Freaky Friday

As I Twittered earlier today, "the market giveth and the market taketh away". Just when we think it's safe to dip back in the water out come the bears with a vengence on some lower consumer spending numbers out of the US. As the story goes, US dollar bounces up and the stocks get smoked.

What was remarkable though was gold's resilience. It was only down around $10 at the lowest point and even with the DOW down over 200 points and the US dollar up .40 of a cent it roared back to up $1 then closing down $1.40. We have never seen this play out like this before.

Something is happening here when gold survives that type of onslaught. In the past it would have been smoked $25 easy. The longer gold stays above $1000 the more confident I get long term on the precious metals.

Artha Resources News

My number one precious metals pick Artha Resources, V.AHC, put out some news after the bell. They have hired a new PR firm for Investor Relations.


http://www.artharesources.com/

Bull Fights Back

Was that a rebound or what ? So much for the Goldman GDP call, the numbers surprised by 3/4 of a point to the upside and the market acted accordingly. Short squeeze was an understatement,there was some nasty odors of burning shorts out there as the DOW and TSX bulls kicked some serious bear butt.

Gold,silver and oil all fell into place moving up in grand fashion as the US dollar did a perfect TA bounce off the top of the downtrend channel line. This bodes very well for the precious metals and commodoties moving forward, as the so called bottoming US dollar media stories are a little premature in my opinion.

The chants of the ending recession are now ringing through the hallowed halls of Wall St. but we will keep a cautious eye with an optomistic heart. A Christmas rally would be sweet and after this past year we deserve it.

Blowing Off the Froth

Haven't made many TA predictions lately as it seems every call for a serious pullback when on the ropes winds up with much egg on one's face. But I will say that I saw this one coming as we trade in what I call a "longer term/bear rally since March/ uptrend with range trading gyrations". How's that for stock terminology ?

I could see last week that this market was running out of steam and needed to blow off some of the froth built into higher than expected earnings that sooner or later had to disappoint. Toss in some declining US consumer confidence numbers,Goldman Sachs calling for a lower GDP number (how do they always know ? hmmm),and month end profit taking and you have a correction in a hurry.

We all know the script now, a rising US dollar when on the abyss sees gold,oil prices and stocks get whacked til the buyers slowly step back in.

My main point here is my charts that I use on www.stockscores.com are showing another day or two more of a pullback on the SPY as the TA signals begin to touch the bottom. 102 looks like the next support line.

The question will then be whether or not we tread water sideways for awhile after this froth has been blown off. Barring some geopolitical event, I am thinking we will flatline/range trade rather than any further moves down as the upside expectations seemed to be maxed out for the time being. But as always one has to expect the unexpected as tax loss selling season upon us.


http://www.stockscores.com/quickreport.asp?ticker=spy&x=13&y=15

Strategy

One thing all stock trader/investors have to keep focused on is what is their strategy for making money in this game. Without the master plan you can get lost in a hurry,especially in the venture stock arena.

It's so easy to get thrown off course in these kind of markets and start hop- scotching from one hot play to the other. The problem with the hot stocks is usually by the time you find them they already did most of their run and any remaining profit makes the risk so high that it is not worth it.

That's why I try to stick to a simple plan of searching for companies that are "underfollowed" but more importantly "undervalued" based on the DD of new company developments on the horizon. Once you find all three elements then usually you will make some decent profit if general market conditions are in place and the coinciding sector is also in market favor.


What I try to do is keep my focus on 4-5 stocks max, all with potential to make 100% to 400% profit over a period of 3-6 months. If I can do that once a year then I will be in the drivers seat. If I even make on 2 of them I will still be doing decent.

Not to say I won't play a blue chip, or an option play along the way, but my focus is getting the ducks lined up, planting the seeds and being patient and watching them grow. No brain surgery involved or high priced newsletters here,just solid hunting and digging for those gems laying in the weeds ready to explode when the time is nigh.

Most important is to learn to trust your research. As long as the company's plan is still in motion, then eventually your profits will come. If it changes,then you have to make a decision....but that is for another blog post.

Hi Yo Silver !

Just another boring up day for the precious metals. Gold ended on the upside once again after testing the $1045 low for a $15 swing closing at $1060. Silver had a 68 cent swing closing at $17.61 but is the one metal I believe is going to surpass gold in percentage terms when all is said and done. It is still off it's $20 high last year but the interesting part is the supposed massive short position that could propell it much higher and faster should the US dollar downdraft ramp up.


