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Dear Eric,

I have to thank you for all your great charts and in-depth analysis which you contribute to all of the readers of JSmineset, and now your blog. I have to admit, I am curious as to how you learned to do all your great analysis and charting, but my real question, is regarding your latest chart, and the indicator at the bottom. I've not seen the RVE(e) indicator before - can you tell me where to read up on it and what it is exactly. Again, I thank you for your great analysis and for sharing your knowledge. By the way, I like your taste in favourite books to read.

All the best,
CIGA,
Chris

Chris,

Years of experience reading the markets, and learning/adapting from the trading masters.

REV(E) is the cumulative energy of the tape, so to speak. Like most my indicators, it is my creation. It can be best described as similar but more complex than on-balance volume.

Regards,

Eric

GOP, Dems in “Death Embrace”: U.S. Budget “About to Go Off a Cliff," Cal Prof Says

U.S. Budget “About to Go Off a Cliff," Cal Prof Says

If we haven't already gone off the cliff, see chart, then it's probably best not to ask what if he's right.

The budget deficit is skyrocketing

Raise taxes or cut spending? Washington must take action on both fronts to curb U.S. debt or run the risk of a dollar crisis, according to a report by the Committee on the Fiscal Future of the United States, a panel of bipartisan experts.

1. Raise Taxes
2. Cut Spending
3. Devaluation

The first two choices are hard. The last one is easy. Political will is like electricity, it always seeks the path of least resistance.

Source: finance.yahoo.com

Gold

The technical picture of gold is similar to that of silver. The only exception is that gold has yet to test the overhead gap.

Gold ETF (GLD):


The under performance of gold relative to silver, illustrated by the gold to silver ratio, suggests a return of the leveraged carry trade.

Gold to Silver Ratio (GSR):


A falling GSR tends to coincide will powerful rallies in both metals. A study of gold breakouts from consolidation indicate that time is open for another trend acceleration. This flies in the face of popular F-TV analysis calling for a major consolidation or top.

Study of Gold Breakouts from Consolidation:


It is still time to stand strong with gold.

Ratings Rise Fastest Since ‘07, Boost Ford Bonds

“Companies are coming out of this recession with balance sheets that are as good or better than they were going into the last recession in 2001,” said John Tierney, a U.S. credit market strategist at Deutsche Bank AG in New York. “Leverage is lower, margins are better, however you slice and dice it.”

Thanks to FASB "flexibility" on derivatives everything looks better. These same rating agencies failed to acknowledge the risk of the financial sector in 2007-2008, so take the upgrades with a grain of salt.

Source: bloomberg.com

AP Exclusive: Obama wants $33 billion more for war

The Obama administration plans to ask Congress for an additional $33 billion to fight unpopular wars in Afghanistan and Iraq, on top of a record request for $708 billion for the Defense Department next year, The Associated Press has learned.

War has alway been in the playbook when all else fails.

Source: news.yahoo.com

New Lincoln penny, unveiled here, to feature union shield

The U.S. Commission of Fine Arts (a group that includes architects, art experts and others who make their livings creating pretty things) first recommended that 13 stalks of bound wheat decorate the back of the 2010 penny. Then, however, someone discovered that shafts of wheat also appeared on German coins minted during the 1920s and 1930s, the era when the German government was known as the Weimar Republic.

With history repeating, they should have went with it.

Source: http://www.sj-r.com

SEC May Stiffen Disclosure Rules for Asset-Backed Securities

The agency is working on rules to give investors more “timely information” about how asset-backed securities are performing, SEC Chairman Mary Schapiro said today in prepared remarks before the Financial Crisis Inquiry Commission.

How about an exchange with an independent clearing house and real time pricing? Maybe that's too timely. More likely it would shatter the perception of value for these "assets".

Source: bloomberg.com