“When a Mere Ass-hat Just Won’t Do”

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Before I talk about this Disco Ball Market, I want to take a second to explain why I love this country and I love going to work every day, despite the imminent Tsar Bomba of Damocles hanging over this economy thanks to the near-brain dead or simply evil (your pick) statist government with which we’ve been collectively saddled.

You see my line of work brings me into contact with blindingly smart people every day.   And not just smart people, like your average egghead dufus at State U., but smart ambitious fellows not unlike Le Monsieur Le Docteur de Le Fly.   People who want to actually do and create things in a clever and efficient fashion that no one has considered before.

It gives me such hope, you see.   (Aside: Can I use that word, or has it been wholly discredited like the otherwise once-honorable “liberal?”)  

Anyway, it gives me hope for this benighted land, that we might still have the IP to make it “on to the next,” as Jay-Zee would say.   These are the people that are continuing to create value every day, even in the worst of market circumstances.    And here I am,  just lucky enough to stumble into them every now and then, and maybe lend them a hand along the way.

Without getting  too deep into specifics, let me proffer this example of  the young man I met  this morning…

   This guy used to be in plain vanilla big project software consulting.   Serendipitously, or unluckily depending upon your tolerance for such things, many of his clients were large state governments.   You know the drill if you’ve been exposed — this is a client base characterized by horrendously long sales cycles, diffident bureaucracy, inefficient and/or politically-driven decision making — you know the drill.   The biggest net positive to that kind of customer base is that it’s magnificently sticky, if perhaps only by dint of inertial motion (thanks Newton).  

You’re probably saying “so what? — there’s a myriad of private sector gov’t suppliers out there, and they all sell for about 5.0x cash flow and maybe 0.75 to 1.0x sales.”   Big whoop, right?

   Well, that’s where the innovation I so love comes into the picture.    This young man came to realize, via quiet hard analysis and slow revelation, that the value he could extract from his customer is so valuable to the outside world, that he can afford to pay them and himself, and still make four to five times the margins he was originally making in his original model.

Think of that for a second.   He can afford to  pay his clients to allow him to do what he does, which also happend to be a value added, money-saving service to them.   You think that’s going to drive some demand for his products, maybe?

I love my job.  God Bless America, and screw Damocles while You’re at it.

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This Disco Ball Market is turning and turning and sparkling and sparkling, and it’s even worse on my poor M. Le Fly’s brain than the chemical laser-krunk, electro-youtube sonic Ecstacy-Assist “the kids” are replacing Gloria Gaynor with these days.

Sometimes I feel like one of those “lucky ones” of the generation X+ who were too young for Viet Nam, but too old for the Gulf Wars,  but replacing those armed conflicts with the twin piers of “Disco” and “Electronica.”   Much like the tenets of war, the universal deficiencies of bad club music remain eternal.

One is driven to speculate as to whether the Spartans and Etruscans had to winnow their young from the atonal lull of the thumping lyre.  Better than warring with the Athenians, I guess…

Watch the dollar.   If it breaks down, we will continue up.   However, today’s action in gold and silver seem to be signalling, if weakly, that we’ll have a pullback here.   I may lighten on some of my calls, at least temporarily.  

In the mean time, the banks BB&T Corporation BB&T Corporation BB&T Corporation BB&T Corporation (BBT: 30.66 +0.79%) , Citigroup Inc. (C: 3.97 -5.02%) , KeyCorp (KEY: 7.57 -3.93%) , and Pacific Capital Bancorp (PCBC: 1.44 +6.67%) and my favourite (sic) L.E.D.  techs, Cree, Inc. (CREE: 70.84 -1.23%) and especially Veeco Instruments Inc. (VECO: 39.86 -0.08%) look very strong, telling me this is not an “about to plunge” market, no matter the sweaty-palmed Denninger-types’ trepidations. 

Please also remember to take any spare change lying around in the cushions and apply them to a short of ArvinMeritor, Inc. (ARM: 12.38 +0.98%) , so I may defeat mine righteous enemee (sic), CA, and proceed to the Elite Eight.  

Thanks in advance.

Update:  The real thang, yo’ –

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“More than any time in history mankind faces a crossroads. One path leads to despair and utter hopelessness, the other to total extinction. Let us pray that we have the wisdom to choose correctly.” – Allan Stewart Konigsberg
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Woody Allen once said “80% of success is just showing up.” To some extent that’s true, as reliability is an attribute valued across a wide spectrum of employers, friends, relatives, lovers, etc.

Why do you think (MCD: 65.53 +0.49%) sells so many Happy Meals? Because their burgers are made of some top quality succulent sirloin? No, it’s because the little kid in us knows we are going to get the same overdone blandburger-and-salty-fry combination every time, and that’s comforting.

So too, the comfort of a trending market soothes the savage breast of the coked-out daytrader in all of us. But even a long term trending market is not without it’s harrowing pullbacks and trials of faith. For that we need perspective, humility, and in the end, endurance.

