The VRTrader.com VR Silver Newsletter - Monday 7/24/2006
"Tools for the High Performance Trader"
Copyright ©2006, All rights reserved.
Leibovit Files
Monday, July 24, 2006
Wall Street Waits for a Rally
Economic Data/Events July 24-28:
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MONDAY, July 24:
Treasury announces 2 & 5-year note auctions (11 am ET)
Treasury auctions 3 & 6-month bills (1 pm ET)
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TUESDAY, July 25:
Weekly Chain Store Sales (8:55 am ET)
Consumer Confidence Index for July (10 am ET)
Existing Home Sales for June (10 am ET)
Treasury auctions 20-year TIPS (1 pm ET)
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WEDNESDAY, July 26:
EIA Petroleum Status Report (10:30 am ET)
Treasury auctions 2-year notes (1 pm ET)
Fed Releases Beige Book (2 pm ET)
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THURSDAY, July 27:
Durable Goods Orders for June (8:30 am ET)
Weekly Initial Jobless Claims (8:30 am ET)
New Home Sales for June (10 am ET)
Help Wanted Index for June (10 am ET)
Treasury auctions 5-year notes (1 pm ET)
Weekly Money Supply (4:30 pm ET)
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FRIDAY, July 28:
Gross Domestic Product (GDP) for Q2 (8:30 am ET)
Employment Cost Index for Q2 (8:30 am ET)
Michigan Consumer Sentiment Index for July (9:45 am ET)
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The Saudis are pressing President Bush to call for a cease-fire. That means the Saudis andtheir friends on Wall Srreet are either long stocks or want to short on the next rally. Infact, that's all Wall Street wants is an 'indication' of cessation of interest rate hikesby Bernanke or an 'indication' of cessation of hostilities in Lebanon/Israel so they getabout the business of rallying stocks. If indeed this market is in trouble (and we'retalking about big trouble), we understand why they so desperately want to see a rally.Only time will tell whether the 1987 Crash type scenario unfolds or not, but theingredients are certainly in place.
Then, of course, there is the wild card surrounding the Plunge Protection Team and whatthey will and when they will do it. What truly stinks is that we're trading and investingin markets that run by 'big brother'. In the old days it was the floor specialists, marketmakers and stock 'operators' that controlled the game. Now, these 'big boy's have beenupstaged.
In truth, stocks have to go down to go up. Does that make sense? Yes, stocks have to bedriven down (as they were in 2000-2003) as stocks went from weak hands into strong hands.If the 'big boys' can't drive the stocks lower to accumulate them and the PlungeProtection Team is always standing in the wings, the dynamics of the market will certainlychange. We suspect, however, the 'big boy's are somewhat in cahoots with the PPT, as WallStreet and Washington are so closely tied, e.g., S.E.C Chairmen come from Wall Street.
Meanwhile, the 'bear' cycle we predicted in January vis a vis our Annual Forecast Model(on sale at $450 through the end of the year) is still very much intact with not sign ofan important bottom.
Last week's 'bull trap' cloaked in a 200 plus point one-day rally looked legitimateenough, but if you're in this crazy business long enough you gain understanding of theterm 'painting the tape'. The financial press has had a 100-year love affair with the DowJones Industrials and are easily fooled about what the stock market is really doing. But,the real story is told elsewhere, namely, the Nasdaq, the Dow Transportation Average, theS&P 500 Midcap and the Russell 2000 which have been and remain in downtrends. Whenthis changes (and it probably won't happen overnight), we'll report it to you.
The bulls are not only counting a cease fire in the Mideast. They are counting on interestrates continuing to raise and expect they will start to fall because today's inflationscare is almost entirely related to energy. They claim high oil prices are already slowingdemand for fuel. As demand levels out, they say we will begin to see oil and gas pricesstabilize and even possibly fall toward the end of 2006. Of course, they are not countingon a prolong recession, a further deterioration in the housing industry and real estate orterrorism, but someone has to remain optimistic, don't they? But, they do make a couple ofother interesting points. One of which is that the S&P 500 index is selling at itslowest P/E ratio in 10 years suggesting there is a fire-sale now occurring. And, since1945, the last two years before a presidential election have produced a 40% gain in theS&P 500!
Where are we? Well, end of the month 'window dressing' could begin this week with the lastday of the Monday a week from tomorrow and a couple of indexes appear capable of bouncinga bit. Of course, there is always the infamous 'Turnaround Tuesday' phenomenon to contendwith, and a slew of earnings reports hit the Street this week as well. We assume any rally(for the time being) is a short-sale opportunity, especially since we're entering the mostdangerous time of year (September/October) and we have theoretical technical measurementsto 9600-9800 in the Dow Industrials and now 1170 in the S&P 500. If we don't reachthese targets by the end of October, we would put these on the back burner. With Novemberelections and the seasonal tendency for market strength from the end of October to May, wewill likely be avoiding the short-side.
