Riding The Gravy Train

shorting Best Buy, BBY

2012-01-27T02:24:00.004-05:00

We enter Best Buy, ticker BBY, short.

We believe it's a good time for a hedge on the short side, and that Best Buy is a very compelling candidate. We've been watching this stock and following the company and sector for some time now. Here's our thinking on the situation.

Chartists will note obvious long-term downtrends in place, and the 200-day moving average has clearly been an important line of support and resistance. It's currently circa $27.30

We suggest shorting Best Buy, BBY, at current levels or higher. It closed today at $25.02 We suggest covering the position for an effective loss of approximately 14% on closes above $28.50 which is slightly above a level of key resistance in our view. That's the level which proved supportive in April and June of 2011, where the stock broke down from in late July of last year, and where the highs were put in during November and December.

Shorts must factor that Best Buy pays a dividend, which of course short sellers are on the hook for should we hold it through a dividend declaration. On average, that's $0.14 share quarterly. Next dividend declaration should be circa mid-late March. BBY's next earnings announcement is scheduled for March 26th.

The other other obvious technical points of note include the long-term downtrend in RSI (Relative Strength Indicator) peaks, and we find that the RSI has very recently peaked and apparently turned down from that downtrend.

In the MACD (Moving Average Convergence & Divergence) we see that the current levels correspond to long-term peaks and a possible downturn beginning in that indicator too.

The business itself, as well as the overall sector is weak. In general people have spent and borrowed far more than they can afford, and have all the electronic gadgets and large televisions they "need". For several quarters now, Best Buy has been disappointing vs. analyst estimates. We expect that to continue.

On a relative basis, BBY is extremely weak. Since early July it is down 22% while the DJIA is slightly higher and gold is about 15% higher over the same period. Since January of 2008 the DJIA is essentially flat, gold is up 96% and Best Buy is down 46% We believe this relative failure will continue going forward.

Lastly, general equities markets are up signficantly since early October and there is material overhead resistance. By contrast, Best Buy is relatively flat since then, and if & when markets falter we think BBY will drop at least to its December lows cirica $23 and over time we'd frankly not be at all surprised to see the stock below $10.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the positions we do, or for mentioning any positions or companies in this blog. If we hold existing positions we divulge the fact.

This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, them, they, us and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only and not to be taken seriously in any way. Just like "real" analyst proclamations. Thank you.

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VIX calls opened

2012-01-26T15:11:00.002-05:00

Per the last update, with the DJIA above 12740 this morning we did buy VIX $25 April calls at $3.00

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

selling GS, Goldman Sachs +16% in two weeks

2012-01-20T13:18:00.003-05:00

GS is up over 16% from our entry the morning of January 6th, just two weeks ago.

Brilliant, so we'll book it as markets enter an overbought condition with material overhead resistance not much further above.

A compelling bet to us currently is the VIX ("volatility index") $25 April calls, which last traded at $3.90 If the DJIA gets above 12740 we'll pick up a bunch.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

long GS, Goldman Sachs

2012-01-06T00:46:00.002-05:00

For our first trade of 2012, we go long GS.

Based on a look at the stock's chart, we've reasons to believe support below $90 is strong and that a protracted upward move is due. If that happens, it'd almost certainly correspond with general equity markets worldwide moving higher.

We're currently hedged for market downside via shorts in gold, silver, and China, as well as via a levered long position in the U.S. dollar via UUP. We've got TBT, which usually goes up if the market does, but we could use another long position and that'll be Goldman Sachs which last traded at $94.53

We'll stop out on any close below $84 which is a level not seen since early 2009. The stock's worst closes in 2011 were $87.70 in December and $87.89 in November, so it'd take serious weakness to close below $84. The lowest intraday trade in 2011 was $84.27

We believe GS is due for a large and protracted move within the next few weeks, hopefully in our favor, but in case this becomes a long-term position that continues to generally move sideways as the stock has for months now, we note that based on the current price of the stock GS's quarterly $0.35 dividend equals roughly 1.5% per annum.

Wildcard : GS announces its earnings on January 18th, at which point things could get volatile for good or ill. This is another catalyst, perhaps "the" catalyst, for a big near-term move.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

Gold & Silver

2012-01-01T17:46:00.002-05:00

Eight months ago, equties hit their highs as did many commodities.

Since then, gold is dead flat and dropping fast. Silver, the so-called "poor man's gold", is down over 40%.

Equities in North America are down less than 5% over the past 8 months, and the U.S. dollar is considerably higher.

Over the past six months, the dollar and equities were quite profitable long holdings while both gold and silver were relatively big losers.

The recent trend, to us, is self-evident and we believe will continue throughout the New Year.

We go into 2012 very short, already very profitably, gold and silver. Going forward we're much more likely to see ZSL over $50 than silver. Gold should prove more stable, but still drop.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

2012 Outlook

2011-12-30T01:37:00.003-05:00

1. We wish a very happy, healthy and prosperous 2012 to you.

2. We should continue to do well in the new year with our core positions and ideas ; short China, short gold and silver, long U.S. dollars. Short Brazil looks good to us too, but we do not yet have a re-entry on that position.

