Weekly Technical Comments – “Oversold But (SP500) 1320 Possible to the Downside”

Another solid report from the swiss team. They acknowledge the correction has “expanded” but they stick to their bullish call that this is a correction and rotation rather than the ending of the 2009 bull market.

On the plus side the seasonals are good from here and many sectors remain constructive including many European markets.

They predict next week should see the lows of the move and that the lows of next week should represent the opportunity to enter cyclical, financial and technology related themes.

They don’t pick up on the Asian issues and the problems within the industrial and energy commodities. Real technical damage is starting to occur here which is a concern.

Read tomorrow’s summary on this Tuesday’s session of the Shanghai. It won’t make for easy reading is my analysis. We are back to the bottom of the range for the Shanghai and near the 2012 lows for copper. Oil is also not promising here. The lows since early 2010 are $80 a barrel for nymex. We are at 85 and falling. The IEA lowered demand projections again today.

Sentiment remains very bearish. Momentum has been diminishing for quite a while on this bull trend. We are over sold and due a bounce. Lets see which instruments react to this bounce to gauge where the relative strength lies next.

Precious metals remain unconvincing for now. The bounce was from a very over sold level. The inflation trade is under immense pressure here and now. Its a close run battle with the near term edge to the inflation-ists due to the oversold asset markets. That’s all we can say for now.  Its worthy of note that Japan’s JGB 10 yr rate is reaching its record low once again which is not a wonderfully bullish indicator.

My own book is now long having left the hedges partially at the end of last week and on the euro indexes today. I’m naked long but with reduced leverage at around 110% balance sheet. Concerned but not overly concerned as yet. Fixed income remains in her inverse correlation to equities which is a good thing in terms of managing your risk.

Here the report.

http://www.capitalsynthesis.tech/wp-content/uploads/2012/reports/Weekly13-11.html

All the best

Rich

 

Weekly Market Roundup – “US Equities Vulnerable Short Term But Weakness An Opportunity To Average In”

SC sticking to their defensive yielding blue chip equities theme. Buy the dips is their view with 1370 and 1345 buying zones in their opinion.

Fund flows to fixed income and money market funds as well as the level of bearishness in the market leads me to mirror their view at present.

I’m out of time today as off to the UK tomorrow for a week and New York the week after and the week after back to London.

ll try and comment more meaningfully in the coming days. I’ll maintain business as much as usual during my travels.

I leave the detail to their report to SC to explain.

http://www.capitalsynthesis.tech/wp-content/uploads/2012/reports/Weekly-Market-View-2012-11-09.html

And here a WF’s global chart run through.

WF-GlobalChartbook_11092012

The very best to all.

Rich

Weekly Bullion Technical Comments – “Short Term Bearish, Medium Term Bearish”

I’d like them to explain themselves a little more than they have done in the past but we have to hand it to the German team they have “nailed” the bullion weakness in recent months. Only the false break to the upside made the question their call and this questioning lasted only a week or two. Last week they flagging 1661 as a target to the downside on gold and 30 on silver.

This should have some implications for the GDX, Sil and HUI miners indexes which wouldn’t be helpful for my own book’s mid Jan option call position.

Here last week’s report. I’m awaiting this weeks.

BullionWeeklyTechnicals29102012

Here the Standard Bank’s analysis:

sbank022012weekly

Patience patience. We are in no rush so long as you are getting paid to wait from the other exposures within your portfolio of assets.

Rich

P.S. And here WF on economic indicators roundup.
WF-MonthlyEconomicOutlook_11082012

 

Weekly Technical Comments – “A Break of S&P 1428 Outright bullish”

An excellent report from the Swiss team. They correctly, in my opinion, highlight the consequences of the near term price supports giving way.

“A daily close below 1395 (stop loss for tactical longs) would be, at least on the short-term basis, a game changer, suggesting more weakness into mid-November towards 1378/1370”.

There remain lots of positives for this bull market to get another leg up including the various banking sector indexes. The various cyclical indexes and the continued lack of bullishness amongst market participants.

Friday’s smash on the precious metals looks to have been a “bear raid” and appears to have already reversed.

We are in US election week so we can expect a continuation of this volatility. For active traders and investors this is producing a lot of work as we have to reverse and reverse again positions, sector exposures and fx positions according to the tape. 95% of investing is research and sitting. Occasionally we have to be more active and this appears to be one of those moments.