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Gold/Uranium:
Well, we all know geopolitical angst over intensified Israeli strikes against Lebanon,twin explosions in Nigeria, Iran's nuclear standoff, and terrorist attacks in India lastweek pushed investors toward safe haven assets, like gold but gold is not responding. Wespoke of a corrective 'gap' at $597.00 and it appears we're headed there. The problem isthat we could go a lot lower than that gap, but still providing another great long entrypoint for long-termers who believe like us that gold is headed to $2000 $3000 or $5000 anounce in the years ahead. When we say years ahead, we're taking the 15-20 year bull marketperspective which calculating from the 1999 low places us out to 2014-2019 for the mostlikely period of significant upward acceleration in price. Short-term, with gold basicallytracking in sympathy with the overall stock market (along with a weak Dollar), we suspecta big buy point should unfold in the fall. Meanwhile, don't forget think uranium! It isstill sitting at a multi-year high at $45.50 lb. and the scramble for uranium to fuel thenew nuclear power plants on the drawing boards around the world is only beginning. Did youknow that since the 1970s France has built 58 nuclear plants and gets 78% of itselectricity from them? Plans for two new nuclear plants at South Texas Power is on thedrawing boards while sixteen utility companies across the U.S. are expressing interest inbuilding 25 new reactors. Meanwhile, eighteen reactors are are being built in Asia and 77are being planned or proposed. South Korea already gets 40% of its power from nuclear. Theanswer to pollution and gasoline prices in the U.S. is to get on a fast-track of buildingnuclear plants while developing battery technology in automobiles that can quicklyre-charge electrically. No more internal combustion engine, no more pollution, no more oiland gas dependency and a clean environment. It may take 50 years for it to happen and ifdon't get blown to kingdom come by terrorists first, this is one ultimate solutioVR SilverNewsletter - 724200.ems n.
Robert Kiyosaki, best known for his "Rich Dad" series of books, has beeninvesting in gold since 1972 and said he thinks it is still a good investment. "Istill think gold will go to $1,500 an ounce. I'm betting against the U.S. dollar. Gold isa hedge against U.S. government mismanagement," said Kiyosaki, adding that his familymembers have a tradition of saving all their spare change for months on end and thentrading all the coins in for a single gold coin.
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DEBKAfile Exclusive: Syria placed its army on war preparedness, pointedScuds at Israel from Thursday, July 20, the day Tehran took control of Lebanon War
July 22, 2006, 12:27 PM
Our sources add Syrian fighter pilots are sitting in their cockpits. These orders went outfrom Syrian president Bashar Assad July 20 when Iran's Revolutionary Guards commanderBrig.-Gen Yahya Rahim Safavi assumed command of the Lebanon war from Hizballah leaderHassan Nasrallah. Tehran's direct military intervention in the conflict was accompanied byan Iranian weapons airlift which began landing Wednesday, July 19, at the Abu Ad Duhurmilitary airfield north of Homs. The deliveries include large quantities of new missiles,including the long-range Zelzal and Fajr 3 and Fajr 5 missiles, Katyusha rockets,anti-tank and anti-air missiles sent out from RG HQ in Bandar Abbas on the Persian Gulf.Assad acted on the assumption that Israel, whose air force and ground forces are alreadyhammering the cross-border supply routes north of the Litani River to block the passage ofIranian hardware to Hizballah, will soon decide to go for Iranian military operations inDamascus and Abu Ad Duhur. Gen. Safavi has set up two forward command posts whichcoordinate war operations with Hizballah chief of staff Ibrahim Akil. One center isworking out of a cellar of the Iranian embassy in Beirut to regulate Hizballah rocket fireagainst Israel and direct the groups of 3 or 4 RG officers taking part in every Hizballahface-to-face engagement with Israeli ground troops in the south. The second, housed in thebasement of the Iranian embassy in Damascus, is in charge of communications, intelligenceand getting hardware into Lebanon. The deliveries were made to the Abu Ad Duhur airfieldbecause it belongs to the joint Iranian-Syrian Scud missile factory which employs a largenumber of Iranian engineers and technicians. DEBKAfile's military sources report that someof the Iranian arms have Hizballah in Lebanon notwithstanding intense Israeli cutoffoperations and their impact will probably be palpable in the coming days.
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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 specificdelivery times due to factors beyond our control. Suggestions? Comments? on the newsletter service. We would like to hear from each andeveryone of our subscribers. Our email is mark@vrsurvey.com.
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