ITZ Monthly Update: August 2013

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ITZ takes a look at several charts as we end the month of August..... historically September is the worst performing month for equities. LINK

August closes as worst month of 2013

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Heavy Metal(s) : Gold, Silver & Copper

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Crude Oil: Buy The Rumor - Sell The News

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ITZ is looking to re-enter Proshares UltraShort Crude OIl (SCO) should crude cross below $109 a barrel. We could see a limited U.S. strike on Syria this weekend, since President Obama made 'cross the redline' comment, we have to act otherwise lose credibility.

ITZ will re-enter at 1/4 position increments - follow on TWITTER

 

 

Greg Priddy, Eurasia Group, provides perspective on how Middle East unrest is impacting energy prices, including a reduction in production in Libya.

 

ITZ Exits Silver Wheaton (SLW)

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ITZ exited Silver Wheaton (SLW) position 1/2 yesterday @ $27 & 1/2 this morning at $26.13 for a 47.5% gain.

ITZ Weekend Update: Crude Oil, Gold & Silver

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Defense Secretary Chuck Hagel suggested Friday that the Pentagon was moving naval forces closer to Syria in preparation for a possible decision by President Obama to order military strikes. Read more:

Expect crude to possibly break above 108/109 resistance on fears that U.S. intervention in Syria will stoke further conflict in the oil-rich Middle East. While Syria isn't a major oil producer, investors fear that the two-year-old civil war could spill over to affect oil supplies in nearby countries.
Also what will be the response from Russia and Iran, they may step up their involvement.  Russia recently rejected the U.S. government's evidence of chemical weapons used in the Syrian civil war, calling it "unconvincing."
ITZ is long Proshares Ultra Short Crude (SCO) having entered on 6/29 $35.80; 7/2 $34 & 7/3 $33 as a hedge. The Commitment of Traders chart as highlighted over last several weeks showed a decrease in net short position by commercials recently. see charts

For now ITZ will remain in the position, but a break over $109 on any escalation in Syria by U.S. military & ITZ will exit SCO.

Gold rose 1.9 percent on Friday, hitting its highest price in more than two months near $1,400 an ounce, as a big drop in U.S. new home sales renewed hopes that the Federal Reserve will maintain its bond-buying economic stimulus and geopolitical tensions also added to the move.

Silver outperformed gold to rally nearly 4 percent to a 3 1/2-month high as the dollar fell and U.S. Treasury bond yields dropped. It also rose above the $24 mark for the first time since May 9.
 Silver Wheaton (SLW) has rallied nicely and ITZ sees further upside.

Crude Oil, Gold, Silver & Copper (Commitment of Traders) 8-18-13

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The geopolitical upheaval in the Middle East has levied crude oil prices back up to nearly $108 a barrel, and gold prices above $1,373 an ounce.  Fear is a key component of higher oil prices. With Egyptian protests ramping up in intensity, traders' fears that the oil markets could be affected have driven the price of oil. Latest News

Rising oil prices: Is it really all about Egypt? Read

Economic questions of stability in the Middle East have also sent investors back to the relative safety of gold. But these two commodities have a relationship - and one that investors might be able to exploit, if they know what tools to use.

What this ratio infers is that when the current ratio is below 15.5, gold is either too cheap, or oil is too expensive. When the ratio is greater than 15.5, oil is either too cheap or gold is too expensive, as noted in this chart below.

With the ratio at just about 12.75, fundamentals are more important for direction in each commodity, and I'm thinking that if oil supply is not disrupted by the uprisings in Egypt/Suez Canal, then we could likely see prices fall back below $100 a barrel. ITZ is targeting $94.

ITZ takes a look at several weekly metal COT Commitment of Traders Report charts & Crude Oil this weekend.

The COT report is a great analytical tool for traders in any market because it provides up to date information about the trend and the strength of the commitment traders have towards that trend in each of the commodities markets. The COT report essentially shows the net long or short positions for each available futures contract for three different types of traders. If traders are overwhelmingly long or increasing their long positions then we will have a bullish bias on that market. Similarly, if traders are short or increasing their short positions then we will have a bearish bias.

ITZ follows the Commercial Hedgers - Commonly believed to be the "smart money", these traders are involved in the day-to-day operations of each commodity. They have an excellent handle on the underlying market, and it typically pays to follow their positions when they reach an extreme.

Large Speculators - This group mostly consists of large hedge funds, and almost always take the opposite side of commercial traders. The are primarily trend-followers, and will accumulate positions as a trend progresses. When their positions reach an extreme, watch for a price reversal in the opposite direction of the existing trend.

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JPMorgan: Buy Gold

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JPMorgan: Buy Gold
In a note to clients Thursday titled, "Gold and the Denver play: Gold Shrugs Off the Paulson Sale; Buy the Bounce," JPMorgan analysts John Bridges and Anant Inani point to a number of bullish factors for the shiny yellow metal. >Link

Thank You Uncle Carl: Apple (AAPL)

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'On the technical side, the $380/$390 level looks like it has formed a 'Double Bottom' and most of the selling has been seen. With reasonable expectations, low sentiment and compelling valuation traders/investors are looking for some positive news to move the stock.' LINK

Then early this afternoon billionaire Carl Icahn posts on Twitter:

 

 

Billionaire Carl Icahn says Apple shares could trade at $700 Read story

 

 

 

Silver Lining

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After losing nearly 60 percent from it's peak two-years ago, silver is finally rallying and maybe set for the next leg up. ITZ noted back in late June that silver & Silver Wheaton (SLW) were nearing a pivotal bottom and should be bought. LINK

ITZ has updated several silver charts and believes entering or adding to position could prove to be very profitable in coming weeks. With the prospect of making +30% in SLW and SLV.

Recommendation: BUY

Crude Oil Inventories 8-7-13

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EIA reported petroleum inventories for the week crude drawdown of 1.3 mm barrels, lower than expectation, API reported yesterday evening with -3.7 mm bbl.

WTI Crude Declines on Signs Fed to Curb Stimulus Read

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