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| Home -> Archives -> Sol Palha -> The Macro Outlook |
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April 28, 2006 The Macro Outlook |
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Dates will be put next to any new changes made from now on. From time to time we will stop analysing certain markets; on the same token we will suddenly add new markets, as was the case with Wheat recently. We might not always provide entry points; hence advanced traders can start looking for entry points when comments such as this market is bottoming are made (for example corn appears to be bottoming)
This acts as a barometer for the general markets as we are extremely conservative in this service. So if we are long here that means we think the markets are headed up. When we are in cash it usually means the markets are going to go through an extremely volatile phase and when we are short then the markets are going to go down.
This yoyo patterns continue. One week all the moving averages of new highs have a healthy lead over the new lows and then we have a sharp reversal. Once again we have another sharp reversal and this simply continues to reaffirm our views that volatility levels are going to keep rising to levels that most investors have never experienced before.
Market Commentary It appeared that the markets were nicely correcting last week when they mounted a humungous rally; the rally was all based on the fact that the public felt that the Feds are looking for a reason to start lowering interest rates. This caused many of the short sellers to hit the panic button and hence the Dow mounted a massive rally. There is nothing new to report on from our last week's stance. We keep waiting patiently for a nice decent pull back and until we experience one it would not be wise to initiate new higher risk plays on the Dow or any of the other indices. Our smart money indicator issued yet another negative divergence signal on the hourly charts and it definitely did not confirm the new highs the Dow has put in the last 9 trading days. Last week we stated that the Dow Jones Utilities based on trend line analysis appeared ready to mount a rally; well since then they have rallied about 20 points before pulling back. The Utilities based on past analysis appear to rally first or correct first which means that the Dow still has time to correct before rallying as the Dow Jones industrials seems to lag the utilities. So based on this scenario the Dow still has room to correct up to 600 points and then come back roaring to life. This final top that we have been looking for could actually still occur before the end of this quarter but we do not think the markets will simply crash after that. Most likely they will trade sideways for a bit just to drive the bulls and the bears nuts. Once again even though logically it appears that the final top has already been put in; a few facts prevents us from taking this stance
Notes on some of our plays RTHXF This chap certainly tested everyone's patience including us to the limit; formerly known as STUOF it did absolutely nothing for almost 2 years and for most of that time it was in the red. Finally in the last two weeks or so it has surged over 200% from its lows and most of our subscribers should be up about a 100%. So those of you that have your profit limits locked in at a 100% or below should have automatically sold all or half of your positions. The rest of you that are waiting for our signal to exit continue holding for now. We can't help but recall an email from one of our subscribers who said that the owners in both companies STUOF and RTHXF were somehow related and perhaps they were planning this merger all along. The new company has only been trading for roughly 4 months and certainly lived up to its name rolling thunder. The volume was extremely huge on Friday, which suggests that after this pull back we could witness even higher prices. NCOC The story here is the opposite of the above this chap exploded in a really short period of time. Before it corrected today it was up roughly as much as 60% from our entry prices. We feel that more and more utilities are going to start bringing their coal power plants online and most utility companies have rather low reserves of coal. These two factors could have a huge impact on the price of this commodity. NCOC has just put in a new 52 week high if it can now trade to 11 and stay above this zone for sometime (say 18-21 days) it should be able to challenge and possibly surpass the 15.00-dollar mark. Palladium
The above chart is a weekly chart with 6 years of data. One can clearly see the nice channel formation in place. The longer the channel formation the more powerful the eventual move is. The long-term trend line shows that we have pretty strong support in the 300 ranges so it appears that prices will not dip below this point; if they do it would be a great time to run and buy more palladium
This is a monthly chart of palladium containing roughly 29 years worth of data (each bar represents one month). If one takes a close look at this chart one will notice that Palladium has been trending up during the entire 29-year period. Currently this chart is indicating that there is a small chance that palladium could dip below the 300 ranges; again based on the infancy of this bull we doubt it will stay below the 300 level for any extended period of time. So if it does happen to trade below this level run out and buy more. Demand for Palladium is starting to surge primarily from China, as they do not see the logic of paying over 1100 dollars an ounce for Platinum when Palladium is cheaper and performs even better. We are referring to the use of Palladium and Platinum in catalytic converters and since China is set to have more cars then America in 2030 they certainly are going to go after the cheaper metal. Furthermore demand for Palladium as jewellery is starting to surge again the Chinese appear to be leading the move here. There are many other applications where palladium is vital but we are not going to list them all