Without any more delay here the report.

http://www.capitalsynthesis.tech/wp-content/uploads/2012/reports/Weekly06-11.html

(Once again the file is in a flash format so viewing with a mobile device may not be possible).

All the best

Rich

 

 

 

Weekly Market Roundup – “Weakness is Likely To Prove Temporary”

The SC team once again producing a wide ranging report and a more bearish tone, short term, than the UBS technical report.

SC are sticking to their defensive themes and are expecting a deeper pull back post the US elections to sp500 1345. This would take price below her 200 d.ma. and would infer a be type reading for the Dow30 index. Nonetheless they see such weakness if it does play out to be a short term issue and therefore a buying zone on such weakness. It is worth noting that although sticking to their defensive recommendations they are now expecting Asia to out perform and copper to see strength. On top of this they see tech as being a sector out perform.

We must draw our own conclusions. For my own book some allocation to cyclical themes seems wise to me. The defensive sectors have come under pressure on this recent correction whereas there are some technical signs of a base in the cyclical themes and evidence of a bullish scenario for these sectors. There is also some convergence now across technical and macro views that relative strength is projected for these cyclical themes, at least in the next few months.Whether the strength can sustain is another matter but in view of the medium term strength its wise to shift allocations a little to respect this changing landscape.

As an overall comment we continue to see a slight improvement in economic data. Europe continues to struggle, Germany aside. It appears as though monetary actions world wide have averted the hard landing double dip that appeared to be underway.

Fund flows continue to be highly skeptical of equities. The last Lipper Flows report continued to provide little positive data in this respect with bond flows remaining positive in spite of  their negative returns.European fund flow data proved a little more positive but its hardly a reversal of the market’s continued ‘love affair’ with the fixed income market.

Here the latest IMA report.

http://www.investmentfunds.org.uk/press-centre/press-releases/press-release-statistics0912/

The most equity bulls can cling to is that there are some signs of at least this skepticism moving to a neutral position and that the equity bull camp remains far from a crowded trade.

Following the recent sell off sentiment levels reached an extremely bearish levels on a parr with the highest level of bearishness for the year. From a contrarian perspective a bullish sign or at the least a sign that falls may be capped for now.

Have a good weekend all. Here the report.

SCWeeklyView – 02-11-12

Rich

 

Weekly Technical Comments – “Buy The Dips on Cyclical Themes”

Another strong (and bullish) report from the Swiss team. I’ll leave the detail to you. Report below.

Regarding my own book, I expected the cyclical stocks to be in the front line of the recent correction but this is not what has occurred. Cyclical themes usually provide a beta to the overall market both up and down but they have remained very strong on downward index moves showing relative strength not weakness. I liquidated quickly but prices did not move significantly to the down side. I therefore re-entered my entire cyclical position at marginally lower prices but I anticipated the pain would be more acute on the cyclical themes than it has been.

Alongside the Asian base formation in Shanghai and strength in some other “EM” indexes this is bullish. Closer to home the Dax and Ftse100 have shown relative strength. Both these indexes are biased to the cyclical stocks. On the safety side the telecoms and some energy stocks have shown relative weakness. Overall this correction, thus far,  has provided yet more evidence to the bull side of the equation even as index values fell. Oil has been weak but oil is extremely volatile and can easily show false signals especially on short term interference moves by the Saudis. The US$ index has failed to break out of bearish patterns. The probability remains to the downside for the US$ index.

Overall, sector prices are showing bullishness not bearishness in spite of my desire to pick up cyclical themes at a discount.  What we can say is that technically a window is open now for a cyclical lead rally here and now. Much of this will be driven by rotation but some capital is likely to rotate out of fixed income so i don’t anticipate the yielding defenses to fall either. An under performance for sure but falls in value i don’t anticipate. If momentum rejoins to the bull side I’d expect new highs in equity indexes due to this soon enough lead by EMs, Dax and Ftse100.

Without more delay here this week’s report. (Excuse the flash format. This may mean viewing via mobile devices is not possible).

http://www.capitalsynthesis.tech/wp-content/uploads/2012/reports/Weekly30-10.html

Rich

 

Greenlight Capital Q3 Letter to Shareholds – “Desperate measures in non-desperate times”

Below David Einhorn’s Q3 letter to shareholders. Einhorn has become one of the great hedge fund managers so its worth giving his letter a little time to hear what he says.

For note he finished Q3 strongly at +13%. Since 1996 he has achieved an annualized 21.5% return at his firm, Greenlight Capital.

