Friday, April 30, 2010

Quick and Dirty Market TA for 4.30.2010

The DOW hasn't touched a lower 2 standard deviation Bollinger in almost 3 months and the 50 DMA in 8 weeks.

Still a stock pickers market, though I remain decidedly bearish on the consumer and the fall out from financial regulation, which I hope separates banks from brokerages, and in size to eliminate any concern of "too big to fail."  Also, anyone billing Medicare should start to see nice cuts until new loopholes are discovered through which to drive the bilk bus.  Finally, as the inflationista, I must maintain course and bearing with bullishness on precious metals, but especially silver, which is generally under appreciated, and well known to be highly manipulated.  I think palladium has way over shot its value as a scrubber catalyst and that is a bubble that could do some damage, I watch it for cracks all the time.

There has also been some bullish activity in nuclear stocks.  Of course SHAW got all the news because of the loan guarantee program in the new climate legislation, but USU should get nice action from the down-blending trend on top of what it has already seen which, I feel, only relates to amelioration of concern related to loan backing on their new Ohio plant.

The chart below has 4.29 closing price highlighted, followed by 50 dma and 200 dma highlighted below that.  MACD is boxed to show the beginnings of divergence.  Obviously, the heavy blue trend line is just that.

Chart below (as always, click on picture to get a higher res shot):

Wednesday, April 28, 2010

A bull case for Endeavour Silver Corporation (EXK)

Using this line as a marker for the language.

Favorable Conditions:
  • Silver probably needs to run to $22 to test a double top.
  • Favorable chart pattern.
  • Increasing output.
  • Strong valuation ratios.
  • New mines coming on in 2H2010.
  • Audited by KPMG.
  • etc.
  • Uncertainty surrounding USDCAD forex.
  • Located in Mexico.
  • etc.
And now, a marked up chart:

Tuesday, April 27, 2010

Unions and Public Sector Employment: A perfect storm.

If now isn't a time to pile onto bandwagon of Greece bashing when is?  To Dasan my rudimentary analysis of the situation shall be branded "smidiocy" and granted that may be so with my hindsight 20/20 (or better) and the stats freely available now that main stream media has pulled back the curtains on the structural disaster adjacent to Turkey.  The chickens have come home to roost for the poor bastards now that strikes are crippling the negotiations between the "fiscal conservatives" in Germany and the entitlement hungry gyro eaters.  Why?  I feel that extortionist unions and public sector workers, often one in the same, are the primary culprits.

To anyone who has read my previous musings my strong feelings for libertarianism, self-reliance, and will-backed effort come as no surprise.  I feel that unions and public sector jobs deprive employees of these basic principles of survival due to diffusion of responsibility and operant conditioning toward reward with minimal effort.  As long as times are great, margins are strong, and the ruse can continue, but the antiquated structure underlying the reasoning for unions makes them unsustainable not when times turn terrible, but even when economies marginally decline.

We saw this in the auto sector, now the California pension system is getting more attention, and most of all Greece where their public sector accounts for up to 60% of the civilian work force, and more when factoring in the armed forces.  It is noble to think that there is a basic human right to retire, but America was not founded on that principle.  To me, human rights are confined to the entitlement to do what one wants so long as no purposeful harm is done to others.

So what will happen?  It's tough to think that the European culture will change on a dime, and therefore, I suppose that the experiment must fail.  Where the States are responsible for earning income tax from California, Germany and others do not need the convenience of Greece on their balance sheet.  Strictly from a free market standpoint, Germany must decide that its own future is more important than the welfare of citizens over which it has no control.

The Grecian allegations of market manipulation seem foolish if not comical once it is learned how they gained admittance into the "hallowed halls" of the EU.  Their whines ring hollow, and not surprisingly, rhyme, to anyone who has traded in penny stocks.  Alas, these proclamations lend credence to the broken mindset on the Peninsula, those being that their sovereign nation is under attack from those who would see the world burn. No amount of reasoning will bring about recognition from citizens who have spent generations suckling from the government teet, that their arrogance has undermined the stability of a shamefully beautiful country.  The tragedy then, is that the same impetuous entitlement that broke Greece will be the one that forces Germany to tell them to fuck off.

