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Monday Market Wrap

Big Al
August 31, 2015

Click download link to listen on this device: Download Show

All the conventional indices closed down today. Oil (both West Texas Crude and Brent) were up about 7% and gold and silver both closed up although ever so slightly. Many people are predicting a very rough time in the financial markets starting this month. Listen to see what we think about that.

Discussion
144 Comments
    CFS
    Aug 31, 2015 31:53 PM

    I like the Wrap.

    I like, ETFs: JJE and DBE better than XLE, I think. Comments, Guys?
    Haven’t looked up gas content, which I don’t want.

      Aug 31, 2015 31:43 PM

      Thanks Professor.

      Will pose your question to Gary.

        Aug 31, 2015 31:50 PM

        I think XLE is a winner. There is also XOP and OIH that have more liquidity and have performed better. On the chart below – right click on the “200 Days” bar and select “All”. You’ll see what I mean.

        http://stockcharts.com/freecharts/perf.php?XLE,XOP,OIH,JJE,DBE#

          Aug 31, 2015 31:54 PM

          I just saw comments below so I added DIG to the composite. Again, right click on the time bar “200 Day” and select “All”.

          Now this chart has XLE, XOP, OIH, JJE, DBE, and DIG.

          http://stockcharts.com/freecharts/perf.php?XLE,XOP,OIH,JJE,DBE,DIG#

            CFS
            Aug 31, 2015 31:11 PM

            Thanks. If you look at the last 3 months performance you come to a different conclusion.

            I’m so worried about the conventional market, however, I’m going predominantly short that.

            Aug 31, 2015 31:18 PM

            I just changed the time horizon to 3 months and XLE and OIH were still out-performing the rest of the pack. DIG isn’t looking very good in comparison.

            Aug 31, 2015 31:40 PM

            Yes CFS – the conventional markets are on very shaky ground.

      Aug 31, 2015 31:50 PM

      From Gary: They are a little thin for my taste. If one wants higher beta they could always go with DIG.

        Aug 31, 2015 31:55 PM

        Yup, Put some meat on them bones!

        CFS
        Aug 31, 2015 31:37 PM

        They are thin, Big Al, I agree. That’s why I was wrong on SDD rather than SDS.
        I useally am almost fully invested, and change from long to short, depending on whether I’m bullish to bearish. But choose ETFs to eliminate management mistakes when I’m short. I forget the vast majority of investors are always long. Options often seem thin to me too. I have often used DIG in the past.

          CFS
          Aug 31, 2015 31:38 PM

          I do know how to spell usually, but my vision gets worse in the evening.

            CFS
            Aug 31, 2015 31:41 PM

            I believe the PPT will have to get involved in the conventional market tomorrow.
            I don’t like the look of things.

    Aug 31, 2015 31:07 PM

    Upload it to iTunes please.

      Aug 31, 2015 31:20 PM

      Hi Skeeta, the segment should have uploaded to iTunes when we posted this segment. I will contact our webmaster to see if she can figure out the issue.

        Aug 31, 2015 31:44 PM

        Thanks Cory…its not there presently.

        Aug 31, 2015 31:43 PM

        I like that this audio comes with people doing dishes in the background 🙂

          Sep 01, 2015 01:32 AM

          THAT is OWL working at his second and third time job, trying to make ends meet as a retiree……………………..lol

            Sep 01, 2015 01:01 AM

            Yes, I heard dishes clanking on a prior interview last week and it sounded like a restaurant. I figured Big Al was living it up in a posh country club near the home-front, not doing the dishes. Oh well, they do these audio commentaries no matter what the location (Gary’s out rock climbing, Glen is in China in the middle of the night, etc..) That’s why we love these guys!

    Aug 31, 2015 31:15 PM

    Doc, you don’t sound too convinced by this massive jump in oil?

      Aug 31, 2015 31:43 PM

      That, I believe, is an understatement Bob UK!

        Aug 31, 2015 31:03 PM

        LOL Al 🙂

    LPG
    Aug 31, 2015 31:16 PM

    Hope everyone is well.
    There was a study put out last week on Financialsense.com on the matter.
    TYPICALLY, commodities move UP ahead of interest rates hiking cycles.
    GL to all investing/trading.
    LPG

      Aug 31, 2015 31:31 PM

      Exactly what I have been saying. It’s why the bottoming process in so many commodity indexes virtually guarantees rate hikes if they don’t fall further. We are only 5 years into the current commodities bear though so it is theoretically possible more downside is ahead as Doc has mentioned a number of times recently.

      Aug 31, 2015 31:44 PM

      Hi LPG,
      Was that ALL commodities across the board?

        LPG
        Aug 31, 2015 31:20 PM

        Hello Skeeta,
        Article doesn’t say it but the CRB is a good proxy mentioned at some point:
        http://fat-pitch.blogspot.ae/2015/08/how-asset-classes-have-responded-to.html#more

        Best to you,

        LPG

          Aug 31, 2015 31:03 PM

          thanks for the link/read LPG

        Aug 31, 2015 31:22 PM

        I’ve pointed that out for years here. Commodities soared with interest rates in the 1970s but everyone seems focused on the very high interest rates at the end of the bull market and draw the wrong conclusions.
        More recently, gold more than tripled as Greenspan hiked rates relentlessly into the 2008 top.

