The VRTrader.com VR Silver Newsletter - Monday8/25/2008
"Tools for the High Performance Trader"
Copyright ©2008, All rights reserved.
Redistribution in any form is strictly prohibited.
LEIBOVIT FILES | by Mark Leibovit
Monday, August 25, 2008
Guess Which Month Is The Worst Of The Year!
UPCOMING ECONOMIC RELEASES/MARKET EVENTS August 25-29, 2008:
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MONDAY, August 25:
Existing Home Sales for July (10 am ET)
Treasury announces 2 & 5-year notes (11 am ET)
Treasury auctions 3 & 6-month bills (1 pm ET)
---------------------------------------------TUESDAY, August 26:
'Turnaround Tuesday'?
Weekly Chain Store Sales (8:55 am ET)
Consumer Confidence Index for August (10 am ET)
New Home Sales for July (10 am ET)
FOMC Minutes Released (2 pm ET)
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WEDNESDAY, August 27:
Durable Goods Orders for July (8:30 am ET)
EIA Petroleum Status Report (10:30 am ET)
Treasury auctions 2-year notes (1 pm ET)
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THURSDAY, August 28:
Corporate Profits for Q2 (8:30 am ET)
Gross Domestic Product (GDP) for Q2 (8:30 am ET)
Weekly Initial Jobless Claims (8:30 am ET)
Leading Indicators Index for July (10 am ET)
Philadelphia Fed Index for August (10 am ET)
Treasury auctions 5-year notes (1 pm ET)
Weekly Money Supply (4:30 pm ET)
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FRIDAY, August 29:
Personal Income and Consumer Spending for July (8:30 am ET)
Chicago PMI for August (9:45 am ET)
U. of Michigan Consumer Sentiment Index for August (10 am ET)
SIFMA recommends early market close (2 pm ET)
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STOCKS - ACTION alert -
The Dow rallied sharply 197.85 points on very light summer trading volume accompaniedby at 34.33 advance in Nasdaq and a 14.48 point bounce in the SPX. Closing prices were11,628.08, 2414.71 and 1292.20, respectively. This rally did not come unexpectedly as Iwrote Friday morning: "we're getting a tad oversold here with some indexes down fourdays in a row. Next week may host end of the month 'window dressing' (for the life of me Ihave no idea what money manager would even want to buy) and next weekend is Labor Dayweekend - both of which could host a rally try in the marketplace. The historical tendencyis for a rally the day before the Labor Day holiday and the two days after."
A bogus story regarding the Korea Development Bank's supposed interest that it wasconsidering buying Lehman hit the tape early Friday and triggered a lot of short-covering(see article at the bottom of this piece). That along with an oversold market conditionand light summer trading conditions ignited the fuse. Also, a strong US Dollar Indexhelped set a positive pre-market tone as Warren Buffet came out and said he has nopositions against the dollar.
Cyclically, we're due for a low into the fall and when I see this type of blatantmarket manipulation, my confidence increases that the sell-off could be vicious. Still,the thieves and cockroaches are still out there and there isn't much we can do about it. Iremain on my TIMER DIGEST 'Sell' signal and am betting that break of the July 15 lows(perhaps dramatically) is a near-term risk and opportunity. Think about it. With FannieMae and Lehman Bros. insolvent, where do you think the market should be headed?
Despite Friday's rally, equity markets are still just climbing out of an oversoldcondition. The rally began off 1261.15 (Wednesday's low) in the S&P 500 could stillhave legs, but if 1261.15 is broken (equivalent in the Dow Industrials is 11,290), themarket is likely signaling 'dive, dive, dive'. Remember, September (and early October) arehistorically the worst times to be long the market and plenty of money managers know this.
With US banks getting more reluctant to lend money, the US economy grinding to a
halt, and the velocity (turnover) of money, which has the biggest influence over the moneysupply growth rate, is expected to slow down further in the months ahead.
The ideal scenario would call for the market to rally or hold its own into Labor Dayand then rollover with a vengeance, but I'm not going to play that game. We will know inthe fullness of time!