For regulars here there is little new. He is as shocked as we all are  at the Fed chief’s actions. He picks out a few key quotes inc:

“Even after the economy starts to recover more quickly, even after the unemployment rate
begins to move down more decisively, we’re not going to rush to begin to tighten policy.” (Ben Bernanke)

From Einhorn:

“We have just spent 15 years learning that a policy of creating asset bubbles is a bad idea, so it
is hard to imagine why the Fed wants to create another one. But perhaps the more basic
question is: How fruitful is the wealth effect?”

Beyond the macro issues he provides some information on his GMT short, GM long etc.

Here the report: David-Einhorn-Greenlight-Capital-2012-Q3-Investor-Letter

Rich

p.s. list of holdings..

http://www.gurufocus.com/StockBuy.php?GuruName=David+Einhorn

 

Weekly Bullion Technical Comments – “Gold 1693 to 1697 in Play”

The German team remain consistently bearish in tone although their stated short and medium term judgements are neutral. They remain long term bullish on both gold and silver.

They have indicated today that according to their model should 1713 break today 1693 to 1697 should come into play with the 200 day moving average at 1663 in line of sight of being tested.

For Silver a bounce off the 31.6 level remains probable in their view.

I’ve taken some heat on my precious metal positions. The P&L remains strongly positive and price has entered a buying zone from a short term perspective. Priced in euros and pounds today the precious metals barely moved in price. On a longer basis, the last few weeks correction move is a mere 35% retracement of the recent bull trend. Its a long way therefore from being directionally counter trend conclusive. The gold miners HUI index having been so weak in until recently is now strongly bid even as other correlating instruments and sectors fall. Individual issues like AEM seem incapable of falling at present. The technical picture remains a classic bull flag pattern which appears primed to provide a positive signal on any bounce in correlating instruments.

Without delay,  here the report

http://www.capitalsynthesis.tech/wp-content/uploads/2012/10/BullionWeeklyTech-23102012.html

Rich

Weekly Technical Comments – “Buy into Weakness S&P500 1395/1400”

I must say the more time I see the Swiss team tested the more i like their methodology. Their approach is current best practice and its worth has been tested over and over in the time we have been following them.

To the report. An outstanding report once again.

The only level i would question is the SP500 1395 to 1400 level of support. I personally believe we could go to Sp500 1380 cash, at least intra day. Its a small detail i agree.

Looking at the DAX and Ftse100 note we are already very close to their key support levels. This demonstrates to me the cyclical ‘attack’ under way!

The reason i say this is the trader in me. Trading opportunists will want to use this weakness to make a profit from those that are late to the trade. A large volume of capital recently rotated out of defensive stocks and into cyclical themes. This capital was late to the party and is now under immense pressure to liquidate. The 200 dma on the sp500 is at the 1380 level. Copper is in breakdown. The Dx has plenty of room for a bounce and no macro news flow is assisting the euro here given Spain’s delay in accepting the bailout. We could easily get a spike below 1380 intraday would be my view but I won’t be looking or playing for this. I’m looking for the 1380 to 1385 level sp500 cash as the area to lose my shorts. This will place sufficient pressure on holders of cyclical socks to question their entries. That event would produce a pay day for the commercials so its an event that has some probability of occurring.

Looking for evidence of this note that the DAX and Ftse100 are, on this moment, very close to their key support levels. This demonstrates to me the cyclical ‘attack’ under way as these levels have approached far faster than index support levels on the dow and other defensive instruments.

Lastly, i agree with their main thesis that this is a buying opportunity and that, therefore, this bull trend remains firmly intact, for now.

Without more delay here the report.

http://www.capitalsynthesis.tech/wp-content/uploads/2012/reports/WeeklyTechnical-23-10-12.html

All the best

Rich

Weekly Bullion Technical Comments – “1724 Crucial Support, 1800 Key Resistance”

Hey guys here below the German teams comments on the precious metal markets.

They hedge their bets this week with a neutral stance on the short and medium term. But remain bullish longer term.

Two scenarios..

The bullish scenario is for gold to hold above the 1724 level and eventually breaks the 1800 level which would immediately open the door to an attempt on the 1900 prior high.

The bearish case is for the gold to breakdown through the 1724 level which would open the door to 1660 potentially as the 200 day moving average. The doomsday scenario endangering the whole longer term bull trend would be the 1522 level.

Without further delay here the report.

BullionWeeklyTech-15-10-12
I remain bullish and therefore long precious metals and their miners with just about every instrument the market offers me on multi time frames.

