The VRTrader.com VR Silver Newsletter - Monday 3/10/2008
"Tools for the High Performance Trader"
Copyright 鲰08, All rights reserved.
Redistribution in any form is strictly prohibited.
LEIBOVIT FILES | by Mark Leibovit
Monday, March 10, 2008
The Bear Tightens His Grip - But Traders Must Stay alert!
Economic Events and Market Reports March 10-14:
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MONDAY, March 10:
Wholesale Inventories for January (10 am ET)
Treasury announces 10-year note auction (11 am ET)
Treasury auctions 3 & 6-month bills (1 pm ET)
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TUESDAY, March 11:
'Turnaround Tuesday'
International Trade for January (8:30 am ET)
Weekly Chain Store Sales (8:55 am ET)
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WEDNESDAY, March 12:
'Weird Wally Wednesday'
EIA Petroleum Status Report (10:30 am ET)
Treasury Budget Statement for Feb. (2 pm ET)
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THURSDAY, March 13:
Retail Sales for February (8:30 am ET)
Import/Export Prices for February (8:30 am ET)
Weekly Initial Jobless Claims (8:30 am ET)
Business Inventories for January (10 am ET)
Treasury auctions 10-year notes (1 pm ET)
Weekly Money Supply (4:30 pm ET)
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FRIDAY, March 14:
Consumer Price Index (CPI) for February (8:30 am ET)
U. of Michigan Consumer Sentiment Index for March (10 am ET)
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Where are all the market bulls this weekend? Subscribers to the Annual Forecast Model are watching in awe as the see the Dow Jones Industrial sink precisely as forecast in the current timeframe. Indeed, folks, it is predictions such as these that never cease to amaze me!
So far, Bernanke and Paulson have not! Bernanke at the Fed and Paulson with the US Treasury's 'Plunge Protection Team'. The market has spoken. The verdict is in. Bernanke's drastic rate cuts have failed. Not because, technically, they cannot work, eventually, but because no one has confidence today that they will.
On Friday morning I wrote: "Yesterday, I wrote 'Drawing a Line in the Sand'. Will Bernanke and Paulson stop the bleeding here and now? It may depend on this morning's Jobs Report. Some are speculating that an emergency inter-meeting rate cut (regular meeting coming on March 18) might be forthcoming should the market respond today to a negative Jobs Report. Technically, we're oversold anyway and cyclically we're approaching a possible 'change of direction point' today or Monday. I caution. It could as easily be a washout low!"
We're at that point in time where we could bottom on a trading basis, but will Friday's lows hold or will we nosedive today well under the January 22 lows? We should know today or tomorrow! Regardless, the bear market is upon us and whether we see a knee-jerk bounce here or not really makes little difference. If I see a safe trading opportunity on the long side, I will take it, but it will be a contra-trend play. The short side, however, is the place to be, but you've got to be very limber here and be able to react quickly should the Plunge Protection Team decide to act - even though they have been unsuccessful to date. Some would argue that they have intentionally NOT supported the stock market, waiting instead for a more propitious moment in time.
How we got here is a long story, involving Bretton Woods, Enron, Sarbanes-Oxley, Fannie Mae, Greenspan and a couple of wars for starters. The short version is: we lost our way. The solution is what it always was: it is up to you and me as individuals to be guided by our own inner compass. And True North on that compass for many of us is gold. Gold and silver, both free of government meddling. Unpolluted and rightly called: precious. Only these currencies cannot default. Consider: gold is still at less than half way to its inflation-adjusted peak of $2,239.67, hit on January 21, 1980. At $1,000 an ounce, we have a long way to go. If you are skeptical of the official CPI numbers used in the $2,239.67 calculation then you must conclude: we have a SUPERB run ahead of us. Plus, with oil up and the dollar down, we have two more powerful forces, not present in 1980, to account for this stampede. I have been a gold/silver bug since 2001 and remain so. We are hoping for a pullback here and, as I've said, should the US Dollar Index rally at all, recent history says a better buying opportunity lies ahead. The problem is: Will we get that pullback? If not, you stand to miss out on one of the greatest profit opportunities of your lifetime. My predictions for $3,000 or even possibly $5,000 gold should not be dismissed. Silver back to the 1980 high of $45.00 is conservative. How about $100? Long-term positions should be held and traders should be keeping some powder dry.
The market got a terrible employment report Friday, but after opening lower, it shrugged it and for a while traded higher. The cause?
The Federal Reserve on Friday announced two new steps to add cash to the banking system. In the first measure, the Fed said it would increase the size of the two Term Auction Facility, or TAF, auctions to $50 billion each, or a total of $100 billion. Secondly, the Fed said it will initiate a series of term repurchase transactions that are expected to cumulate to $100 billion. The Fed said it would consider increasing both the repos and the TAF if conditions warrant. In other words, as JP Morgan's surrogate said during the panic of 1907 (according to Reminiscences of a Stock Operator), "Take it
easy! There will be enough for everybody!" So don't worry everybody, the Fed has enough money to bail us out..