Exchange Traded funds we use for Platinum subscribers to trade the markets. Long ETFs:DIA, SPY, QQQQ, MDY, IWM. Double-long ETFS: QLD, SSO, MVV, DDM, UWM. Short ETFs: DOG, SH,MYY, RWM. Double-short ETFs: DXD, SDS, QID, MZZ, TWM.
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GOLD - ACTION alert -
Gold settled only 5.50 lower at 833.50 basis December during the normal session, butthen sold off in after hours touching 821.80. In overnight trading Gold is trading even toslightly higher. Silver is up a couple of pennies.
The cockroaches are at work here too! One of the greatest frauds ever perpetuated isnow in front of the regulators, but, as usual, nothing will be done about it. Why bit thehand that feeds you? The event? If you attempted to purchase Silver in the cash marketlast week, you quickly found out there was little or none available. Holders of physicalSilver willing to sell were just not in the marketplace. Apparently, the only sellersappeared in the futures markets which is a phony market. The selling of futures contracts,rather than real silver has thwarted the free market process, since real silver is notprovided to people who want it. The sale of Silver futures was clearly a manipulation bybanks, hedge funds, or even the Plunge Protection Team to discourage speculation incommodities and to punish those who have. So long as you recognize the truth of what isoccurring, know that Silver and Gold are strong buys at current levels EVEN IF ONLY FOR ATRADE. We won't know for several weeks how sustainable any recovery in Gold or Silvertruly is because the perpetrators of the current sell-off may try their hand again. Bringit on, I say! The only problem is that if you can't get you hands on the physical metaland rely solely on ETFs such as SLV and GLD, you're ultimately going to be hung with yourown rope. The day is not far away when you may not have access to your money and the only'safety' will be what you've squirreled away in the safe deposit box or in the mattress.As dire as that statement might seem, it could very be the truth, so don't take thiswarning too lightly. As incredible as it may sound, those of you with 'wealth' thinkingyour money is safe in banks, brokerage firms or even at the US Treasury may wake up oneday a pauper.
The US Dollar Index spiked higher on Friday sympathetic to the Korean DevelopmentBank/Lehman story. It is my feeling the US Dollar Index needs to retrace from currentlevels on its way to new lows.
I remain on my TIMER DIGEST 'Buy' signal for Gold. Keep in mind that Gold displays ahybrid personality, sometimes acting as an anti-fiat currency, or tracking the generaldirection of commodity markets, or tracking trends in the local money supply, for cluesabout the direction of inflation. It changes day to day. All you need to know is to ownit!
I told you last week a technical bounce at this time in Gold back to 880 or so is notunreasonable with an equivalent move in Silver back to the 14.50-15.00 range. Above thoselevels, we're headed to new highs. If we break last week's lows, e.g., 12.60 in Silver and780 in Gold, there is risk to 730 and possibly 690 in Gold and 10.50 in Silver in theweeks that follow. I think we're going up from here!
Here are the vehicles we use for Platinum subscribers to trade the markets. Long ETFs:GLD, SLV, GDX, DGP. Short ETFs: DGZ, DZZ. Long ETF for Platinum: PTM. Short ETF forPlatinum PTD.
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BONDS - ACTION alert -
I am remain on my TIMER DIGEST 'Buy' signal.
Foreign money coming into the US as a flight to safety. Holding US Treasuries in the weeksahead is the best place for your money, unless your comfortable on the short side viainverse ETFs or shorting long ETFs (assuming you can borrow the shares). Bernanke's nextmove may very well be to lower interest rates. He may have no choice.
Here are the vehicles we use for Platinum subscribers to trade the markets. TLT is ETFplay here. Short ETFs: PST, TST.
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CRUDE OIL - ACTION alert -
October Crude which settled 5.62 higher at 121.18 on Thursday sold-off 6.59 closing at114.59 on news that a Turkish pipeline is now back into production, along with news of theRussian pullout of troops from Georgia, temporarliy releving diplomatic stress. But, thisstory is far from over.
