Monday, 26 August 2013

FREECharts.com Are We Really In A Recovery Or Headed For A Relapse?

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Is The US In A Recovery Or Is The POTUS Credible? No & No!

 

August 26, 2013
In This Issue
The Death of the PC
September E Mini
December Gold
December Corn
Are We Really In A Recovery?
Trend Compression & Crossover Systems

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The Death of the PC  

 

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Dear Reader,

 

Assuming there is a shred of truth to anything coming out of the White House, the folks who allegedly work there, or just about anyone else in this administration, we have nothing to worry about.

 

Sadly, this probably is just not the case. Just in the past few days it was reported folks on disability will be completely without a penny of "benefits" within 36 months and faster if the current trend of 100k new additions per month continues.

 

Currently there is 5.84 non-government workers for every single government worker. That ratio of just under 6 to 1 is shrinking with the incompetent leadership on display at exclusive golf courses and vacation spots around the globe when our dear leader pokes his head up to lecture Americans on how we should do more to help the less motivated and under prepared.

 

Zerohedge reports government workers are going to soon be sorely disappointed to find their pensions are massively underfunded, nearly 5 times the shortfall of the private sector pensions.

 

Private sector pensions seem to be underfunded by over $215b while government pensions are underfunded by over $1 trillion. Perhaps a few less rounds of golf and vacations would help the government workers feel better when their pension checks stop arriving, should that happen.

 

When 16% of the pensioners are at risk of not receiving their promised retirement, this well oiled media slick administration is going to have to do some pretty fast talking to retain their collective scalps. Blaming this on past administrations lost any real zip about 4 1/2 years ago. The only ones who believe that nonsense are the chemically enhanced and the die hard liberals who just can't get enough of something for nothing.

 

Raising taxes won't help. We are dangerously close to a tax revolt now. Confiscating more of what folks earn to make up for a government who can not seem to control spending while the decision makers are squandering hundreds of millions of dollars while abusing the authority on loan to them by the citizenry just looks like a recipe for disaster to me.

 

Somehow, working productive Americans have been busy supporting their familes and themselves while the moocher class, which obama and his ilk rely upon, has grown into an unruly and ungrateful mob.

 

I would suggest a change in the voting system a bit. Everyone has to show two forms of ID to vote and voter fraud is an offense punishable by loss of citizenship and a one way ticket to the country of your choice, assuming they will accept you.

 

In addition, if one is not a property owner, they are not allowed to register to vote. If one is receiving a penny of anything from the government, they would be ineligible to vote.

 

The under achievers and the folks with a desire to have what you and I earn are influencing the policy making of government and that is just wrong.

 

They have foisted on America a regime that is so obviously unfit to lead, and have done it not once, but now twice in a row. We are allowing the wrong people have a voice in the direction America is going to travel and these people are just clueless.

 

We should have a commander in chief that knows the difference between the Marine Corps and a corpse. We should have a leader who has some understanding of employing people and some success record in business, which currently we have the village idiot who has proven to know none of these.

 

His idea of a recovery is getting a birdie on the 9th after going one over on the 8th. He has no idea of what a recovery is. Employment is almost at a 30 year low, bonds are dropping faster than Ms. Cyrus' pants, federal debt is going up a lot faster than the $billions we are hearing about I suspect, the Baltic Dry Index is just bouncing off a 7 year low which was about 8% of it's highs.

 

We can not listen to what this government is telling us. They are not capable of articulating the truth and should be ignored at the very least. The below average American is brighter than these knuckledraggers. The average American is way beyond these folks.

 

The Dry Index is an indication of where the global economy is. Copper is a great indicator of where the American economy is. Both are near the bottom and we are told we are in a recovery. What crap!

 

If you have a pension or a 401(k), you may want to do some investigating. If your qualified program was with a company that was bought or closed, you need to find out who the administrator is, how the funds you were promised are going to be paid out long term, and if this is an insurance annuity product as your fund redemption could be held up and your requests for information could be costing you more than you know. In addition, some companies are even charging a "hostage" fee of up to 10% of your account balance to agree to send you the money. That does not mean necessarily you will get the money, that is just the beginning.

 

In any case, beware of politicians and administrators as I suspect none of them have your best interest at heart.


 

 

The days of paying for costly software upgrades are numbered. The PC will soon be obsolete. And BusinessWeek reports 70% of Americans are already using the technology that will replace it. Merrill Lynch calls it "a $160 billion tsunami." Computing giants including IBM, Yahoo!, and Amazon are racing to be the first to cash in on this PC-killing revolution.

Yet, a small group of little-known companies have a huge head start. Get the full details on these companies, and the technology that is destroying the PC, in a free video from The Motley Fool.

 

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September E Mini 

 

The e mini experienced a bit of a dip and now is beginning to retrace. Although it closed near the low today, the range did make a higher high than on Friday. 


September E Mini  
The RSI is indicating the e mini should be going lower, stochastics is still pointing up. A mixed bag and a bit of a confused market being pushed by market news and then political blather by a secretary of state about as accomplished as his boss.

 

September Bonds  

 Bonds and treasuries are looking up while interest rates are rising. This could be putting a lot of pressure on the market in the near future. With the Chinese, Japanese, and others selling treasuries for the past 90 days, this is a market where one should look at the fundamentals as well as the technicals and definitely use solid money management.

