Tactical
Investor Newsletter
Tactical
Investor Newsletter
The last quarter was unkind to most investors. Everything except the Energy sector and few other unknown sectors performed terribly. The SP500 was down 2.5%, the Nasdaq was down over 8.2% etc etc. Most fund managers could not outsmart the market and ended up with negative returns for the quarter. Gold stocks continued to get pummeled into the ground though Gold bullion managed to hold up relatively unscathed. We had advised individuals several times in the past when Gold stocks were trading at lofty levels that they should be looking to take profits of the tables. Our subscribers were warned of this even earlier; in Nov and December 2003 we told them to take profits and sit tight. It so happens that as far as Gold stocks are concerned that these two months actually ended up being the top for them; prices just slowly but surely plummeted after that.
Energy sector
There is simply too much money sloshing around this sector and we feel that it will continue to contract. We bailed out of this sector early April.
Generally its still not in the extremely oversold region though they are some very good plays here that could appreciate as much as 100% in the next few months. If you are familiar with trend analysis you can start scouring for potential winner.
Key stocks in this sector have generated rather strong buy signals and it looks like this entire sector could suddenly heat up.
Precious Metals
No buys here, key stocks are now starting to establish channel formation; the ones that break out first will be the best one to take positions in. These early front-runners will be the leaders when Gold and Silver start to roar again. Last year we informed everyone that PPH looked rather interesting and those that took positions in this are doing well. You can look to close half your positions now and le the other ½ ride. We don’t often issue plays here but every now and then we will post some a play or two. For those of you looking to get a sample of the Market update service you can do so at ½ the price. Get the first month for only 29.99 instead of the regular 50-dollar a month price. In addition we will most likely drop this offer soon as we are very close to filling our quota on this service; it has a cap of 330 subscribers currently.
General
market Analysis
Throughout
this pull back we have taken the position that this is nothing but a correction
and not a crash as so many top called analysts were calling for.
Now that we have rallied significantly off the lows many of these pundits
are now trying to change their tunes.
If we trade past 10560 for several days in a row then there is a good chance that we will end up testing the 10800 ranges before we experience another meaningful pull back. Do not think of shorting this market unless you are looking to empty your bank account. If you are short you should be looking for an exit strategy now.
Gold,
Up Or Down?
XAU has broken its 3-year main up trend line; bearish this is. It has also put in a double top and triggered several negative divergence signals at the same time.
Gold bullion is probably going to end up following the path of the XAU. It has broken one of the up trend lines. Lets see what it will do on a pull back to the main up trend line. Gold bullion also set a new high while flashing several negative divergence signals. This means that the outlook for Gold could be bleak for a lot longer then most gold bugs are ready and willing to accept (we are referring to Gold bullion now as Gold stocks have already been smashed to pieces).
Bell
weather NEM has also broken its long term 3 year up trend; another bad sign and
it now looks like it could correct all the way down to 26 dollars.
Watch the 34 dollar mark a break below this point it’s going to trade
much lower before bottoming.
The outlook for Gold looks far from great, initially our indicators were suggesting that Gold could put in a possible bottom in April; however the pattern changed and went from issuing a possible buy to flashing a neutral signal. We will continue sitting on the sidelines till a buy signal is flashed we are not going to challenge our indicators they have always kept us on the right side of the market. One should also remember that there are several markets out there besides Gold that one can jump in and out of ( a good example was the energy markets, they were strong till about April of this year) and lock in some serious profits. So we will keep playing sectors that our indicators flash buys on while we wait for a new huge buy signal on the Gold sector.
Daily trend = down
Weekly trend = down
Monthly trend= just turned down.
We have been sitting on the sidelines since Nov- Dec 2003 when we publicly stated that it made sense to take some money off the table. While everyone was fretting about Gold we were busy playing the energy sector, we even took positions in some key Nanotech stocks; one such play was ALTI ( which really delivered some serious profits). What we are basically trying to say is that there are a lot of ways to make money and the Gold sector is just one of them.
Everyone
should have a core position in Bullion (bullion is not the same as worthless
paper stocks) and you can use pullbacks to slowly build a core position in
bullion if you don’t have one. One interesting contrarian development is that Gold is now
among the 10 worst sectors; gold stocks should start putting in some nice very
nice formations and the strong ones will be the first to break out.
All the above charts were supplied courtesy of www.prophetfinance.com
For those of you looking to get a feel of the Market update service you can do so at roughly ½ the price. Get the first month for only 29.99 instead of the regular 50-dollar a month price. In addition we will most likely drop this offer soon as we are very close to filling our quota on this service; currently set at 330 subscribers.