I don't believe the overall correction in Crude Oil is behind us as we may still bemirroring the 2006 pattern (from July '06 to January '07), where a 35% correction unfoldedand herein would translate into a price of $97.00 or perhaps even lower for Crude Oil. Atthe same time, there is still room for Crude Oil to rally again (perhaps into the high120s) if geopolitical noise again begins to be heard. Overall, I prefer to sit this oneout and watch a bit. If I see a high confident trade, Platinum subscribers will hear ofit.
Here are the vehicles we use for Platinum subscribers to trade the markets. Short ETFs: DUG, DTO. Long ETFs: DIG.
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According to a poll of 29-economists at US banks and research groups polled by ReutersThompson, 21 thought McCain would be better for the stock market in the first year afterthe election, while six chose Obama and two gave no response. For investors, a key concernthis election year is taxes on dividends and capital gains, which Obama has pledged toincrease. He also favors allowing income tax cuts enacted under Bush to expire, whileMcCain wants them made permanent. "The only thing that is necessary for evil totriumph is for men of good will to do nothing," said Edmund Burke, but confrontingIran could send oil to $200 /barrel. The Saudis prefer a McCain presidency, to protect theoil kingdom from a menacing Iran and its Russian ally. Also, Riyadh does not want Iraqspiltting into sectarian violence and chaos, from a artificial timetable of withdrawalpromised by Obama.
Friday's rally was also aided by steady words from Fed Chairman Bernanke as he said inWyoming he was encouraged by recent downward trends in commodity prices and by recentgains in the dollar. It was all good today as traders (the few that weren't on vacation)focused on the positive and paid no attention to simmering tensions with Russia or thelingering credit crisis that is still there whether we put our heads in the sand or not.
Mr. Bernanke spoke. He was as calm as the waters in the lake outside of the TetonLodge. Markets listened. Speculators acted. The public continued to scratch its collectivehead. How and when will the storm end? What will the damage be? Where is the next greatinvestment to be found?
We found this passage from his speech referring to the trends we've seen since mid-Julyin commodities and the dollar, as most relevant.
"Recent developments in commodity prices and the dollar, combined with slowergrowth, should lead inflation pressures to ease. The recent decline in commodity pricesand the increased stability of the dollar have been welcome trends. If not reversed, thesedevelopments, together with a pace of growth that is likely to fall short of potential fora time, should lead inflation to moderate later this year and next year."
Read into these words what you will; we interpret them to imply that if the dollarslips back towards where it was aiming in mid-March and mid-July, the Fed will pull theinterest rate trigger sooner rather than later. Ditto, if it senses that oil and otherinflation-boosting commodities start getting out of hand again.
Mr. Bernanke also used the "too big to fail" term several times during hisspeech when referring to financial market instability. The take-home notes from today'spresentation may conclude that while Fannie and Freddie will very likely not be left tocurl up and die, there might be one or two firms which - if not successfully adopted byoutside interests - could be allowed to go under and restore the sense of fairness asregards to the 'moral hazard' issues that many are obsessing about. Too big to fail is notthe same as too interconnected to fail. Supervision and regulation will become the hotbuzzwords in financial markets as we move along and leave the current debacle to beanalyzed by scholars. On that, the Fed may (finally) be ahead of the curve.
A noteable laggard once again was the NYSE Composite which was up .71% on the daycompared to the Dow's 1.73% advance and the Nasdaq 1.44% advance. The indices overall shotout to new highs in the first 90 minutes only to spend the rest of the day treading waterareound those levels. The Nasdaq made a modest charge into new high ground during theafternoon, but ended up settling back around the highs established earlier in the session.This definitely looked like a typical Friday in August where trading volume is paper thinand the side that gets off first gets to dictate the trade for the day.
