[youtube:http://www.youtube.com/watch?v=bpA_5a0miWk 450 300]

Quite possibly the “Best Music/Worst Video” combination of all time

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At the end of the Sir Thomas Malory’s Le Morte d’Arthur, the famed British hero King Arthur is transported back to an enchanted island to recover from his mortal wounds after the Battle of Camman  and perhaps be frozen in time for the next time England might need it’s hero king.

Some say he did come back– as Mick Jagger, or more likely the closer kin — Welshman Tom Jones– but that’s only idle speculation.  The important bit to remember here is that enchanted isle was called “Avalon, the Island of Fortune. ”   Some of you who are on The PPT may think sometimes that all of my picks have gone to a magical island to recover from their mortal wounds.  Perhaps they too will reappear someday when Chess or Rage or le Fly are having a bit of a dry spell.

That too may be idle speculation, but in the meantime, there’s a rare earth metal stock that I’ve been accumulating as of late, now to the tune of 30 kilotons, mostly in the low to mid $2 range.  It is of course called Avalon (AVL), and may finally be revealing itself as the font of good fortune I expected after many a day of bouncing around like a malfeasant pinball.

You’ll note in the chart below, that I marked an original consolidation point upon which I thought AVL might rest for a bit after rallying off it’s lows in October, hitting resistance at the old breakdown point (about $4) in early November, and then making a higher low in late November.

As the stock rallied back above that mid-consolidation line in early December, you will recall that I expected it to base there on the consolidation line.  Well that didn’t happen, at least not for very long, and the stock actually began breaking down again.  It eventually broke down below the “higher low” area all the way to the October lows before rallying once again on strong volume.   Note all that progress in the chart below:

Now the question begs — did we just experience a double bottom in these cursed rare earth metals?  If you look at REE, your answer might surely be “hells yes!”  Checking QRM, however, and you might consider the jury still in the anteroom.

What I can see, however, from the above chart is that we have some pretty helpful guideposts available.  If what we’re seeing on the past two high volume days has been the first two legs of the three white soldier candlestick pattern, we’ll see AVL‘s price burst above that consolidation line that so effectively served as our ceiling today.   Since this is a bullish reversal pattern, it should mean continuation after a bit of consolidation, so we might venture some additional buying in that case.

If however we do not get any follow through on the last two days momentum, we know that the consolidation line is acting as resistance.  If we really do have a double bottom pattern here, then we likely will not see another low below the most recent “DB” lows, and you’ll rather have a “rest,” followed by a final break of the resistance.  Given the volume of the last two days, I think that’s the more likely bet.

As an aside… my “Magnificent 7” 2012 picks, including Pick of the Year UPS, as well as AG, COP, DE, MON, PBR and RGLD, are up 5.9% collectively so far this year, and that’s not including dividends, which on some of those can be a significant sweetner.   MON is in the lead as far as top performers, with 12.5%, followed by AG and PBR with 8.5% each.  My two laggards are UPS and COP, with 0.4% and o.1% returns, respectively, thus far this year.  This does not include either stock’s phat dividends of course.

I’m going to be in and out the rest of the week, meeting with buyers, so I may be scarce, but will endeavor to visit at least in the evenings.   My best to you all.

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Some prefer to chart the mathematical spreads between petroleum jelly and its tasty chemical equal, petroleum margarine (I can’t believe it’s not butter!), all the while poking a charred oak barrel stave into the entrails of a freshly killed hedge mole for further signs of rain or drought.

Me? I’m a man of simpler methodologies and observations. And over the last ten years, there’s rarely been a more able indicator than the following monthly view of this pathetic store of national goods and services:

Note that we’ve recently breached one near term support.  I don’t expect the dollar will be done keening into the night until we reach that second basing area, well below $71.00.

Luckily for us, that means we can still make some lemonade and Jack out of these lemons and white corn.  Despite the opprobrius doomsaying of the terminal top pickers, I’m coming across a number of charts that do NOT look like the now-cliched blowoff top we’re all expecting in the physical commodities, and specifically, the precious metals.   In this case, the miners have become “the tell” after lagging the physical commodities for some weeks now.

Take for example one of my finest stalwart Jacksonians, ANV.  Remember this set-up chart from mere days ago?

Pretty measured flag and pop formation right?   Now look again, mere days later… Does this methodical ascent give you pause to believe we’re pricing ourselvs to oblivion here?  Not me:

I get the same frisson from a number of other names that have pulled back and consolidated while the commodity metals themselves have gone somewhat bonkers.   As a result, these babies have room to roll for at least another goodly ascent to the stratos.  Consider AAU, which I’ve accumulated quite a bit of in these last weeks.  Recall this weekly chart from just before Valentine’s Day?