today; we did provide such a list several weeks ago. If for some reason we have a big break through in the Fuel cell arena this will add even more pressure to the demand side of the equation. Russia reported sometime ago that a significant portion of their reserves were actually somehow no longer there; even if this story is not true all Russia needs to cause a huge spike is hold supplies back for just a little time and prices will go through the roof. They control over 70% of the world's palladium supplies and have a major interest in still water mining the biggest palladium producer in North America. Hence the long-term outlook for palladium continues to remain bright. From a mass psychology point of view the fact that very few people are talking about this metal is indeed a very huge bonus. Price targets for Palladium bullion (very long term targets) If we can trade above 345 for roughly 3 months in a row then the next target
would be in the 480-510 ranges. Since we are posting very long term targets one has to understand that in between we are going to witness some rather deep corrections (but if you got in early these corrections will not feel that bad). Based on the above targets we expect the following targets for SWC And PAL SWC It has to break past 24 on strong volume and stay above this level for at least 18 days then it should be able to challenge the 33-dollar range. 2nd target is going to be a challenge and a test of the 42-dollar price point level. 3rd target This target is going to be extremely high compared to the other two targets. But we would not be surprised to see SWC trading close to 150 dollars if not higher one day. PAL The story with PAL is slightly different. In comparison to SWC it is a relatively new company so we have a limited amount of data to base our price targets on. If PAL can stay above 11 dollars for 90 days or so it should be able to easily challenge the 14.40 ranges and then will go on to put in a series of new all time highs. Eventually we could see PAL trading in the 99-120 ranges. Real Estate Timing The second best time to buy real estate is when a few smart investors take advantage of the fact that Fed is embarking on an aggressive rate reduction plan; they have to understand that this plan is fake and that interests rates are purposely being forced lower just to push the consumer to spend and borrow more. This is what happened after the stock market collapsed in 2000. If you invest in this time frame and you have good credit you can pick up property for 0-5% down and then use the rental income and build up in equity to help you finance more properties. If you employ this method you should always buy income-generating properties as in 4 family plus units. With this method you could make anywhere from 200-600% in profits. The truly spectacular time to buy property is when the Feds have embarked on a vicious rate hiking policy. However this method requires patience and discipline. It's what helped make Trump who he is today; I believe his first property went from just over 1 million dollars to over 400 million in value. The trick here is to wait for them to move from a raising rate bias to a neutral position. Or if you are familiar with trend analysis you could just look for topping action on the charts. This was the case in the 1980's; those who bought property when interest rates were peaking literally locked in several thousand-percentage points in gains. Again one should go for income generating properties. We believe that those who are patient will be provided with such an opportunity in the years to come, as the Fed will be forced to raise rates to attack the self-created Frankenstein better known as inflation. I was talking to a Polish lady the other day that owns a multifamily unit in Brooklyn. About 20 years ago she paid about 100k for this 8 family unit. Today she collects a minimum of 8K a month on rent from this unit. So in one year she collects almost what she paid for this property 20 years ago. Random Musings China China uses 6.5 million barrels of oil a day and the US uses 20 plus million barrels a day. In a few years it displaced Japan as the world's number 2 users of oil. Its GDP is growing at 8-10% a year. It has a population of over 1.3 billion people and many of them are dumping their bicycles and buying cars. In less than 14 years its energy needs are projected to increase by over a 150%. In 4 years China is projected to have 90 times as many cars as it had in 1990 and by 2030 it is estimated that it will have more cars then the United States. The problem is that supplies of oil are not increasing; well that's what the media is saying at least and in the end that's all that matters, as the masses believe everything they are told. In reality there are very huge supplies of heavy oil; the reserves in the Orinoco region of Venezuela are larger then those in Saudi Arabia but because it's heavy oil these reserves are not counted. In other words when the worlds reserves of oil are calculated heavy oil reserves are not taken into consideration. By the way our play IVAN has proven technology to convert heavy oil into light oil in a process that actually generates energy so it can be used in very remote areas. We wonder why these reserves are not counted; our take is that as usual the big guys want to generate panic and thus leave less time for the masses to think. When you are in a state of constant worry you cannot think or focus on anything. Pay careful attention to the news and you will see that almost all the time this trick is employed; it's a very good psychological ploy to make sure that the masses never see the light. To be able to think and see patterns you have to be relaxed and that's why we push the concept of cutting one's stress down so much. Once you cut your stress down and are relaxed you can see through this nonsense very easily. Every disaster can be prevented but none are and the reason is always the same "money". It is for this reason that we have always stated that one should not panic no matter how bad things look because every disaster is nothing but opportunity