The market has been quite resilient in the face of the possible bankruptcy of Fannieand Freddie. This shows you why it is so hard to trade on news. The market anticipatesnews even before it is public. The stock market indexes already suffered through a bear(20% decline) while Fannie and Freddie dropped over 90% each. Only then did theprobability of their bankruptcy become headline news. The trend for Fannie and Freddie,the financials, and the market as a whole has clearly been down for months or even a year.Had you traded the trend, you would be rich. If you wait for the news, you end up sellingat the bottom. Fannie Mae and Freddie Mac's preferred stock was downgraded to the lowestinvestment-grade rating by Moody's Investors Service, which said the increased likelihoodof ``direct support'' from the U.S. Treasury may devalue those shares. The ratings werelowered five steps to Baa3 from A1. The so- called bank financial strength ratings for thecompanies, which refle ct the odds of a government bailout, were cut four steps to D+ fromB-, Moody's said in a statement today.
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Canadian TSE and TSE Venture Commentary as a courtesy to our Canadian Clients updated forMonday, August 25:
TSE:
A five-hundred point rally culminated at 13,575.83 Thursday and the result was atwo-hundred point retracement into Friday's lows. Volume increased to the upside Thursdayand declined Friday, but the burden of proof is clearly on the bulls. Next key resistnaceis the 13,727.97 high of July 31. Even before then I would like see a Positive VR or aseries of Positive VRs formed to help confirm a low. If for whatever reason we cannot holdthe August 19 low (13,015.88), downside risk is anywhere from 500 to 1000 points in themonths ahead. Support is 13,339.84, 13,015, 12,950, 12,775, 12,450, 12,200 and 12,011.Resistance is 13,575, 13,727, 13,889, 13,983, 14,157, 14,580, 15,096, 15,154, 15,600,15,792, 16,100, 16,400.
TSE Venture:
The TSE Venture traded within Thursday's range on Friday. On Thursday we peaked out at1951.97 seventy points above the bear market low of 1887.41 posted on August 19. Nothingmagical here yet, but we're watching. My long published 'support' level of 1800 has held,but what I'm looking for is consistent upside volume to help confirm a meaningful low. Sofar, no sign of that. Support is at 1919, 1887, 1800, 1700, 1600. Resistance is 1966,2010, 2083, 2124, 2155, 2239, 2294, 2307, 2340, 2367, 2505, 2649, 2688, 2735, 2809-2814,2850 followed by the .618 Fibonacci number of 2975, 3000, and 3372.00 the big high."
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TIMER DIGEST has named Mark Leibovit of VRTrader.com 'TIMER OF THE YEAR' for 2006 and wasnamed the #2 Timer for 2007. Also, Mr. Leibovit is currently the #3 Gold Timer for 2008and the #9 Market Timer for 2008.
More kudos - Mark Leibovit was named the #1 Intermediate Market Timer for the 10 yearperiod ending in 2007; the #1 Intermediate Market Timer for the 3 year period ending in2007; the #1 Intermediate Market Timer for the 8 year period ending in 2007; and the #8Intermediate Market Timer for the 5 year period ending in 2007. NO OTHER ANALYST SURVEYEDAPPEARED IN ALL FOUR CATEGORIES FOR INTERMEDIATE MARKET TIMING AS PUBLISHED IN TIMERDIGEST JANUARY 28, 2008!
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Ux U3O8 Prices* (Uranium)
August 18, 2008
Spot: $64.50 Unchanged. Bull market high in the cash market was $136.00.
The August Uranium Futures are trading at $66.00 Unchanged. Since the June 13, 2007high of 154.95 we have traded down to $57.00 in June. Major support lies well under themarket at $36.00. Confirmation of a bottom should be evident when the uranium shares beginto move higher.