          Aug 31, 2015 31:33 PM

          Yes Matthew, you’ve mentioned the strength of gold in a rising interest rate environment for some time, so I got to tip my hat to you on this one.

            Aug 31, 2015 31:54 PM

            I should’ve mentioned that even copper, zinc and lead beat gold during the Greenspan hikes. Not to mention oil.

            Aug 31, 2015 31:37 PM

            Yes. I truly believe Commodities are about to come back into the discussion a bit more with the general investing community as their is so much bifurcation right now in the marketplace. There are many interesting opportunities that will emerge over the next 3-6 months peppered all throughout the commodity sector that will be great long term holds for 3-7 years.

            It’s times like these that I wish I had a dime for every dime I have.

      Aug 31, 2015 31:57 PM

      Agreed on the commodities historical preference to rise ahead of rate hike cycles.

    CFS
    Aug 31, 2015 31:17 PM

    For individual stocks, do you guys use a stock screener, or just look at some of the “known” names?

    e.g. screener:
    http://finviz.com/screener.ashx?v=111&f=cap_midover,fa_div_o2,fa_epsyoy1_pos,fa_estltgrowth_o5,fa_payoutratio_u90,fa_roa_o5,fa_roi_o10,sec_basicmaterials&ft=4&o=industry

      Aug 31, 2015 31:24 PM

      I like this CFS. I will play around with it a bit more this week but after a quick glance it looks like it could be great to isolate a number of stocks that could interest me.
      Thanks for sharing.

        CFS
        Aug 31, 2015 31:44 PM

        One never knows enough, but every extra bit helps.

          Aug 31, 2015 31:49 PM

          Thanks for the link CFS,
          Much appreciated,
          I’m going to have a play with that.

    CFS
    Aug 31, 2015 31:21 PM

    The PPT did NOT intervene in the market today. (AS far as I could see.)

    I do believe the PPT is only going to intervene to stop major drops.

      jon
      Aug 31, 2015 31:46 PM

      PPT? really? Where were they Monday? Where were they in 2008? 2000? The Asian crisis? Pure nonsense.

        Aug 31, 2015 31:48 PM

        Initiated by Reagan. Remember?

        Aug 31, 2015 31:51 PM

        Al is right; not nonsense at all. Don’t expect to know their reasons or goals behind their interventions.
        Google can help you.
        https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets

        Aug 31, 2015 31:01 PM

        One more thing, how do you know that last week’s plunge wouldn’t have been twice as bad without intervention? The answer is, you don’t.
        I am not saying that they did intervene but just pointing out that you have no way of knowing for sure if they did or did not based on price action alone.

          Aug 31, 2015 31:37 PM

          Also, the stock market “circuit breakers” (post 1987 crash) limited the downside. The markets got haulted a few times to slow the carnage.

            Aug 31, 2015 31:48 PM

            There ya go. That’s intervention.

            Aug 31, 2015 31:39 PM

            Right. I was throwing that in as another way the markets are tempered.

            Sep 01, 2015 01:19 AM

            I believe the circuit breakers kick in with a 15 minute hault at 7% loss, 13% loss and then the markets close early if there is a 20% loss.

          CFS
          Sep 01, 2015 01:14 AM

          Yes I think you do.
          The PPT are too lazy to disguise their action.
          Their order comes in as a large single order against the trend.
          This causes a vertical jump as you are watching in real time, completely unlike any other movements in the index.
          There may have been more than two interventions last week, which were disguised, but there were two complete anomalous jumps observable in realtime, and still could probably be seen in the price graphs . I posted the times and days on this blog. Both were in the morning, 10:30 one day 10:40 another.

            Sep 01, 2015 01:04 AM

            My comment was directed at Jon who thinks the PPT is “pure nonsense.” I stand by my claim that you can’t always tell by price alone if they were intervening or not. It is a big mistake to underestimate the PPT by saying they are too lazy. It is not made of politicians.

    CFS
    Aug 31, 2015 31:23 PM

    Gsry, I believe being short is safe, PROVIDING NO GEARING.
    Pigs that want to use -3x are going to be slaughtered unless they close out positions every night.

    Aug 31, 2015 31:25 PM

    We have an interesting chart formation on the daily gold chart in a potential cup and handle formation that, if activated and confirmed, will target a minimum objective of around $1,255 and even a likely test of the big prior support from the trading range at $1,270.

    Also Goldman took delivery of 98,300 ounces last week (2.8 tonnes) …
    Did Goldman still expecting a price under 1000$ or do they know something that
    we don’t ???

      CFS
      Aug 31, 2015 31:38 PM

      You don’t believe a proven multiple liar ever tells the truth, do you?

