Commodities Moving from Left to Right

Talk of a bubble ready to pop is premature. Shorting a trend moving from lower left to upper right is dangerous.

Spot Commodity Prices: CRB Spot Index (1947 - Present);
16-Raw Industrial Spot Price (1935-1947);
Great Britain Wholesale Price of All Commodities (1885-1935) and Z Scores from Primary Trend


Headline: Japan Rice Buying May Outstrip Supply on Hoarding, Marubeni's Shibata Says

Japanese consumers may almost double rice purchases this fiscal year, driven in part by contamination “rumors” surrounding the nation’s worst earthquake and nuclear disaster, as demand outstrips crimped domestic production.

Hoarding may result in purchases of as much as 15 million metric tons, from about 8 million tons last year, making it impossible for Japan’s farmers to meet demand after a quake- generated tsunami washed over paddies in an area representing 18 percent of the country’s output, said Akio Shibata, head of the research unit at Marubeni Corp., in an interview in Tokyo.

Source: bloomberg.com

Mailbox

Don,

Major retail brokerage outlets offer reliable and competitive electronic platforms.

Day trading which is based on turnover can be difficult to control. Great profits are rarely found down the path of heavy turnover.

Investing takes discipline, creativity and some enhanced Street IQ. Success cannot be achieved in one, two, three, even four attempts. The transition from weak to strong handed investor can only be achieved by turning failure into success. Learn from Jim. He’s one of the best.

It takes a lot of work to get off the grid. The work will be rewarded if the grid falls apart. The trick to self-reliance is maintaining balance between protection and profits.

Regards,

Eric

Hi Eric,

What's a good way for a poor man to place a bet on futures and ETFs? Do
you know/like any alternatives to Ameritrade?

Is daytrading the only way to profit from Jim Sinclair's gold angles? (It
seems that I spent too much time "going off the grid" and not enough time
profiting.)

BTW, this is my second attempt at trading. It's steep learning curve and
constant vigilance turn me off. It's just not much fun fighting ruthless
quant computers. My plan is to study Sinclair's compendiums, read the
suggested TA books, and get back up to speed.

Thanks.

Don

Follow the Money In Oil

Timely comments designed to scare the hell out of the weak hands. Very few coincidences in this business.

Crude Oil (WTI) and Crude Oil Diffusion Index (DI)


Headline: Oil price drops more than 3 percent

Oil tumbled more than 3 percent Tuesday after Goldman Sachs warned investors that crude is due for a "substantial pullback."

Goldman analyst David Greely noted that global supplies remain "adequate" even though the rebellion in Libya shut down production there. Before fighting broke out in February, Libya exported about 1.5 million barrels per day2 percent of global demand -- mostly to Europe.

Source: finance.yahoo.com

Budget tricks helped Obama save programs from cuts

Lots of arm waving over nothing. Any material reduction in spending will slow the economy into an election year. No chance.

Details of last week's hard-won agreement to avoid a government shutdown and cut federal spending by $38 billion were released Tuesday morning. They reveal that the budget cuts, while historic, were significantly eased by pruning money left over from previous years, using accounting sleight of hand and going after programs President Barack Obama had targeted anyway.

Source: news.yahoo.com

Valuations Are Not Driving Equity Prices

The study of history must include a comprehesive analysis that exceeds at least one economic and confidence cycle within two different financial centers. Conculsions based on anything shorter, such as historical 'valuations' within varying degrees of currency stability in the US, are not reliable.

Valuation are a moving target during periods of currency devaluation. A simply review of any of the world's hyperinflations illustrates this point. For further discussion equities prices and hyperinflation - Weimar Republic

Headline: History Bodes Ill for Stock Market

Commentary: Market's valuation currently well above average

Here's a sobering thought as earnings season begins in earnest:

There have been only four other occasions over the last century when equity valuations were as high as they are now, according to a variant of the price-earnings ratio that has a wide following in academic circles. Stocks on each of those four occasions would soon suffer big declines.

This modified P/E was made famous in the late 1990s by Yale University professor Robert Shiller, particularly in his book "Irrational Exuberance." In this modified P/E, the denominator is not current earnings per share but average inflation-adjusted earnings over the trailing 10 years. This modified ratio — sometimes called P/E10, or CAPE (for Cyclically Adjusted Price Earnings ratio) — has a markedly better forecasting record than the simple P/E.

Source: finance.yahoo.com

It's All About Control in Gold and Silver, Until It Isn't

As Jim writes in Slow Rise To The Top gold and silver are all about control.

The scatter plot below reveals one aspect of this control. This scat plot illustrates two-dimensional map between connected money flows and price changes in the paper market. The distribution with the scatter plot should be largely random (no discernible pattern) in a free (uncontrolled) market. The negative sloping least squares linear model clearly illustrates a nonrandom relationship exists in the paper gold market. In other words, a definable linear pattern when none is expected reflects a managed market.

Scatter Plot: Net Long As % of Open Interest (NL%OI) for Commercial Traders vs. 6-Week Natural Logarithmic Change in POG Since 2002


Managed, however, is a relative term. Today’s paper shuffling on the leveraged exchanges no longer generates as strong of a price response as it did in the past. This deterioration in paper control is suggested changing slope of the model since 2006-2007. While the price of gold is still controlled today, the grip of ‘paper shuffling’ over it has loosened.

This trend is significant. The trading sharks, known for sensing blood in the water from a wounded animal, always press vulnerability for profit. Right now, it's only a matter of early recognition.

"In all my years of investing, I have never seen an asset hit record highs, as gold has done recently, with less fanfare. There were no front page stories in the Wall Street Journal or Financial Times, heralding the new milestones." Fred Hickey, editor of the High-Tech Strategist and a member of Barron's Roundtable.

Source: dowtheoryletters.com

The Power of Perspective - Infinite Liquidity Or Be Damned

If the following quote fails to clear up any doubt about the US's commitment to infinite liquidity as a means of supporting the ‘economic recovery’, you're not reading between the lines. Gold understands this commitment – probably better understood as the lack of acceptable policy choices in handling the debt crisis that hampers real economic growth.

"He realizes now that raising the debt ceiling is so important to the health of this economy and the global economy that it is not a vote that, even when you are protesting an administration's policies, you can play around with."

Headline: WH: Obama regrets vote against raising debt limit

The White House said Monday that President Barack Obama regrets his vote as a senator in 2006 against raising the debt limit — a vote he's now pressuring Congress to take.

Obama "thinks it was a mistake," presidential spokesman Jay Carney told reporters. "He realizes now that raising the debt ceiling is so important to the health of this economy and the global economy that it is not a vote that, even when you are protesting an administration's policies, you can play around with."

Source: news.yahoo.com