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ANNUAL FORECAST MODEL STILL ON SALE - INQUIRE BY E-MAIL AT MARK@VRSURVEY.COM
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Full Annual Forecast Model charts and commentary for 2008 can be viewed by clicking onthe VR Forecaster link on the left side of the Home Page and then click on 'Click to View2008 Report'. You will then be prompted to enter your username and password. For the restof you, don't miss the opportunity to subscribe to this special report and mid-year updatethat long ago vindicated OUR claim that it represents a 'blueprint to the future'. If youhad been a subscriber, you would have known ahead of time that the market in 2007 wouldlikely nosedive in February/March, rally to June, the nosedive into mid-August, then rallyinto early October and the sell-off into the third week of October - followed by a choppyNovember. You have also known that the market could be weak into April 14, 2008 and topout on or about April 30, 2008 with a secondary rally try into May 16. You would also beenprepared for the sell-off that occurred after May 16. What's next? Subscribe today and seefor yourself! Now, you have no excuse. You can buy the 2008 Annual Forecast Model for 50%off!
Remember, folks, there is no price too high for good information!
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VR TRADER.COM WATCHLISTS: Please note: The VR Watchlist is currently now only availablevia the VRTrader.com website accessed via your assigned username and password. Pleaseemail mark@vrsurvey.com if you misplaced that information. At this time there are noWatchlist listings.
SAMPLE DAILY VR LIST:
Editors note: The Daily VR List here is abbreviated with the full list only available toPlatinum subscribers by clicking on 'Current VR List' on the Home Page of VRtrader.com.Silver subscribers who find this useful should upgrade to Platinum where you can pull downVR charts for many securities and watch the patterns unfold for yourself. There is notechnical service on the planet that posts Positive and Negative VR! Why? Because they areproprietary to VRtrader.com!
How do you use this list? VRs are buy and sell triggers and are particularly useful indefining 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 theVRs in conjunction with your other technical indicators and you've added a uniquetechnical tool to your arsenal.
What is a Volume Reversal? There are several proprietary subtleties to the Volume Reversal™ algorithm, but essentially a Volume Reversal ™ is a change from a Rally day to aReaction day accompanied by a increase of volume or a change from a Reaction day to Rallyday accompanied by an increase in volume. Volume Reversals ™ coming off intermediatelows or highs have greater significance in helping to define those lows or highs andimportant pivot points in the marketplace. The Volume Reversals ™ presented hereprovide you with a unique research tool that may have trading (short-term) significance,but it also may have 'trend changing'(intermediate) significance as well. The sectorVolume Reversals ™ show where big money is possibly affecting an entire group ofstocks. The stocks listed under the group have posted Volume Reversals ™ along with thegroup as a whole. The individual stocks listed have posted Volume Reversals ™ on theirown and are valid plays as well.
To see a visual representation of Volume Reversals ™, please go our Current Portfoliosection and click on any recommended stock. Or, if you would like to get a VR Chart for aspecific symbol, please click here. Please note that not all symbols may be currentlyavailable.
*** Sectors Positive Volume Reversals ***
AEROSPACE/DEFENSE Aerospace/Defense Products & S
ESL Esterline Technology Cp
HWK Hawk Corp
BANKING Regional - Midwest Banks
AMFI Amcore Financial Inc
HBAN Huntington Bancshares
BANKING Regional - Northeast Banks
CAC Camden National Corp
CBNJ Cape Bancorp
BANKING Regional - Pacific Banks
BMRC Bank of Marin
CATY Cathay General Bancorp