3. At some point in the future, perhaps in 2012, a long-term trend change in U.S. interest rates will happen and TBT will rocket. We diarized an initial entry in TBT in early August, too early and at too high a price. At the time we wrote that "we'd not be surprised to see it as low as $20 but if it gets there we'll possibly buy more." TBT has spent the last three months between $17.50 and $23 but we've not added to our position as we fear it may go much lower still. Those without a position may wish to speculate on an initial or partial entry at current prices.

4. We're neutral on U.S. equites at present. Our macro market calls have generally been excellent in this blog, and in our personal accounts we normally trade in accordance with those views. Equities at present are extremely overvalued on a fundamental and logical level, and a massive tanking in equities would be nice in the sense that it'd punish the complacent and provide sane pricing for the prudent, but that doesn't mean a massive rally couldn't currently be underway which wipes out the bears, thus we trade based on technical and trend considerations rather than fundamentals. Time will tell, and we'll try to trade the swings successfully along the way. When we've a firm opinion on upcoming market direction, we'll post it.

5. We believe fear over the euro situation is mostly mass hysteria, and it'd be very good for western economies in the long run if there were to be an end to the common currency with banks and bondholders taking their deserved lumps. For once we'd have truly "free markets" but instead we'll probably suffer continued "extend and pretend" jawboning and policies, thus perhaps a continuation of the past eleven months of wildly-swinging markets.

6. An observation : the Dow Jones Industrial Average is currently at the same level as it was mid-February, early and late March, mid-April, late May, mid-June, mid-July, early August, late October, mid-November and early December.

7. Early in a new calendar year markets will often establish a tend and continue from there in the same direction. Roughly 12250 in the DJIA has been a good over/under line since February and might continue to be, meaning for the long term we should on net think bullishly above that line and bearishly below.

8. Another good litmus test is Goldman Sachs (GS) below $87.50 being very bearish for the market overall, and below $100 mildly bearish. Bullish above $100.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

selling FXP +24%, China Manufacturing Drops

2011-11-22T22:51:00.003-05:00

More good news for our two levered short positions on China.

Click this text to read "China Manufacturing Shows Contraction".

We'll try to sell the most recent entry for no less than $34.84 which is 24% higher than our entry just two weeks ago. For more on that, see the posting below in this blog dated November 09.

When we diarized the trade, FXP was at $26.07 but when markets next opened it was unfortunately much higher at $28.10 so that's our entry price on this 2nd position.

We'd not want to be without a China short position, but markets may be due for a bounce so we'll book this big, fast gain and possibly re-enter this 2nd China short position later.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

"60- Minutes" video on Government Insider Trading

2011-11-18T00:13:00.002-05:00

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

China's Economy Crashing ?

2011-11-16T20:10:00.001-05:00

China’s Economy on the Brink of Collapse

China’s economy is on a dangerous track and may soon experience a crisis worse than the European debt crisis, Chinese economists say.

Since the Chinese regime implemented a series of “tightening” policies to curb the real estate market, home prices have been falling across China. Meanwhile, land sales–the main source of local governments’ revenues–have also dropped sharply.

In late October, several developers in Shanghai abruptly lowered home prices in new developments by 20 to 40 percent. Soon after, price cutting spread to Beijing, Hangzhou and Ningbo in Zhejiang Province, and Nanjing in Jiangsu Province. Recent homebuyers, unhappy about the sudden devaluation of their investments, staged protests with many demanding refunds.

End of Huge Profits

“The price cuts in Shanghai are just the beginning, the worst time will be the first season of next year,” an analyst at Centaline China Property Research in Shanghai told The Epoch Times. He added that the era of huge real estate profits will no longer exist in the next decade.

Economist Xie Guozhong recently stated at different occasions: “If China continues its tight monetary policy, many real estate developers will go bankrupt,” and “a 50 percent drop in property values will be the norm in China in the future.”

The large glut of unsold housing can only be digested by the market when prices drop to a level that is affordable to first time home buyers–which means there will be a significant drop in prices, Xie said.

Land Sales Cooling

Government land sales have also cooled off across the country, and local governments’ income from land sales has dropped sharply as a result. Zhuhai City in Guangdong Province serves as an example.

Southern Metropolis Daily said, data published by Zhuhai City’s Financial Bureau shows that land transfer fees in the first three quarters of this year have fallen significantly. Previously estimated at 8.8 billion yuan (US$1.4 billion), the Financial Bureau has adjusted them down to 5 billion yuan (US$788.65 million), a 3 billion yuan (US$473.2 million) reduction.

According to another analysis by First Financial Daily, revenues from land sales in Zhuhai City for the first 10 months of 2010 were 20.39 billion yuan (US$3.22 billion), which accounted for 24 percent of the city’s GDP, and a 14 fold increase from the previous year. Land revenue for the first 10 months of 2011, by contrast, are barely half that amount.

On Nov. 1, the city started implementing a new restriction on home purchases and prices. Many developers see this as a trigger for a new wave of real estate prices declining.

Financial Crisis Imminent

Cheng Xiaonong, an economist based in the U.S., told The Epoch Times that a 30 percent drop in home prices in a short period of time is a sign that a financial crisis is about to hit China.

“When the housing bubble bursts and developers go bankrupt, banks will grapple with high default rates and bad debt, resulting in a financial crisis in the banking system,” Cheng said.