      (Statement also holds for many politicians)

        Aug 31, 2015 31:46 PM

        Ahhh… Who To Trust???
        COMEX And Their Paper GOLD Papers.
        NYC FED And Their Underground GOLD Stocks Unaudited.
        Fort Knox GOLD Storage Unauditesd.
        Chinee And Their LOW GOLD Numbers Unaudited.
        Ahhh… Who To Trust???

          CFS
          Aug 31, 2015 31:43 PM

          Trust in yourself.

      Aug 31, 2015 31:43 PM

      I noticed that too Gabriel. But my problem with it is that this cup and handle are forming at the bottom of a falling price range and not off a prior peak which is where the pattern is usually valid.

    CFS
    Aug 31, 2015 31:36 PM

    For quick looks at graphs of commodities I use:
    http://finviz.com/futures.ashx
    hovering a cursor over each currency/commodity brings up a graph.

      Aug 31, 2015 31:47 PM

      Again, thanks for the link Professor!

      Aug 31, 2015 31:01 PM

      Wow – that’s a very handy website CFS. Thanks!

    Aug 31, 2015 31:53 PM

    Great show Gary. I loved your comments. Very positive. I just want to point out a chart that I came across yesterday and posted previously (you may or may not have seen it).

    The chart is one going back 100 years called the Raw Materials Prices (index) and preceded all our modern commodity index’s. Take a look back at the last time the debt bubble burst during the 1930’s and you will see an amazing sight.

    From about 1926 to 1933, commodity prices were in a deep bear market. That is a seven year period that led up to the end of the gold standard and currency devaluations around the globe.

    Anyway, during those few years in the beginning of the Thirties we had dozens of countries defaulting on debts. It was a global event. As the sovereign debt crisis slowly wound down there was an explosive commodities rally that started in 1933 and carried on for almost 15 years.

    You really need to look at the chart and marvel at what a time that was (for those on the right side of the trade of course). The graphic is a little hard to read so a ruler might help.

    The trick here is to understand where we are today in terms of that historical chart. We are currently a little more than 4 years into a commodity bear and the sovereign defaults are only just beginning if that helps.

    A last note…..there is a very clear double bottom on that chart that signaled the termination lows for resources and raw materials.We should probably anticipate a similar thing happening today. In other words, if this is the bottom we will get another good chance to buy it.

    Only time will tell.

    Raw Materials Pricee Index 1915 to………
    http://chartsrus.com/charts.php?image=http://www.sharelynx.com/chartsfixed/1RawPriceMaterials.gif

      GH
      Sep 01, 2015 01:19 AM

      Great commentary and chart, thanks

        Sep 01, 2015 01:42 PM

        Many thanks GH.

    Aug 31, 2015 31:16 PM

    SIGN OF THE TIMES…………..Illinois can not pay lotto winner $250,000, sends winner IOU……………ZEROHEDGE.

      CFS
      Aug 31, 2015 31:21 PM

      They are raising property taxes 30% though in some districts.
      I was going to write about the dangers of Real Estate, when government pensions are having a problem, but got busy doing other things over the weekend.
      ZIRP in the long run will be disastrous, state and locally.

      Aug 31, 2015 31:05 PM

      I saw that. IL is broke and is taxing the snot out of its residents & business owners, and that’s why there’ been an exodus out of IL for families and for businesses.

    CFS
    Aug 31, 2015 31:17 PM
    Aug 31, 2015 31:26 PM

    Hi Doc,

    Been a long time, but I have been listening regularly.  

    On Thursday’s commentary, you mentioned that the metals and the miners have had a nice little pop and could go just a bit higher (to about the 50 dma), which it did on Friday.  Then, the next couple of weeks you expected it to move lower to about the 1100 area.

    Today, you mentioned that we could get a bit of a run in gold here.  This seems to be in direct contrast to the what you were expecting on Thursday.  

    In review of the charts, I couldn’t find any dramatic changes – only (I think as Matt has mentioned) that GLD appears to have closed above the 50 dma for 2 days.

    I’d like to ask:

    Is there a particular change you are seeing that has changed your short term outlook?

    If we do get a bit of a run in gold, how far would you expect it to go?

    Thanks!

      Aug 31, 2015 31:18 PM

      Doc fan; Tomorrow in my view is a key to gold as far as whether it has a chance to run higher. In any event; currently, the technicals I follow aren’t exactly positive for a massive run up in gold anytime soon. There are 3 resistance points amongst others: 1. 20 day MA of the BBs. 2. The 50 day MA of gold and 3. the upper band of the BBs—-if we would move high enough to challenge the upper BBs, the upper BB would be about 1220 by that time. You can almost bet that gold would never take that out on a first try. Furthermore, there are multiple gold charts that are screaming they’re going lower and I can’t imagine that with a significant move in gold. I still feel we have a very good chance of moving in the short term toward 1100 gold. Tomorrow will give a good idea whether gold will continue this grudgingly move higher. I also still feel that we’ll be lower by December with the price of gold—-the charts at this time are giving that indication along with the fact that seasonal tax loss selling could occur again this year around October and into November. I feel that’ll supply some downward pressure on gold again this year but not to the degree of the last 2 years. By the way, how’s the family and good to hear from you.