BANKING Regional - Southeast Banks
FBSS Fauquier Bankshares Inc
FNB Fnb Corporation (pa)
BANKING Regional - Southwest Banks
BOKF Bok Financial Corp
CFR Cullen Frost Bankers
BANKING Savings & Loans
BFBC Benjamin Franklin Bancorp MHC
BFIN BankFinancial Corp
CHEMICALS Specialty Chemicals
ACET Aceto Corp
FOE Ferro Corp
COMPUTER HARDWARE Computer Peripherals
AVCT Avocent Corporation
ELON Echelon Corporation
COMPUTER SOFTWARE & SERVICES Application Software
ACTU Actuate Corporation
BORL Borland Software
COMPUTER SOFTWARE & SERVICES Business Software & Services
CNIC Copernic Inc Common Stock
CSGP Costar Group Inc
CONSUMER NON-DURABLES Rubber & Plastics
CSL Carlisle Companies Inc
GT Goodyear Tire&Rubber Co
CONSUMER NON-DURABLES Textile - Apparel Clothing
GES Guess? Incorporated
GIL Gildan Activewear Inc A
DIVERSIFIED SERVICES Business/Management Services
ABM Abm Industries Inc
ACN Accenture Ltd
DRUGS Biotechnology
ABPI Accentia BioPharmaceuticals In
CADX Cadence Pharmaceuticals Inc
DRUGS Diagnostic Substances
APPY AspenBio Pharma Inc
BLUD Immucor Inc
ELECTRONICS Scientific & Technical Instrum
AFFX Affymetrix Inc
ASY Elecsys Corporation
FINANCIAL SERVICES Closed End Fund - Debt
AINV Apollo Investment Corp
AVK Advent Claymore Cv Sec&incm Fd
FINANCIAL SERVICES Closed End Fund - Equity
AGC Advent Claymore Global Convert
BLU Blue Chip Value Fund Inc
FINANCIAL SERVICES Closed End Fund - Foreign
BHK Blackrock Core Bond Trust
DOO WisdomTree International Divid
HEALTH SERVICES Medical Appliances & Equipment
AMMD American Medical Systems
BABY Natus Medical
HEALTH SERVICES Medical Instruments & Supplies
ATRC AtriCure Inc
COV Covidien Ltd
INSURANCE Property & Casualty Insurance
AGII Argonaut Group Inc
AHL Aspen Insurance Holdings
INTERNET Internet Software & Services
AKAM Akamai Technologies Inc
ARBA Ariba Inc
LEISURE Restaurants
CHUX O'charley's Inc
CPKI California Pizza Kitchen
REAL ESTATE Property Management/Developmen
BPO Brookfield Properties
EMITF Elbit Medical Imaging
REAL ESTATE REIT - Diversified/Industrial
BRE Bre Properties Inc Cl A
CUZ Cousins Properties Inc
REAL ESTATE REIT - Healthcare Facilities
HCN Health Care Reit Inc
HCP Health Care Prop Inv Inc
REAL ESTATE REIT - Hotel/Motel
FCH Felcor Lodging Trust Inc
HOT Starwood Hotel&Resort Ww
REAL ESTATE REIT - Office
ARE Alexandria Real Est Eqts
BDN Brandywine Realty Trust
REAL ESTATE REIT - Residential
AEC Associated Estates Realty
AVB Avalonbay Communities
REAL ESTATE REIT - Retail
EQY Equity One Inc
FRT Federal Realty Investmnt
TELECOMMUNICATIONS Communication Equipment
CRNT Ceragon Networks Ltd
IDSY I.D. Systems Inc
TELECOMMUNICATIONS Diversified Communication Serv
CCI Crown Castle Intl Corp
PGI Premiere Global Services Inc
TRANSPORTATION Shipping
DHT Double Hull Tankers Inc
HRZ Horizon Lines Inc
*** Sectors Negative Volume Reversals ***
ENERGY Independent Oil & Gas
COG Cabot Oil & Gas Corp
ISRL Isramco Inc
ENERGY Oil & Gas Drilling & Explorati
ATW Atwood Oceanics Inc
BDE Bois d'Arc Energy
[Section Reserved for Subscribers]
Suggestions? Comments? on the newsletter service. We would like to hear from each andeveryone of our subscribers. Our email is mark@vrsurvey.com.
DISCLAIMER
This newsletter is a publication dedicated to the education of stock traders. Thenewsletter is an information service only. The information provided herein is not to beconstrued as an offer to buy or sell securities of any kind. The newsletter picks are notto be considered a recommendation of any stock but an information resource to aid theinvestor in making an informed decision regarding trading in stocks. It is possible atthis or some subsequent date, the editors and staff of VRTrader.com may own, buy or sellsecurities presented. All investors should consult a qualified professional before tradingin any security. The information provided has been obtained from sources deemed reliablebut is not guaranteed as to accuracy or completeness. VRTrader.com staff makes everyeffort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control.
