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Gobble, Gobble, fellow pilgrims!  Are you concerned about your precious metal stores and stocks this close to Turkey Day?  Even though The PPT has assured us that these are the stuffing days for such metals coursing into year end?

Well, I can’t say that I don’t blame you, given the vexatious day we had yesterday, where everyone and their brother decided that liquidating hard commodities was the answer to Europe’s considerable paper problem. On the other hand, with a relatively high Blees rating (a relative ratio of commerical trader sentiment over the last 18 months) of above 50% (at 74 as of last reading), I can’t see traders going against historic trends hear and blowing out of these positions in defiance of the Turkey gods.

In other words, I think yesterday was something of a panic day.  Do tell, right?  

But panic days are what we are here for… especially when they are delivered toward the end of the year and a mere week before Tryptophanatic Day.

So far the Bernank seems to be playing along, as the dollar is currently down below my target of $77.80 as revealed on Fly’s blog yesterday.   If it stays down there, I believe we will have a chance for a sustainable bounce in play on all the PM’s and even the much beknighted silver that so many were moaning about here yesterday. 

Before I show you my silver chart, I want to remind you that it was junior golds that I thought would provide the biggest bang for the buck here.  That should still be here, and outside the old favorites of SLW and EXK, I would probably avoid getting too crazy about silver miners until we see a rebound, and then a re-test of yesterday’s levels. 

That being said, I note that AGQ weekly is still well above it’s long term trend line.  And while yesterday I thought perhaps we’d get a test of that line, I think we may even open higher this morning (above $60), and if so, I might actually begin adding to my 50% positions here.   The stops are pretty obvious on the weeklies, but you may not want to set them below the trend line if you are more of a short time type.   In that case, I’d recommend a stop below $60, and a “wait and see” going into next week.  

Keep in mind that Friday after Tryptophan Awareness Day is often one of the best PM days of the year (although not always long lived).  Here’s my latest on “fast money” AGQ.

 

Given the oversold levels of AG and even of the more stable $HUI (we missed the 200 day EMA ($552) by a hair yesterday, and may test today, but we did bounce right at the reliable 34 week EMA as well), I will be looking to add to a number of positions today.  

Keep in mind a number of caveats…

1) If the dollar index (DX-Y) breaks back above $78, which is the 61.8% Fibonacci retrace on the long term weekly, I will take these adds off

2) If the $HUI breaks below it’s 200-day EMA (approximately $552), I will take these trades off.

3) If the POG breaks below $1700, I will take these trades off.

Again, I am still not convinced that any of the above events means our traditional Santa Claus Gold Mitzvah is off for this year.  In fact, it probably just means the rebound will be pushed into next week.

That said, one must take some precautions, and those levels are good ones to pay attention to.

Perhaps we will revisit this weekend, if I don’t have 12 kid parties and 15 lacrosse/field hockey/Quick Recall games to attend.

My best to you.

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I’ve found a bipartisan effort I invite you all to get behind.  Yes, that was me, invoking the word “bi-partisan.”   Harken quickly and not so lightly, as this will surely be a rare occurence not often repeated.

What I’m talking about is Representative Jeff Flake’s idea to “Staple Green Cards to PhD diplomas” so as to make sure we don’t cede any of that freshly minted U.S.-educated talent back to the Third World and worse (in the case of the Red Chinese).   Even President 0’Bama has gotten behind the idea, despite his telling Steve Jobs that he couldn’t sever the Gordian Knot of immigration reform gumming up the Congress.

And why not, I ask you?  Post-secondary education is one of Americas remaining differentiating advantages, and smart children from the world around come here to take advantage of it.  Why shouldn’t we make it easier for those bright individuals to enhance our quality of life here, not to mention add to the employment ranks by creating new businesses and hiring even more people?  Did you know that half of Silicon Valley start-ups over the last two decades have been started by foreign born individuals?

Howabout this — we wouldn’t even have Steve Jobs were his Dad not here on a student visa.  Serendipitous, no?

Maybe we should take the cue?

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Well that dollar bounced severely today, and so did my Skiffles, which are my one remaining hedge.  They weren’t enough to make up for the blood on the ground from my newly minted mining additions, but I’m not even yet half invested, so I’ve got a lot of room and a lot of dry powder…

And a lot of patience.

I will be adding to my Skiffles tomorrow, however, if the dollar continues it’s climb.  Gold is holding up strong here, and so is silver, which bodes well for the miners.  If this were a real commodity sell off, silver would’ve been bludgeoned far worse today.   BAA is a quarter shorter than yesterday and I might add to my holdings there in the morning, as I really liked the way it looked like it was being accumulated at the end of the day.

If you want to play with more generic pieces, keep GDX (large cap gold), GDXJ (junior gold) and SIL (silver miners) in mind to play the ETF field.  For the more adventurous, like m’self, I also like NUGT on a pullback here as well as AGQ.  RGLD, last of all, is showing nice relative strength.

See you tomorrow, I hope.

