Cuter  than Bing, no?

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I’ll have you know, the direct translation of “too ra loo ra loo rah” is “Get drunk, you Irish monkey, and buy stocks.”

Here’s hoping my good friend M. Le Docteur de la Fly, who is resoundingly French on all days save this one, will comply.

Why?

Well, it seems the tell-tale market indicator, the BKX, has broke the shilelegh (sic) out, and wants to take the rest of the market with it.   Everyone with an ounce of Galway joostice (sic) in him knows that means the market wants to rip.  

Want proof?   Here’s a shot of Jamison’s and a chart for ye to consider in your bear suit:

Will we have a pullback?  Sure, most likely.   And I will likely lighten a bit more tomorrow, as I did today, with my Silver Wheaton Corp. (USA) (SLW: 15.96 -2.15%) calls, (GDX: 46.02 -0.54%) calls and (AGQ: 57.73 -0.10%) sell off, all at a tidy profit, mind you.   But I haven’t sold a drop of BB&T Corporation (BBT: 32.25 +0.28%) or even Pacific Capital Bancorp (PCBC: 2.15 +11.98%) as I think the banks are for real here.

You see, the dollar has begun it’s move back down to the $78.50 or so level, and that’s going to be tough love for those of bearish persuasion going forward, even after our expected pullback.  

As a matter of fact, you might even think of adding to your (TBT: 46.91 +0.26%) because Ben as much said he’s all for inflation today, that crazy bearded leprechaun of questionable heritage.  

I’m hoping all my fellow Irishman will lay down their “dukes” (sic) and join me in a pint of Guinness (and some Diageo plc (ADR) (DEO: 66.64 -0.49%) ? ) this glorious day.  Celebrate our heritage, get a little drunk, get a little long.

It’s easy.

Erin go Bragh!

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I don’t often talk about the University of Kentucky on this site, being a “mostly” Louisville Cardinals fan (and they don’t like it much around here when you’re “both.”  You might as like to try to “borry” from a man’s still instead).   However, UK freshman, SEC “Player of the Year,” “Newcomer of the Year,” and quite possibly #1 NBA draft pick John Wall makes for a nice metaphor for today’s dollar discussion.

Wall, while deified in the Blue Grass for his eye-popping offensive talents, is going to be the number one (or #2, his teammate DeMarcus Cousins may go #1) draft pick because of his defensive capabilities, which are sometimes similarly eye-popping.   It’s arguable, for instance, that he beat Vanderbilt at Vanderbilt all by himself with a last second shot block on a dead-eye three-point shooter, followed by a clean pick of the ball right from said startled shooter’s hands.  

What’s that?  Of course Youtube has the clip!

Pretty spiffy, no?   You don’t see that kind of instinctive defensive thinking in a lot of freshman.

And that kind of defensive, er… “wall” brings to mind our old weekly dollar chart and the “fib wall” we’d identified as going to be a tough area to breach.   It turns out, the 200-week exponential moving average (”EMA”) served as a barrier as well.   Look at the slow topping we’ve seen here, keeping in mind this is a weekly chart:

I think this bodes well, at least in the near term, for our commodities “risk trade,” and especially the precious metals, which are perking up quite nicely this morning as the dollar (DXY) drops below $80.00.    (AGQ: 57.73 -0.10%) is taking all it’s friends out for a champagne party, and purchasing them Norma Kamali handbags.   Fellow silvers (EXK: 3.28 +0.31%) , (CDE: 16.228 -1.71%) and even rag-tag Hecla Mining Company (HL: 5.82 -0.68%) are also again off to the races.  As always, the best name in silver is Silver Wheaton Corp. (USA) (SLW: 15.97 -2.08%) .  On the gold side, you know my favourites (sic) but NovaGold Resources Inc. (USA) (NG: 7.46 -1.06%) is really picking up steam as it matures here.

Keep an eye as well on our dollar proxy (UUP: 23.529 +0.59%) , which we’d like to see stay below $23.60 for our shiny metal dominance to continue.