My past experience has told me that in a precious metal bull market you want to own an explorer in a prime area, near a big mine, and with strong experienced management that knows what they are doing.

This brings me back to my #1 precious metals pick, Artha Resources, V.AHC. They have a 55% option on a piece of land that surrounds three sides of Silver Standard's Pirquitas silver mine in Argentina, as well as some choice exploration properties in the near vicinity. You could not ask for a better situation being next to one of the big boys.

Nothing is ever gauranteed in the junior exploration game but in this case your odds sure went up being in this neighborhood.


www.artharesources.com

EmerGeo in the News

One of my top fave picks had an excellent article in The Province yesterday on the front page of the business section on their connection to the 2010 Olympics security. You can access the article here :


http://www.theprovince.com/sports/2010wintergames/Mapping+trouble+spots/2091557/story.html


This a very well written article and explains how EmerGeo's niche software saves lives and property by improving communication to all Emergency Response teams from fires,to earthquakes to terrorist events.

The ability to look 3-D into a building is very cool and shows why they are the leader in this niche sector and are a possible take over target down the road. I look forward to the next few months as their clientele list expands,this is a no brainer stock at these dirt cheap prices. Under-followed and under-promoted makes for EmerGeo a great buy before the masses discover it.


www.emergeo.com

Bernake's Shot Across the Bow

You just knew something had to give with the US dollar as the week went on. Reeling on the ropes, with every pundit predicting the dollar's demise including suspicous Euro oil dollar stories denied by many,somewhere another magical FED rabbit will be pulled out of it's arse.


All the market needed to hear was the remote possibility of an interest rate hike will happen when the time is ripe and respond they did. The US dollar popped,bonds were driven lower,the ten year note $TNX index leaped a point and some in the knee jerk fashion. Even RBC raised mortgage rates which rattled a few in Canada I am sure where housing is being bought and sold like BRE-X and Nortel shares at their all time highs.


Gold got hit $10 or so but recovered to only down $6 so the COMEX players aren't buying it quite yet the dollar will spike. Gold is acting very strongly here and if inflation is coming, the shiny stuff will be there to act as a hedge. Next week will be very important for gold. Any more interest rate hike talk may take an edge off as the shorts are maxed and a few stop loss hits and down gold could go but not for long in my opinion.

Bernake indicated no hikes til the economy improves but just the impression it will be happening may give those in control of the Forex markets a reason to hold the fort and play any short term squeeze on the dollar shorts as it is very oversold.

I hope to have some more stock updates this week. My SPW.P announced their oil deal is not happening but will announce another deal shortly so stay tuned, I think things are beginning to heat up with all the Closing Bell's picks.

You Got The Silver ?

"You got the silver you got the gold"
Richards/Jagger


Well after much DD, here is my new silver/gold play pick. It is V.AHC, Artha Resources. More silver than gold at this point but is dirt cheap and is prime silver country,right smack next to Silver Standard's silver mine,one of the top few largest open pit mines in the world. Do your own DD as I am not responsible for any losses but I believe this is an easy double from here.

Good luck !

Oil and Gold Show Update

Just thought I would update you on my last post re: US Oil Dollar dump story. Since then the Arabs,Russians and Japanese all denying any "secret meetings" to dump the US dollar. I didn't want to jump to conclusions when I first read it but it was taken as fact by the markets one had to comment and be aware. One part that did concern me that it may not be fact is the article stated this supposed switch was supposed to be implemented over nine years. Now that is a long time and if the US recovers by then and retains it's world power status then what ? Egg on face ? I have seen some sketchy to outright fraudulent articles in the UK papers over the years so until I see more concrete evidence this "meeting" even took place then I call bullshit.

What we are seeing is lack of faith in the US dollar,no doubt about that, but we are also seeing one mother of a gold short squeeze as the commercial shorts were short HUGE at just over $1000 and they are covering like madmen. When will this end ? When the big players say so and the dollar hits the 72 cent range is where I figure which will put gold around $1150-1200 range. No denial here the US dollar is in bad shape but printing stories without facts and then to see vehement denial from the key players tells me there is some serious market manipulation going on here.

I am sure the Chinese may have brought it up and someone jumped on it but this subject has popped up many times and the process to pull off such a currency switch is no easy feat. So I rest my case for now.

Gold is flying as the shorts get squeezed, and the US dollar hits the 75 cent level. I do smell some sort of move by the US but whats left other than an interest rate hike ? Bond sale at 10 AM,should be interesting.


