Playing A Rebound In Sara Lee (SLE)

Sara Lee (SLE) has traded down for 6 consecutive trading sessions. That is obviously a rare event and the odds of a short term 1-2 days rebound are quite high. On the last 9 occurrences the stock averaged a gain of 0.50% with a winning probability above 75%.

Those aren`t bad odds, are they?

Besides the stock is trading at the 200 day moving average. It probably will open lower today and that will be a good entry point.

Have a great trading day.

The CRB Spot Commodities Index Reaches A New All Time High

"The CRB Spot Commodities Index today reached a new all-time high (485), eclipsing the previous high (481) set in July 2008. This can be interpreted in many ways, of course, but let me state the obvious: this is not a symptom of deflation, and this is not a precursor of a double-dip recession. This is unambiguously symptomatic of growth and accommodative monetary policy."

in Calafia Beach Pundit

Related ETFs: PowerShares DB Agriculture Fund (NYSE:DBA) , Powershares DB Base Metals Fund (ETF) (NYSE:DBB), iShares Silver Trust (ETF) (NYSE:SLV), SPDR Gold Trust (ETF) (NYSE:GLD), United States Oil Fund LP (ETF) (NYSE:USO), United States Natural Gas Fund, LP (NYSE:UNG)

Jim O`Neill: Not Convinced About The Sustainability Of The Gold Move

"I am not convinced about the sustainability of the gold move"

Jim O`Neill, Chairman of Goldman Sachs Asset Management

Video Interview : Hugh Hendry, The Most Eccentric Hedge Fund Manager

Fantastic video interview with my favourite money manager, the eccentric Hugh Hendry.

Part I


Part II


Part III

Art Cashin Is Calling The Market Top

Art Cashin recently said that the S&P 500 was going to rally to 1200. He is one of the best contrarian indicators out there, so it gives me added conviction to my short lines:

“The S&P 1,130 to 1,133 will become the support level and we’ll see if we can build on it. You can make a projection that this could lead as high as 1,200 on the S&P.”

That is amazing, Art. Keep it coming.


Related ETFs: SPDR S&P 500 ETF (SPY), ProShares UltraShort S&P500 (ETF) (SDS), SPDR Dow Jones Industrial Average ETF (DIA), iShares Russell 2000 Index (ETF) (IWM)

Video: Chanos Says China Is The Next Enron...

"James Chanos of Kynikos Associates says China is the next Enron. Of course, this would sound ridiculous if Chanos hadn’t been one of the original people to uncover the Enron scandal. Chanos is a master short seller, accountant and hedge fund manager. He essentially believes the Chinese economy is one big government run ponzi scheme. He thinks it will end very badly"

in The Prag Cap

Is The Smart Money Indicator Giving A Sell Signal?

According to Bespoke Investment Group the current stock market rally has been fueled mostly by individual investors:

"Individual investors may be moving back into stocks, as gains in the Standard & Poor’s 500 Index this month occur at the start of the trading day, the time when they enter most transactions, Bespoke Investment Group LLC said."

in Bloomberg

Bespoke adds, "Investors are looking out of the side window and reacting to the financial news of the day or hour, for that matter.”

The S&P 500’s average hourly change between the prior close and 10 a.m. is 0.45 percent, higher than the 0.18 percent that occurs in the next 60 minutes until 11 a.m., according to a Sept. 17 report sent to clients by Bespoke. The difference during the remaining one-hour segments of a session is less than 0.1 percent. The benchmark index for American equities has risen more than 8 percent this month.

The increase in the hourly percent change is a reversal from the last two weeks of August, when most of the declines happened in the first half hour of trading, Bespoke said. The S&P 500 averaged a drop of 0.43 percent each day through 10 a.m. during that period.

The declines in the early part of the sessions in August created a bullish signal in the “Smart Money Indicator,” the report said. The SMI says retail investors, or individuals, trade near the start of sessions, while institutional investment actions are carried out mainly near the close.