knocking in disguise provided you are calm enough to see it. Eventually they will start to attack these heavy oil reserves but they will wait till the very last minute to do so and then it will take at least another 6-11 years for us to see the results. Again the reasons are simple money, money, money and more money. Light and Darkness We are told to walk in the path of light but how about if most people misunderstood this message. Normally light is made to look as good and darkness is supposed to be bad. If most so called contrarians were really true contrarians they would question this premise, if they applied mass psychology and common sense they would most definitely question the above perceptions. Lets examine a few facts Science has now proven that approx 95% of the universe is black (as in darkness). So that means only 5% is in the light so as to speak. This information alone should be enough to make one think. But lets go further it has been shown that humans on average use about 5-7% of their brain capacity and geniuses at most 15%. Hence it's safe to assume that the most advanced human being would only have knowledge of maybe 0.05% if not less of this 5% of the universe that is in the light. Next the reason most people are afraid of the dark is because they fear the unknown, but if you fear the unknown then how can it ever become known. So in essence the fear is irrational, as it's based on pure hear say or superstitious beliefs, twisted religious beliefs etc. Now just with the above info a contrarian would say perhaps the darkness holds the secret, as 95% of the universe is black. How could you possibly learn anything by just studying 5% of what's out there; that the equivalent of some jackass reading one book on investing and assuming he is the worlds best investor. Lets dig even deeper and use knowledge that is available to anyone that might want to dig deeper. An object gets its colour by absorbing all the other colours except the colour it reflects so a blue object is blue because it absorbs all the other colours except blue. Taking this one step further we could actually say that the darkness is the path of light simply because it absorbs all the light and reflects black and the light is actually darkness because it absorbs all the black and reflects just the light. If something is absorbing light then one would have a better chance of finding the answer there then something that is absorbing darkness only. I mean we don't go to idiots and ask them for advice do we; idiots absorb everything else besides knowledge and the opposite can be said for geniuses. Okay this was a simple mental exercise and an examination of the facts using simple data that is available to most individuals. We are making no assertions whatsoever. Draw your own conclusions. All we wanted to do was offer you a different view and possibly push you to put your thinking caps on. High cost of Petrol One minute you have the talking heads in the news come out and say that high prices of petrol are not stopping people from driving huge cars. Then you dig deeper and you find stories of retired and low-income individuals skipping on some of their medications just to be able to fill their cars at the pump. One chap actually skipped on his blood pressure medications and passed out; he could have died and it makes us wonder why he would risk his life for petrol. He could have sold his big car for a small Japanese car or done the unimaginable and maybe bought a scooter (these little buggers can go about 100 miles on a gallon of gas). Interesting demand for scooters is actually increasing it appears that some individuals are deciding to find a solution rather then sitting on the curb and whining about gas prices that are still one of the cheapest in the world Full Story Another interesting point is that pawn shops (this term is not used that often in the rest of the world so for subscribers outside the United States. A pawn shop is where someone takes in something of value and borrows against it usually at high interest rate or simply sells it for next to nothing) are witnessing a surge in business and a lot of this has to do with people pawning their stuff so they can buy more petrol. It amazes us how it takes so long for people to do something simple. If the price of petrol is too high get rid of the big car and get something smaller. The price of Petrol in Turkey is now in excess of 10 dollars per gallon and they are still surviving. Census: Americans Are Fleeing Big Cities WASHINGTON - Americans are leaving the nation's big cities in search of cheaper homes and open spaces farther out. Nearly every large metropolitan area had more people move out than move in from 2000 to 2004, with a few exceptions in the South and Southwest, according to a report being released Thursday by the Census Bureau. Northeasterners are moving South and West. West Coast residents are moving inland. Midwesterners are chasing better job markets. And just about everywhere, people are escaping to the outer suburbs, also known as exurbs. "It's a case of middle class flight, a flight for housing affordability," said William Frey, a demographer at the Brookings Institution, a Washington think tank. "But it's not just white middle class flight, it's Hispanics and blacks, too." Full Story The masses always react towards the end of the cycle. They are making two key mistakes