U.S. nonfarm payrolls fell by 63,000 in February, the second straight decline. It was the largest drop in payrolls since March 2003. Economists were looking for a gain of about 20,000. Payrolls for December and January were revised down by 46,000. Payrolls have declined by an average of 28,000 over the past three months, down from a gain of 80,000 or so a year ago. The unemployment rate fell unexpectedly to 4.8% in February from 4.9%, due to a 450,000 decline in the labor force, the largest drop in nearly five years. Economists were expecting the jobless rate to climb to 5%. According to the separate survey of households used to derive the jobless rate, employment fell by 255,000 in February. Average hourly earnings rose 5 cents, or 0.3%, to $17.80 an hour. Average earnings have increased 3.7% over the past 12 months, less than the inflation rate.
Bond insurer Ambac Financial said it raised $1.5 billion by selling stock and convertible bonds. The common shares offered were sold at $6.75, below the current market price. As a result, ABK is down 6.5% to 6.93.
News that Thornburg Mortgage has $610 million in margin calls that exceeds its liquidity. The fear is U.S. financial companies may face a chain reaction in selling off assets at fire-sale prices. Washington Mutual saw a steep decline of 8.6%. The Wall Street Journal reported that WaMu is seeking a capital infusion from private equity and sovereign-wealth funds. These announcements brought and end to the short covering rally in financisls that was caused by traders squaring their books into the weekend. Believe me, those shorts could easily be reapplied on Monday.
I remain on my TIMER DIGEST 'Sell' signal.
The US Dollar Index hit a new low of 72.462 on Friday. Similarly, crude oil hit a new high of $106.00 a barrel, but sold off into the close. April Platinum was down $137 $2041. Platinum has fallen more than 10% from it's high set on Tuesday. It appears bidding for the metals under the market is correct short-term strategy.
VR TRADER.COM WATCHLISTS:
Please note: The VR Watchlist is currently now only available via the VRTrader.com website accessed via your assigned username and password. Please email mark@vrsurvey.com if you misplaced that information.
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DAILY VR LIST:
Editors note: As you may have noticed, we have been posting our daily VR list for both Silver and Platinum subscribers. Silver subscribers who find this useful should upgrade to Platinum where you can pull down VR charts for many securities and watch the patterns unfold for yourself. There is no technical service on the planet that posts Positive and Negative VR! Why? Because they are proprietary to VRTrader.com! http://www.volumereversaltrader.com/vr_platinum/GetVRChart.asp
A Volume Reversal ™ is change from a Rally day to a Reaction day accompanied by an increase of volume or a change from a Reaction day to Rally day accompanied by an increase in volume. Volume Reversals
™ coming off intermediate lows or highs have greater significance in helping to define those lows or highs and important pivot points in the marketplace.
How do you use this list? VRs are buy and sell triggers and are particularly useful in defining lows or highs in stocks and stock
indexes. Traders find them particularly useful, especially coming off market extremes as an indication of a change of direction. Use the VRs in conjunction with your other technical indicators and you've
added a unique technical tool to your arsenal.
List of Volume Reversals 3/7/08 - Sectors
*** Sectors Positive Volume Reversals ***
**** NONE ****
*** Sectors Negative Volume Reversals ***
Chemicals - Agricultural Chemicals
AGU - Agrium Inc
CF - CF Industries Holdings Inc
COIN - Converted Organics Inc
MON - Monsanto Corp
MOS - Mosaic Company
SYT - Syngenta AG
TNH - Terra Nitrogen Co Lp
TRA - Terra Industries Inc
Energy - Oil & Gas Drilling & Exploration
DNE - Dune Energy Inc
DO - Diamond Offshore Drilling
PTEN - Patterson-Uti Energy Inc
RDC - Rowan Comapnies Inc
RIG - Transocean Inc
STO - StatoilHydro ASA
Manufacturing - Farm & Construction Machinery
BUCY - Bucyrus International Inc
DE - Deere & Co
MTW - Manitowac Co Inc
Metals & Mining - Aluminum
AA - Alcoa Inc
KALU - Kaiser Aluminum Corp
Metals & Mining - Copper
FCX - Freeport McMorran
PCU - Southern Copper Corp
Suggestions? Comments? on the newsletter service. We would like to hear from each and everyone of our subscribers. Our email is mark@vrsurvey.com.
DISCLAIMER
This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of VRTrader.com may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. VRTrader.com staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Do not duplicate or redistribute in any form.