Cheng said within a year China could experience a crisis worse than the European debt crisis. “Actually, a financial crisis has already erupted in China,” he said.

Chen Zhifei, an economics professor at New York’s City University told New Tang Dynasty TV that the rapid drop in both home and land sales will lead to drastic reductions in local governments’ land revenues, and local governments will make up the loss through taxation.

Such taxation would lead to mass protests and social instability as was seen recently in Huzhou of eastern China’s Zhejiang Province where a mass protest against taxation attracted worldwide attention, Chen said.

Economist and author He Qinglian told The Epoch Times that China’s real estate bubble should have burst in 2008. But at that time the Chinese regime put out a 4 trillion yuan (US$630.92 billion) stimulus package to save the economy, and half of it went to the real estate market and related fields, delaying the bursting of the bubble.

“The bursting of the bubble at the present time, its damage and negative impact on China’s economy, is a lot harder for the Chinese regime to deal with now,” Ms. He said.

Bursting the bubble gives China’s economy a chance to adjust the economic structure, and local governments should tighten their belts, since land revenues have dropped, Ms. He said.

“Nevertheless, they will increase taxes to raise their income, and China’s economy therefore will never be on the right track,” she added.

Ms. He said China’s economic development is a false prosperity achieved at the cost of damaging the environment and natural resources. Being the world’s factory, China doesn’t have its own brand name products. In addition China heavily relies on imports for its energy needs and has few resources to export except rare earth metals. Furthermore, with the largest peasant population in the world, China is unable to maintain self-sufficiency in food production.

Regarding some economists’ comments that the collapse of the real estate market will result in a “hard landing” for China’s economy, He said: “China’s economy has never taken off, so there is no such thing as a landing. Actually, China’s economy is more like an out-of-control high speed train that could derail at anytime.”

Source : Epoch Times

Professor of Finance at Chinese University of Hong Kong says Chinese regime on brink of bankruptcy

China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.

In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said.

Lang’s assessment that the regime is bankrupt was based on five conjectures.

Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.

Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.

Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.

Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).

Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.

Several commentators have expressed broad agreement with Lang’s analysis.

Professor Frank Xie at the University of South Carolina, Aiken, said that the idea of China going bankrupt isn’t far fetched. Major construction projects have helped inflate the GDP, he says. “On the surface, it is a big number, but inflation is even higher. So in reality, China’s economy is in recession.”

Further, Xie said that official figures shouldn’t be relied on. The regime’s vice premier, Li Keqiang for example, admitted to a U.S. diplomat that he doesn’t believe the statistics produced by lower-level officials, and when he was the governor of Liaoning Province “had to personally see the hard data.”

Cheng Xiaonong, an economist and former aide to ousted Party leader Zhao Ziyang, said that high praise of the “China model” is often made on the basis of the high-visibility construction projects, a big GDP, and much money in foreign reserves. “They pay little attention to things such as whether people’s basic rights are guaranteed, or their living standard has improved or not,” he said.

Behind the fiat control of the economy, which can have the appearance of being efficient, there is enormous waste and corruption, Cheng said. It means that little spending is done on education, welfare, the health system, etc.

Cheng says that for the last decade the Chinese regime has accumulated its wealth primarily by promoting real estate development, buying urban and suburban residential properties at low prices (or simply taking them), and selling them to developers at high prices.

According to Cheng, the goals of regime officials (to enrich themselves and increase their power) are in direct conflict with those of the people–so social injustice expands, and economic propaganda meant to portray the situation as otherwise prevails.

Few scholars inside the country dare to speak as Lang has, Cheng said. And that’s probably because he has a professorship in Hong Kong.

Source : Epoch Times

Lending Crisis Stokes Fears of ‘China Economic Model’ Collapse

China’s distorted economic model is to blame for the lending crisis faced by privately owned businesses, that has hit several Chinese cities, including the wealthy city of Ordos, and Wenzhou, the eastern entrepreneurial hub, according to leading Chinese economists.

Dubbed as Dubai of China, Ordos, in Inner Mongolia, is one of the wealthiest cities in all of China, where private business has flourished. Over 7,000 residents own assets worth more than 100 million yuan (US$15.67 million), according to a report by the Ministry of Housing and Urban-Rural Development. More than 80 percent of property development in Ordos has been financed by private lending, according to the report.

However, since July at least one business owner in Ordos has committed suicide and several have fled after failing to resolve their debts owed to private loan sharks.

Mr. Wang, a local businessman, told The Epoch Times that the area’s rich natural resources have created many nouveau riche who wanted to make money with money, which led to the booming usury business there.

Many people were engaged in speculative real estate investments a few years ago, according to Ms. Song, an Ordos resident. But recently almost half of Ordos’ real estate businesses have closed or are facing closure, a real estate agent told The Epoch Times.

“Many real estate companies in Ordos have been facing disruption of their capital chain, which will get worst by the end of the year,” financial analyst Li Huizhong, who investigated private capital in Ordos, told China’s National Business Daily.

Wenzhou Business Shut-Downs

In China’s eastern entrepreneurial hub of Wenzhou, Zhejiang Province, a thriving underground lending market has helped keep small and medium-sized enterprises (SMEs) going for years.