        Aug 31, 2015 31:29 PM

        Thanks Doc, for taking the time to provide such a detailed answer. As always, very much appreciated! The family is doing great! I love being a family man. We’re even considering another expanding a bit. 🙂 How about you? Have you and family enjoyed the summer. I imagine it’s really nice up north in September.

        Aug 31, 2015 31:09 PM

        Good thoughts Doc. I expect tomorrow to be an up day for Gold, but agree it will run into resistance long before the upper end of where this upleg could go $1224. $1180 and $1200 will be barriers first.

    Aug 31, 2015 31:55 PM

    Wed is the US Oil inventory report and if its down like last week along with a robust Fri NFP release Oil will be looking to take out its resistance zone at $50 heading towards major resistance at $54, what the heck who called the last run from March $42 level to $62 in a mere 6+ weeks! will it repeat?

      Aug 31, 2015 31:13 PM

      OJJ, I’m looking at Oil being down tomorrow (Tues) but then possibly ratching up past resistance later in the week. I picked up some DWTI at the end of the trading day Monday, and hope to sell into tomorrows pullback (if we ever get one). Then it’s back to UWTI.

        Aug 31, 2015 31:16 PM

        That’s what I did….just curious Shad, what was your tipoff before the close that oil might soften into tomorrow? I mean what technical were you using? Or are you going on daily counts or gut instincts?

          Sep 01, 2015 01:31 AM

          I saw the 200 day EMA & lower BB get broken to the downside on high volume after 3 days of out-sized moves in Oil to the upside, and conversely DWTI to the downside. In addition, the prior July trough at $107.80 was taken out, as well as the prior June peak at $100.74.

          I realize that the MACD and Slow Stochastics have further to go before crossing and the overall the trend is still for oil to rise, but I expect a large volume up candle in DWTI tomorrow and conversely, for Oil to pull back (5-7%) before making a run at $50.

          Here’s a chart with those prior troughs/peaks labeled and the 200 Day EMA & lower Bollinger Band getting broken to the downside. Setup for a brief reversal.

          http://stockcharts.com/h-sc/ui?s=DWTI&p=D&b=5&g=0&id=p95152439275

            Sep 01, 2015 01:37 AM

            I feel pretty good about getting in at $92.47, but I could get my back-side handed to me if Oil keeps charging tomorrow. I may have to bail if it gets ugly. My goal is to make 10-20% and then sell, and then put some profits into another sector, and take the principle amount and roll it into UWTI ahead of the Oil inventory announcements on Wednesday. We’ll see how it goes….

            Sep 01, 2015 01:53 AM

            I just sold 55% of my position in DWTI for $113.13 (for a profit of 22.3% since taking out yesterday’s position of $92.47). I’m waiting just a little longer for the remainder before going back into UWTI.

            Sep 01, 2015 01:04 AM

            Well I sold the balance 45% position at $112.12 as I’m just not sure what is going on in Oil. I wanted to lock in the profit of 21.25% but may be leaving money on the table. I just want to be ready to buy UWTI and we’ve been stuck in a range.

            Sep 01, 2015 01:31 AM

            I just took my first position in UWTI at $1.15, but it is trying to catch a falling knife.

            My thoughts are that Oil will still try for $50-$55 later this week before the rally tops out. We’ll see how it goes…..

            Sep 01, 2015 01:59 AM

            Darn – DWTI ratcheted even higher now at $113.94. Should have held my 2nd position longer, but earlier today it looked dismal. Oh well, it was a good trade regardless. I’m done for the day and hope everyone had a great day in the markets.

            Sep 01, 2015 01:12 PM

            Well done Shad. And thanks for the explanation. In my own case I just counted out the waves that were, in this particular case, fairly easy to read. It is not always so though so alternate methods need to be used. I just got in btw…..missed the whole day due to an appointment. Wow…too much action. Be back tomorrow though.

            Cheers!

            Sep 01, 2015 01:35 PM

            Good thoughts on using the wave counts and welcome back to the insanity of the markets. September is kicking off with some excitement. Good luck!

            Sep 01, 2015 01:51 PM

            Thanks. Btw…..We had a double bottom on UWTI near the end of the day as seen on the one minute chart.

      Aug 31, 2015 31:15 PM

      OJJ – I’m looking at Oil being down tomorrow (Tues) but then possibly ratcheting up past resistance later in the week. I picked up a short-term tradable position in DWTI at the end of the day Monday, and hope to sell into tomorrows pullback (if we ever get one). Then it’s back to UWTI for a little more climbing.

    CFS
    Aug 31, 2015 31:50 PM

    Oil inventory is down, I saw a preliminary report.

      Aug 31, 2015 31:24 PM

      Forecasts call for declines too.

    CFS
    Aug 31, 2015 31:52 PM

    Gas (natural gas) inventory is strongly up)
    Didn’t pay attention to gasoline numbers.

