Thursday, April 30, 2009

Early Strength

We are seeing strength across the globe right now and bulls seem firmly in control. It doesn't matter whether you think we overshot to the downside or think we are currently overshooting the upside---we seem destined to touch 900 on the S&P. You can't fight the market and this market has the strength--especially if you see how we reacted after the bad news yesterday.

It seemed that the Federal Reserve was talking to the ECB yesterday in their statement. The Fed is looking for help in their battle with the current downcycle. They are out of room to move rates and it would help their position if our friends across the pond would participate---notice that I didn't say it was the right thing to do--just that it would help the Feds position. Most agree that we are trading inflation---possibly hyperinflation for short term stability. We will have guests on our show to further discuss whether it is a good strategy.

We sent the email summary of the Jim Rogers interview to all and apologize for the technical difficulties. We will continue to post great interviews so stay tuned.

Thanks for your participation.

Wednesday, April 29, 2009

AWAITING THE FED!!!!

No doubt traders want to take this market higher. I look for the action to be very choppy after the announcement---not because the decision will be a surprise---but because the markets have been in neutral all week. The battle lines are drawn and there will be strong advocates on both sides and we shall see whether it is the bulls or the bears that prevail.

Oil numbers this morning would indicate a sluggish economy, but that didn't deter some of my favorite inflation type plays like FCX. Bad news this morning did not keep these markets from going higher.

We had a great interview with Jim Rogers this morning and even though we had technical difficulties, those of you on the email list will receive a summary of the interview. Our show is growing and our new website is almost complete. STAY TUNED

Thursday, April 23, 2009

Surprising Strength

These markets are showing surprising strength. I watched as some of the overseas banks gave a ray of hope last night---and saw it give a boost to domestic futures. This crisis is not over---but confidence is improving. So often we see the markets overshoot and this one could have overdone it to the downside.

I hate to be boring, but in this environment I like FCX. If in fact the banks are in better shape than many thought, does that mean that inflation is near? I believe that it does. I have been wrong with my initial timing on inflation, but believe that if the banks recover faster---inflation will have to be dealt with.

Do you have a trading plan? I use to think that I didn't need one--was I ever wrong. We are going to write our plan online and continually revise it. You can watch as we see where we were wrong. The thing that I like most about this business is most traders are willing to help other traders---this is a great business.

We are spending alot of our time working on our new website and will be producing much more content as soon as it is ready.

We have some great interviews coming up---most notably we will be talking to legendary investor Jim Rogers live from Mobile, Alabama with Mr. Tom Busby on Fed announcement day next week.

STAY TUNED

Wednesday, April 22, 2009

Awaiting the PULLBACK

The futures are pointing to a lower open this morning, and while yesterday was a nice day in terms of finding support and bouncing---I think we are going to see some profit taking. In my quest to become I better trader, I am learning to flush my emotions. In the past, I would have wanted to go "all in" after a day like yesterday. I am not saying that this market can't go higher from here---just that I think we have exceeded short term expectations of many and will see some pullback. I do think that days like yesterday give us a clue that the "doomsday scenario" is now on the back burner.

What will next weeks Federal Reserve announcement hold? I don't think there is any question that they will hold rates at these historic lows, the real "meat" of how the markets will move is obviously in their statement. So how will they posture? Even though I have been screaming inflation, I think the Fed is going to discount the possibility of inflation at this point. When you look at what oil has done over the past few days (even if you are an inflationista like me) you have to say that they Fed will still keep deflation their main focus. I have been early on my inflation call and have been wrong. Several months ago I posted a question "Is being early equivalent to being wrong" We had many great responses to the question--but I have decided that being early is being wrong WHEN YOU PUT YOUR MONEY ON IT. I lost money trying to play the weak dollar and I WAS WRONG---I LOST MONEY. I have since made a few nice trades on FCX and other plays that I was looking at because of my inflation thesis.

Right now I am mostly in cash and have been trying to make a little money by "scalping" the SP futures. Today's focus will be earnings as we don't have any scheduled news that we would expect to derail the markets.

Have a question for Marc Faber? We will interview him either today or tomorrow, so get your questions in now. Dr. Faber was advocating that those buying gold do so by purchasing the physical metal for delivery when he was on Bloomberg a couple of months back. I will ask him if he still believes that the entire financial system is such that one would need to hold the "physical metal"

I am sitting by patiently today trying to exercise "caution". We are trying to finalize an interview with Mr. Sam Zell for May. I am anxious to get his outlook on commercial real estate, especially given what we heard from noted trends forecaster Mr. Gerald Celente a couple of months back.