Related stocks: Apple Inc. (NASDAQ:AAPL) , Exxon Mobil Corporation (NYSE:XOM) , JPMorgan Chase & Co. (NYSE:JPM), Google Inc. (NASDAQ:GOOG), Ford Motor Company (NYSE:F), Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)

Latest Article On Seeking Alpha

You can read my latest article on Seeking Alpha about the japanese yen here:

"Roubini and Faber Disagree on Yen Outlook"

Marc Faber expressed his bullish views on the japanese stock market on the CLSA Conference in Hong Kong, "It’s a country that people have given up on. The catalyst for a rally could from come a weakening yen, which in turn would weaken the attractiveness of the bond market and push investors to equities in the search for dividend yields. I think there is an opportunity, because compared to the bond yield Japanese stocks are inexpensive."

Have a great trading day.

New Thoughts On The Inflation/Deflation Debate

I found this very interesting analysis on the inflation/deflation debate written by Scott Grannis:

"There are a number of market-based indicators that tell us that money is not in short supply, and that money is in fact in abundant supply. If the dollar is weak relative to other currencies, it's because there is an abundant supply of dollars relative to other currencies. If gold and commodity prices are rising, it's because there is an abundant supply of dollars—lots of dollars chasing a limited outstanding stock of gold. A steep yield curve also reflects abundant money, because it is the market's way of saying that short-term interest rates are going to have to rise by a lot at some point in order to reverse the Fed's current willingness to over-supply dollars to the world."

Of course this is a very important discussion because the investors who get this right will be well positioned to profit from the upcoming moves in risk assets.

With the high correlation between equities, commodities and currencies I expect the risky assets to move all in the same direction. If inflation keeps rising, the risk trade will extent further into new high grounds, but if deflation kicks in, expect major bear markets everywhere...

Related: iShares Silver Trust (ETF) (NYSE:SLV), SPDR Gold Trust (ETF) (NYSE:GLD), SPDR S&P 500 ETF (NYSE:SPY), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ), ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE:TLT), iShares FTSE/Xinhua China 25 Index (ETF) (NYSE:FXI), iShares MSCI Emerging Markets Indx (ETF) (NYSE:EEM), iShares MSCI Brazil Index (ETF) (NYSE:EWZ)

Soros: Gold Is The Ultimate Bubble

"Gold is the ultimate bubble. It is certainly not safe." , George Soros said at an event in New York sponsored by Reuters.

Soros said he expects a repeat of the historical pattern of bull runs in assets like gold ultimately hitting records and then suddenly reversing. Gold is currently the only bull market, Soros said, adding that it may continue to rise but "it's not going to last forever."

Related stocks and ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), Newmont Mining Corporation (NYSE:NEM), AngloGold Ashanti Limited (ADR) (NYSE:AU), Harmony Gold Mining Co. (ADR) (NYSE:HMY), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Barrick Gold Corporation (USA) (NYSE:ABX), NovaGold Resources Inc. (USA) (Public, AMEX:NG)

Greenspan On Gold

The former central banker noted that gold, the price of which has been surging, still represents the ultimate means of payment. What is happening in that market is a signal there is a problem with respect to currency markets. He reckons the problem is not a large one, but the jump in gold prices could be the canary in the coal mine to keep an eye on.

Related stocks and ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), Newmont Mining Corporation (NYSE:NEM), AngloGold Ashanti Limited (ADR) (NYSE:AU), Harmony Gold Mining Co. (ADR) (NYSE:HMY), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Barrick Gold Corporation (USA) (NYSE:ABX), NovaGold Resources Inc. (USA) (Public, AMEX:NG)

Stock Alert: SandRidge Energy (SD)

Sandridge Energy (SD) rallies 4.87 +0.25 (5.41%) without any major news.

Is the bottom in for this stock?

Daily Stock Trading System Update: Here are the results for the session of September 14th: VMware (VMW) +2.66% and Hershey Company (HSY) -0.57%.

System Performance in September: +9.65% Long Only Version and +2.8% for the (SPY) hedged version.

Low Cash Levels In Mutual Funds: Warning Signal

“The percentage of mutual funds cash levels was 3.4% in July. This is the lowest percentage cash level ever and is near levels that accompanied the 2007 equity market peak.”

