Itz Weekend Review

 Subscribe in a reader


A few weeks ago Itz posted this focusing on the 'Flash Crash' & Euro Contagion....>>link

Itz made numerous posts on Twitter today and just prior to the meltdown posted --'Capitulation!'--, But was it really. Selling on Friday will follow through with out a doubt as Asia chimes in. The possible pivot and catalysts maybe the Jobs Report @ 8:30am. Today was a 'Preview' of how low markets can trade off from overbought conditions. .....Itz Stock Chartz has for a few weeks now been repeatedly telling readers to protect against a correction, with either options, ProShares ETFs like SCO, DUG or SDS or just taking some money off the table. Things move fast, volatility as seen in the $VIX, $VXN & $OVX or the divergence in rising gold versus copper & silver warned that something was going to give ...soon. Was it a computer glitch, human error or whatever excuse the problem comes down to the FEAR of a Eurpoean Contagion that could spread into a global problem. That the credit markets and the cost of capital is going up (dejavu 2009). The 1000 point move in the Dow Jones if anything reinstated the fear and lack of confidence into the retail investor just as they were getting hopeful about stocks. That said we could see more selling either way on the Jobs Report, good or bad. Stay hedged, have your shopping list ready and tighten those seat belts!

Well it appears we got that selling and retest of the lows, now the question remains...will there be more? Itz in the near term believes the markets are extremely over sold. The 'line in the sand' 1050 S&P500 levels or February low remains near term support. The Euro rallied Friday as Germany approved the $1 Trillion bail out package. While most watch the Euro, the Australian dollar was the currency to watch, as Itz stock chartz has mentioned over the last several weeks. Both the Australian Dollar and Swiss Franc saw substantial declines this week, prompting speculation that the central banks in those countries intentionally intervened in the currency market. The Reserve Bank of Australia would do so to prop up its currency-- while the Swiss National Bank actions would weaken the Franc against the Euro.

Itz Pix entered an energy play this week recommending the ProShares Ultra Crude Oil ETF (UCO). Veteran trader Mark Fisher commented on CNBC that investors shouldn't be buying gold, but rather crude oil/energy (see past posts). Itz agrees, energy stocks account for about 11% of the S&P 500's sector weight and the index. The time to buy oil is when it's on sale, need we forget global demand for crude is rising >>Read >>Chart

There are some analysts calling for crude to head lower $60, maybe so...but the way to view it is $60 downside risk, versus $80..$90 or more upside. Gold may be a global currency & insurance, but so is oil as well as a necessity!

Time To Buy Is When There's Blood In The Street

 Subscribe in a reader

Today, Itz Stock Chartz suggested an energy play, getting long crude oil via the ProShares Ultra Crude Oil ETF (UCO) under $9 and to phase into this position. Oil has been overdone to the downside, the UCO is leveraged 2:1 on the movement of $WTIC. Why energy? Itz believes that the economy is doing much better than most believe and that the selling in the markets is out of FEAR and UNCERTAINTY...which should be resolved soon. Doug Kass posted a very astute report today-- Fear is the Friend of the Rational Buyer >>LINK
Another indicator that is giving a bullish economic signal is the railcar loadings indicator from the AAR >>LINK

You had all the bear's out today giving dire outlooks and pessimistic downside targets for the S&P500...which was actually a bullish contrarian signal. Nouriel Roubini was in full force calling for another 20% decline in the indicies from here. >>READ

This is interesting, Hedge Fund Managers: Drowning in 'Liquidity' >>READ

~~BREAKING NEWS~~ US Senate Approves Sweeping Wall Street Reform Bill >>READ

MARKET SENTIMENT:Why investors are turning more bearish, with Mark Hulbert, Hulbert Financial digest editor.

Oil Oversold This ETF Looks Attractive

 Subscribe in a reader

With oil hitting an intraday low on futures trading of $64.24, suggesting phasing into Proshares Ultra Crude Oil ETF, which is leverage 2:1 on crude oil movement. Ticker symbol UCO, enter under $9, phase in over next few weeks. Itz entry level $8.75

Silver Wheaton (SLW) Covered Call Followup

 Subscribe in a reader

Those that did a covered call against the Silver Wheaton (SLW)  suggested April 8th LINK for $0.65, should consider buying back those calls to close the position. Sold May $18 call for $0.65 ~ buy back to close $0.40 Ask. That places the cost basis @ $11.80 or $12.05-$0.65 + $0.40.

ITZ Mid Week Update

 Subscribe in a reader

In April Itz alerted readers to pay close attention to the Australian Dollar Index $XAD, noting as follows..."oil rallied and is approaching the recent $87 highs. Itz is keeping an eye on the Australian dollar $XAD, it has over the past few years peaked as oil has peaked." >>READ
I couldn't help but smirk as CNBC's Rick Santelli pointed out the move in the Australian Dollar and that it has not been a closely followed indicator....um I guess he's not a reader of this blog?
Below are some updated charts.
Oil is cheap, but could get cheaper, as can the S&P500. The markets are continuing to deal with uncertainty and the hedge funds are reducing risk. For those who watch Fast Money Half-Time today, veteran trader Mark Fisher made a very insightful comment that was spot on. He noted that Gold is Not the global currency and that traders are chasing the wrong sector. He believes that Oil/Energy should be bought. Exactly how Itz is positioned,actually Itz Stock Chartz strategy is to buy energy & industial metals, oil, coal, silver, copper platinum & palladium.

