2/4/08 1:15 PM UPDATE: The future of Wall Street financials ain't looking good if you use the ETF SKF (Short Wall Street financials) as an indicator. Although there is talk of a bond insurers bailout, looks like the talk isn't enough, fast enough. As of the time of this update, SKF is UP 5% for the day. It was trending down last week, with all the warm and fuzzy talk of a bailout. When SKF starts going up, looks like Wall Street is betting it will be too little, too late. The derivatives markets start coming due this month. And that's not going to be good news for the entire market. This little detail could be why SKF is rising. (Smart money showing what is to come?) HERE'S THE PROBLEM FOR THE DOW (AND THE ENTIRE STOCK MARKET)...
Remember last week, when problems with the bond insurance market, cause the market to start heading south at least a couple hundred points, even though the Fed stepped in with an emergency rate cut the day before? Well that means this little crisis can head the market to historic downs. So if SKF is an indication of what is to come, the stock market may be heading south fast. The G-force may be crushing! (MONITOR CLOSELY...and check back here for updates.
BIG BANKS WORK ON BOND INSURERS BAILOUT: "Efforts to help bail out troubled bond insurers are escalating, with one group of big banks focusing on a potential rescue of Ambac Financial Group, according to CNBC." Banks in possible talks include RBS, Barclays, Citigroup, Wachovia, UBS, Dresdner, BNP Paribas and the now famous Societe Generale. (Does "French Rouge Trader" ring a bell? It rang the Fed's.)
Only problem, SU sources say all of this mess is worse than they are planning/can admit, they are now pandering overseas for a bailout; and AMBAC is only one little old company, compared to the big boys. (Ambac is the little wave, before the big one.)
Start watching SKF (Short financials to gauge Wall Streets latest sentiments regarding the bond insurance crisis and the likely hood that there will be a big enough bailout in time. Since SKF SHORTS the Wall Street financials, when you see it rise -- bad news for banks. If you feel the subprime, credit, derivatives and bond insurers are in worse shape than currently factored into the market, today may be the day for SKF!
RANGOLD (GOLD) is a mining stock that had a great run, as gold rose recently. It was up more than most any other mining stock you will find. But earnings came out today, and they disappointed Wall Street. Watch for this one to start under-performing the other miners. And don't but it. We put an alert on it last week, due to power outages in South Africa, so hopefully you were already out, if you had it. If not, better watch it carefully today, if you own it. (And I doubt my readership is that huge that anyone owns that specific stock.)
CHECK STRATEGYUPDATE.COM for 24 hour LIVE gold, silver, platinum and palladium charts.
PLATINUM AND PALLADIUM: Forget gold...well, don't exactly forget it, but look at Platinum and Palladium, first for Monday and beyond. With production problems in Australia (biggest producer), and South Africa (power outages over the past week, or so) -- the price of these two sister metals has taken off like the space shuttle. Even if gold and silver experience temporary "dips" as people access their take on the dollar's strength or weakness (also based on upcoming European rate cut decisions*) -- Platinum and Palladium have been nothing but UP. But you gotta watch Palladium, it goes up and down (a little more volatile) than Platinum. (But it's a fast, fun ride up, when you catch it at the bottom of the predictable, cyclical dip.)
ALERT: WITH PALLADIUM CLOSING AT ALL TIME RECORD HIGHS ON FRIDAY...EXPECT TO SEE SOME BIG AUTOMATIC PROFIT TAKING (SELL-OFFS)...SO THE PRICE MAY BE DROPPING TO EARLY "BUY" POINTS ON MONDAY MORNING!!! However, the wild-card is the fact that there are production outages at the biggest miners, causing a shortage which is why the metal has been skyrocketing. If you check the 24 chart, you will see some wild downs, and ups on Palladium, while Platinum continues to rise at at steady pace. Gold is up and down in overnight trading, too. So watch for the dip on PAL, because with Platinum rising steady, Palladium should be following that trend line.
I HATE making specific stock picks, but PAL is a $5 palladium stock that I like a lot. It can go up and down 10% in a day (before the mining outages which has cause the prices to go up more than usual, without the usual dips).
Recently, it has been leap-frogging gold and silver, having up 10% (or more) days. So you wanna make sure you don't buy it just as it's about to take the 10% down -- but if you agree that Platinum and Palladium will only be going up, due to shortages, even if gold and silver take a temporary "dip", as a world-wide liquidity infusion into the U.S., has made the dollar look temporarily stronger, then check out PAL.