But with the economy slowing down in recent months, at least 90 business owners have disappeared, leaving behind mounting debts and their companies completely or partially shut down. Three business owners were reported to have attempted suicide.

A lot of money from private lenders has also gone into the real estate market, Zhou Dewen, chairman of Wenzhou’s Small and Medium Enterprise Development and Promotion (SMEDP) told Zheshang Magazine. Only 35 percent was invested in businesses, according to a report by the Central Bank’s branch in Wenzhou.

Characterized by low cost and low profit margins, the Wenzhou model has been challenged by increased cost of production, labor, and land. Consequently, the average profit margin for Wenzhou’s SMEs has dropped to between three and five percent, Zhou told the Guangzhou Daily.

Unfair Economic Environment

Bank loans are hard to come by. Nearly 90 percent of SMEs in Wenzhou could not obtain loans from banks, according to a recent report by Wenzhou’s SMEDP. Private businesses that do get a bank loan have to pay higher interest rates and higher loan processing fees than state-owned enterprises (SOEs).

Private businesses are also deprived the right to enter high-profit sectors monopolized by SOEs. Real estate is one of the few high-profit sectors open to private businesses, and that’s why so much hot money in Wenzhou and Ordos has gone into the real estate market.

The increased money tightening, and a series of measures to curb the real estate market since early 2011, eventually led to a private lending crisis.

After visiting Wenzhou on Oct. 5, Premier Wen Jiabao urged financial support for SMEs and recommended a crackdown on the private high-interest lending market. But private lending has helped many private businesses stay in business, and a crackdown will only aggravate the problem, according to Zhou Bin, chief economic editor of the 21st Century Business Herald.

China has more than 10 million privately owned SMEs, accounting for 99 percent of enterprises, generating 60 percent of GDP, 50 percent of tax revenues, and 80 percent of job opportunities, according to data released by the Department of Medium & Small Enterprises at the Ministry of Industry and Information Technology.

Hu Xindou, an economics professor at the Beijing Institute of Technology says the Chinese regime’s monopolistic system has distorted the economy by establishing a discriminative and unfair economic environment that is dominated by bureaucracy and power.

“China’s distorted economy is responsible for creating the current financial crisis in Wenzhou, Ordos, and other areas of China,” Hu told Private and Entrepreneur Magazine.

According to Hu and several other analysts, the Chinese regime needs to be serious about building an open economy that gives equal access and opportunities to all businesses, including SMEs and SOEs, that allows private banks to operate, and that implements market-based interest rates instead of the rigid state-controlled interest rates.

According to the Business Herald’s Zhou Bin, the Wenzhou model is the epitome of the China economic model. Many people are worried that the collapse of the Wenzhou model may lead to the collapse of the China economic model.

Source : Epoch Times

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

FXP 2nd position repurchase

2011-11-09T01:38:00.003-05:00

Click this text for background info on this trade idea.

FXP went another $1.52 higher before dropping over 20% during the subsequent three weeks. Unfortunately we didn't repurchase at that time, as it then rallied over 70% in a month!

Then it dropped 50% in five weeks, which not only clearly illustrates the big and fast profit AND loss potential in levered instruments but brings us to today.

The fundamental and logical reasons to be bearish China are not only intact but mounting. The technical basis for further shorting is at best dubious at present, but such is the case always at inflection points.

We may or may not be at such an inflection point now, however in any case we're repurchasing that 2nd effective China short positon represented by FXP which closed today at $26.07 That is roughly $1.50 above its all-time low hit in late April of this year. A slightly higher low was also hit last November, in early April, and in late May, so as a technical support level the $25 area is very well-defined and a significant break below that area would perhaps cause us to become neutral for awhile pending a better technical setup in the future. Time will tell.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, us, they, them, and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only and not to be taken seriously in any way. Thank you.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

ZSL update, yet another.

2011-09-28T18:03:00.006-04:00

On Monday afternoon we wrote of silver that "We won't chase these bounces, given they are not usually of material height or duration. However if this one is, we'll be looking to buy our half-sale of ZSL back somewhere below $15."

We received correspondence today about this. Yes, we did buy back some ZSL below $15 and yes it is already over 15% higher only a day later, and finally yes we did book a profit on some of that repurchased position today and may do so on the rest of it tomorrow, thus getting back to 1/2 the original holding.

We do not have an interest in diarizing intra-day trades, nor do we believe readers of this blog have an interest in reading same, thus will not post when we make that move. We will post, after market hours as is our style, before we sell out the rest of the original position. Diarized entries we'll always post the result of, if and when we close the position. Entries suggested as general commentary we will not necessarily update even if we take positions.

We're pleased that some readers are doing so well shorting silver and have written to thank us for the idea, however the credit for the move is all yours as is the onus to act independently of anything we do or write.

We've been asked why we hold only half the silver short now, if we feel certain silver will go much lower? We're just being prudent, as the half-sale at Monday's open will attest. Also we're short gold, too.

In this blog mid-February we posted the following :

"selling EMX +76 % and CGP +457 % on 2nd half

Our absence has been partly due to our lack of interest in the current market rally (we'll prefer to short it when it's over, which we believe will be soon), and partly due to spending time developing a remarkable gold price indicator which we've been using to profit on swings up and down in gold over the past while. More on that in an upcoming update."