The Pragmatic Capitalist underlines that the last two times we witnessed cash levels near these levels were directly before the 1999 market implosion and the 2008 market debacle. And he adds "surely it’s unwise to use any single indicator to make market decisions, however, this is one macro indicator that is worth noting."

There is sound reasons to be cautions with long positions going forward. Besides, the stock market`s seasonality is terrible going into October.

Graph with Mutual Funds cash levels:


Related ETFs: SPDR S&P 500 ETF (SPY), ProShares UltraShort S&P500 (ETF) (SDS), SPDR Dow Jones Industrial Average ETF (DIA), iShares Russell 2000 Index (ETF) (IWM)

Gold Is Poised For A Correction

I recently read this argument from a money manager: "Either a swift economic recovery or further dismal economic performance should bring new buyers into the gold market."

Arguments presented as win/ win situations -- better if the economy improves, better if the economy goes south -- are usually found closer to the peak of a move than the beginning. Are we very close to a major top in gold and gold miners?

The chart shows we are trading very close to major resistance, so its "make it or break it", McKinsey style. (Click to enlarge)

Another interesting analysis is comparing what gold as been doing versus other assets. This is an interesting chart I found in The Pragmatic Capitalism:

Gold looks expensive relative to stocks and to agriculture commodities on a historical basis. My view is that there is a great risk in opening new gold long positions at these price levels and the risk of a sudden, large market correction is quite high.

Gold stocks like Newmont Mining (NEM), Goldcorp (GG) and New Gold (NGD) have reversed close to resistance from the June highs and look poised to continue the downside movement. Gold Fields (GFI) is way overbought and will probably correct meaningfully.

This article was originally published in Seeking Alpha.

Is The Move In Gold Near Its End?

Very interesting gold analysis on Bespoke Investment Group website:

Today we read one article that quoted an analyst as saying "Either a swift economic recovery or further dismal economic performance should bring new buyers into the market." We realize that there are certainly some valid arguments for buying gold, but a comment like this is not one of them. Now, we wouldn't necessarily go as far as to say that gold is in a bubble. After all, unlike a lot of recent asset bubbles where prices skyrocketed even as supply expanded, the supply of gold is relatively constrained. That being said, arguments presented as a win win regardless of the outcome are usually found closer to the peak of a move than the beginning.

Related stocks and ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), Newmont Mining Corporation (NYSE:NEM), AngloGold Ashanti Limited (ADR) (NYSE:AU), Harmony Gold Mining Co. (ADR) (NYSE:HMY), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Barrick Gold Corporation (USA) (NYSE:ABX), NovaGold Resources Inc. (USA) (Public, AMEX:NG)

The “Irrational” Move In Gold Is Very Much Alive. Its Likely To Find Support On Any Significant Weakness.

"Personally, I still believe the “irrational” move in gold is very much alive and will likely find support on any significant weakness. Gold is likely to remain the “go to” asset for investors looking for a hedge to the fear and uncertainty of the current environment. The Euro is being viewed as a faulty fiat currency (incorrectly I believe) and the US dollar is believed to be in long-term disarray due to the actions of the Fed. As long as the de-leveraging cycle persists and the sovereign debt woes continue we are likely to continue to see strong demand for gold."

in The Prag Cap

Related: New Gold Inc. (USA) (NGD), Goldcorp Inc. (USA) (GG), SPDR Gold Trust (ETF) (GLD)

Dennis Gartman: Gold Prices Outlook

Related ETF: SPDR Gold Trust (ETF) (Public, NYSE:GLD)

Paul Tudor Jones Stock Picks

According to stockpickr.com, Paul Tudor Jones top holdings are two almost unknown stocks, a chinese insurance company CNinsure Inc. (NASDAQ:CISG) and a small cap biotech, Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX).

That is very interesting and I would bet alongside Paul anytime. He has been the best money manager in Wall Street for decades.

They are both well below their 52 week highs, so there is no risk of buying overextended stocks.