Technicals and fundamentals remain very strong, is my own view for the moment.

Rich

Weekly Market Roundup – “Short Term Risks Of Mild Correction”

Apologies for the delay in posting up Standard’s report. The SC team have become shorter term bearish it seems but medium and longer term remain committed to their long defensive equities, gold and oil position. If the recent weakness breaks the recent up trend they recommend using the weakness to add to positions.  I would agree. A break of 1400 S&P would suggest a deeper correction in the short term for the SC team. The positive breakouts for Asia continue with SC pointing to the strong technical chart of the Hangseng. UBS sighted the Korean index.

The data over the weekend after this report was published from China was very positive re money supply as well as export growth.

http://www.bloomberg.com/news/2012-10-14/china-s-economy-shows-signs-of-stabilizing-as-exports-strengthen.html

Their economy looks likely to exceed the government’s own growth forecasts. On the negative side historic earnings look a little weak but these are historic so i wouldn’t get too concerned on these. Anyone who expected stellar earnings for the last quarters from Chinese cos must have been asleep at the wheel. Q2 and Q3, on a world wide basis, has been a disastrous period for the world economy but these are historic now and much policy action (money printing in the developed world and interest rate and bank reserve cuts in the emerging world) have occurred to prevent the weakness becoming an avalanche.

Technically the Shanghai does appear to have successfully based. We are at a key technical resistance on the Shanghai so last night was interesting to technical watchers.

http://www.stocktiming.com/Shanghai_Daily_Stock_Market_Updates/shanghai-index-update-friday.htm

The Shanghai shows a reversal daily hammer. (For candle stick price technical traders). A reversal bar at a key resistance is not enough to enter but its a positive at a time of bullish divergence across Shanghai technical indicators. To remind the Shanghai is an important index for commodity and cyclical themes. A breakout now would infer stepping up the allocation to these themes and would support the general ‘reflation’ trade. Personally I’d like to see policy announcements (from China and Spain) to cement the breakout for until we get these the cyclical reflation trade continues to look vulnerable.

Western indexes wise i don’t see any trends really broken yet. Ok, a few key levels have been stepped over by “inches” but this is stop hunting so far. Its an age old practice to take price over the level to clear out those late to trade to roll them over and book the profit. Note, many cyclical themes remain strong here with miners and manufacturers looking ok and well supported as are the various banking indexes even inc the euro banks – sxp7  index. Indeed the SXP7 appears pretty bullish which has a strong correlation to Spain going for the bailout. I would continue to watch the sxp7 as a key indicator of near term direction. For now given the above, it appears part of a cyclical rotation, thus far.

Precious metals, a little weakness here. 1740 gold a key, near term, support area. Seen as a retrace of the august up trend, zippo, in terms of fib retracement levels, etc. We are in a buy the dip area of the chart on gold. Nothing more to say, is my own view. The US$ remains in her downtrend with almost no buyers. A nice technical candle stick here on the day. I would continue to sell US$ vs commodity currencies or borrow and go long equities and precious metal themes.

On the macro front the frustration in Europe with Spain is really palpable. The door remains open to them on this bailout but next time they need Europe’s help may be a different story. Rajoy has certainly burnt any good will he enjoyed a month ago even from his allies in France and Italy.

Events wise we have yet another European summit. Last week it was the finance heads and this week (18th and 19th)  its the European leaders turn to enjoy yet more EU funded “hospitality”. We live in hope that one day soon a policy decision on something will be made by Europe. Spain and Greece remain the focus as they have been for the last few years of meetings.

Here the report

SC-weeklymarket – 13-10-12

All the best

Rich

 

 

Weekly Technical Comments – “Price Structure Remains Bullish Above S&P1430”

The Swiss team sticking to their pro material and cyclical bullish theme again. They observe the strong rally in defensive and admit being surprised by the relative strength. On the break of 1430 they explore possible alternative scenarios and interestingly the possibility of an early q4 correction in markets. They maintain that this is a lower probability though of course possible. For now they stick to buying dips on AUD, Shanghai, material stocks etc.

I concur with their view having, if you remember, not let my defensive’s go previously. The strength in the yielding defensive sector comes as no surprise to me given the negative yield environment we live in.  I’m not so sure i would describe the Shanghai as “strong” but she does appear to be basing and therefore the materials offer upside potential. Id like to see the underlyings like copper break their bear trends to be happier. We look out for this event.

Here the report.

Weekly09-10

Rich