News and other related Events
What percentage of Americans claim to have heard nothing about a potential housing bubble?
Despite
all the signs of a potential housing bubble, only 23% of Americans have heard of
the potential of a housing bubble according to a recent Experian-Gallup poll.
When the economic definition of a housing bubble is explained, 37% reported that
they believe a housing bubble is "somewhat" or "very likely"
to occur in their area in the next three years.
The
same poll also revealed that approximately 70% of Americans believe that housing
prices will increase over the next year and only 5% believe they will fall. Of
those respondents that believe housing prices will continue to rise, 23% believe
prices will rise by more than 10%. At the same time, 75% of people believe that
mortgage rates will also continue to rise in the coming year.
http://post.polls.yahoo.com/quiz/financeresults.php
Well this Poll does tell us a lot, almost 1 ½ years ago we stated that it was a bad sign for gold after we noticed ads hyping this sector appearing all over Yahoo’s website. Now we see that most of these blind rats have not heard anything about a housing bubble; I dread to think what percentage of them think the housing market could potentially crash; I would not be surprised if the figure was very close to the zero mark.
Graduates
fear debt more than terrorism
The
generation that came of age after Sept. 11, 2001, fears college debt and
joblessness more than another terrorist attack. That's according to a new survey
of college seniors and graduates of the class of 2005, most of whom were just
weeks into their college careers that fateful Tuesday.
They still fear terrorism, and most believe that Americans will
experience another attack. But when asked, "What are you most fearful of at
this time?" only 13.4% said a terrorist attack; 32.4% answered "going
deeply into debt," and 31.2% said "being unemployed." The survey,
released today by the bipartisan Partnership for Public Service, finds that
45.1% say they expect to graduate with $10,000 or more in college loans, with
20.6% saying they have more than $20,000 to pay off.
Another 27.5% say they will have no college debt.
Finally
they realise the problem but for the most part the masses are doing nothing
about it. It looks like the only solution is going to be extreme pain and
suffering. Live within your means or all your means of living will be taken away
from you eventually. Actually
living 1-2 levels below your means is really the way to go (put the money you
save from doing this aside or invest it)
Greenspan:
China Revaluation Won't Help
WASHINGTON
- America's bloated trade deficits probably wouldn't be helped by China
revamping its currency system as the Bush administration has been pressing
Beijing to do, Federal Reserve
Chairman Alan Greenspan said Friday
Greenspan's
comments, during a question-and-answer session following a speech he delivered
to the Economic Club of New York, come as the administration over the past week
has increased pressure on China to change its currency and trade practices. The
United States' trade deficit ballooned to a record $617 billion last year,
including a $162 billion deficit just with China, the highest ever with a single
country. A move by China to revalue its currency "does not follow that that
will lower our overall trade balance," Greenspan said. "Indeed, it's
probably quite unlikely."
http://news.yahoo.com/s/ap/20050520/ap_on_bi_ge/greenspan
It seems that the Maestro agrees with our take on the situation (we made comments to the same effect several weeks ago). The problem is not China it’s the spending of money that we do not have that’s the culprit; the only way to fix it is to spend within ones means.
WASHINGTON
- South Korean scientists have dramatically sped up the creation of human
embryonic stem cells, growing 11 new batches that for the first time were a
genetic match for injured or sick patients.
It is a major advancement in the quest to grow patients' own replacement
tissue to treat diseases. The same scientists last year were the first to clone
a human embryo. Now they have improved, by more than tenfold, their efficiency
at culling these master cells, thus making pursuit of therapeutic cloning more
practical."I didn't think they would be at this stage for decades, let
alone within a year," said Dr. Gerald Schatten of the University of
Pittsburgh. He acted as an adviser to the Korean lab in analyzing its data,
which was being published Friday in the journal Science
http://news.yahoo.com/news?tmpl=story&u=/ap/20050520/ap_on_he_me/stem_cells
The end of the story is very easy to envision, America is going to be left behind in this very important sector; Asia and Eastern Europe (Russia) will lead the way in this area, further sealing the case as to why they are going to be the next world economic leaders. One good thing to emerge from this as far as the west is concerned is that prices for stem cell therapy and possibly nano treatment are going to be very reasonable.
The information contained herein is deemed reliable but no guarantee is made about its completeness or accuracy. The reader accepts this information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Investors are urged to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.