clip of Ben Bernanke from way back in the summer of 2008 right before the banking system crashed and millions of Americans got devastated by the stock market collapse.

The "Black Swan" is a theory popularized by Nicholas Taleb that says that unpredictable financial stress periodically hits the financial markets and wipes out Wall Street institutions that use models that claim that such events are so rare that they do not need to worry about them.

In the summer of 2008 Taleb wrote an article saying that Fannie Mae and Freddie Mac were on the verge of total collapse and so was the entire banking system.

CNBC smeared him for saying this. But that didn't stop his article for being news for a short period of time.

It was at this moment in time that a reporter asked Ben Bernanke about Taleb and the "Black swan." Bernanke's reaction got caught on camera as you can see in the above video clip.

He laughs and says he doesn't read Taleb.

Bernanke's own policies created the financial bubbles that led to the 2008 crash. And he laughed.

When Obama came into office he had a window of time to make some real changes, but he didn't. Instead he kept Bernanke on and staffed his administration with Wall Street henchmen.

Today Bernanke's zero interest rate and quantitative easing policies are creating new bubbles that when they pop - and they will eventually, probably starting in two or three years - will lead to another disaster.

Bernanke claimed after the 2008 crash that he had no idea it was coming.

Well this time we know that he is being warned about the new bubbles he is creating, because it is in the Federal Reserve minutes and being talked about in recent Fed studies.

Bloomberg today reports that it got minutes of an internal Fed meeting thanks to a freedom of information request.

Bloomberg reports that a Fed panel has discovered that farmland values have risen 30% in 2012 and created a new bubble. It also found that student debt has grown so much that it has created something akin to the subprime crisis. The panel says this has occurred because of Fed zero interest rate policies - created by Ben Bernanke.

According to Bloomberg:

Data compiled by the regional Fed banks have documented a rapid run-up in farmland prices, particularly across the Midwest’s Corn Belt. The Kansas City Fed said irrigated cropland in its district rose 30 percent during 2012, while the Chicago Fed reported a 16 percent increase.

The panel of bankers is appointed by regional Fed banks and dates to the founding of the central bank in 1913. Bloomberg obtained minutes from the quarterly meetings from May 2011 until February.

At a meeting in February 2012, the council said “growth in student-loan debt, to nearly $1 trillion, now exceeds credit-card outstandings and has parallels to the housing crisis.”

Student lending shares features of the housing crisis including “significant growth of subsidized lending in pursuit of a social good,” in this case higher education instead of expanded home ownership, the council said.
The advisory council opposed continued Fed accommodation on Sept. 14, a day after the conclusion of the FOMC’s two-day meeting Sept. 12-13. The Fed after that gathering announced a third round of bond buying with purchases of $40 billion per month of mortgage-backed securities.

“Further accommodation is not warranted,” the bankers said, according to the minutes.

The advisory council warned of distorted bond prices resulting from the Fed’s purchases, limited impact on the economy, and “uncertain effects” from an eventual unwinding of the balance sheet, including “risks to price and financial stability.”

Bernanke is being told to STOP his zero interest rate money printing operations, because it is dangerously distorting the economy and he is ignoring these warnings.

He will not stop his policies until they end in disaster.

You see President Obama needs him to keep printing money to finance the deficit and CNBC and the Wall Street press will continue to treat him like a genius, because his policies are helping make the stock market go up.

And that is the second bubble the Fed has discovered.

The New York Fed has just discovered in a study that the US stock market is essentially more overvalued now as a whole then it practically has ever been before.

The study has this chart in it:

The study claims that the stock market is at this high valuation due to Fed policies:

Why is the equity premium so high right now? And why is it high at all horizons? There are two possible reasons: low discount rates (that is, low Treasury yields) and/or high current or future expected dividends. We can figure out which factor is more important by comparing the twenty-nine models with one another. This strategy works because some models emphasize changes in dividends, while others emphasize changes in risk-free rates. We find that the equity risk premium is high mainly due to exceptionally low Treasury yields at all foreseeable horizons. In contrast, the current level of dividends is roughly at its historical average and future dividends are expected to grow only modestly above average in the coming years.

Ok, I am not saying the stock market is topping out. I think the bull market will continue. But I also think that for investors the best thing to do is to invest where stocks and markets are actually cheap and not expensive, and there are such opportunities in Europe, Latin America, and even in the metals markets. Traders can have fun playing the DOW and S&P 500 though.

But I worry that in a few years when the next bear market hits it will be a real disaster, because Ben Bernanke and Obama are creating a bubble in the bond market that will make the subprime crisis look like child's play.

And these Fed reports show us that they know exactly what risks they are taking.

This is Taleb a few months after the 2008 crash. Once the crash happened he was allowed to be on TV for a few months to explain what happened.

People like Ny Times house economist Paul Krugman had claimed that Obama and Bernanke have been heroes of the economy and the crisis is over. But what has happened is that the 2008 banking crisis has been transformed into a bond bubble. The government took on the debts of the bankers and put it on the Fed balance sheet. Government Treasury bond debt is the new bubble and it is growing every second.

People are warning of this. One such person is David Stockman, who served as budget director for Ronald Reagan:

Stockman just came out with a book explaining all of the problems in the economy just a few weeks ago.

For that he has been mocked in the Wall Street Journal, on CNBC, and in the editorials of Paul Krugman. Instead of answering him with facts his simply being smeared just as Taleb was by CNBC favored guests.

The average American has no idea what is going on and for most investors as long as the stock market is going up they don't care. In fact rising stock prices convince most that things are just fine and the experts on TV will continue to rationalize the new bubble as being a "new normal" or "new economy" as it grows.

They are being told by people like Paul Krugman that government debt doesn't matter:

Everything blew up in 2008 thanks to reckless Fed policies and it seems that so many so called experts have learned nothing from that, including Bernanke himself.

Topics: Technical Analysis

This is a chart from advisorperspectives.com of the cyclically adjusted P/E ratio and the S&P 500.

As you can see the stock market is at an expensive valuation. Of course this means nothing in regards to what the stock market may do tomorrow, next week, or next year. It means nothing when it comes to trading the market, but it means everything if you want to invest now and hold something for a few years.

The best times to invest have been when the cyclically adjusted P/E ratio is 10 or below. Right now it is close to 23, and at levels that have eventually led to big market declines in the past.

The cyclically adjusted P/E is 20% above its mean regression level.

What is funny is that no one cares. No one on CNBC is talking about the fact that stocks as a whole in the United States are overvalued. They never say that if you want to invest in bargain markets then look overseas.

They just say the market is going up, because of money printing and hot earnings reports.

And for now valuations don't matter. The reality is people don't really invest in the stock market, they just throw their money at it.

Even though this chart is for "advisors" very few investment advisors or money managers actually base their investment decisions on market valuations, because they can't. If they get out, because the market is expensive and then it keeps going up then their clients will take their money away from them. So they'll lose their job.

That's why they will keep investing in the market and keep holding and keep coming up with new rationalizations to do so. In 2009 they talked about cheap valuations and were right. Now they just talk about money printing.

It's a fun party. There is no sign that it is over. But one day it will be. The current bull market though can go on for another year or two, but when it ends we'll have to be very careful when it comes to stocks.