Here's the "more on that in an upcoming update". Again, this is a link to a site at which we share ideas & commentary with the site's authors and we contribute to their premium advisory. We also allow them to publish the signals given by our gold pricing indicator.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, them, and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only and not to be taken seriously in any way. Thank you.

ZSL update and silver shorting strategy going forward.

2011-09-26T14:27:00.004-04:00

Corrected the scoring on the ZSL half-sale in the original posting below. +62% not the +40% expected. How sweet it is.

Lovely seeing the panic selling in Europe this morning, with silver falling another 15-odd percent before bouncing a bit today. We won't chase these bounces, given they are not usually of material height or duration. However if this one is, we'll be looking to buy our half-sale of ZSL back somewhere below $15.

We feel completely certain that the silver bull market is over for a very long time to come, and quite possibly gold has topped too. Please see the link in the posting immediately below for more.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

selling 1/2 ZSL +62%

2011-09-24T16:48:00.010-04:00

At Friday's close ZSL was up 40% from our call. Not bad for 6 weeks, and another big winner this year. We'll now sell half the position, perhaps repurchasing that half-position later if silver makes a big bounce. [EDIT : On Monday's open when we affected our half-sale, ZSL was +62% from our call.]

Those who bought the ZSL options we mentioned were rewarded for their risk, up hundreds of percent. See the entry immediately below this one for that call. Also the options we mentioned for TNA were up as much as 80% later that week.

Regarding the August 8th blog entry, TBT has been a bit of a disaster so far. We said that we'd not be surprised to see it as low as $20 and if so we'd possibly buy more. We've been asked if we're buying more. The answer is "not yet", though if anyone has not bought any then now might be good time.

Why so? Bond shorters have been out in force for 2 years, and all have been crushed so short covering is no longer likely to add to buying pressure. All those calling for hyperinflation have been dead wrong, as we expected. Rather, the deflation we've long written about is entrenched but must end someday. However that day could still be years away.

The Fed's recent "Operation Twist" announcement seems to have resulted in 10-year bond rates going up, which is good for our short thesis. Irony? Possibly some Fed front-runners taking profits so the rise in bonds could well resume shortly especially if markets continue to drop. That'd be bad for our short.

However with so much bad news widely known and so many people frightened about global economic collapse, maybe this is the bottom for equities and interest rates. As of yet though, there are no such signals in place which is why we're in no hurry to add to a losing position - it could become a bigger loser as some do. Eventually though, we feel very confident that we'll come out ahead on it.

This article & charts should be of great interest to this blog's readers, and to anyone with an interest in gold or silver.

We occasionally share ideas & commentary with the site's authors, we contribute to their premium advisory, and in general are similarly contrarian speculators with a disdain for what passes as popular economic and market commentary.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

buying ZSL, effectively shorting silver

2011-08-11T04:25:00.006-04:00

It's a great time to short silver. When markets rise silver has been going down, and a big market bounce is arguably due. When markets drop, silver has been dropping or at best staying steady.

Gold is up nearly $200 this month so far, as a "flight to safety" which ironically will eventually prove to be anything but safe, as is everything else that goes parabolic including silver when it was at $50 at the beginning of May. Gold might not be at a top yet, but silver was in early May when it crashed and now its bounce seems over and the next leg down begun.

It is extremely rare for something to break down as badly as silver did this year and then recover to new highs. If the recent market panic and massive spike in gold can't lift silver to new highs, probably nothing will. Based on that, while laughing off the many fantasies that abound about silver being used as money or massive conspiratorial short positions due to unwind any day thus spiking the price to $100 or higher, we're of the very unpopular belief that silver below $30 is not far off.

When we make the most unpopular trades is when we realize the biggest gains, and we've done that very consistently over time in this blog. Here's hoping this will be another one of those big counter-trend wins.

ZSL is a levered inverse ETF which goes up in double proportion to drops in SLV, the silver ETF. It closed Wednesday at $13.44 We're going long. Downside risk is probably another 10-15% while the upside is 50-100% or more. A reasonable risk/reward in our view.

Very aggressive traders may consider November calls on ZSL at $20 or $25 strikes, last offered at $1.20 and $0.65 respectively. We're comfortable with the already high risk and profit potential in the double-levered ETF.

Options speculators might also consider $50 or $55 August calls on TNA, if wishing to profit from any big market bounce that could occur imminently. August calls on those strikes were offered Wednesday at $1.00 and $0.35 respectively.

We'll probably play the options if there's at least one more big downward move intraday in the equities markets.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

selling FXP +32%, BZQ +45% & buying TBT

2011-08-08T18:12:00.005-04:00

A quick update on past entries diarzied here.

FXP is now 32% higher than our 2nd entry in late May. It'll at most go up another couple dollars, we believe, before a material correction, so we're selling that 2nd portion while keeping the original position which is at roughly break-even from our entry in December 2009.

BZQ is up 45% from our entry in late May. It'll probably go much higher in time but for now we'll step aside and book these gains.

We'll go long TBT, an ETF which is double-inverse to the 20-year U.S. Treasury Bond. It closed today at $26.62 and we'd not be surprised to see it as low as $20 but if it gets there we'll possibly buy more. For now we'll just hold this position awhile and if we're blessed with a quick price appreciation we'd book it and update the blog.