Here`s a short summary of both companies:

CNinsure Inc. is an independent insurance intermediary company operating in China. The Company had 48,693 sales professionals, 1,421 claims adjustors and 571 sales and service outlets operating in 23 provinces as of April 15, 2010. As an insurance intermediary company, it does not assume underwriting risks. The Company distributes to customers in China a range of property, casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China and provides insurance claims adjusting services, such as damage assessment, survey, authentication and loss estimation. It also provides services, such as around-the-clock emergency services and assistance with claim settlement, to its customers, individuals and institutions that purchase insurance products through CNinsure. In July 2010, CNinsure announced the acquisition of InsCom Holding Limited.

Progenics Pharmaceuticals, Inc. is a biopharmaceutical company focused on the development and commercialization of therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases. The Company’s principal programs are directed towards supportive care, oncology and virology. In supportive care, the Company’s first commercial product is RELISTOR (methylnaltrexone bromide) subcutaneous injection, a therapy for opioid-induced constipation (OIC) approved for sale in over 40 countries worldwide. In the area of prostate cancer, Progenics is conducting a Phase I clinical trial of a fully human monoclonal antibody-drug conjugate (ADC) directed against prostate specific membrane antigen (PSMA). In the area of virology, the Company is developing a viral-entry inhibitor (a humanized monoclonal antibody), PRO 140, for infection due to human immunodeficiency virus (HIV) that causes acquired immunodeficiency syndrome (AIDS).

Stocks With the Highest Short Interest

Bespoke Investment Group published an interesting article regarding stocks with the highest short interest (these stocks can suddenly rally due to short covering squeezes):

"Below is a list of the stocks in the Russell 1,000 with the highest short interest as a percentage of float. Generally when the market is rising, the most heavily shorted stocks outperform, and we've seen that so far this month as well.

In the Russell 1000 Index, AutoNation, Inc. (NYSE:AN) has the highest short interest as a percentage of float at 40.74%. With a gain of 25%, AN has hit the shorts pretty hard year to date. Alliance Data Systems Corporation (NYSE:ADS) and MGM Resorts International. (NYSE:MGM) rank second and third in terms of short interest and are the only other names with SIPF above 30%. SunPower Corporation (NASDAQ:SPWRA) and Sears Holdings Corporation (NASDAQ:SHLD) round out the top five with SIPF of 27.65% and 26.05% respectively.

Netflix, Inc. (NASDAQ:NFLX), MBIA Inc. (NYSE:MBI) , and Las Vegas Sands Corp. (NYSE:LVS) are all on the list as well, and the shorts have gotten killed in these names this year. All are up more than 100% year to date. Some other notable names on the list include Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), United States Steel Corporation (NYSE:X), First Solar, Inc. (NASDAQ:FSLR), Jefferies Group, Inc. (NYSE:JEF), American International Group, Inc. (NYSE:AIG), Newell Rubbermaid Inc. (NYSE:NWL), and Garmin Ltd. (NASDAQ:GRMN)."

in BIG

Krugman: Its All Downhill From Here

“I’ve had a couple of conversations lately with people who follow politics and public affairs, but aren’t that close to the economic discussion — and I’ve discovered that there are two comforting delusions still out there.

Delusion #1 is that we’re on the road to recovery, just more slowly than we’d like; to be fair, the White House keeps saying this.

But it’s not at all true. GDP is growing below potential; employment, even if you focus just on private employment, is growing more slowly than the working-age population. If you ask how long it will take us to return to, say, 5 percent unemployment on the current track, the answer is forever.

Delusion #2 is the belief that the stimulus may yet do the trick, because there are still substantial funds unspent. I tried to deal with this last year. The level of GDP depends not on total funds spent, but on the rate at which funds are being spent, which has already peaked; GDP growth on the rate of change in the rate at which funds are being spent, which peaked last year. It’s all downhill from here.”

Doug Kass: Short Bonds

At current yields, bonds represent certificates of confiscation, and bond holders face the likelihood of large capital losses.
I believe that, on a risk/reward basis, shorting fixed income is among the most attractive investment strategies in the year(s) ahead.

