My blog has been added to the Tickerspy.com News Feed which means you will start seeing some of my material/articles posted on their site. Their site allows users to create portfolios and track and compare results to other investors and institutions. It is definitely a fun site to search for investment ideas and the best part– it’s free!
Below is a guest article from Adam Hewison of INO.com analyzing gold along with a free video with visual aids and charts (no registration required):
While I recognize that gold is one of the few commodity markets that people are really passionate about; the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, I want to discuss my interpretation of the markets cycle.After spot gold made an all-time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.Here is the dirty little secret about the gold market. It can be a horrible investment and here’s why:Gold first started trading in the 80s while I was on the floor of the Chicago Mercantile Exchange in Chicago as a member of the International Monetary Market, (IMM) which was at that time a division of the CME now the CME Group. When gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? Thats right it was the pros- the guys who made their living trading. As a result, gold hit an all-time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. I dont know what your timeline is, but 25 to 30 years is an awful long time to get even again.So what is really happening in this market?Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.Based on the declining value of world currency against gold you might ask- why isnt gold trading at $2,000 or even $3,000 an ounce? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.Here is what I’ve been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you’re interested in the next big move in the gold market.Before gold can move higher it needs to create what I call an “energy field”. The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80s mentioned earlier.The energy fields I have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.On the on the upside we will also be looking for gold to make a nature cyclic high in October or November of 2011. It’s impossible to predict the future with any degree of accuracy; however when we look at the cycles in gold this reads as a pretty good bet.No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.
A Whole New Brand of Inflation – Jim Jubak
What Does Greece Mean to You? – John Mauldin
I frequently use Fibonacci techniques in my charting along with a few other basic tools. If you have no idea what Fibonacci means, free) to get the full 6 page tutorial:from Elliot Wave International. Register for their (
Below is a list of 10 stocks under $10 trading near 240 day highs as of Friday’s close. While well more than 10 stocks under $10 traded at a 240 day high on Friday, this list was chosen based on their quality/value/growth rating from stockscreen123. Additional criteria were a) over-the-counter stocks were excluded, b) share price was higher than $.50, c) average share volume the past 20 days was over 25,000 shares, and d) no one position would constitute more than 10% of the portfolio’s value when rebalancing. This is a useful criteria for preventing one or two stocks to dominate the portfolio and skew results when less than 10 stocks met the criteria.
This strategy is highly speculative and volatile. One option would be to hedge the strategy by shorting the Russell 2000, using bearish option strategies, or only using the strategy when the Russell 2000 is above a long term moving average. It would also be prudent to use money management or stop loss techniques or more in-depth trading strategies such as one I detailed here. However, an unhedged investment in this strategy dating to March 2001, rebalancing every 4 weeks, and allowing for .5% slippage results in 1500%+ return versus just over 50% return in the Russell 2000. Dividends and commissions are excluded in both return results. The 3 year returns are 41%+ versus a loss of approximately 15% on the Russell 2000 (second image).
Below is the current list of qualifying stocks as well as a return chart for this strategy:
|MDF||Metropolitan Health Networks,||Here||2.98|
|MPAA||Motorcar Parts of America, In||Here||6.56|
|BGCP||BGC Partners, Inc.||Here||6.36|
|ISSI||Integrated Silicon Solution,||Here||9.67|
|OMN||OMNOVA Solutions Inc.||Here||8.01|
|SBH||Sally Beauty Holdings, Inc.||Here||8.95|
|SMOD||SMART Modular Technologies (W||Here||8.14|
|SCI||Service Corporation Internati||Here||9.08|
|FSS||Federal Signal Corporation||Here||9.15|
No Positions in stocks mentioned
This eye-opening free report, which represents more than 10 years of research by Robert Prechter, goes beyond the Fed’s history and government mandate; it digs into the Fed’s real motivations for being the United States’ “lender of last resort.” In this 34-page report, you’ll discover how the Fed’s actions, combined with public outrage, may ultimately lead to its demise, plus much more about its secret activities and how it affects your money.
Rocking-Horse Winner – Bill Gross
Swap Tango: A Derivatives Regulation Dance, Part 2 – Satyajit Das
Wall Street Dead? No, Just Moving – Jim Jubak
I have begun conducting the following screen on a monthly basis. Early results have been positive, especially in a bullish environment like the current one. February’s list is here and January’s here. The screen looks for the following:
January’s list returned 1.39% vs .57% for SPY. February’s list returned a solid 11.78% vs. 6.77% for SPY. The top stock for February’s list was Techwell (TWLL), which returned over 49% in one month. For the full list of stocks and results, please see the right hand side of Scott’s Investments.
With the US equity markets near an 18 month high, this list will be more expansive than in other, less bullish periods since it looks for stocks near 250 day highs. It has tested well historically in bullish periods. Strategies an investor could use to avoid drawdowns would be to either a) abandon this type of strategy entirely when the S&P 500 or another major index is below a long term moving average, or b) hedge positions with a short option strategy on an equity index or ETF like SPY.
No positions in stocks mentioned
|MDF||Metropolitan Health Networks,||Here|
|FCFS||First Cash Financial Services||Here|
|TSCO||Tractor Supply Company||Here|
|JOSB||Jos. A. Bank Clothiers, Inc.||Here|
|DECK||Deckers Outdoor Corporation||Here|
|PTI||Patni Computer Systems Limite||Here|
|MANT||ManTech International Corpora||Here|
|AFAM||Almost Family, Inc.||Here|
|TRLG||True Religion Apparel, Inc.||Here|
|LHCG||LHC Group, Inc.||Here|
|OMPI||Obagi Medical Products, Inc.||Here|
|AEO||American Eagle Outfitters||Here|
|CHSI||Catalyst Health Solutions, In||Here|
|CTRN||Citi Trends, Inc.||Here|
|URBN||Urban Outfitters, Inc.||Here|
|CPLA||Capella Education Company||Here|
|STRA||Strayer Education, Inc.||Here|
|BWLD||Buffalo Wild Wings||Here|
|QCOR||Questcor Pharmaceuticals, Inc||Here|
|HCBK||Hudson City Bancorp, Inc.||Here||4.3||22.03||54.7|
|LLTC||Linear Technology Corporation||Here||3.19||25.16||62.1|
|LPHI||Life Partners Holdings, Inc.||Here||4.43||26.48||13.54|
|OSG||Overseas Shipholding Group In||Here||4.16||20.11||67.16|
|TKC||Turkcell Iletisim Hizmetleri||Here||5.43||32.27||65.2|
As I often do once or twice a week, below are some recent (free) articles I’ve found interesting:
10 to 1 Up Volume Shows Initiation – Tom McClellan
For Now, the Money’s Made in the USA – Jim Jubak
An Update on Valuation and Forward Earnings Assumptions – William Hester
Zombies and Rube Goldberg Machines – John Hussman
Swap Tango: A Derivatives Regulation Dance, Part 1 – Satyajit Das