Tuesday, April 21, 2009

Earnings Fail To Impress

Earnings are having a hard time impressing this market. It seems that traders are dismissing the euphoria that has dominated the market for the past six weeks. Was this really a surprise? Were we really expecting that after the past 18 months of dismal economic news people were not going to take profits? I wasn't. I missed a lot of this rally as I expected it to end faster than it did. The futures are down this morning and I am not calling for us to retest the lows of the year, but I do expect the S & P to go test 790.

We are in the area where you can start making your buy list and wait until the market affords you an opportunity to get in. Personally, I think a great way to play the China recovery story is thorough FCX. I think it may fall with the market for the next few sessions and give us a strong buying opportunity.

I am still negative on many healthcare stocks, even though Boston Scientific reported stronger than expected earnings this morning. They are one of the best in the space and I would not advocate selling them short, but there are others such as EMS that I like as short candidates.

We will have a hard time with clarity until we get the final results of the bank stress tests. Other than the news factor, I could care less how these banks do with these tests. I would prefer to stay away from the space and just see what kind of news value these test results bring.

WE HAVE AN INTERVIEW WITH MARC FABER THIS WEEK.

STAY TUNED

Sunday, April 19, 2009

CHARLES PAYNE INTERVIEW

I interviewed Charles Payne of Wall Street Strategies and Fox Business News on Saturday. Charles thinks the rally is overdone. Visit our website for the full interview www.stockshotz.tv

Thursday, April 16, 2009

DOW 10000?

Is DOW 10000 by year end a possibility? I don't think so, but you can hear alot more bulls chattering these days than you did just a few short weeks ago. I think the market is going to move back down soon.

I am about is big of a healthcare bear (big pharma excepted) as you will find. There are so many changes in the reimbursement arena for healthcare providers that it will be virtually impossible to forecast earnings over even a 2-3 year time horizon.

I have seen more deflation pumpers making posts than ever before. So if the real money is betting deflation, how is the market going up. If deflation is the big bad wolf--then why is the market trading solidly? Because deflation is done, stability is perceived and inflation will take hold and will drive the markets higher.

I am still a FCX fan and am long AMN and DMND at the moment. I just bought those 2 for a swing trade and may be looking to exit tomorrow.

Every day I see that emotions play such an important role in the success of traders. We all want to see lines such as the title of the post and HOPE. But you can't eat hope, you have to see what the market is giving and try to take a little. How many of you trade for small, consistent wins and then wind up losing it all back on one trade? I sure have on many an occasion. Take control of your emotions. Looking back to my natural gas trade, I was wrong because I was so determined that it should go up. Instead of admitting defeat and taking a small loss, I got hammered and subsequently had to admit I was wrong anyway.

Tomorrow is one of those days that quickies are the best way to play and flat is the most peaceful way to start the weekend.

Charles Payne will be on the show Saturday---CHECK BACK

Tuesday, April 14, 2009

Crisis Over?

It seems like many want to declare the financial crisis over. I was listening to Larry Kudlow on the ride home last night and he was almost screaming buy as loud as Cramer does. Technically, I am looking for maybe a little more upside here, but crisis over? C'mon Mr. Kudlow, do you really think we are in for a V shaped recovery. Yes the Wells Fargo news was good and yes Goldman had some positive things to say---well maybe some not as negative as expected things. The bottom line is that this is a technical rally and none of the fundamentals have changed that drastically. I think most of us are more positive on the financial situation, but not to the point of calling the "all clear" when it comes to this crisis.

It will be interesting to see the intel numbers tonight after the bell. Many have been saying that the Financials had to lead us out of this downturn and others are saying that tech could possibly lead us. Regardless of your theory there, it would be great to know that we had some demand for Intel's products.

Copper prices are hanging in there nicely==about to make 6 month highs and my Freeport FCX continues to look strong. Of course, I am looking at copper when I make inflation calls---believe me there is nothing that I would be more happy to be wrong about than inflation. We seem to be getting a price break in Oil and that will help the overall economy---the longer it can stay low. I just see that with things picking up---we are going to get some demand shock which will drive prices higher.