How Much Lower Will Crude Oil Go?

 Subscribe in a reader

Crude oil has now broken under $70 on concerns that Europe's debt crisis will slow economic growth, and hence demand for energy, next support level will be $65.
Interesting report from AOL Finance today ... 'The World Can't Live Without Deepwater Oil'... >>READ

SELL GOLD!

 Subscribe in a reader


"We want out...entirely," Gartman tells clients regarding the gold trade.
Investors should get out of gold immediately as the metal reaches a technical top and is due for a pullback, says Dennis Gartman, hedge fund manager and author of The Gartman Letter. >>LINK

In a post last week, Itz sounded the caution alarm on the recent runup in gold and the euphoria... "there have been those that hyped the S&P500 @ 1250, those that suggested oil was going to $150 when it was at $87 and now that gold is at $1230...it's a buy??? Sounds like a crowded trade...just be careful. As always diversify & be hedged." >>LINK

While Gartman is exiting the gold trade, John Paulson, remains firmly long. In a 13F filing released yesterday, it was revealed that Paulson did not liquidate any of his GLD position. Paulson and Co. holds 31.5 million shares of GLD - in addition to huge holdings in AngloGold Ashanti (AU), Kinross Gold (KGC), and a number of other smaller gold companies. Note...this 13F filing was as of holding ending March 2010. If you look at the chart below GLD was testing the 150ma a buy, who knows what Paulson has done with his positions in recent days?

Itz Stock Chartz recently suggested Stillwater Mining SWC under $16, if the global economy is recovering then industrial metals should outperform.

Itz Weekend Review

 Subscribe in a reader

To sum up the weeks events, the market as Itz pointed out over the last several weeks, was looking for an excuse to sell from it's overbought levels. The spreading contagion from the Eurozone was just that excuse. The Eurozone contagion is similar to the Lehman problem. Once banks and brokerages started smelling blood in the market they refused to loan to anyone until they were sure it was safe. That meant Lehman and others could not get funding they needed to stay alive. Almost a year past before banks started lending to one another. Paul Volcker raised doubts over the euro's long-term prospects saying, "You have the great problem of potential disintegration of the euro." Also, "The essential element of discipline in economic policy and in fiscal policy that was hoped for" has not occurred. A break down of the Eurozones debt and problems LINK

Gold was on the lips of everyone this past week, but if you noticed the dollar rallied too. What does this mean? Its a sign of INSTABILITY!

ITZ PIX New Position Stillwater Mining SWC @ $15.25

What's ahead for trading this coming week? I suspect that Monday and Tuesday could see a continuance of last weeks selling, use this as a buying opportunity. Economic data points this week, PPI, Philly Survey and FOMC minutes.

Stillwater Mining SWC 'On The Radar'

 Subscribe in a reader

As written in yesterday's blog, gold has been the 'investment dujour', followed by its cheaper cousin silver. How useful is gold in an industrial and recovering economy? Silver, palladium & platnium as well as copper have a more useful purpose. Yet its gold...gold...gold being hyped by the media. Looking at todays movers Gold ETF GLD was actually down -0.32%, Silver SLV +0.9%, Palladium PALL +1.69% and Platinum PPLT +2.72%.

Itz Pix portfolio currently has Yamana Gold (AUY) & Silver Wheaton (SLW) in the portfolio. Itz mentioned SWC on Twitter today being on the Itz Pix 'On The Radar' stock. Itz is suggesting buying or at least phasing into the this stock. Note, precious metal stocks could see a nearterm pullback off of this weeks euphoria. SWC was up over 6% today alone closing at $16.76. Palladium prices are set to rally this year on the back of a supply shortfall, low inventories and reviving world auto demand. >>Read

Company Profile:

Stillwater Mining Company, incorporated in 1992, is engaged in the development, extraction, processing, refining and marketing of palladium, platinum and associated metals (platinum group metals (PGMs)) from a geological formation in south central Montana known as the J-M Reef and from the recycling of spent catalytic converters. The Company conducts mining operations at the Stillwater Mine near Nye, Montana and at the East Boulder Mine near Big Timber, Montana. Ore extraction at both mines takes place within the J-M Reef. The Company operates a smelter and base metal refinery at Columbus, Montana, which improve the mined concentrates into a PGM-rich filter cake. Besides processing mine concentrates, the Company also recycles spent catalyst material at the smelter and base metal refinery to recover the contained PGMs palladium, platinum and rhodium. Form 10-Q >>LINK

*Forward P.E. of 10
*Average sales growth for the past 5 years has been 25%
*Total cash on hand 201 million
*Total debt 196 million
*% of shares held by insiders is a very healthy 52%
*% of shares held by institutional and mutual owners is 34% and this accounts for 72% of the float.

