Tuesday, December 28, 2010

Itz Pix: Silver & Crude Oil Update; Silver Wheaton

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Itz Pix stock portfolio is long several energy sector names RIG, PDE,SU, VLO, WLT, PWE & PGH. Suggests that now maybe the time to start accumulating Proshares Ultra Crude Oil ETF (UCO).
2011 will continue to be favorable for the commodities, we believe that silver will be a leader as industrial usage picks up. Copper & crude oil will play catch up as well. Itz has been long copper via Freeport McMoran FCX.

What to expect from commodities and futures markets, with Tom O'Brien, The Gold Report; John Kingston, Platt Global Director of News; Todd Colvin, MF Global; Robert Iaccino, TraderOutlook.com; and Dan Greenhaus, Miller Tabak.

Monday, December 27, 2010

CNBC Commodity Videos

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The top three plays for your portfolio next year, with John Stephenson, First Asset Investment Management.

John Kilduff of Again Capital and Timothy Jennings of Vantage Trading share their outlooks on oil prices.

Predicting where gold prices are headed in the year to come, with Peter Sorrentino, Huntington Asset Advisors and Frank McGhee Head Precious Metals Trader Integrated Brokerage Services.

Sunday, December 19, 2010

Itz Week End Review 12-19-10

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Over the last several weekend reviews Itz has focused on gold, silver, copper & oil. In a recent speech by Commissioner Chilton before the High Frequency Trading World USA 2010 Conference NYC CFTC he  signaled that he was fed up with JPMorgan manipulation silver. >>READ  The CME is so concerned about speculation in copper and silver they raised the margin requirements for future contracts by 19% at the close on Friday. The reason gold continues to climb is because it is seen as an inflation hedge and a defacto global currency. Copper and silver are more a pure commodity play on the global recovery. Silver demand is rising in electronics and manufacturing of all types and its gains have been on the back of China's manufacturing boom. Copper has the same fundamentals but also widens out into building and home construction. There are some that feel we could run short of copper in 2011 if the recovery continues to accelerate. Copper prices have risen +50% since June as speculators added to positions. One major speculator is a client of JP Morgan. Speculation is that JP Morgan has reduced its silver position and has now entered the copper sector. >>READ They have bought $1.5 billion in copper in December alone. Analysts believe they are front running the two ETFs currently in the application process. One of those ETFs will be sponsored by JPM. The bank claims it has not bought any copper for its own account but I have a hard time believing they are not related to that single investor in some way.

President Obama signed the tax compromise into law on Friday taking some uncertainty out of the market, note how complacent the Volatility Index is. The last time the $VIX was down under the 16 level, it marked a topping in the S&P500.

In the energy sector, Crude Oil Bumped up against the $90 level again. The EIA report Wednesday showed that inventory levels for oil declined by 9.85M barrels. >>EIA link On Friday the Commitment of Traders Report showed that Non- Commercials declined long position by 9,420 contracts while Commercials net short position declined by 8,801. >>LINK

Sunday, December 12, 2010

Itz Week End Review 12-11-10

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Equities are finally starting to break higher this week. Helping push the markets higher was a stronger than expected Consumer Sentiment report for December. The headline number jumped to 74.2 from 71.6 in November. This is the highest level we have seen since June's 76.0 reading. The summer decline ahead of the elections appears to have ended and sentiment has surged +6.5 points in just the last two months. Although the Bush Tax cuts have not passed, as some Dem's need to vent their disapproval. President Obama even gave former President Bill Clinton the podium Friday to make the case for passage. Bubba looked so happy to be back in the spot light. Most expect passage in the coming week, which should give the markets another boost into the New Year. On the negative side the budget deficit for November was -$150.4 billion. That was a 25% increase over November 2009 and the largest November deficit on record. Revenues were up +12% but outlays increased by +18%. The government's fiscal year begins in October and for the first two months the deficit has totaled $290.8 billion. The government is projecting a $1.3 trillion deficit for the entire year or 9% of GDP.
Edward Yardeni said in an interview on Friday his 2011 year-end target is between 1400-1500 because of improving global fundamentals and expected earnings on the S&P of $100 in 2011. At 16 times earnings that would equate to 1,600 on the S&P.
Pimco, the world's largest bond fund, is raising its forecast for U.S. growth next year as policy makers pump in a "massive amount" of stimulus into the economy, according to CEO Mohamed El-Erian. Pimco raised their estimates for growth to the 3.0-3.5% range from 2.0-2.5%. JP Morgan's Thomas Lee raised their estimate to 3.5% and Morgan Stanley raised estimates to 4% from 2.9%. On a historical statistic, the third year of a presidential election cycle has averaged a 20% gain since 1962.

Friday evening China announce that their CPI hit 5.1%. The news was not good. China's consumer prices rose +5.1% driven by higher costs for food. That was well above the 4.7% consensus by analysts. It was also significantly higher than the 4.4% rate in October. Producer prices rose by 6.1% and a full point over estimates. Industrial output rose +13.3%, also stronger than analyst estimates. Retail sales jumped +18.7% and fixed asset investments rose by 24.9% year to date, also higher than expected. Their trade surplus was $22.9 billion. (That compares to our trade deficit of $38.7 billion) Broad money supply or M2 rose by 19.5% and the fastest gain in six months. M2 has risen +55% over the past two years and yuan denominated loans have risen 60% to 47.4 trillion yuan from their low in November 2008. China wants to limit that to 7.5 trillion yuan in 2011. The People's Bank of China raised bank reserve requirements by half-a-percentage point on Friday as a way of clamping down on inflation. It was the sixth reserve hike this year and the third in the past five weeks. So will China raise interest rates? As of Saturday midnight, no news as of yet. China can’t raise interest rates because of the risk of attracting inflows of cash that would fuel inflation, said Wu Xiaoling, a former deputy governor of the central bank. >>Read
So how does one play China's decision? If the do raise rates, expect a knee jerk reaction, which should rally the US Dollar sending commodity prices lower, albeit short term. ITZ has been projecting a pullback in crude oil, OPEC met this Saturday. OPEC discounted last week’s $90 oil price and kept its output targets unchanged, betting supplies in storage and a fragile global economic recovery will prevent crude from surging. >>Read Full Story

The pullback should be minor in commodities, bottom line China demands on them will not diminish but continue to grow. Use the pullback as an opportunity to buy or add to positions.  