I am still long AMN and DMND. AMN hit my target price and I got greedy---I'll never do that again--HA.

Don't get burned by earnings announcements. Know who is reporting or you could wake up and have your feelings hurt.

CHARLES PAYNE WILL BE ON THE SHOW THIS WEEKEND!!!!!

Sunday, April 12, 2009

EARNINGS SEASON

Is this simply a Bear market rally? George Soros seems to think so. So the near term trade is short, right? I am not so sure. I think we may be headed a little higher. I expected the futures to to come out lower than they did tonight. Could we be in the "here comes the money from the sidelines zone"? So many are afraid that they are going to miss the "rally of a lifetime". I think we could get some panic money moving into the market--but I don't buy that we aren't ultimately headed lower.

The Wells Fargo news on Friday was so powerful because it was totally unexpected. Shouldn't banks be making money in this environment? Their product is almost free to them as long as they eliminate fear and maintain deposits. There are still many loans that are paying like clockwork. It appears that we have averted a financial system collapse and are now focusing on other things. I still contend that the money multiplier is going to cause us inflation. For those that have been arguing that the recent government action is only rebuilding the banks balance sheets, what happens when they get the banks rolling again? Isn't there normal wealth destruction on some level all the time? If not, why do banks make provisions for loan loss reserves? Do you Deflationistas contend that we have had no significant increase in the money supply?

Think about China and their recent stimulus plan. Will their spending on infrastructure cause commodities prices to rise? Does China have the demand to significantly impact the price of commodities? I would argue yes. Last year we saw inflation caused by rising fuel prices and it hurt our economy. As a matter of fact, the level at which we saw demand destruction surprised economists. Many were arguing that we would not see demand destruction because in an inflationary environment that phenomenon would not occur. Being half right is equivalent to being wrong. Can you have price increases without inflation? Many would argue no, but based on last summer, I would argue yes. Just as some stocks go up or down faster than the level of the entire market, so can commodities prices within the context of the global marketplace. Is a service based economy more susceptible to stagflation? Is an economy of entitlements more susceptible to stagflation? Yes.

Will our economy get less efficient with the redistribution of wealth? If your answer is no---please post it in the comments section. I believe that it will. So what does that mean for our investments? To me it means buy commodity based stocks FCX is still one of my favorites.

I believe that we are very dependent on what we see out of this earnings season. If we see better than expected earnings, we could see this rally move up more. If we see dismal earnings, I think it will provide shock to the downside more so than last earnings season. I think we have silently heightened expectations during this rally. If we confirm that things are worse than dismal---look out below.

Thursday, April 9, 2009

Bullish Today

Wells Fargo just posted great news and Wal Mart sees earnings on the upper end of the range. This is great news on a traditionally bullish day. Barring a nasty jobs report today should be a great trading day. Good news from the banks will drive these markets higher and in my opinion--it will drive commodities prices higher as well.

By popular demand, we will post the FULL UNINTERRUPTED BOB LANG INTERVIEW TONIGHT.

Wednesday, April 8, 2009

April 7, 2009 Interview with Bob Lang of BIG TRENDS

This is part one of our interview April 7, 2009 with Mr. Bob Lang of Big Trends.

video

Tuesday, April 7, 2009

The Fear Trade

I have contended that this was nothing more than a Bear Market Rally, but I am not ready to sell short with both barrels yet. I am going to play wait and see today. I do think we are seeing fear removed from the market and at some point gold will be a buy as an inflation play--but for now I am content to watch as the fear premium comes out of the "yellow metal". I am long RHT, AMN, and DMND but stand ready to close all of those if necessary today. This market is making me believe in tight stops.

I saw Marc Faber on television last night and he was very iffy as to oils next move--he said it could hit $35 or it could hit $70. We are working to have him on our show. Tonight we have Bob Lang of Big Trends. Bob is an options player and this should be an excellent interview.

I am truly in wait and see mode so I will have more to say with the interview tonight.

Monday, April 6, 2009

Listen to theTIPS---Treasury Inflation Protection Securities

What does the activity in TIPS (Treasury Inflation Protected Securities) tell us? That the smart money is betting on inflation? Given the fact that the TIPS returned the most in March since they have since their inception in 1997---I would interpret that as a pretty strong indication that the smart money is betting inflation. Many are expecting the the CPI to exceed 4% or more this year.