Now look at what has taken place just these last two days:

Does that chart scream out “exhaustion” to you?  Me neither.    

Last, let’s not forget some metals which aren’t so much “precious” as they are scarce.   Because of that concern, we can see moves and profitability in names like REE and AVL like we’ve seen with some of our precious names.   My favorite of the moment continues to be QSURF, which broke to new highs today like it was hocking silver on the side:

Go get ’em, tigers.  

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[youtube:http://www.youtube.com/watch?v=4cnAfSsk2wc&feature=fvw 450 300]

A Gentleman

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Interviewed above is a man who is arguably one of the best rock and roll musicians of all time, with an indelible legacy that will never be questioned by the more serious students of the genre.   And yet Levon Helm is also indubitably a Southern Gentlemen in the truest sense.  Born to poor cotton farmers in an Arkansas town just west of the Mississippi, he was brought up with impeccable manners, respect for others, and a healthy fear of God.   The phrase “salt of the Earth” is cliched, but applies here if anywhere.

Note the patience, humility and even respect he allows the over-earnest newsdork interviewer?  A teevee journalist who, much like myself and most of my urban Northeastern brethren, reveals a contrasting self-important air of arrogance that far belies his functionary status?   It’s awe-inspiring.

Hell, I’ll say it– Levon is inspiring.    And his example and those of many of his generation is one of the major reasons I wanted my kids to grow up down here.   I wanted them to meet people with the quiet American dignity you see in this clip.  People like my children’s grandparents, and their grandparents’ kin from the Appalachian regions.   Because make no mistake, even in the South, folks like Mr. Helm are slowly becoming a rarity.

Every day, therefore,  I will strive to be more like him– not in talent, of course, but in pursuit of that humilitous honorability — as I believe that a most worthy goal.

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On the trading front, I covered a large number of my silver sold calls today, specifically SLW, PAAS, MVG and EXK, all at 35-55% profits.   I did this mostly because I think we will have a short term rebound here.   Maybe 2-5 days.   I find it hard to believe we are done, however.  

I think the noobs who piled into the PM markets in December still need to be shaken like rats running from the terrier.   What fun is a bull, after all, if it’s weighted down by noobs? 

I kept almost all of my gold hedges, not because I don’t think gold will bounce as well, but because the silvers are more volatile, and I have alloted the gold calls (sold) a bit more rope.   I will likely step out of them tomorrow morning.

The dollar is ramping, and it may return to our old mid $81 resistance levels once again.   I am preparing, and prepared.   You should be as well.

Lastly, if you are looking at the rare earth’s we’ve dabbled in recently, you should think of paring some here.  I expect a larger market correction to be upcoming, and that means the hottest stocks will be the hardest slapped.  Take note on AVL, as well as REE and MCP if you have any (I’ve neither).

Best to you all.

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There’s a lot of excitement on the blogosphere and within our own confines.   Now is not the time to lose one’s head.  EXK is an excellent long term investment.

Its time, however, is not yet come.   The dollar will die, and the precious metals will return ascendant.   However, this bull will shake you like a terrier on a sewer rat.   It has not been and it will not ever be an easy bull.

If you want to pile in on something, drunken sailor style, go with the very tiny market phantom metal stocks like REE or AVL.   Silver and gold are longer in the tooth than Yukon Cornelius.  Good DAY, sir.

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Not my Yanks, that’s for sure
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Drawdown days are a bitch, I don’t care how well hedged you are. Some of my positions took 7 and even 8% haircuts today, but mostly that was the small ones. The bigger ones were hedged, so the bleeding was not entirely egregious. I was almost entirely out of my AGQ with only 400 shares left, so that was not a horrible caining I took even in that double slammer today, given I formerly owned 3k shares.

Word to the wise, the $HUI index is oversold already on the deep dive it did today, so I would not dwell long in the land of shorting this gold bull.  You are far more likely to receive  profitable thrills by waving your junk at a basket filled with hungry ferrets.

Of all the single precious issues out there, I like IVN and GSS to rebound first.  Don’t ask me why, just attend to my Spider Senses.   I also like almost precious REE, if it ever comes back down to earth again.  

In the non-metals world, I still love the Trannies and their strength here, relative to the scaredy cat sell off.   I especially love UPS, and you should look to add to this core holding if it can dip just a little below to it’s 50-day EMA at $66.60 or so:

RGLD is another core hold  you should be looking to glom here.   I will be adding to it, to ANV and to SLW very shortly. 

Watch the dollah!   More tomorrah!

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