When I see Greece in the news I think of the shareholder screwings beset upon Americans by the scumbag leadership of Oceanfreight and Dryships.  Theirs is not a nation deserving of the goodwill of the world.  Only when their will is broken, and total devastation looms will a new generation of entrepreneurship save Greece.  They will save themselves.

Thankfully Boeing, Toyota, and others have stood up to the unions here in the United States, but their will is yet strong, and their pockets deep.  This smidiot hopes that the free markets can destroy the temporarily weakened unions before more tax payer money goes to strengthening their cause.  Failure to do so pushes our country ever closer to economic warfare brought about by market participants willing to challenge the notion that our word is our bond.

As for shrinking the United States government payrolls, I cannot think of a way that that happens now that California and others have broken the balanced budget requirements put upon them.  One foot is on the slippery slope, not even inflation can change that.

Friday, April 23, 2010

Market Order

Saw this in Capital One today (click to enlarge):

Unintended Consequences: The Feudal Divide

While bailing out banks served to keep the ruse of fractional lending and the functionality of the financial system alive, an unintended consequence of last year's extraordinary activities will be a more clearly defined stratification of American social classes.  Why?  Through financial engineering the government has propped the markets in order to drive sentiment in lieu of improving fundamentals, the burden of this engineering will be felt greatest by the middle class via inflation and taxation, and the penalties for a typical lower middle class family operating in manners similar to the banks are much more severe, and lasting.

In order for the government to supercharge the recovery a campaign was conducted of 0% borrowing in tandem with, I speculate, a calculated and concerted effort to use the money for buying and supporting the markets.  During this time banks have been reticent to voluntarily improve their customers' financial situations.  Under the guise of "protecting shareholders" banks took the position that circling the wagons around the balance sheet for profit today instead of taking the long term notion that stemming total write-offs through principal or interest reductions protects the viability of the Country.  As if to say that moral hazard at the corner office is somehow different than the home office these banks have taken advantage of the whole of America.  So while the S&P may be running up the score, nothing has really improved for the middle of the middle class and lower.

Inflation and taxation resulting from last years' activity will squeeze what were formerly middle class citizens.  Though not an expert on detailed matters of money supply, today's PPI report validates my concern that inflation at the daily level has already set in.  While salaries are flat and unemployment remains high the pro-cyclical wave of inflation will continue to reduce recreational consumer spending.  The middle class's margins are to be squeezed until raises are effected, which may not happen for a while due to the unemployment levels.  Recognizing the implied demand for basics the price of basics will continue to increase.  Additionally, the taxation aimed at recovering the cost of the bailouts will be passed through to customers, and by the time the trader tax is enacted most of the Joe Sixpacks will have their 401k's stuffed with bloated stocks courtesy of the banks who were first on the ground last spring.  Of course, we will all see changes to the federal income tax structure over the next couple of years, and the middle class, as weighted by the cost of taxation against the difference between needed and discretionary income, will experience the greatest burden.  The results, then, will be ongoing low savings rates, and demand for consumer credit at usurious rates.  Great.

Finally, lower middle class families, many of whom abused the lending system and some of those abetted by irresponsible shills, face the toughest repercussions of all.  Upon losing a house, or missing credit card payments, a broken credit system penalizes these people for a period of up to 7 years.  Where the Country needs these people to have hope of starting anew, with the goal of keeping them off the government teet, the lower middle class shall spend a decade digging out, if they can find jobs at all.  Drunk with profits, shareholders are quick to forgive the banks and forsake the humble in a hell where retirement probably seems like a dream.  Without hope this group will be driven to government entitlement programs, where easy government money again jams the costs of basics.

Though the skeeball scoreboard of the S&P reads like a stuffed teddy bear payday none of the structural problems have been addressed and I feel that the repercussions of the repair will reinforce a growing fiscal feudal system.  What are the solutions?  Sadly, the more a government attempts to legislate morality and fairness, the less effective it becomes.  Therefore banks should be well partitioned such that none is too large or too well entrenched to fail.  A campaign of consumer financial education needs to be undertaken in a manner that the basic principals of not spending more than you have sinks in.  To do so with credibility this means that the government, and banks, need to stop behaving in a way that consumers are not supposed to.  Those with the means to do so must start taking an active interest in their local society rather than concentrating on the ghost of satisfaction from material wealth.