Often times when I make a post about inflation, I get comments or emails that criticize it if commodities fall that day or the following days. The inflation argument is over the next 18 months--not the next 18 hours and I am not pegging it to a particular commodity---even given the fact that a rise in oil prices is the scariest of them all. In a guest blogger post on Market Club last week, someone made a comment that milk was $1.87 per gallon in Denver. Either I am getting screwed paying $3.50 per gallon or this guy was quoting mountain goat milk. We have not seen food prices drop at near the rate that they rose when oil was running last year---and if it starts to run again---prices will head up from these already inflated levels. Why? Because the demand will continue at surprising rates and the market will allow it.

I am expecting the markets to pull back soon. I am not totally convinced that we are in full bull mode as are many. Looking at the chart, I would change my mind over 870 on the S&P, but as for now I think we have ourselves just another rally in a Bear market. One thing to keep an eye on is the changes to the components of the S&P 500--those changes may alter the earnings outlook for the group as those stock being taken out were losing money.

I still like EMS as a short. It had a nice drop on Friday and I think it is headed to $25. Again, I think this is a well run company, I just think they are playing in a market that will be punished in 2009.

One of my favorites FCX may pullback with any market weakness. I hope it does, as this is a great long term play--but it has almost doubled over the short-run and I would like to see it pullback. If copper prices take a breather--this one could provide a buying opportunity.

Don't get fooled---INFLATION IS NEAR

Saturday, April 4, 2009

The Energy Trade

I am trying to see what I can learn from the recent movement in the energy stocks. Does it point to inflation? I would submit that it does. Many will argue that the move in the energy commodities is only technical and there is no increasing demand for oil and gasoline. How many of you out there have canceled vacation plans this summer? While some have, many have not and I believe that we will see surprising demand this summer.

Stocks like RIG,DO,NOV, and XTO did very well yesterday. Many argue that we can't see demand pick up until after our economy starts to turn around. Is that true? Or can demand from China and India cause demand to rise while we are still in an economic downturn. I wrote about pockets of strength earlier in the week and believe that it is that concept that will shock some with the demand this summer.

I was and have been very wrong about Natural Gas. I just can't see natural gas staying at these low levels for very long. Lets face it, companies are still pulling gas out of the ground for 2 reasons---one they have to have continued cash flow and they are anticipating a turnaround in prices. Do you believe that they are rushing to put new production online right now? I think not. The cost of developing new sources outweighs the risk with prices at these levels. When demand does pick up---it will take some time for the production of new fields to come to pass. We could see rapid upside once demand picks up. It is not a matter of IF it is a matter of WHEN this happens.

Companies such as XTO are well run and have suffered at the hands of falling commodities prices. These are the companies that are poised to do well as inflation takes hold. This is not to say that they can't go lower in the short run---but the upside potential is appetizing to me!!

Many are arguing that the banks are going to contract credit and while I don't argue the point--I argue the impact. I recently had a card cut off simply because I had not used it in a couple of years. Did banks contract credit? Yes Was that credit really "in play"? Not at all. Actual economic impact of that company "bringing in" $8500 of available credit? ABSOLUTELY ZERO.

Friday, April 3, 2009

Inflation--Why is it So Misunderstood??

Yesterday I was the guest blogger at INO's Market Club. My post about inflation received far more than the recent average of comments on their site. There was some great debate in the comment section. I decided that I would post direct questions aimed to debunk the "deflation" argument and see what kind of responses we get. We want serious debate, not unrelated criticism so keep it focused.

1) Many have argued that every dime of TARP,TALF, Bailout, Handout will go to rebuild the banks balance sheets. If this is your position, is it also your position that we will not see any new lending for a long period of time? That banks will refuse to lend and hence seek to only generate revenue through fees?

2)Do you believe that wage pressure must be present first for there to be true inflation? (there was a comment to this effect yesterday on market club) If so, how would you explain the rise in oil, milk, and other prices last year during the beginning of the worst economic downturn in recent history?

3)Is it your position that none of the other areas of the massive government spending bill will have enough impact on our economy to increase the money multiplier?

4) Do you really believe that a rising money multiplier will not provide incentive for banks to begin lending again.

5)Do you believe that the current level of personal savings rate will increase over time? That fear will get worse? That individuals posses the power to contract the economy through savings while the government is borrowing and spending?

LET THE DEBATE BEGIN!!!!!!

INFLATION IS ON THE HORIZON----CASE CLOSED.....