Those who shorted Apple on our suggestion were stopped out for a loss of just under 6% and those who hedged it with a market long as we suggested in the link below came out well ahead on the pair trade as BGU was up 22% when the Apple short was stopped.

No other changes, and certainly no surprises with respect to the recent market action per this commentary published just days after the apparent market high for the year : http://ridingthegravytrain.blogspot.com/2011/05/goldman-sachs-share-price-signals.html

A follow-up can be read here : http://ridingthegravytrain.blogspot.com/2011/06/update-fxp-bzq-qid-faz-aapl-hao.html Indeed a market rally began immediately after we predicted it, which turned out to be one of the biggest weekly gains in many years.

Early in the last week of July, subscribers to our paid advisory were given a short-term sell signal which remains in effect today. By the beginning of this month even our conservative readers were signalled to be short or hedging longs, and anyone reading this knows what a lucky call that seems to have been. We refer to these as "signals" because we use a proprietary indicator that does a reliable job of catching market turns in different time frames. Speculators follow the short-term signals, while investors consider the longer-term signals.

At this stage our thinking is that gold and especially silver are marking tops of some duration, as are bonds, while equities are still overvalued but due for a big bounce. We remain very bullish the U.S. dollar, though we'll change our minds on material weakness and if so we'd sell out of our May 5th entry into UUP.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

Update - FXP, BZQ, QID, FAZ, AAPL, HAO, UUP

2011-06-18T17:17:00.006-04:00

Herein we update recent trade suggestions.

Those who followed our lead in purchasing FXP on May 24th or the week after were up between 4.5% and 14.5% at Friday's close. Markets continue to look weak, but a rally is due so it may be prudent for some to book these profits. We will not close the position at this time.

FAZ is now over 13% higher, QID 14% higher, and BZQ at the same level as when we suggested these as good speculations in our post dated May 21 entitled "Goldman Sachs Share Price Signals Danger."

Perhaps ironically, Goldman Sach's share price is slightly higher now than it was then, which in part is why we suspect a rally imminently.

AAPL, which we like as a short, is over 3% lower and showing relative weakness to the overall market. It closed Friday below its key 200-day moving average, and down for the calendar year thus far. The NASDAQ Composite is also below its 200-day moving average and is down for the calendar year.

We'd keep the APPL short while hedging it with a long bet on the overall market, via purchase of BGU and holding it on closes above 69.20 BGU closed Friday at 73.51

HAO, trading on the Canadian Venture Exchange, recently hit a high more than 40% above our April entry. We're still holding.

UUP is also doing well for us. We're still holding, and still very bullish on the US Dollar.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

Nothing New

2011-06-02T01:34:00.004-04:00

Those with equity long-term in AAPL Apple, GOOG Google, LNKD Linkedin, Facebook, Groupon, etc. are advised to keep this in mind :

Click here for an article regarding News Corp's purchase of MySpace for $580 million a few years ago, and current attempt to sell it for $100 million.

We can't help but to also think of MP3.com and Napster.

Who? What?

Exactly.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

adding FXP

2011-05-24T22:00:00.007-04:00

In this post dated December 04 2009 we announced buying FXP, the ProShares UltraShort FTSE/Xinhua China 25 ETF. Adjusted for subsequent splits, that entry price is $37.30

We wrote : "Its downtrend does not yet appear to be over, from a technical perspective, so in case it drops significantly we're planning to add to our holdings rather than stop out. Our thinking may change on that, but for now we feel increasingly certain that a turn in the global markets is imminent."

Global markets did turn lower and just 6 weeks later FXP was 43% higher. However we're looking for even bigger gains by shorting China, so we took no action and by summer 2009 that position was in the red as markets reversed again. Shame.

The good news is that now the 2-year downtrend is finally broken for FXP (also true of BZQ, another effective short we favor), so we add to our FXP holdings and if it should close below $24 we'll sell all of our accumulated FXP holdings.

FXP closed today at $27.90

BZQ closed at $16.26

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

Goldman Sachs Share Price Signals Danger

2011-05-21T16:30:00.005-04:00

So far this year general equities markets have been going up without the financial sector participating in the rally. "So far."

Friday the financials began to fall faster. Click this text for a link to the details.

Below are two charts of Goldman Sachs, the first for the year-to-date and the 2nd is a 4-year chart (since the bull market top in 2007). The other financials have similar charts.

Typically this sector leads, or at the very least provides a great deal of support, for general equities markets and investment sentiment in general. These charts do not illustrate supportive price action or positive sentiment.

Possibly it doesn't matter and it's different this time. Possibly Goldman's chart will make a "double-bottom" pattern around this price level, relating to its lows of last summer. Possibly, and we think probably, not.

Given the silver collapse in progress and global markets being very overdue for some correction if not a bear market resumption, those going unhedged and unconcerned in light of these very bearish signals do so at great risk we believe.

For a little over 2 years now any monkey could point to almost any stock ticker or commodity and pick something that would multiply the money invested. Some would argue that's a good thing. What is inarguable is that all good things come to an end.