Bearish economic concerns are overblown. There will be no double-dip. Most indicators point toward a domestic economic growth rate that is moderating but also likely to be sustained.

The 2.60% yield on the 10-year U.S. note is discounting a double-dip. Over the course of the past 60 years, the 10-year note has yielded 365 basis points more than GDP growth. In other words, the fixed-income market is now discounting an unlikely 1% drop in GDP (2.60% less 3.65%).

Over the same time frame, the yield on the 10-year U.S. note has averaged about 300 basis points more than the inflation rate. While zero-interest-rate policy argues for a somewhat lower relationship, since the implied inflation rate in TIPS is about 1.6% now, this would imply that the yield on the 10-year U.S. note should be closer to 4.60%, or 200 basis points above the current reading.

in The Street.com

The Summer Is Over In Wall Street

The trading desks will begin to fill back up next week as the unofficial summer comes to an end this weekend. This usually means market activity starts to pick up again, and we could be in store for a new trend to emerge over the last four months of the year.

Related ETFs: SPDR S&P 500 ETF (SPY), ProShares UltraShort S&P500 (ETF) (SDS), SPDR Dow Jones Industrial Average ETF (DIA), iShares Russell 2000 Index (ETF) (IWM)

China Is Signaling Rising Stocks In The US

"In the past few years I’ve often noted the tendency of China’s Shanghai composite to lead the US equity market. It led us down from 2007, bottomed before the S&P in 2008, topped in late 2009, signaled a death cross signal several months before the S&P signaled the same indicator (which subsequently sent the bears on a rampage), deteriorated noticeably in April (while US stocks were hitting their highs) and has since bottomed in July. The index has rallied 14% off its lows and at this juncture is providing a pretty bullish indication for US stocks."

in The Prag Cap

Related ETFs: iShares FTSE/Xinhua China 25 Index (ETF) (FXI), SPDR S&P 500 ETF (SPY), PowerShares Gld Drg Haltr USX China(ETF) (PGJ)

Buy The Strongest Stocks, Avoid The Laggards

This study shows that the best performing stocks keep on outperforming, while the laggards keep showing a lousy relative performance.

This study considers the stock performance over the last 12 months, and how its performs 12 months forward.

Some of the strongest market performers in their sectors are, The Estee Lauder Companies Inc. (EL), Cognizant Technology Solutions Corp. (CTSH), SanDisk Corporation (SNDK) , Akamai Technologies, Inc. (AKAM) , VMware, Inc. (VMW), Las Vegas Sands Corp. (LVS) and Equity Residential (EQR).

The Confidence Will Plunge Faster When Government Stops Spending

“The risk is that the government can’t keep spending money to keep the economy afloat. The government’s thrown everything and if they fail, the confidence will plunge much faster.”

Russell Abrams, Titan Capital Group LLC

Related ETF: ProShares UltraShort S&P500 (ETF) (SDS), ProShares UltraShort QQQ (ETF) (QID), iPath S&P 500 VIX Short-Term Futures ETN (VXX)

Short Pick: Salesforce.com (CRM)

"Cloud computing is a great story just like the Internet was a decade ago. But the stock price (salesforce.com, inc. (CRM)) , at 150 times trailing earnings, is completely divorced from any sort of sane valuation based on fundamentals or growth prospects."

Bret Jensen, chief investment officer at Simplified Asset Management

James Montier: Bond Market Analysis

“In essence, the bond market is implying a 70% probability that the US turns Japanese.”

James Montier, GMO's asset allocation team

Related ETFs: ProShares UltraShort 20+ Year Trea (ETF) (TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (TLT)

The 3 Best Performing Stocks In August Were Tech Stocks

McAfee, Inc. (MFE), priceline.com Incorporated (PCLN) and Akamai Technologies, Inc. (AKAM) were the 3 best S&P 500 Index performing stocks in August.

McAfee rose 42%, Priceline rallied 29% and Akamai, one of the strongest stocks in 2010, surged 20 percent.