December Gold


As I pointed out in an earlier newsletter, if the 1290 level would hold, then I thought we could see a rally back to the 1400 level.

 

December Gold  

I was right and wrong. The 1290 level was not held but we did see the rally back to 1400 with a push above that level. I understand gold in India is actually selling for over $1800 an ounce. India is one of the largest purchasers of gold so I suspect we could see some additional upside as they may continue to buy gold here in the US and trade it back in India for a handsome profit.

 

The banks and the Fed can only hold this market down so long and eventually the demand, which has been enormous, will overcome the banks and the Fed. When that happens, we may very well see some well known banks shutter.

 

If you are a buyer of gold, this may still be a bit of a bargain price. For traders, if the dollar continues to show weakness and the bonds can not hold, I feel gold may be moving to it's former highs and push beyond that. 

 

December Corn


Once again we have seen the USDA revised numbers which is becoming all too common with this administration. They just can not get much of anything right.

 

An additional million plus acres found and then a flood in Georgia have been blamed for the price drop and the rally. How do you "find" an additional million plus acres of corn?

 

In any case, corn growing farmers and traders long corn should be happy with today's price action as you can see in the following chart.

 

December Corn  
How stochastics can be pointing down after today is a little surprising but at least the RSI has it right. There is a gap based on today's action that will likely want to get filled and volume was sky high today.

 

It looks like we could have some additional follow through buying as some contracts were up the limit set by the exchange. This could lead to expanded margins so if you are in this market with a futures contract, be aware the exchange can and often times does expand margins.

Are We Really In A Recovery?

The definite answer is an unequivocal maybe but not likely. There are a number of indicators but a few of the ones I like to watch are below . If we are talking about an economic recovery for the middle class, which I don't think you can have a real long-term recovery unless the middle class earner is front and center of a recovery, Two indicators I like to look at are copper and lumber. These two charts have a little age on them but the prices have not really changed a great deal since they were made.

September Copper
Does anything get made before copper is purchased? Is there anything in construction that can be built without copper? Until copper is leading the way, I would have a hard time believing there is a recovery for anyone except the ultra wealthy Wall Street types and the folks who are already very wealthy who can afford to push money around the globe. The vast majority of Americans I don't believe are in that group so according to my first indicator, I would say someone is blowing smoke about a recovery.

September Lumber
Now looking at lumber, the prices are not at the absolute bottom, however, they are far away from the 400 they were just a few months ago during the heart of the winter when construction is normally at it's lows. Volume was very high today with a close near the top so perhaps this is the beginning of something. 

Unfortunately, once again, not much gets built until copper and wood are purchased. What kind of doors, trim, cabinets, windows, desks, chairs, lamps, appliances, wiring, and so on are we going to have without wood and copper. These are purchased well in advance so the producers know what they will have to charge for products so the builders know what they will charge the buyers so the buyers know how much to seek from lenders.

To me, food still looks high and very likely will remain high while industrial goods and base materials for manufacturing are expensive. 

Then looking to energy, what gets manufactured without energy? Crude oil is getting extremely high as the following chart will illustrate.

 October Crude Oil
 Stochastics seems to be flattening out as is the RSI. If the conundrum in chief, who seems to be in a constant state of confusion,  gets us into another middle east squabble, expect to be paying around $5 a gallon for gasoline very soon and watch the stock market slide, hard. This may give us a peak at what we can expect this fall.
  
Current Trading Trend Compression & Crossover Systems

 

I have been testing two of my systems and wading through hardware, software, and data problems for the past number of weeks and now am beginning to employ my two systems. I had been looking at ranges for as much as a 30 to 60 day period. With a market that is being pushed politically, the results were not what I had hoped so I am going to employ systems that depend on much shorter time frames and using trailing stops.

 

Last night my systems indicated shorts on some currencies but markets did not open in my favor so I did not execute my orders. Tonight the TC indicates a long trade in the Pound, the Euro, and the Suisse. I would not execute all these trades as a rally in the dollar would put all these trades on the defensive so I will have to pick just one early this evening and see if we can get in. I may place all the trades and cancel the others as soon as one gets filled and is moving in our direction.

 

At present, only Lee and Bart are aware of the TC system but this week I plan to create a newsletter just for clients that will explain in more detail what I am doing. When you see the method to the madness, so to speak, I think you will appreciate these systems and their potential.

 

After I am in trades, I will alert everyone where we got in and they can follow the trades. I will also alert you when I exit the trades with a recap of where we entered and where we exited.


If there is a stock or commodity you have a question about, let me know. I will try to get back to you as quickly as possible and perhaps include your question in the next commodity newsletter.

By the time I am finished doing my research, scouring charts, and writing most of these newsletters I am just about brain dead. Going back and reading them sometimes can make me cringe and sometimes laugh when I see my spelling and grammar. Neither of which have ever been my strong points. Thanks for overlooking these. 

Sincerely,

 

Robert Biggs
Robert Biggs
FREECharts.com
Disclaimer: There is substantial risk in trading futures and options on futures. Past performance is not necessarily indicative of future results. You may make money or you may lose money regardless of whether you or an industry professional manages your account.
  

 

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