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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (69718)	9/13/2006 7:35:14 PM
From: orkrious	Respond to of 110194

@Hulbert -- trotsky, 16:47:57 09/13/06 Wed at the March/April 2003 low, the Hulbert gold sentiment index stood at over 65 - so he penned an article saying one should stay out, they were too bullish. the HUI was at about 120 points at the time. in December, it had reached about 260 points. guess what, the gold timers turned bearish - and Hulbert penned an article saying how that indicated one should buy any dips. the dip buyers promptly got burned in the 17-month long cyclical bear market that followed. iow., one must take that indicator with a big grain of salt. it may begin to work better now that more people have joined the gold train, but in '03 i concluded that the survivors of a 20-year bear market were apparently a lot savvier than Hulbert gave them credit for. by the way, almost ALL the timers use the same major signals, and among those the foremost is the relative performance of gold stocks vs. gold. this signal's validity is unlikely to be disturbed by the fact that it is widely known, for reasons explained previously.

To: ild who wrote (69718)	9/14/2006 10:47:29 AM
From: orkrious	Respond to of 110194

@takeover candidates ignored by the market - so far -- trotsky, 10:29:31 09/14/06 Thu consider that even CBJ, with all its well known problems, actually managed to find a suitor. we don't know what went on in the suitor's mind, but still, it has happened. now, if e.g. MRB and NSU are NOT taken over within the next year or so, i'll eat my hat. however, not only do they fail to sport any sort of takeover premium - their share prices don't even reflect their fair value absent a takeover. i would even say the respective discounts to fair value are so large , it's astonishing. these strike me as extreme examples of market inefficiency - however, that also means that there is a lot of opportunity. presumably, potential suitors will be able to afford to offer large premia with valuations so low. @going down again -- trotsky, 10:13:18 09/14/06 Thu well, it's Thursday - as a good a reason as any. AU_NB@Hulbert -- trotsky, 10:12:23 09/14/06 Thu i should maybe also mention, he can not claim to have 'forgotten' about past wrong calls using his indicator, because i had an e-mail exchange with him over the topic. his reply struck me as wishy-washy btw. - nothing much was achieved by that exchange of views. AU-NB @ Hulbert's indicator -- trotsky, 10:09:16 09/14/06 Thu well, on the one hand i'm glad the gold timers have lost their exuberance, on the other hand the thing is that this might not mean a whole lot. as i've mentioned, several contrarian calls Hulbert has issued in the past based on this indicator turned out to be dead wrong. he never mentions this when he writes a new article discussing the indicator's latest position and the implied implications, but it's a fact. @IAG/CBJ -- trotsky, 09:32:30 09/14/06 Thu while i find that an odd choice by IAG, and an even odder premium, this continues to show that it's much cheaper to buy your gold reserves on Wall Street than finding and developing them yourself. it follows that the entire sector deserves to be rerated, especially the owners of large, lowly valued in-the-ground reserves.

To: ild who wrote (69718)	9/14/2006 3:35:51 PM
From: orkrious	Respond to of 110194