    Aug 31, 2015 31:11 PM

    An article on the possible gold bottom by the Aden sisters.
    http://www.321gold.com/editorials/aden/aden083115.html

    Aug 31, 2015 31:21 PM

    Negative rates are gold positive:

    http://finance.yahoo.com/bonds

    Aug 31, 2015 31:24 PM

    Spike in rates shows that discounting of treasury bills were preparing for a sell off, but that did not succeed at advancing the major indeces, so rates have fallen again, which is not commensurate with Fed expectations:

    http://schrts.co/SXgMle

    Aug 31, 2015 31:30 PM

    CNBC experts keep calling for $30 oil. Dent is calling for $8 to 20 which is just not possible.

      Aug 31, 2015 31:04 PM

      Lol, funny that Armstrong finds himself in Dent’s company!
      Thanks sharing that.

        Aug 31, 2015 31:28 PM

        Eight to twenty bucks a barrel? They are all nuts. It seems mathematically impossible as well because nobody would be pumping for export at those levels. Not even Saudi Arabia. That’s like saying the dollar will go back to 1913 highs or something equally absurd. It seems to me that what most are forgetting here is that the US and the dollar don’t function in a vacuum anymore and the rest of the world will take care of pricing should we ever get such steep falls even briefly.

        Anyway…I DO NOT buy the deflation argument at those extremes and what these analysts are saying is so at odds with everything we know about interest rates, commodity pricing and inflation that is isn’t even funny anymore.

          Sep 01, 2015 01:29 AM

          A listener, you know Harry Dent is just a jerk who is only interest to sell his book. So making extraordinary prediction can attract attention.

      Aug 31, 2015 31:11 PM

      (50 ma below 200 ma)

        Aug 31, 2015 31:31 PM

        Thanks for pointing that out. I might have missed it otherwise.

    Aug 31, 2015 31:29 PM

    The yen has taken back its previous trading range that it broke down from in May:
    http://stockcharts.com/h-sc/ui?s=%24XJY&p=W&yr=5&mn=9&dy=0&id=p01906469242&a=411218747

    Aug 31, 2015 31:44 PM

    Gold is up almost 5 fold vs the CRB (commodities) since 2001. That’s a lot of deflation in real terms.
    http://stockcharts.com/h-sc/ui?s=$GOLD:$CRB&p=M&st=1980-09-07&en=today&id=p81079349212&a=422676478&listNum=1

    CFS
    Aug 31, 2015 31:20 PM

    Have you guys seen a heat map with this much blood except at major crashes?
    http://finviz.com/map.ashx
    Long VIX, Short conventional and try to avoid being run over, is my decision.

    CFS
    Aug 31, 2015 31:25 PM

    Canada looks safer than the US:
    http://finviz.com/map.ashx?t=geo
    But that because of its energy stocks.

      Aug 31, 2015 31:34 PM

      Perfect CFS! And that is why the Loonie is about to get one hell of a bounce off its major support. Next week perhaps?

        CFS
        Sep 01, 2015 01:27 AM

        There is a lot of variation between companies though, some canadian energy stocks are definitely not safe.
        This market scares me.

    CFS
    Aug 31, 2015 31:27 PM

    Here’s the Heat Map for ETFs.

    http://finviz.com/map.ashx?t=etf

      Sep 01, 2015 01:11 AM

      Thanks for posting that CFS.

      Very cool heap map of the different ETFs. I just spent 20 minutes clicking around and discovered a number of ETFs I’ve never heard of before.

        CFS
        Sep 01, 2015 01:29 AM

        Like stockcharts during the trading day the charts are 20-25 minutes delayed, but give an easy quick view.

        CFS
        Sep 01, 2015 01:31 AM

        there are lots of odd-ball ETFs not included on finviz, like the currency hedged foreign index ETFs.

    CFS
    Aug 31, 2015 31:32 PM

    The size, of a section, gives the volume, so that makes liquidity easier…..just pick big squares!

    CFS
    Aug 31, 2015 31:46 PM

    i don’t know! Shortly after I tell someone I’m going to France and England, but haven’t decided about Munchen, I see articles about Octoberfest!

    http://kingworldnews.com/gold-oktoberfest-and-the-great-illusion/

    Aug 31, 2015 31:05 PM

    Here’s a Schiff fork applied to the monthly oil chart. I like.
    http://stockcharts.com/h-sc/ui?s=%24WTIC&p=M&yr=20&mn=11&dy=30&id=p15752517679&a=422687906

    Aug 31, 2015 31:41 PM

    Copper is looking somewhat positive for the last few days.
    http://stockcharts.com/h-sc/ui?s=%24COPPER&p=D&yr=1&mn=1&dy=0&id=p00363205766&a=370688539

    Aug 31, 2015 31:46 PM

    THE DAILY MARKET WRAP…..makes a lot of sense…………

    Aug 31, 2015 31:48 PM

    WELL, WELL, WELL…………..gentlemen, we are now in SEPTEMBER!