Endurance and a willingness to sit and wait for the trade to come to you are the key to the type of long term wealth accumulation we like to talk about here. Remember how scary gold looked a few weeks back, when we thought maybe the bull had finally tapped and the dollar was re-ascendant? Note how I said the 34-week had been a great place to buy in the past, despite the strength of the dollar? Look at the dollar gold chart I’d shown you a few weeks back:

As in the past, the 34 week Exponential Moving Average (”EMA”) has been a reliable signal in this uptrend (all but for the one dreadful period at the end of 2008, where the 200 wk EMA was the stopper).    Note in this next “nine year bull” chart how reliable the signal has been, and also, how it seems the “touches” are starting to get farther apart.  

 I’m not sure what to make of this “touch extension” business, but I will point out that as bull markets enter their parabolic stages, they tend to spend longer and longer periods above the common daily and weekly moving average “rest-stops”  (ie, 20, 50 and 200-day on the daily and 13, 34 and 200 week on the weeklies).  

I am of the mind that our hard earned endurance will pay off here, friends, and the dollar will soon break down again, and that should push our gold:dollar ration back over $14 again, to the great chagrin of metallic ursines the world over, but especially those on the upper Left Coast.     

For turnaround Toosdee (sic), I would expect further deterioration in (UUP: 23.42 -0.64%) , and therefore highly recommend a late day grab of some Fronteer Development Group Inc. (USA) (FRG: 4.88 +2.09%) , Exeter Resource Corp. (XRA: 8.22 -2.26%) and (SVM: 6.58 -3.24%) .

I also believe Cree, Inc. (CREE: 70.84 -1.23%) is almost done pulling back, and it should move above $70 this week, as the market continues to roll over wide-eyed, squatting Kodiaks.  As a consequence, Veeco Instruments Inc. (VECO: 39.86 -0.08%) is also worth a look.

Best to you all, fellow Konigsbergs.

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Note, upper left corner — “The Perfect Sammich”
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To the chagrin of Bears and cash horders everywhere, the unemployment numbers were magically re-arranged in unicorn land to gallop forth and match the pixie-dust retail fabulations we got yesterday.

Ladies and gentlemen, I’d like to take this moment to thank The Gap Inc. (GPS: 22.82 +0.62%) for saving America. It’s quite obvious that all those laid off investment bankers and advertising execs are putting their latest model Research In Motion Limited (USA) (RIMM: 75.30 -0.84%) and Apple Inc. (AAPL: 226.5895 +0.48%) communications devices to work via banana-skin-tight tee shirt sizing down at the Mall of America.

Let’s face it, late stage consumer meltdown (”don’t get mad, go shopping!”) is the only logical answer to our employment resurgance (only down 35,000 jobs this month, President Obama, we thank thee!)– Coo coo coo joo, Urban Outfitters, a nation turns it’s plastic cards to you… hoo, hoo, hoo.

Hoo, hoo, hoo. Now, get back to folding!

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We didn’t get our (HUI: 0.00 N/A) touch of $415 yesterday, and that annoyed me, but only temporarily. I think we may get just enough dollar strenth today (DXY rose to $80.89 this morning on the good news that the mall employee to mall attendee ratio was flattening). Same goes for Allied Nevada Gold Corp. (ANV: 15.08 -0.66%) which got as low as $14.33, but did not fill Monday’s gap at $14.24.

I’d keep my PM buys in there at those levels, as I think those gaps want to be filled. Silver Wheaton Corp. (USA) (SLW: 15.42 -0.84%) is a different story, as it fell quite a bit yesterday on typical pre-employment number chicanery trading. I would be buying it right now, as I think yesterday’s washout was a last wriggle before it heads back to the recent highs in the high $17 area.

All that said, I expect to be lightening up on some of my option plays, perhaps as soon as early next week, as I think we’re due for a pullback after fighting the overly bearish for the last week or so. As they pile in, we shall pile out — if only temporarily — from our higher risk positions. That would include my (GDX: 45.06 -0.57%) and Monsanto Company (MON: 72.28 +0.94%) calls, not to mention the previously discussed Silver Wheaton Corp. (USA) (SLW: 15.42 -0.84%) , though north of $16.00 for that last.

Expect the dollar to begin to weaken here (watch (UUP: 23.42 -0.64%) with DXY), after absorbing some of the glow of cheap brandy acclaim from today’s numbers. I still like (TBT: 47.84 -1.26%) , however, as I think the treasury markets will recess in unison with their underlying currency. Chickens & eggs and all that.

Best to you all, and enjoy your smelter sammiches (sic).
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I don’t have a lot of time, as I’m “leaving on a jet plane” from Minnesota South, also known as Palm Beach County, Florida, to warmer climes in the Bluegrass region.   Also dealing with some family issues, not the least being my wife’s tolerance for “vacation” with our four kids — “not to exceed five days/nights” it read on the labelling.  Can you picture the look she’s giving me as I tap these words out whilst I should be loading the car with luggage?

Yet, it’s my devotion to my Docteur Le Fly, his magical engine in The PPT,  and my good bloggish friends that drives me like a grizzled veteran of the India campaign is driven to a brown ale at the end of a long day of patrol. 