(disclosure: I do not own PAL at the time of this post, but I hope to buy some at the right price!)
4:00 AM UPDATE: WOW! If you check the micro-charts on our website (StrategyUpdate.com), you can see the exact point when the price of gold (and silver) took a huge dip...more like a dive. Initially, it was up in early overnight trading in Hong Kong and Australia. If you check the point where these metals took the dive, it was right as the London Market opened! So there was either some major hedge fund profit taking, overseas; some giant overseas investor just made an ATM withdrawl (withdrew some gold, the way you and I withdrawl cash from the corner ATM) to pay for one of many upcoming financial bail-outs in the U.S.; or some other reason why some folks in London had to sell off a bunch of gold, enough to drive the price down $10 dollars from it's overnight high in the 4 am EST hour. EVEN PLATINUM, THE UNDEFEATED-ERA MIKE TYSON OF METALS THIS PAST WEEK HAS SOLD OFF PROPORTIONATELY, AS WELL. (See SU micro charts at 4am EST.)
SPEAKING OF HATING GIVING PICKS: Here are some of my favorite stocks. And it's tough to recommend them, because they are all up big today. So I make the prediction now, because even though they are up at heartbreaking levels today, I think they are all headed for continued heartbreaking upward trends. SNCR, DPTR, MOS, VOL, PAL, (and get ready to jump on the gold mining stocks). And ZD likes SEED , which used to be risky and volatile, but recently, it doesn't look so risky if you check the charts. The only risk is not having it. BUT DO YOUR RESEARCH ON THIS ONE. It's a definite BUY...but it's also a definite SELL at certain times, based on the strength of the dollar.
HOW BUSH USED THE MEDIA AND POLITICS TO HELP BRING DOWN THE PRICE OF OIL!: "There are troubling signs...serious signs that the U.S. economy is weakening."
What would compel Bush to come out so publicly in the media to create such widespread panic, when they are trying to instill confidence in the U.S. stock and industrial markets? He had to do what he could to help drive down the price of oil, because when the dollar drops in value, you can expect oil prices to rise (as OPEC has to find a way to make up for their loss in profit per gallon, since they are paid in U.S. dollars (for now).
Remember last month, when Bush flew to the Middle East to try and convince oil sheiks to increase output, so the price would drop? (See: Supply and Demand) But of course they said, "No", and kept levels steady. First of all, it's not like they can just start cranking out more oil so easily, even if they wanted to. (Which they don't!)
Secondly, there is no indication that there needs to be a boost in output, because indicators show U.S. demand slowing, if anything. (Even though Strategy Update feels world wide demand for oil in emerging markets will keep demand high -- OPEC will claim they are at maximum production levels/no increase in production to keep up with rising global demand -- and we will see oil prices rise in '08. The Batcomputer feels in March/April oil price will rise toward and above $100 a barrel.
So OPEC says, "No, gonna keep output where it is", which is supposed to keep prices stable. So Bush flies home, and returns the favor to OPEC by jumping on TV and announces to the world that there are serious, troubling signs that the U.S. economy is weakening.
And look what happens...the price of oil drops on fears of a U.S. recession. Even though Bush knows that it is more likely to be increased U.S. growth in '08, as the Fed continues to cut the dollar. (And don't think that Bush's "serious, troubling signs" announcement was also issued to help pave the way for Bernanke and the Fed to continue to cut rates at pleasing levels at the next meeting in March.)
All of these cuts will add up to global investors pull money out of other markets and having them pour it into the deeply discounted U.S. marketplace.
I don't know if any of this is true, in reality. But if it is...perhaps this is one good thing Bush has done for the U.S. since he has been in office.
And now watch for OPEC to return the favor, again, by announcing some problem they are experiencing in production.
(Remember MAD Magazine's "Spy vs Spy"?
*= European rate cut changes?: The European Bank (in London) says no rate cuts, and any talk of such is, "wishful thinking". However, The Bank of England says it will cut rates a quarter point (.25%) to 5.25%, on it's own.
OIL PRICES STILL DROPPING on fears of U.S. recession will cause slower growth. The Batcomputer does not feel oil prices will be lower, in '08, past this short-term seasonal dip.
2/4/08 Updates at StrategyUpdate.com
PLUS -- LIVE 24 Gold, Silver, Platinum and Palladium Charts!
(disclosure: UXG, and PAL was purchased since this thread was initially posted.)
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