Sunday, December 5, 2010

Itz Week End Review 12-4-10

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Surprise.... only 39,000 jobs gained for November and unemployment rose to 9.8%! Officially the BLS claims there are 15.1 million people currently unemployed. Those jobless for 27 weeks or longer stood at 6.3 million and 41.9% of the unemployed total. Those underemployed and working part time stood at slightly more than nine million. There were also 2.5 million "marginally" attached to the work force and 1.3 million "discouraged" workers. Those are not included in the unemployment rolls. BLS.gov site
The ISM Non-Manufacturing report for November rose to a six month high at 55.0 and slightly better than the 54.5 analysts expected.
Fed Chairman Ben Bernanke is scheduled to appear on CBS 60 Minutes Sunday evening, last time he appeared on the program the markets rallied. Most likely, Mr. Bernanke will attempt to explain why the Fed plans to spend $600 billion on quantitative easing and why it might be necessary for them to spend up to $2 trillion more. The FOMC meets on December 14th.
Itz Stock Chartz maintained 2 downside targets that came close the S&P500 going to 1155 & Crude Oil to $78. The S&P is now on the verge of a significant breakout over 1228 and a new high for the year. We could easily see that year-end 1250 prediction by Goldman Sachs as a real possibility.

 a few weeks ago ITZ called for RIMM to make a run towards the $68 level on a breakout of $60 (RIMM is in the Itz Pix portfolio)  read more on Jefferies $80 Upgrade

Helping to rally the markets this week was Goldman Sachs 2011 forecast that was very bullish. They stated the U.S. was on the verge of a "very strong recovery." They believe the S&P will end 2011 at 1,450 for a +23% gain. Gold is expected to hit a high of $1,750 but close the year at $1,690. The U.S. GDP is expected to clock in at +2.7% for the full year. Last year Goldman forecasted that the S&P would close '10 at 1250 and they are going to be very close!  Goldman sees oil prices to "average" $110 in 2011, up from a prior forecast of $100. The company said, "the stage is set for a return to a structural bull market in oil." Goldman expects a two million barrel per day increase in demand in both 2011 and 2012 and require OPEC to tap the majority of its "reported" 5.64 mbpd of spare capacity.
Itz Stock Chartz has been for $110 in 2011 for several weeks now & was looking for a pullback shorter term towards $78, which came close $80. Oil has been trading at the upper range of OPEC implicit target of $70-$90 over the past few weeks. Investors are probably interested in the cartel's upcoming general meeting on December 11.
Commodities took off this week on the weakening dollar, as the Jobs Report took some of the bullish economic recovery momentum away. There seems to be a split call on the dollar now, there are those who see a recovery for the U.S. economy in 2011 and then there are some who say more QE is needed.  Itz see the EU weakening and the U.S. continuing its snail pace recovery and China trying to slow down it's economy. According to Li Daokui, an academic adviser to the People's Bank of China (PBOC), measures such as rate hikes will be implemented moderately and gradually. Moreover, RMB may appreciate faster if gains are controllable. The market forecasts the Chinese government will announce rate hikes this month the earliest in order to curb inflation and asset bubbles. Apart from uncertainty in Eurozone's debt problems and long-term weakness in U.S. Dollar as Fed's monetary stance will stay loose, China's accumulation may help push the yellow metal higher. Xia Bin, a PBOC adviser, said China should increase its gold reserve as a pathway for internationalization of RMB. Indeed, although China ranks as the world's largest foreign holder of US Treasury, it only has 1054.1 metric tons of gold as of April 2009. According to the latest data compiled by the IMF, China's gold reserves stayed at the same level, compared with US' reserves of 8133.5 metric tons. While consolidation in gold price will continue for some time, its outlook remains robust and the uptrend should remain later.

Itz Stock Chartz raised the 12 month  price target on SLW from $40 to $65 Twitter post previous SLW post on this blog >>Read More

This Week's Video Highlights
Is oil heading back over $100 and does that threaten a fragile economic recovery? Insight with Dan Dicker, independent oil trader; Peter Beutel, Cameron Hanover and CNBC's Sharon Epperson.

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks at where oil and gold are likely headed next week.

A look at how experts are playing the current situation, with Ashraf Ladi, CMC Markets chief market strategist.

Oil hits a new high after a bullish call from Morgan Stanley and issues with the dollar are likely to make it happen, with CNBC's Melissa Lee & the Fast Money traders. Also, Pops & Drops and a look at the chip sector brings to mind the word "bullish."

Wednesday, December 1, 2010

Crude Oil Nears $90...What's Next?

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Itz Stock Chartz has been targeting $78 for crude oil and then a rally in 2011 taking it to $110. Obviously currency trading and geopolitical events have been driving commodity prices. Below are some chart observations, also the COT #s were reported Monday because of the holiday last week, this weeks will be release this Friday.