We like AAPL short, last at $335.22 and bidding to cover on any close above $356

Those more aggressive may consider inverse levered ETF products such as FAZ, QID and BZQ. Of course the great volatility and thus inherent risk in these must be factored, and prudent stops & exit strategies must be determined and respected.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

buying UUP

2011-05-05T03:34:00.005-04:00

We've done well with currency speculations in this blog. We recommended UUP/DRR in Nov. '09 which in 6 months returned 16% and 59% respectively, then URR in June '10 which returned 23% in 2 months.

Today we go against virtually everyone, as usual, in buying UUP the ProShares Double-Long US dollar Index ETF. The standard caveats regarding levered instruments apply of course. No stop, as of yet.

For the next while we expect, generally speaking, to see markets and precious metals going down and the US dollar going up.

Those hoping to snag cheap silver as a long-term holding will wish to wait a few weeks and seek a price in the mid-low $20's. Aggressive speculators may try something in the mid-$30's, possibly as early as today and with an advanced understanding of the concept of tight stops and re-buying if need be. Those who bought recently in the $40's, especially the high-$40's, are completely reckless and extremely unlikely to ever make money via speculating. Readers of our paid service were warned stridently about an imminent silver crash late last week, at the exact top. The silver futures contact has had its biggest 3-day decline in 28 years, so please let's not pretend this is "a dip".

Below is an excellent chart of HAO (see last update, this blog) which we are pleased to share with you :

Will the current market and precious metal swoon affect HAO? Possibly, but all that really matters is the chart. It is a red flag that this stock did not rally late last year when most Venture Exchange stocks were on fire, but currently HAO is drilling and hopefully promoting as their situation is compelling. They might even find something significant, though the chances of that, as with all such ventures, are near-zero. Perhaps precious metals will double again in the next few weeks, taking related stocks up with them, though the chances of that are less than near-zero. Allocate accordingly as always, or just keep an eye on it for fun. We're in with a large position.

We receive no remuneration, encouragement or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks, trading ideas & strategies, or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

HAO Habanero Resources, buying

2011-04-12T17:21:00.004-04:00

HAO looks very worthy of accumulating below $0.12 in hopes of exponential gains if or when it breaks above its long-term downtrend, shown in red in the 3-year chart below.

Here is the 10-year chart, which shows the stock's possible explosive potential and the volume study reveals a similar accumulation before the last run-up as it is exhibiting currently.

In our experience something like this is best held until it booms or completely busts. Risk the 100% loss and consider it like a cheap option contract without expiry date. Otherwise selling it on closes below the black uptrend line is a reasonable exit strategy.

The last penny stock we found that looked this good to us was CGP, Cornerstone Capital Resources which we bought pet this blog at its low and sold in mid-February days from its top for a gain of over 450% on the 2nd half of our holdings. We can only hope for even a fraction of that good fortune with Habanero Resources, but we must allocate prudently in preparation for the worst.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

selling EMX +76 % and CGP +457 % on 2nd half

2011-02-14T05:58:00.006-05:00

Our absence has been partly due to our lack of interest in the current market rally (we'll prefer to short it when it's over, which we believe will be soon), and partly due to spending time developing a remarkable gold price indicator which we've been using to profit on swings up and down in gold over the past while. More on that in an upcoming update.

As is the case with equities, gold is currently grossly overbought, overhyped, and overbelieved. Consequently, action has been light and movements erratic in the venture "penny stock" markets since mid-December, roughly when gold topped out on the most recently rally move. This could be a top of significant duration with a material correction underway.

We view it as an ideal time to clear out some old positions.

We bought EMX, Eurasian Minerals, per this blog in late January of 2008. Now it's 3 years later and the stock is 76% higher. We'll sell out of our holdings to book that gain.

We bought CGP, Cornerstone Capital Resources, per this blog in late October 2009. We sold the first half a couple of weeks later for a gain of 52% on that portion of our holdings. The stock dropped after that sale and did nothing much until a year later, and finally over the past two months it has rallied massively. This sale makes for a gain of 457% on our remaining shares.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

selling VZ covered calls, selling URR +23%

2010-08-03T14:25:00.006-04:00

Via past covered call sales and the dividends realized on our Verizon shares we've reduced our effective price to $28.50

We now again sell covered calls, the October 2010 $27 strike which was last bid at $2.71 and last traded at $2.68

URR is up 23% since our buy in early June (see below post dated June 08), at a time when the world was bearish on the Euro. We're seeing increasing calls for the Euro to resume falling, which probably means it'll go much higher. However 23% in less than 2 months on top of the gains made previously on being bullish the US Dollar while the world was bearish, is too good not to book so we seek to exit this position in the near term and become currency neutral for awhile.

Note that gold has broken an 18-month uptrend, as seen in the 1st chart below. The incessant hype and rationalizing can't keep the price up, and it is widely reported that several central banks are now buying gold which is a strong contrarian indicator.

At some time in the future, the lower uptrend illustrated in the 2nd chart below will be met, and it seems very likely this will be at a much lower level than the current price. Readers of our newsletter service (details below, in the post dated June 08) have been been double-short gold since July 13.

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

selling UUP +16% in 6 months (DRR up 59%), buying URR, gold & silver chart & commentary updates

2010-06-08T22:58:00.023-04:00

Six months since our last entry. The markets have gone lower, as we'd repeatedly warned would happen, and have taken a very volatile path in getting there. Gold has essentially gone sideways, and it too has taken the scenic route, moving exactly as we'd predicted both up and down. We revise our gold chart today with thanks to those who have written to ask for an update.