On top of our usual metal trades, it seems that the regional banks (KRE: 26.68 +0.64%) are also back on thier horses.  You know I love BB&T Corporation BB&T Corporation (BBT: 32.25 +0.28%) as a long term hold, but don’t be afraid to grab a little Fifth Third Bancorp (FITB: 13.57 -0.95%) and Huntington Bancshares Incorporated (HBAN: 5.61 -2.60%) here as these “Ohio chancres” will someday soon be able to cover up their cold sores and sashay out into the bank M&A saloons once again, all a-flooze.

Last, don’t forget about Elite Eight  pick Cree, Inc. (CREE: 71.41 -0.35%) which is still getting its wind back (thankfully, so is SanDisk Corporation (SNDK: 33.15 -0.42%) ) and it’s sister Veeco Instruments Inc. (VECO: 39.97 -1.16%) , which has really been gaining some nice ground recently.   I like both as hedges against future “Inflato-rama Drama.”

My best to you all.

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Yeah, so I’m the last iBC blogger left in the iBC March Madness Tourney.   It only took me a couple of years of playing, and losing early to realize that a measured, trending, relatively predictable pick beat out a burning comet every time.  In the end, like in life, it’s all about the beta.  Hence Cree, Inc. (CREE: 71.41 -0.35%) , a boring, yet utterly predictably fantastic stock that I’ve owned since the low fitties:

Are you kidding me?  It looks faked doesn’t it?

Now look at this week’s rival, SanDisk Corporation (SNDK: 33.15 -0.42%) on the weekly chart.   Also impressive…

Very impressive, but I think ready for a pullback.  In fact, I think both names are ready for a pullback this week and our competition’s result will depend upon which of the two pulls back  least.   I think the dailies give us a hint on this one.  First,  SanDisk Corporation (SNDK: 33.15 -0.42%) –

Note the relative fragility of the daily, with all those gaps and the overstetched nature of the recent upmove? 

Our friend (CREE: 71.41 -0.35%) is experiencing a similar overstretched period here (over it’s 200 day EMA especially), but I think the chart is a lot more “tight” and predictable.  As a result, I think the pullback will be less severe:

Long story short on my take:  the tightly wound anal retentives at Cree should squeeze one past the loose-bowelled chip-eaters at Sandisk this week. 

Let the shit talking begin.  (Oh, that’s right, it ’s already begun…)

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Special Update:  My Lou’ville Cardinal Birds are set up as a #9 seed in the East, to play against a soft Cal Bear team (read “Bezerkely hippies”) and then notched to play weak ass #1 seed Puke, er, “Duke.”  

Let me say that knocking off Syracuse for the last Freedom Hall game ever was intense and pleasurable, but knocking Duke off it’s ill-gotten #1 seed perch would be a decade-maker.  Fellow Duke-haters, please pray for the health of senior guard Jerry Smith.  Thank you in advance.

A preview of how good the Cards can be (the first 1:10 is ALL Jerry Smith, last part is all Kyle Kuric). Enjoy.:

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“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: 32.25 +0.28%) , Citigroup Inc. (C: 4.05 0.00%) , KeyCorp (KEY: 7.5901 -3.92%) , and Pacific Capital Bancorp (PCBC: 2.15 +11.98%) and my favourite (sic) L.E.D.  techs, Cree, Inc. (CREE: 71.41 -0.35%) and especially Veeco Instruments Inc. (VECO: 39.97 -1.16%) 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: 13.14 +2.42%) , 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: 66.66 +0.42%) 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: 23.53 +0.60%) , and therefore highly recommend a late day grab of some Fronteer Development Group Inc. (USA) (FRG: 5.014 -1.49%) , Exeter Resource Corp. (XRA: 9.201 +6.86%) and (SVM: 6.7999 -2.16%) .

I also believe Cree, Inc. (CREE: 71.41 -0.35%) 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: 39.97 -1.16%) is also worth a look.

Best to you all, fellow Konigsbergs.

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