Here's the take from Jon Nadler at Kitco:

http://www.resourceinvestor.com/News/2009/10/Pages/Separating-rumor-from-fact-in-the-runup-in-gold.aspx

The Oil And Gold Show

As per my previous post,the gold action at $1000 as it bounced back and forth was unprecedented. What is causing this resistance to the typical pounding back down by the gold shorts ? Oil, or make that oil and the US dollar.

A report from the link below has some startling if not earth shaking news that Russia,China, Japan,France and the Arabs are in plans to shun the US dollar for trading in oil dollars. Is this article true ? Since it came from Peter Grandich's site I will believe there is truth to it for the time being. Will the US protest this move if it happens ? You bet your bippy they will. This is one of the most crucial events that could happen to the US$ as it is has been on the ropes for awhile now but always managed to make it another round.


What could change this direction ? Raising interest rates drastically as in a one point increment which the FED stated a week ago was a possibility. The US has been "pleading" with China to let the Yuan rise and they say "screw you". I see no other alternative for the US,maybe not right away but in a month or so if this continues. Money would flood back into the US dollar and gold would tank along with oil prices. Or would it ? Gold is held against inflation as well so there is a serious support for gold right now like no other time I have experienced,the action proves it.

Gold is currently kissing $1040, a record high,silver is up over $17 but not close to the old $20 record and oil is above $71. Something is cooking here folks. And I will soon have my gold/silver pick for you,just waiting on some confirmation of my DD process. The junior explorers could get very hot here if you are in the right place,as we now know it is the right time.

As far as the DOW goes, as of 9 AM the DOW is up the second day in a row with earnings season kicking off tomorrow with Alcoa being the first big boy to report. So hang on to your hats,this may be quite the ride.

Important update: I just received a report on this from Custom House and they stated the Arabs are denying this but no mention on the others.

"Just as quickly as the report hit the wires, a speedy denial from Saudi Arabia followed, with the central bank governor stating that the rumours are completely false. While the quick rebuff from the Saudis may in fact indicate that they are not looking to diversify away from USD, the same cannot be said for China when speaking about the destiny of the Greenback’s reserve status. From China having taking major stakes in energy and commodities, and from Chinese officials having stated their displeasure with the USD, it’s clear to see that China has already taken steps to branch out from under the Greenback’s wing. While the dollar’s fall from grace surrounding its future as “the” reserve currency has been well documented, the simple fact that there are currently no alternatives available suggests that the decoupling from the USD will be a very slow and arduous process."


http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

Blowin Off Some Steam

Believe it or not that is a British Steam Jet Car that can do 225KMH on the flat...amazing.

On to the the markets. The S&P 500 did what I predicted this week and blew off some much needed steam and traded down the last four days straight. How far will this go ? Depends on several factors. We are now heading into the beginning of earnings season again in 2 weeks and this will be the biggie. Will they show improvement ? will they be flat or will they suck bigtime ? I think the former is the only one the markets are like. Mediocre will not cut it.


On top of that we have a serious battle going on between the US dollar and the price of gold. Never have we seen such a battle at $1000. Tim Geitner is talking up a strong US dollar with quotes by Feds that any interest rate moves will be swift and hard if needed, and a full point move would not be out of the question and to be expected. You can imagine what that would do to the bond and mortgage market. For the gold bugs,thems fightin words.


Over the last months the US dollar has been transformed into what the Yen was the past decade or two, "The Carry Trade". This is where Yen is borrowed cheap and invested,now the US dollar is replacing it and the implications are very scary on how this effects us in Canada and our loonie. Will the US want a carry trade for much longer and raise rates soon to attract investment ? or do they even have a choice in the dollar dropping due to massive borrowing ? It's a fine line and one has to be on their toes and use the charts and expect the unexpected.


The next several weeks will be the most interesting and unnerving of the year. I do reflect back to early July when all were predicting crap earnings and the charts teetered on a few key levels. We all know what happened then. Upon looking at my SPY chart this week I see the identical set up on RSI and Stochastics, and the market has blown off enough steam to bring these down to bottoming levels as back in July.


Will we have a repeat ? Who knows, but if we don't then things could get very ugly once again and very fast. If we do ? Then be prepared for a major short squeeze as I bet there is way more short money out there in both the markets and it is a known fact on gold and the pop could be huge. Stay tuned !