On separate note it appears that more and more speculators in real estate are getting caught with their pants down. Many of them are being forced to sell these properties at a loss because they are either no longer appreciating or they cannot afford their monthly payments as most made the mistake of taking out adjustable rate mortgages. Russia, meanwhile, launched a satellite Tuesday for Israel that the Israelis say will be used to spy on Iran's nuclear program. The satellite is designed to spot small images on the ground and would allow Israel to monitor Iran's nuclear program and long-range missiles, an Israel defense official said. Full Story It appears that Russia is playing both sides of the game. They are supplying Iran with nuclear Technology and arms while at the same time launching a satellite for Israel so that it can spy on Iran's nuclear program. By the way this piece of news was buried under the headline "Iran Threatens to Hide Nuclear Program". If one looks at the headline one would not expect to cover this succulent piece of info under it. Emails Hi Sol, The key point here is that you are implementing the profit guideline rules we published on our website. As result of being able to implement these rules it shows that you are becoming a more disciplined trader; one of the two key components to becoming a successful trader. The other is patience and this stock certainly tested everyone's patience to the limit as we held it for roughly 2 years and in just 2 weeks it moved over 200% from its low. Finally its always good to hear success stories like this especially when they indicate that the stock was held through thick and thin and that the trader was not panicked into selling just when he/she perhaps should have been buying. Sol We published just two emails from the many we received concerning this stock as they both reveal two of the most important factors in the quest to become a successful trader which are Patience and discipline. Sol, some analysts propose the coming correction will ease oil price pressures. But the boone pickens of the world are betting on $150 oil. and today my mom mentioned seeing 1st news of $4 gas price. What's your outlook for oil, and do geopolitical factors involve some form
of manipulation? How do see these moves impacting oil stocks? - Does higher
oil price = higher independent oil and the exploration stocks? DYN is down
as the oil price climbs... DYN is more in the power generating business; it just happens so that some of the places we use to obtain sector information list it as being in the independent oil and natural gas sector. Well we can already see the impact on stocks such as RTXHF formerly STUOF a stock that was nothing but a dog for a long time suddenly explode to the upside in the last few days. The situation right now is completely geopolitical and it looks like we are drawing closer and closer to a full-blown war with Iran. We stated that the Iraq war was a blunder and warned against the huge problems that we would face before even one bomb was dropped. In comparisons to Iraq, Iran is going to be a monumental problem (we will talk more about this in the next issues. One of the things we will look at is the sophisticated missile they have that can sink a huge Aegis war ship and there is no defense against this). Remember in every situation the masses can be right for sometime and this appears to be one of them however the masses will never collect on their profits; as usual they will wait to long and end up holding an empty bucket. If we drop one bomb in Iran oil prices will probably spike by 12-21 dollars in one day; then Iran will attack by closing the straits of Hormuz and oil prices could spike another 30-60 dollars. So its possible we could see oil trading over 100 dollars easily if any one of the above events unfolds. The part that no one is paying attention to though is that consumption will drop severely across the world and then oil prices will pull back very hard (normal correction when you draw in trend lines); it will only look and feel hard only to those who got in late. In the end oil prices come down to a supply and demand issue and when supply drops dramatically prices will drop just as fast. This severe correction will then provide what we like to call a mouth-watering opportunity in this sector. When will this happen at this point in time your guess is as good as ours as it is very hard to time markets that are being controlled by geo political factors. If we attack Iran it will go down in history as one of the biggest military mistakes ever. Oil prices will spike, the major oil route will be closed, terrorist activity will sky rocket and Iran's nuclear program will continue but in deep secrecy. (Again next week we will look at why attacking Iran will really in no way stop their nuclear program) SUPER CYCLE/SUPER BULL QUANTUM WEALTH SEMINAR. Due to back injury last week I was unable to speak to Dr Janice and her partner in regards to the finer details of making the materials from this seminar available to TI subscribers. Hopefully we will be able to get all the details worked by this week. As soon as we have everything worked out an email will be sent out to all our subscribers.
User name and pass codes to the Enhanced privacy section; use the same entrance as above but enter these codes instead.
If you have any questions please email us at subscriptions@tacticalinvestor.com and or to the email address from which the market update was sent out. All charts provided courtesy of www.prophetfinance.com We have another common sense type question. A father looks at his son and says the following "what are you going to do with your life" or another variation of this could be "what are you planning on doing with your life." The answer is so simple that you will kick yourself when we publish it next week. The answer in long form is 9 words in short form its 5 words.
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Sol Palha Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com. The information contained herein is deemed reliable but no guarantee is made about its completeness or accuracy. The reader accepts this information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Investors are urged to obtain the advice of a qualified financial & investment advisor before entering any financial transaction. Copyright © 2004-2008 Sol Palha, All rights reserved. Image rendition and html coding Copyright © 2000-2008 SafeHaven.com « BullionVault.com -- Buy gold online - quickly, safely and at low prices » « Opinions expressed at SafeHaven are those of the individual authors and do not necessarily represent the opinion of SafeHaven or its management. Articles are available via RSS/XML. Please visit RSSHelp for instructions. » |
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