A Short-Term Pause - Mike Swanson (09/19/12)

I've mostly been writing about the long-term trends of the market. Back at the end of July I started to talk to you about how cheap the valuations are in global markets outside of the United States and how bull markets seemed to be lining up to start there and in gold. And then I began to buy and show you exactly what I was buying, how much, and when. And things have gone up. New bulls have started just about everywhere.

I haven't said a whole lot about the short-term moves though. It looks to me right now we are seeing a little pause. Take a look at this chart of gold.

Gold has been on a terrific run as it broke into a new bull market last week. We have seen two quick pauses during this time. I think we are right now going through a similar very short-term pause and will see another move higher for gold and most other world markets for that matter next week. It could start this week even.

I do think at some point there will be a big pause and consolidation period, one that will last for 3-6 weeks. But I don't think we are at that point yet and it probably won't come until October or November.


in particular, that the Oct-Nov pullback you've been thinking about will be a more sideways chop rather than a true pullback type of digestion/consolidation period)?

Just trying to keep up with all the changes! THANKS!!!


And I am glad I am out of my shorts now. Personally, with QE3 I think it was a silly idea to try to make an extra buck on a pullback. Sideways is more likely, as you note.

I have been selling a good amount of my positions a bit too soon, all for profit, but I thought could buy them lower once the market worked it's overbought condition. But no sizable pullback seems to be in order short term, so the best approach for me now is to ride the rest of this move with what I have. So, what would you take as signs that the current move has been exhausted?

Even when this move has been exhausted I don't expect a big pullback, nothing like what we have seen since last August, so what indicators are you planning to use for adding to your positions?

Last, I have not entered any positions in Europe, so please keep us posted on when you think is a good time to add or open a new position.


Best, Abe

Abe, I keep a folder of Mike's positions. I don't very often do a copycat trade, but this morning I noticed that FTE (which Mike owns) dropped hard, so I bought a little at $13.01 - and I'm assuming, of course, that nothing major has gone wrong to cause the sudden drop.

And, after making 19% in a week (earlier) with GREK, I'm waiting/hoping that it pulls back to its 20dma for re-entry.


I also bought a little FTE here as well. It looks great for a long term hold, and is paying a 13% dividend at these levels. Still kicking myself for not adding the Greek telecom, hopefully will still get a chance for that.

Sept. 18, 2012 - 1211 GMT [Dow Jones] Exane BNP Paribas downgrades France Telecom (FTE) to neutral from outperform and cuts its target price by 4% to EUR11.50. Also trims 2013 Ebitda estimate by 1.3% to EUR12.85B, 2%-3% below consensus. Now expects the final dividend/share to be cut to EUR0.40 from EUR0.58. Says the stock's relative outperformance since April and the tougher upcoming newsflow [3Q results on Oct. 25] point to more difficult months ahead. Shares drop 2.6% to EUR10.15.



I noticed several FTE downgrades in the last week. There are 2 players in europe that have 4g or LTE and obviously will get a big chunk of that apple business. I'm unclear whether FTE's network can support the new Iphone. Also appears that the spike in earnings was a one time event.

\\// It would be illogical to assume that all conditions remain stable

My advisor is not convinced that Europe will be a a true bull at this point or if this is a rally with so much still going on....Lots of noises out now about how everyone will have to agree to conditions, Greeks hassling where to cut, etc.

Caution with some analysts as well.

We have Verizon and my advisor isn't thrilled with the valuations at this point, let along playing with foreign telecoms.
This is not to say Mike isn't right long term, just that everyone is in a different place with different time horizons and money to play with and let sit for long terms.

My advisors, who are in the Chris Martenson circle, are about 35-40% cash, in international bonds, gold, some miners, oil services, some domestic things for some divs. and writing some covered calls. So, they're not shy about the international scene, but have bonds at this point rather than European equities.

Louise Yamada was on Bloomberg radio this AM was talking about this is all like a hot-air balloon.

I'm pretty well repositioned now, so not sweating getting into drops of miners. Like Abe, am holding now. If the opportunity comes for some of the European ETFs will dabble.

I do envy those who have the focus to really work this market. Technically, I'm pretty fair at seeing what's going on, but my execution is spotty. My mother slid off her bed in assisted living last night when she attempted to get out of bed instead of pushing that damned call button! She has Stage 2 Alzheimers which is this off and on sort of thing. Never know when the next shoe will drop...she just got there after having fractured her pelvis and broken her lower arm in a couple of places....hospital, rehab, now assisted living. Just when I think I can get to a "normal" schedule, things go to pot again. Not to mention I am in the throes of clearing out and shredding all sorts of stuff in an attempt to get things to a manageable level.

I sure wish I had the time to fish or even just sit down and read a book!!!

I just feel edgy about the whole scene now. Everything seems so tenuous in the market and the world. Shredding, at least, lets me vent some of my anxiety in the form of purging a lot of old crap!

On the bright, space shuttle Endeavor is going to fly over Las Cruces tomorrow on its way to its final home...I love the shuttle and am hoping to see it!
It will be flying out of El Paso, over White Sands base, and over the East Mesa and the city! I live on the East Mesa and have a clear view of the Organ Mountains which sit between me and White Sands, so I'm hoping to be able to see it!!!!!!


apple and other 4g phone vendors have to release region specific devices to use this type of network, as the network providers use different frequency ranges. the phone's antenna has to be made to match the network's frequency range, for the region it will be sold in.

so, the telecoms have some time still to roll out 4g services.

i've read they will have 4 network providers with 4g services in the UK here so discounting a telecom in the UK for not having 4g *today* could be illogical, there will probably be more than just 2 once it matters and that LTE money starts rolling in.


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