      Aug 31, 2015 31:58 PM

      The best time of the year.

      Aug 31, 2015 31:41 PM

      Let the Games Begin!!!

        Aug 31, 2015 31:35 PM

        Ha! Make that three of us. It will be the best September EVER.

          Aug 31, 2015 31:50 PM

          I certainly hope so,
          some of my coal stocks are down 25% at present.
          Some of my other commodities are down as much as 50%.

          …yet I think I still may be in for a bit more pain yet before they turnaround.
          Anyhow……..lets see how it plays out

    Aug 31, 2015 31:48 PM

    LET THE FUN BEGIN!

      CFS
      Sep 01, 2015 01:56 AM

      Sounds like the beginning of a Shakespearean Comedy.

    Sep 01, 2015 01:36 AM

    China and European PMI data both down.

    DOW Futures currently down 365 points. S&P Futures down about 40 points.

    CFS
    Sep 01, 2015 01:38 AM

    I hope for “Much Ado about Nothing”, as opposed to” The Tempest”.

    and so to bed…..remembering Gone with the Wind…..
    Tomorrow is another Day.

    CFS
    Sep 01, 2015 01:42 AM

    Asia did not look good:
    Australia -105.00 -2.01% 5,117.10 2:38am ET
    Shanghai SE Composite Index China -39.36 -1.23% 3,166.62 3:29am ET
    Hang Seng Hong Kong -481.77 -2.22% 21,188.81 3:59am ET
    Mumbai Sensex India -507.35 -1.93% 25,775.74 4:23am ET
    Nikkei 225 Japan -724.79 -3.84% 18,165.69 2:28am ET
    Taiwan TSEC 50 Index Taiwan -157.36 -1.92% 8,017.56 1:33am ET

    Sep 01, 2015 01:23 AM
      CFS
      Sep 01, 2015 01:56 AM

      I am watching for PPT action.

    Sep 01, 2015 01:47 AM

    You’d have to go back six years to find a week in which the venture exchange was up as much as it was last week.
    http://stockcharts.com/h-sc/ui?s=%24CDNX&p=W&yr=7&mn=8&dy=0&id=p77393245250&a=379558732

    bb
    Sep 01, 2015 01:54 AM

    A lot of talk about oil/gas lately, don’t think I saw anyone mention this

    Italian energy giant Eni has announced on its website that it has found a “supergiant” gas field at their Zohr Prospect in the deep waters of Egypt in the Mediterranean, claiming it “could become one of the world’s largest natural-gas finds.”

    It added that this is “an important day” for the company, as well as for Italy and Egypt, as it could fuel Italy’s economic development and “will be able to ensure satisfying Egypt’s natural gas demand for decades.”
    ,

    bb
    Sep 01, 2015 01:59 AM

    Russian President Vladimir Putin has drafted a bill that aims to eliminate the US dollar and the euro from trade between CIS countries.

    This means the creation of a single financial market between Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and other countries of the former Soviet Union.

    “This would help expand the use of national currencies in foreign trade payments and financial services and thus create preconditions for greater liquidity of domestic currency markets”, said a statement from Kremlin.

    The bill would also help to facilitate trade in the region and help to achieve macro-economic stability.

    Within the framework of the Eurasian Economic Union (EEU) the countries have also discussed the possibility of switching to national currencies. According to the agreement between Russia, Belarus, Armenia and Kazakhstan, an obligatory transition to settlements in the national currencies (Russian ruble, Belarusian ruble, dram and tenge respectively) must occur in 2025-2030.

    In August, China’s central bank put the Russian ruble into circulation in Suifenhe City, Heilongjiang Province, launching a pilot two-currency (ruble and yuan) program. The ruble was introduced in place of the US dollar.

    Thought this might be a clue to the timeframe remaining for the American dollar.

    Sep 01, 2015 01:16 AM

    China’s Economy Is Undergoing A Huge Transformation That No One’s Talking About
    Frank Holmes

    August 31, 2015
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    The photo you see below was snapped recently in Beijing. It might not be that special to some readers, but in my 25 years of visiting the Chinese capital, I’ve never seen a blue sky because it’s always been blotted out by yellow smog. Beijing is clearly undergoing a massive transformation right now. This might please proponents of the green movement, but it’s ultimately harmful to the health of China’s manufacturing sector.

    On the other hand, blue skies could be ahead for China’s service industries.

    Misconception and exaggeration are circling China’s economy right now like a flock of hungry buzzards. If you listen only to the popular media, you might believe that the Asian giant is teetering on the brink of economic disaster, with the Shanghai Composite Index’s recent correction and devaluation of the renminbi held up as “proof.”

    Don’t get me wrong. These events are indeed significant and have real consequences. They also make for some great, sensational headlines, as I discussed earlier this month.

    But what gets hardly any coverage is that China’s economy is not weakening so much as it’s changing, much like Beijing’s skies. Take a look at the following two charts, courtesy of BCA Research:

    You can see that the world’s second-largest economy has begun to shift away from manufacturing and more toward consumption and the service industries. While the country’s purchasing managers’ index (PMI) reading has been in contraction mode since March of this year, the service industries—which include financial services, insurance, entertainment, tourism and more—are ever-expanding. The problem is that the transformation has not been fast enough to offset the massive size of the manufacturing sector.