Global sources of Palladium are rather limited. Over 80% of the world’s Palladium is concentrated in just two countries, Russia and South Africa, with Russia’s accounting for 50% of the total Palladium supply. However, production has started to fall again and to meet these supply shortfalls the Russian government has been selling Palladium from its stockpiles. This program has now come to an end and with it roughly 125,000 pounds of Palladium will suddenly vanish from the supply chain. This is going to shock the system (the shock process might already be underway) for taking out of the market such a huge amount of Palladium just when demand is rising is the perfect recipe to precipitate a run on Palladium as companies start to hoard supplies for fear of not having enough of the metal on hand. With Gold and now Silver coming under demand as investors exit the Euro along with recovering economies and increasing auto sales...not to neglect the massive amount of interest the New Palladium and Platinum ETF’s are creating. These two ETF’s are gobbling up huge amounts of Platinum and Palladium. SWC should be primed to double by year end.

On CNBC's Larry Kudlow there was a very interesting debate on gold.
What's behind the rush to buy gold, with John Rutledge, former Reagan Economic adviser and James DiGeorgia, Gold & Energy Advisor.



Several other videos from today....

GOLD!...BUY GOLD...$1500...$2000...$5000...

 Subscribe in a reader

All of a sudden gold is king and you cannot help but hear it being discussed about on the news, at work and or by friends & family. Hmmm?

Gold set an all-time record high Tuesday, as investors continue to have concerns about markets and the global economy. There is a growing realization that the unprecedented measures taken by global governments may not be enough to contain the euro-zone debt crisis. The moves taken to shore up financially strapped nations are similar those the U.S. undertook as the 2008 financial crisis was intensifying. Granted not exactly identical, Doug Kass wrote an excellent report today on this subject... READ

Gold has been rising steadily for a few years now, mostly in response to erosion in the U.S. dollar and rising Euro. But the Euro has collapsed since December '09 while the dollar has been rallying? More than likely the euro is being dumped for gold and buying the dollar, flight to safety. Itz has stated numerous times, that gold reflects the incompetence of global governments. Will gold continue to rally? Yes, could it rise to $2,000? It is possible on a meltup. But as we've seen of late, there have been those that hyped the S&P500 @ 1250, those that suggested oil was going to $150 when it was at $87 and now that gold is at $1230...it's a buy??? Sounds like a crowded trade...just be careful. As always diversify & be hedged.

The rally in gold & silver is due to concerns of rising liquidity into the global financial system by central banks causing FEAR of Pending Inflation! European bailout buys more time but doesn't fix budget deficits in the long term.

On April 30th Itz posted this chart of an Inverse Head & Shoulders Pattern of $GOLD. With resistance @ $1225 and a completion target of $1257.

The Market Vectors Gold Miners ETF (GDX)  is approaching the $55 level on the weekly chart. Using the Elder Impulse System >>READ

Past Itz Gold Blog Posts >>LINK ... >>LINK

Super Bounce Monday

 Subscribe in a reader

From this weekends blog post 'So what do you do? Is a 10% correction it? Shorter term, yes we'll see a bounce, no doubt. Will it be sold into and then head lower? Maybe...one thing is for certain, investor confidence has been damaged. Just as the retail investor was beginning to feel comfortable with equities...BAM! Thursday afternoons meltdown hit. The problem is there are too many uncertainties and loose ends that need to be resolved and fixed. What would be bullish? An answer to what caused the computer glitch Thursday, FinReg passing, a Goldman Sachs settlement, the ECB needs to act before the contagion spreads. The ECB should resort to its “nuclear option” of intervening directly in the markets to purchase government bonds.If these events can happen, it would ease global uncertainty and rally markets. ' What a difference a weekend makes!

Thursday's 'Flash Crash' is most likely due to the absence of a uniform 'circut breaker' system..... SEC: Exchanges agree in principle to new rules >>Read

The Goldman Sachs situation~~ a possible middle ground is a “deferred prosecution agreement,” in which the firm avoids indictment is being discussed with the Justice Dept. >>Read

The news late Sunday on the ECB...appears it played out as Itz called, the 'Nuclear Option' or 'Shock & Awe', with a $1 trillion rescue for the euro that has halted market panic. >>Read

So with these recent events the markets rallied, but the bears are still out there growling and calling for this rally to be short lived. Itz believes that for now the market will conitnue to climb higher, because the fundamentals have changed. Yes, the Euro will most likely decline, but the contagion has been stopped. As for that $1 Trillion Euro Bailout, as with our TARP it doesn't mean it will be spent, just guaranteed. On Friday Itz suggested Ford (F) @ $11, closed today @ $12.15 up 10.45%, Itz also suggested buying Walter Energy (WLT) under $75, closing today @ $79.30 up 5.7%. Again this market should see further upside, however as always hedge yourself.

“There is only one side of the market and it is not the bull side or the bear side, but the right side.” - Edwin Lefevre

Discussing the EU rescue package and the jump in world markets with Jim McCaughan, CEO of Principal Global Investors, and Robert Doll, of BlackRock.