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Welcome to your dead cat bounce, dollar bulls!  Thanks to manic Japanese Central Bankers, the dollar index is soaring this evening.   Don’t underestimate these deadly serious Nipponese, they know where their bread is buttered.  It’s on the export toast of their choosing, hopefully in the form of Sonys, Toyotas and Nintendo Wiis for your flabby American children.  And for that reason they will try to cheapen the Yen as much as physically possible against the gossamer U.S. buck, which is being issued like so much Greek toilet paper to the free world, in the off chance that it might absorb some of the debt poison that’s infected the globe.

Quite a trick for the Japanese, no? Their problem is that, although a debtor nation,like their profligate friends in America, their debt is largely held “in house” by a large group of Japanese washerwomen who wouldn’t think of selling their .01% returning Japanese postal bonds, lest the Emperor be shamed and have to silence the lot of them, bushido-style.

As an aside, this reminds me of when I was getting my MBA in New England in the 90’s.  We had about 20 Japanese (bankers, mostly) students who were being paid to attend my school.  At the time, the Yen was trading at 88 to the dollar.  Geezus did those fuckers live high on the hog!  In between swilling copious amounts of bourbon (you trying to land a Japanese client? Bring mucho Makers Mark), they would go on egregious trips to Egypt and Malaysia, and wherever fuck all they wanted to go — usually with their wives (they were almost all married).  Meanwhile, poor American dopes like myself spent the rest of our bonuses on tuition and textbooks, usually racking up some serious debt along the way.  Sure a couple of us were lucky enough to get our tuition’s paid for as well, but no one got paid like these Japanese dudes.

Meanwhile, today the Yen is trading at about 75 to the dollar (79 as of tonight’s intervention).  Gives you some pause doesn’t it?  Screw “Occupy Wall Street” — those fuckers are losing their jobs.  Howabout “Occupy the Dartmouth Green/Harvard Square/U Penn Quad?”  Let’s get some back from these Japanese MBA blighters who can now afford to take at least a dozen hippies out for sushi a night.

That is, if they haven’t left for Cairo on Fall Break already…

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Listen up, something’s going on.  I had — no joke — one of the most prolific weeks of my life last week.  I’ve been working all weekend.  When I get done with this, I’ve a book to mark up.  I may get a sliver of sleep tonight — Dangerous Monsieur le Docteur-style.

What caused everyone and his uncle to decide to pull the trigger last week?  Was it some sort of manic Golden Ratio confluence ?  I don’t know, but I am right now busier than a Jehovah’s Witness at an atheistic pimping conference.   I will try to attend to you, I promise, and please, forward as many questions as you can through the comments section.  One warning — I will be out of the country starting Thursday and through about Tuesday of the following week.  I will try to log on and give you updates as best I can.  No promises, however.

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Here’s the deal.  The dollar is bouncing and I guess we should expect that.   Do we drive back above $76.20 or so, and thereby violate the breakdown of last week?  I really don’t think so, but we should be prepared for volatility here.  I think it’s important to get back into the PM’s here, even if we are in drawback mode.  From a monetary standpoint the world is getting nervous, and that leads me to believe in the commodities, especially silver and gold.

And you know I love miners, and I’ve noted a few.  Can I leave you with a high risk but potentially high reward junior that I’ve liked for some time?   BAA has been percolating for some time, and I thank my Democrat friend Teahouse for the recommendation of its monthly chart… If there’s one thing a longer term chart will give you, it’s perspective.

Here’s what I think is the play on BAA, but feel free to choose any of your favorite under-$5 juniors (AAU for example) for similar analyses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

My best to you all this week.

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Sit, Midas, Stay!
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I was away on business in outer Lobos Lobovia today (somewhere in the untracked wilds of the Midwest), when I received a cell phone text from my dog, Midas (above).   She’s been trained to faithfully call me whenever I’m away from the screen and there’s a significant opportunity in the precious metals… especially the miners.   She’s to do this no matter how busy I am, and mein gott have I been busy.   Still, she has her training… so…

“Roof!” She said, “roof, urf, roof!”   Loosely translated, this meant “buy MVG,” but that’s of little consequence when you could have bought anything in the PM sector today (save maybe PAAS) and you’d have made a crop of coin.  So who says dogs are smart, right?

Anyway, MVG was up 6% including after hours today.  AAU was up 12.7% today.  Guess what wasn’t up so much today?  If you said “BAA” you get a prize.  It was flat most of the day, only to trade up a shade under 3% in after hours.   Can you guess what I’m going to be buying tomorrow, time allowing?

My dog Midas knows.

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Again, my apologies for being away from you, friends.  It’s truly been one of the busiest weeks I’ve had since I was a gruntling analyst fresh out of my white shoe training program.  And shit, it’s only Wednesday.

That news in itself should be somewhat indicative to you.  Money is moving people, on both sides of the balance sheet.