    Just as a refresher, the PMI is forward-looking and resets every 30 days. It helps investors manage expectations. Consider this: The best-performing country in our Emerging Europe Fund (EUROX) is the Czech Republic—which also happens to have one of the highest PMI readings. Coincidence?

    In China, overseas travel, cinema box office revenue and ecommerce are all seeing “explosive growth,” according to BCA. The country’s once-struggling real estate market is also robust. The government just relaxed rules to permit more foreigners to purchase mainland property.

    But you’d be hard-pressed to come across any of this constructive news because it’s not particularly good for ratings.

    A recent Economist article makes this point very clear:

    The property market matters far more for China’s economy than equities do. Housing and land account for the vast majority of collateral in the financial system and play a much bigger role in spurring on growth. Yet the barrage of bearish headlines about share prices has obscured news of a property rebound. House prices have perked up nationwide for three straight months. Two months after the stock market first crashed, this upturn continues.

    “Commodity Imports Have Actually Been Quite Strong”

    Again, China’s transformation from a manufacturing-based economy to one that focuses on consumption has real consequences, one of the most significant being the softening of global commodity prices. As I told Daniela Cambone on last week’s Gold Game Film, gold’s Love Trade has become not a No Trade, but a Slow Trade. We’ve seen demand cool along with a decline in GDP per capita, the PMI readings and China’s M2 money supply growth.

    Below you can see the relationship between China’s M2 money supply growth and metal prices. Since its peak in late 2009, money supply growth has been dropping year-over-year, driving down metal prices.

    Money supply growth tends to be a “first mover.” When it has contracted, the PMI has usually followed. Recently, this has hurt economies that depend on China as a net buyer of raw materials, including Brazil, which supplies the Asian country with iron ore, soybeans and many other commodities, and Austrailia.

    When M2 money supply growth and the PMIs are rising, commodity prices can also rise. But that’s not what’s happening. It’s important to recognize that when new orders for finished products fall, there’s less consumption of energy to manufacture and ship. Again, this might make the greenies happy, but it’s ultimately bad for manufacturing.

    I’ve said several times before that China is the 800-pound commodities gorilla, and it continues to be so. The country currently consumes about a quarter of the total global output of gold. For nickel, copper, zinc, tin and steel, it’s around half of world consumption. For aluminum, it’s more than half.

    These are huge figures. But investors should know that Chinese imports of these important metals and materials still remain strong. Tom Pugh, a commodities economist at Capital Economics, told the Wall Street Journal last week that the market has it wrong about China, that the drop in demand has been overstated:

    If you look at Chinese commodity imports over the last few months, they’ve actually been quite strong. A lot of it is just that people thought China would continue to grow at 10 percent a year, ad infinitum, and now people are just realizing that’s not going to happen.

    Reuters took a similar stance, reporting that “there were at least 21 commodities that showed increases in imports greater than 20 percent in July this year, compared to the same month in 2014.” Weakening demand has been caused by a number of reasons, including “structural oversupply” and “the impact of the recent volatility in equity markets.”

    But it’s important to keep things in perspective. Compared to past major market crashes, China’s recent correction doesn’t appear that bad.

    Any bad news in this case can be seen as good news. I think that in the next three months we might see further monetary stimulus, following the currency debasement nearly three weeks ago. We might also see the implementation of new reforms in order to address the colossal infrastructure programs China has announced in the last couple of years, the most monumental being the “One Road, One Belt” initiative.

    Dividend-Paying Stocks Helped Stanch the Losses

    As investors and money managers, it’s crucial that we be cognizant of the changes China is undergoing. With volatility high in the Chinese markets right now, we’ve raised the cash level in our China Region Fund (USCOX), and after the dust settles somewhat and the right opportunities arise, we’ll be prepared to deploy the cash. We’re also diversified outside of China.

    We managed to slow the losses during the Shanghai correction by being invested in high-quality, dividend-paying stocks.

    According to daily data collected since December 2004, the median trailing price-to-earnings (P/E) ratio for the Shanghai Composite Index constituents currently sits at 48.6 times earnings. If it reverts to the mean, risk is 32 percent to the downside for the index. Currently, the P/E ratio of our China Region Fund constituents sits around 16 times. This suggests that USCOX has less downside risk and is cheaper than the Shanghai Composite.

    We seek to take advantage of the trend toward consumption by increasing our exposure to the growing service industries—technology, Internet and ecommerce companies (Tencent is one of our top 10 holdings); financial services (AIA and Ping An Insurance); and enviornmental services (wastewater treatment services provider CT Environmental).

    Rising sports participation among white collar workers in China is very visibile these days. Xian Liang, portfolio manager of USCOX, says that his friends back in Shanghai share with him, via WeChat, how they track their daily runs using mapping apps on their phones.