Above all, no matter how counter-intuitive it may seem, government and entitlement must shrink.  The post-Millenium decade must be marked by a return to manufacturing and production for export, rather than consumer spending based economy.  Today we are at an important point that will decide whether or not the narrow avoidance of calamity results in meaningful improvement in the structure of this Country.  Many of the above effects cannot be avoided over the short to medium term.  However, to make no changes, in favor of immediate payoff means that America continues as a going concern.  To choose wisely is to resurrect our standing as a peerless example of cooperative ingenuity and the results that stem therefrom.

Monday, April 19, 2010

Yahoo Message Boards: A Diamond Mine

I spend a lot of time reading the yahoo message boards.  Most scoff at the task, dismissing it for an utter time waste.  However, these boards can be quite an accurate sentiment gauge, and every once in a while, brilliant gems of insight are mixed in to reward the agony.

Witness such a gem:

Sunday, April 18, 2010

The finance sector is too big.

Decentralizing the financial sector and returning balance in the American economy must be a focus in the post-Millenium Decade.

Links and supposition aside, I do not feel like one could communicate more clearly, or that I could agree more wholly, than with the comment post clipped from the Zerohedge article seen here.

Brilliance follows:

Wednesday, April 14, 2010

Notice anything familiar?

Below are two screen captures of pre-market prints in the National Bank of Greece (NBG).  The one on the left is from 4.12.2010, the one at right was captured this morning.

Sunday, April 11, 2010

An IPO every quarter.

Having spent the last week on holiday with Buttercup's folks and interviewing her father extensively on the history of their financial success, I started toying with the idea of employee stock options / grants / purchase plans.

Not until today, though, back home and mowing the disproportionately overgrown backyard for only ten days leave did I put together the notion of creating LP's (or similarly structured vehicles) with company insiders for the express purpose of getting share grants below market value.

Without question, this idea is already in play, but let's call it independent discovery ... like the canoe.

Now, to make friends with people in companies with nice share purchase agreements, that's a challenge worth mounting.

Thursday, April 1, 2010

Points in Paint: Why the Mavericks will never close the deal.

Last night marked Dallas's 50th win and 10th 50 win season in a row.  Today, the local radio station discussed other such teams (60's Celtics, 90's-2000's Spurs and Lakers) and indicated how each of these teams picked up at least 3 national championships in their time.  So, why haven't the Mavs locked up even one ring?  Points in the Paint.

I allege that the Mavericks suffer an identity crisis between a wide-open fast breaking offense, and a sharp shooting "setup-variety" offense, the result of which being a fundamental destabilization of the way the team scores points.  A fast breaking team will launch the ball down court and focus on getting offensive behind the D ideally finishing off plays with uncontested, or 2-on-1 driving moves right at the hoop.  Setup offenses focus on moving the ball to clear defenders by taking advantage of player shifting.

Lane penetration is a key component to scoring.  Lane penetration will always be the key by virtue of the fact that shots in the zone are high-percentage.  By definition, the success rate of high percentage shots like finger rolls, free throws, and dunks varies much less under stress of opposition, physical conditioning, and crowd noise.  These factors cannot be underestimated when the playoffs roll around.

Lane threat is a tool.  Activity down low draws penalties, sucks the D down and away from the arc, and, perhaps most usefully of all, can control the pace of the opposition.

Sure Dallas can shoot, and for quite a few nights in a row, they can shred the back of the net with three-balls.  But a championship team can afford to get cold and lose momentum neither in playoff games, nor in playoff series.  They cannot rely on playing from behind with low percentage fade away jumpers at the elbow, which Dirk has built his career on, when it's discovered that for whatever reason, there exists a general unwillingness to get physical (setup O) or tired (fast break O).

To steadfastly refuse to balance the team's scoring is to accept the "Best of the Rest" designation that looms when commentators ruminate on Dirk's support staff before and after his Hall of Fame induction.  In basketball, as in war, go with the team that bitterly defends its own zone, while passing freely inside and out of the opponent's.  Failing that, ask yourself:  what would Jerry Stackhouse do?  Then do the opposite.