Here’s what I’m seeing, and be sure to filter it through all my inveterate bias and natural cognitive dissonances.  I think the dollar is gasping it’s last for this time period.   It’s raging against the dying of the light in the most poetic way, but it’s punches north grow weaker and weaker, even despite all this news of imminent employment doom and Grecian tragedy.  (UUP: 23.42 -0.64%) would need to stay north of $23.60 to remain convincing that the dollar possibility is still on, and DXY above $80.50.  

I think a weak employment number only weakens the dollar tomorrow, while a strong number (unlikely, as we’ve seen bruted) marches the market north.  Either way, I see “up” for our friends on the PM side.   Note how the (HUI: 0.00 N/A) has broken out of it’s downtrend and is now looking to successfully touch both the downtrend and the 50-day EMA at $415?

I think this will be our signal to buy with both hands.

Here’s the stock I like most for those who are interested.  It’s gold, and it’s been golden to me and mine.  I don’t see why that shouldn’t continue.

Best to you all, and I’ll speak again with you after touch-down back north.

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Helpless Feeb Trading, FTW! (Or Not)
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I don’t usually go for the whole gloating thing, as it’s unkind, and generally karmically challenging.

I’ll make an exception this one time, however.  Call it karmic recognition if you will.   Much to the cognitively challenged’s chagrin, (SLV: 16.76 -0.30%) is triumphant once again, after many weeks of representing second place to Canadians and other luge and curling aficionados.

The dollar index, (DXY: 0.00 N/A) , is back below $80.00, currently trading at $79.86. It’s proxy (UUP: 23.42 -0.64%) is below a significant (61.8%) intermediate term Fibonacci line ($23.52), and looks to be heading towards $23.13, it’s next support.

Many of my compatriots are short or heavily in cash. Small traders have one of the lowest call positions recorded since last March’s lows. People cannot believe this market can go up. In short– It’s a basket weaver’s market, and I’ve just finished a fine set of cane-rush patio chairs.

I’d like (AGQ: 55.60 -0.75%) to stay above $55.02, and (EXK: 3.46 -0.86%) to stay above $3.36 first, and then $3.61 second.   Near term target is $3.76, but I’m holding for the long term.  (SVM: 6.58 -3.24%) is approaching a very important 61.8% fib line at $6.99, and if it should break it (I don’t think it will on first try, frankly) then it should run right to it’s recent highs at $8.00.    Last, (PAAS: 22.74 -0.35%) is good to go over $22.35, and it’s next stop should be in the $26.50 recent high area.

My favourite, Silver Wheaton Corp. (USA) (SLW: 15.42 -0.84%) is labouring (sic) on low volume here, and needs to get above $15.95 in order to “release” to the recent highs of $17.80.   It bears watching, while bears are watching.

Here’s what’s giving me hope for a bullish continuation even amidst the ursinity of my peers… The Russell (I use RUT or (IWM: 67.69 -0.09%) to track it) is breaking out ahead of the (SPY: 115.43 -0.02%) .     If the (DJT: 0.00 N/A) and it’s representative United Parcel Service, Inc. (UPS: 62.34 -0.21%) can continue north and break above recent highs, then I will have further comfort.

Until then, please be sure to purchase plenty of technical trading books.  Those authors need to eat, too, you know.

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We all have a lot of fun on this site with our ongoing theme of pushing wrinkly dissembling bearshitters down open manhole covers, steel fire escapes and empty elevator shafts,, but time in South Florida can really change one’s perspective.

Brothers and sisters, there are fewer more important imperatives for the ongoing health of our civilization than a reverance for our elderly citizens. Think of it — our aged are our only living link with history. Each is a conduit to the past alive and inextinguishable. Those of you lucky enough to still have all four grandparents still with you and sentient (I have none alive) have a veritable treasure trove of personal and historical information unique to your own ancestral past.

Even those of you with living parents (I’m one for two, unfortunately) can still reach back to a period before your birth where those before you confronted the same irascible problems and uncomfortable situations you struggle with every day.

Let’s not be hubristic. There is not brave new world, and the errors and intransigencies of this life have been painted and repainted on the walls of caves and castles many time before this. Why not take the opportunity, while it’s available to us, to plumb the depths of history, even as it stands before us, weathered, mellowed and perhaps past the cheap cynicism that mars the not-yet old.

Reach out — today if you can– and have an elderly friend or relative over for lunch or dinner. Ask them about their youth, and what times were like for them and their family. You will be well compensated for your time and interest, I promise you.
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What do you know? (SLV: 16.76 -0.30%) is kicking Dungeons & Dragons Geek arse in a plummeting-down-the-elevator-shaft fashion. Who’d a thunk it?

Platinum has awoken as well. Dont’ forget about Stillwater Mining Company (SWC: 14.1601 +0.64%) , North American Palladium, Ltd. (PAL: 4.2299 +1.19%) and (PTM: 19.209 +0.10%) . I share with you my good will, and my winning ways (ahem (TBT: 47.84 -1.26%) ) as I head off into the mists of South Florida, to do “kids stuff & shit.”

Best to you all.
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