    With that said, an attractive company is Anta Sports, an emerging, innovative sportswear franchise. Fans of the Golden State Warriors might recall that guard Klay Thompson endorsed its products earlier this year.

    We believe the China region remains one of the most compelling growth stories in the world and continues to provide exciting investment opportunities.

    Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting http://www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

    Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

    The Shanghai Composite Index (SSE) is an index of all stocks that trade on the Shanghai Stock Exchange. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

    The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

    M2 money supply is a broad measure of money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds.

    Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility.

    ********

    There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time.

    Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Emerging Europe Fund and China Region Fund as a percentage of net assets as of 6/30/2015: Tencent Holdings Ltd. 6.52% China Region Fund, AIA Group Ltd. 1.92% China Region Fund, Ping An Insurance Group Co. 3.28% China Region Fund, CT Environmental Group Ltd. 0.52% China Region Fund, ANTA Sports Products Ltd. 0.57% China Region Fund.

    All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

    Courtesy of http://www.usfunds.com/

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    Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm’s chief investment officer in 1999.

    Sep 01, 2015 01:32 AM

    DEFLATION almost every country reported Aug PMI as deflationary! Canada is in a recession would not surprize me if BOC cuts rates again, not $cad bullish

    Yen gives gold a pop as the two continue their dance since 2007….!!!!!!

    50DMA on $WTIC chart was support so very normal action that Monday it was resistance a good place to lighten up on long oil positions, will the gap at $56 ever get filled? Lets see what EIA storage data reaction is Wed, could be short time again.

    http://stockcharts.com/h-sc/ui?s=%24WTIC&p=D&yr=0&mn=3&dy=0&id=p12449384465&listNum=1&a=422721145

    Sep 01, 2015 01:51 AM

    “I find it “interesting” that MSM (mainstream media) seems to enjoy referring to commodity “bear markets”, when the price declines by 20%. When the price rises 20% or more, as it just did for oil, MSM is strangely reluctant to use the term “bull market”.
    http://www.graceland-updates.com/images/stories/15sep/2015sep1oil1.png
    That little blue arrow shows that Stewart understands the value of volume analysis.

      Sep 01, 2015 01:55 AM

      I guess MSM understands a weekly and monthly close is a true reading instead of daily pop and flops

        Sep 01, 2015 01:03 AM

        You miss Stewart’s point. The MSM is real quick to apply their little 20% rule when it suits THEM.

        Sep 01, 2015 01:04 AM

        Btw, is the action in oil what you’d call a “pop?” Does that volume mean anything to you?

          Sep 01, 2015 01:09 AM

          I never traded off volume I trade of indicators trend lines and price along with % gains always selling 1/2 with 100% gains, always

          Where was the volume off the $42.41 March low? I didn’t miss that run watching volume

            Sep 01, 2015 01:15 AM

            You don’t have to trade it directly or exclusively to see that it provides information.

            Sep 01, 2015 01:24 AM

            I agree that volume is a good indicator of sentiment and momentum and is helpful to watch ( for spikes/dips and there can be trendlines within the volume charts as well). Volume is just another indicator to keep an eye on for turns and continuations in runs.

            Sep 01, 2015 01:24 AM

            agree a piece of the trend but I think Stew over emphasizes, oil was bought on US GDP, and OPEC news so of course volume was high traders are paying attention!

            Sep 01, 2015 01:05 AM

            This is true, that news further accentuated the move and volume, and I agree that traders are paying attention. These markets are getting quite turbulent so I’m watching more closely than normal myself. Good luck to everyone in their investing.

    Sep 01, 2015 01:52 AM

    hey goldbugs, US PMI and ISM were terrible suggesting a Sept rate hike is a no go, so why isn’t gold ripping higher and taking all the miners with it = DEFLATION!

      Sep 01, 2015 01:01 AM

      Gold is historically expensive in real terms right now. As I mentioned earlier, that is going to cause some sector rotation. In my opinion, gold is a sell or hold vs gold miners as it has NEVER been so expensive. And with the GSR at around 80, many would choose silver before they buy gold if the miners don’t interest them. Ditto gold vs oil and commodities in general. Gold is down about 30% vs oil since I said gold should be sold to buy oil.
      http://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24HUI&p=M&yr=20&mn=11&dy=30&id=p53101503380&a=383076793

        Sep 01, 2015 01:06 AM

        Its interesting that oil is an easy trade it seems by that I mean you buy the breakout it pops 25% and you sell it, well done, yet if that was gold nobody would have sold cause its going to da moon you know, lol

        Apply the same approach to gold, silver and the miners!

          Sep 01, 2015 01:13 AM

          Even if gold were to rally here, it would likely be plunging in real terms as a falling dollar would benefit the commodities that have crashed for the last year more than gold. Like I said, gold is expensive here in real terms. It could get more expensive but I would do no more than hold in anticipation of that possibility; I would not buy.

            Sep 01, 2015 01:15 AM

            ECB on deck Thurs and US NFP Fri will be very interesting