Given this pace, I may not even make it to the weekend.   So if I don’t, let me share my outlook.  I think we should be aware we could be on the cusp of a cataclysmic move in the PM’s.   The dollar has broken that support at $76, and as I type it’s at $75.89 on the index.   Gold has responded, and is above $1700 again.  I think we’re on the way back up, and am cautiously adding to my piles as time allows.

Silver’s been something of a laggard, but I may take advantage of that by adding to my AG and EXK tomorrow.  If my readings are correct, we’ve still a ways to go in those names.   I may even indulge in some AGQ.  Juniors in the gold sector should also be considered.  Grab GDXJ if you don’t want to choose.   Take care, and I will try and drop in on you tomorrow.

Best to you all.

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What Goes On at Jake’s Desk Whilst He’s Away
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What the hell goes on around here while I’m gone?  I mean, a man takes a couple of days to go on a top secret mission, and the place falls to wrack and ruin.   I come back and my desk is all askew… my papers molested, my fine Cuban cigars gummed and caked with salivatory drool.   What in the bloody blazes has been going on in my absence!?

What’s that?  Random Errand Boys stealing up to my desk and attempting to short the silver lode??   My impulsive young man!  Why not just go bounce on the high-tensile strength trampoline with a fistful of extra-sharpened #2 Ticonderoga Pencils??

Honestly, I just don’t understand the tendency toward self-immolation that pervades this site in my absence.  Why is it some many of you “traders” look to shower yourselves with butane and then engage in “roman candle horseplay” of the most ill-advised variety?   This is not an episode of “Jackass,” this is high-thesis investing!

Don’t you like money?

Why take the high risk trade?  For thrills, a la Beavis, et al?

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It’s nonsensical, I tell you.  If there’s one thing my compadre Gary Savage and I agree on… it’s this maxim: NEVER SHORT A BULL MARKET!

How many times must I repeat it, and still, like moths to the flame, Icarus to the sun and an Obama Voter to a Trans Fat protest march, you insist on ruining your fragile portfolios by playing with pinless grenades whilst cavorting in a cranberry bog.  And here you come again, your fingerless hand-stumps held out in silent imprecation, blaming me for your troubles.

Well, it’s true, I am here to help.   But you mustn’t be led astray again.  Remember, fading over-confidence in certain sectors of this site is almost as sure a signal as an overbought dollar.   Here’s the latest on that curmudgeonly currency, btw… note how we are advancing into significant zone of resistance on this weekly:

 

Note that I think the dollar can extend all the way back up to that0 $78.10 area, where both the 61.8% golden ratio fibonacci retrace and the rising trend line offer strong resistance.    So don’t be surprised if we pull back a touch more in both the markets and the commodities in the next couple of days as the dollar reaches that resistance level one more time.

After that re-touch, I predict that we will see one final glorious “plungerooni” in the dollar… down to the lows indicated on the above weekly chart.   At this juncture I expect the typical bull here will get drunk on cheap cherry wine and– in the the throes of sock-tongued inebriation– bury his face in the bosom of some local tavern wench.

This, I would contend, would be an ill-usage of your time.   I would rather suggest taking that period to phase out of your remaining long positions including, sadly, your precious metal miners (at least for the nonce), whilst battening down the hatchest with some choice shorts (like the Skiffles).

In the spirit of caution I of course must warn you:  should we break significantly past that $78 dollar index price marking our resistance, all wagers are off, and the window should be closed all the sooner.

My best to you, my Nuttiest of Professors.

 

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Interesting that it took us only six days for $HUI to move back to support and re-test the lows of the other day.  Interesting as well that the miners held support despite the lower values of both underlying metals (Silver and Gold).

Let’s have a look at that chart again:

Let’s not quibble, here… we again stand on the edge of the knife.  Note how close we are to a 50-200-day EMA cross over. That would not be a good sign for anyone, and we are going to need a heck of a rally to pull those two nearing lovers apart again. RSI continues in our favor– if only moderately so — even as the slow stochastic is pointed firmly in a southerly direction.

I’m not going to vacillate here.  We should be ready to cut our positions to where we are comfortable with another 50 point southerly move in the $HUI. If we break support at $494-5 or so, then I think we will be headed that way.

All that said, today’s postive divergence action in the miners may indicate at least a short term bottoming in the downward action.  Our trusty negative ETF for silver — ZSL — has registerd three “overbought” days in a row on The PPT.  This is unprecedented in the history of The PPT, albeit a relatively short data set.  We also saw the iShares Gold ETF (IAU) show up on the Wall Street Journal’s Buying on Weakness charts, along with both GG and SLW — two very popular miners in gold and silver.  All of these indicate an appetite for miners that may be setting aside the current fluctuations in the underlying metal.

What’s apparent, however, is that we will know very soon what direction we are going in.   We cannot remain at the support level forever.  We shall either fail here, or make another attempt at the 200-day EMA.   The action from there will determine our more intermediate term prospects.

Keep an eye on the Dollar Index.  It looked sickly again today, and if it breaks down through that $75.20 support, we may have “game on” once again in the shiny metal sector.

God bless.

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