We were bearish China while most everyone else were raging bulls. See our December 4th 2009 posting immediately below and correlate it to these charts of the Hang Seng and of our recommendation FXP.

On December 4th we also suggested the purchase of UUP, which is a bullish position on the US Dollar. At the time US Dollar sentiment was totally bearish and we were the only commentators advising to go long the US Dollar and short the Euro (see commentary on DRR the Double Short Euro ETN dated November 18th). Readers who check the charts for those tickers find that we called the exact reversal points.

Now we're selling UUP for a gain of roughly 16%. Anyone in DRR should also sell we believe. It is up 59% since our mention.

Being short China and long the USD have been arguably the best and most comfortable positions to be in the past 6 months. Now these trades are very crowded, and as always we are nervous when the masses are on the same side of a trade as us, thus we seek to book our profits.

We remain longer-term US Dollar bulls and Euro bears, but believe an intermediate-term reversal in both is imminent. Thus we speculate via the purchase of URR, the Double Long Euro ETN which last traded at $23.14 We'll sell to close the position after any close below $22 and a following morning's open below that same $22 level.

We remain longer-term China stock market bears and continue to hold FXP as a hedge.

As for gold and silver, here is the silver 5-year chart and trends as posted in this blog over 6 months ago.

Silver today.

As is obvious, silver has not confirmed gold's new highs. Far from it. Also obvious is that silver remains in an upwards bearish wedge, and below a significant level of past resistance (in red, horizontal). It looks as though at best silver will rise to around $20 ~ $22 before a very big and protracted drop.

Gold 5-year chart and trends with Elliot Wave Labelling, as posted in this blog 6 months ago.

When we posted the above gold chart, we wrote that gold was likely to pull back to circa $1050 before rallying to new highs. That is exactly what happened, and as seen in the chart below the moves have exactly adhered to the trendlines we'd drawn.

Gold today.

Note that gold in the $1250 ~ $1350 range fulfills both the Elliot Wave labelling and the supposed "head and shoulders bottom" gold put in between early 2008 and finally breaking above $1000 decisively in mid-2009. It would also then be at the top of a bearish rising wedge illustrated bu the upper black line and lower green line. It would further coincide with silver at best rising another $2 or so, and with a near-term (but not long-term) reversal in the US Dollar.

Lastly, this also coincides with a protracted decline in global stock markets, which is still underway and likely to last years. Gold may enjoy a brief "flight to safety" at first, and has so far as the bear market has resumed, but recall in 2008 how gold collapsed along with equities. This time will not be different and the extreme positive gold sentiment also suggests we are at or near a top of some duration in gold and silver.

All speculation of course, but speculating is what we do and we do it well. In fact, we know of no other outlet at any price (much less free) that can boast a record such as ours.

Understandably this attracts attention, and those who read our December 4th entries may recall that we suffered an outage and loss of access to this blog for a few days back then. To us this was totally unacceptable. We said we'd take action and we did.

Readers have been writing to ask us if we'd quit writing about the markets. Thanks for caring. No, far from it. At that time a market newsletter of good repute but very low circulation contacted us to offer us a publication under their banner. We accepted, and our focus has understandably been put on that effort.

While we expect to maintain this blog going forward, the postings will be few and far between as our best and most timely efforts must of course go to paying subscribers of the letter we now co-write.

The results we've attained there mirror those we enjoyed for years here, and so too the accuracy and original chart work and commentary.

Readers of this blog who may be interested in subscribing to that letter may contact us via email (you will find the address below, at bottom of this post) to request a link to a special pricing offer for that publication.

In closing here we copy what we sent to our paid readers in early May, as we believe it is still very true : “Stock markets are extremely fragile. This is not the time to try to buy on dips, or to be deluded into the belief that equities or dividend yields currently, or anytime in the near future, represent value."

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact.

This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.

buying FXP, visual treats

2009-12-04T18:03:00.003-05:00

Click this text for a short but fascinating photo journal of yet another hype-fuelled bubble/scam that has bit the dust, "Off the Deep End: A Look at the Decline of Dubai"

Speaking of hype-fuelled bubbles, we go long the ProShares UltraShort FTSE/Xinhua China 25 ETF, FXP which closed the week at $7.46 This is essentially a levered short on the Chinese stock market and economy.

"ProShares UltraShort FTSE/Xinhua China 25 (the Fund) seeks daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the FTSE/Xinhua China 25 Index (the Index). The Index consists of 25 of the largest and most liquid Chinese stocks listed on the Hong Kong Stock Exchange (HKEX). This free float-adjusted Index caps the weight of any of constituent stock at 10% to ensure broad representation of the Chinese economy. The Fund takes positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as –200% of the daily return of the Index. The Index is a price return index. The Fund’s investment advisor is ProShare Advisors LLC."

Its downtrend does not yet appear to be over, from a technical perspective, so in case it drops significantly we're planning to add to our holdings rather than stop out. Our thinking may change on that, but for now we feel increasingly certain that a turn in the global markets is imminent.

More photo journals, these of Chinese pollution :

Click

Click

Click

Lightening up a little, some fine video entertainment !

We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact.

This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.