@PoG -- trotsky, 13:20:47 09/14/06 Thu the 10-min chart rectangle i described earlier has now been slightly broken to the downside - we'll see if there's another layer of stops there. if so, the next support level is in the 560 region. siempre@NOT -- trotsky, 13:00:58 09/14/06 Thu sorry, that was a misunderstanding. i don't know the company, i only tried to emphasize the word 'not' and i use capital letters as a stand-in for italicized letters. the bears are growling -- trotsky, 12:35:31 09/14/06 Thu it looks like there's a lot of confidence in bear-land (scroll down to the comments on pm shares): Kaplan STILL bearish truecontrarian.com of course, this guy was dead wrong for nearly the entire span of the 2005-2006 upleg if i recall correctly - using the very same arguments! @December gold contract, daily candles and 10 min. chart -- trotsky, 11:46:16 09/14/06 Thu i'm not sure if this collection of tiny indecision candles is good or bad (daily candles). could be just as well the pause before resumption of the plunge as it could be a potential reversal formation. on a 10 minute chart, it has built a rectangle. the good thing is that trading volume in this rectangle has been very high, while price has apparently stabilized. @recent copper price fall triggers -- trotsky, 11:32:50 09/14/06 Thu excerpts: "Copper fell to a three-week low in London after China, the world's largest user of the metal, said industrial production rose at the slowest pace in 17 months. Output at manufacturers and power plants climbed 15.7 percent in August from a year earlier, China's statistic bureau said today. That's the smallest gain since March 2005. " "France, Europe's third-largest economy, said Sept. 11 that its industrial production dropped unexpectedly in July. Output at factories, mines and utilities in the U.S., the second- biggest user of copper, rose in July at half the rate in June." economies slow down all of a sudden note that Japan's recent plunge in machinery orders in July (minus 16,7% - the worst in 20 years) and sharp slowdown in GDP growth to a mere 1% also caught everybody by surprise. it was not supposed to happen. this could be the first signs that the 'China can grow on its own' story is best laid to rest. also, as a new BoC board member recently remarked, with 80% of the population still of rather modest material means, any attempt to adopt a policy of pushing up internal consumption is bound to misfire. @gold in Rand terms -- trotsky, 10:47:20 09/14/06 Thu please note the following one-year chart of the Rand gold price: as can be seen, the average gold price received by South Africa's gold mines over the last quarter was the highest ever - by a considerable margin i might add. chart of the Rand gold price - it's not only up in the clouds, it looks bullish too stockcharts.com nevertheless, most of the SA gold shares trade as if it had gone down instead of up. for instance, you were able to buy HMY at $12 on previous occasions when the Rand PoG was below ZAR. 3,000 /oz. the average price received over the past quarter is more like ZAR. 4,350-4,400/oz. this is absurd.

To: ild who wrote (69718)	9/14/2006 5:37:03 PM
From: orkrious	Read Replies (1) \| Respond to of 110194

derivatives tail wags the dog -- trotsky, 16:52:43 09/14/06 Thu the reason for growing short interest in the market, and comments on option strategies: Succo explains, Mish comments note: i've contended in the past along those lines as well - the large open interest in options actually contributes to a lowering of volatility due to the hedging strategies involved, which in turn leads to even more growth in options OI, and so on ad, seemingly, infinitum. thus we get an ultra-low VIX, coupled with a market that can neither summon a decent rally, nor a decent correction. UNTIL that is, something goes wrong. that something could be an extraneous event - some sort of unexpected shock (anything from a major turr attack to GM declaring bankruptcy could serve as a trigger event), or maybe a mere snowballing of a decline if say, an unexpected news item hits just as important lines of put OI support are reached. fact is, the growth in options OI has far outpaced the growth in underlying share trading volume, so the effect of such a breach could be quite outsized. think 'portfolio insurance, anno 1987'. this current situation is VERY similar in nature. it keeps everybody complacent , but it harbors the seeds of a catastrophic outcome for market participants. everybody should be cognizant of this danger, since as Mish correctly remarks, it's not a question of IF this particular financial hurricane will strike, it's a question of when. # @pm shares, bad news dept. -- trotsky, 16:10:39 09/14/06 Thu with today's break, the small divergence between HUI/XAU and PoG has disappeared. the lateral support break in the HUI is slight, and could conceivably be invalidated by a quick bounce were one to occur. however, that's in the in the 'maybe' chapter under 'we'll see'. as an interesting aside, the more senior the stock, the more break-down prone it appears to be. iow, the juniors have held up much better than the mid tier and senior producers, which could be a side effect of the recent takeover wave. however, the normal correction procedure calls for them to eventually follow the seniors to zool. meanwhile, the gold contract is closing in on a support zone that should be at least good for a bounce.