GoldStream Capital

2011-11-04T18:15:00.002+01:00

Stopped out !

2011-08-13T19:25:00.001+02:00

Got back from holiday and saw that I got stopped out of 3 of my positions:
XLF: stop loss triggered at $15.0
BRXX: stop loss at $22.5
XLE: stop loss at $63.0

Still long in 4 trades: SLV (silver ETF), GDX (goldmines ETF), GXG (Colombia ETF) and Creativ Industrial Group (Ukrainian agricultural company)

65% in cash now !

Buying silver

2011-05-07T08:12:00.003+02:00

The price of silver fell by 30% in the last 5 days, dropping from a high of $48 per oz to a price of $34 today. I believe the long-term trend of silver is still to go up and that it is now a good time to initiate a position in this precious metal and make a "buy on the dip". Silver price had gone up too much and too fast during the last 3 months. Such parabolic rises always ends up like that. Time has come for a consolidation before a continuation of the move higher.

I bought on Friday night before the market close a position on the "silver ETF", the iShares Silver Trust (ticker: SLV on the NYSE) at a price of $34.48 for a total of $10,000.

Stopped out of URA at $15.73

2011-03-14T21:35:00.000+01:00

The Uranium ETF fell sharply today (- 17%) due to the events taking place in Japan and causing prejudice to the nuclear energy. To the contrary, equities linked to renewables energies (solar, wind, geothermal) went up strongly.

Energy ETF chart analysis

2011-03-13T10:29:00.002+01:00

The daily chart of the Energy Select Sector SPDR (the "Energy ETF") clearly shows the end of the uptrend of energy stocks. Next move? Probably a consolidation in the next few weeks.

Interesting to see what the chart of the opposite ETF says. In this case, we are speaking about the ProShares UltraShort Oil & Gas (ticker: DUG on NYSE): you make profits when oil & gas equities drop.

S&P 500 index chart analysis

2011-03-12T19:49:00.002+01:00

The S&P 500 index is currently delivering us a classic technical figure called "symmetrical triangle". The symmetrical triangle appears after a strong uptrend or downtrend and shows the indecision of investors and the fight that is taking place between the bulls and the bears. Generally, this technical figure is a continuation figure: the trend that precedes the appearance of the symmetrical triangle continues. However, the move that occurred on March 10 was an exit of the triangle to the downside after an uptrend took place. This means that the probability is higher that a downtrend is now starting.

To change my mind, I would need to see the S&P 500 index return to the 1340 price zone and then break out to the upside. But I think this scenario is unlikely to happen.

Volatility index chart analysis

2011-03-12T19:17:00.000+01:00

Weekly chart of the CBOE Volatility index (VIX):
- bullish divergence between the MACD and and the VIX price
- VIX reached the support area and started to move higher
- the scenario I have in mind? a move up

US Dollar index chart analysis

2011-03-12T19:10:00.001+01:00

Monthly chart of the US Dollar Index:
this is the scenario that I have in mind for the next few months: a move up to around 83-84.

Selling DBA at $34.42

2011-03-10T18:52:00.000+01:00

Selling today my position in the PowerShares DB Agriculture Fund ETF (DBA) with a return of +32.4% compared to my purchase price of $25.99 paid on November 24, 2009.

EUR-USD chart analysis

2011-03-10T13:55:00.001+01:00

Weekly chart of the EUR/USD:

- price has reversed at the approach of the down trendline that joins the previous highs of July 2008, November 2009 and October 2010

- I am now becoming bearish on this currency pair and expect a return to 1.20

- If EUR/USD goes above the trendline and stays there for more than a week, I would change my mind

Buying the Colombia ETF

2011-03-01T21:24:00.003+01:00

The Global X Interbolsa FTSE Colombia 20 ETF (ticker: GXG on the NYSE) is a market capitalization-weighted index of the 20 most liquid stocks in the Colombian market.
Top 10 holdings include:
- Pacific Rubiales (17.2%): natural gas and oil company
- Ecopetrol (16.1%): biggest Colombian oil producer
- BanColombia (14.9%): biggest Colombian bank
- Grupo Aval Acciones y Valores (5.3%)
- Cementos Argos (4.7%)

Colombia is one of the so-called promising "frontier markets".
The Global X Interbolsa FTSE Colombia 20 ETF is the only ETF that offers exposure to the Colombian stock market and allocates around 34% to the oil and gas industry.

Fundamental reasons to invest in Colombia:
- this nation is very rich in natural resources: oil, coal, natural gas, gold, silver, nickel, platinum
- the country has the largest coal reserves of South America and, among the Latin American countries, is just behind Brazil for its hydroelectric potential
- political stability has been gradually improving over the last 10 years with strong decline in violence and number of kidnappings
- foreign direct investment in the country has quadrupled in the past decade to reach more than $9 billion in 2010
- inflation is under control: 2.6% in 2010
- Colombia is pursuing free trade agreements with Asian and other South-American nations to export its resources, in particular oil and coal

Technical reasons to buy now:
- price has retraced to the 200 day moving average and then rebounded
- a bullish divergence appears on the above chart between the price and the MACD

I am buying this ETF today at $40.87 for a total of $10,000. Stop loss: $34.

Stopped out of UNG @ $5.66

2011-02-08T20:25:00.000+01:00

Buying Market Vectors Gold Miners (GDX) on the NYSE

2011-02-02T21:05:00.002+01:00

I am buying today at a price of $54.92 the ETF Market Vectors Gold Miners (ticker: GDX on NYSE) for a total of $10,000. Stop loss: $48.0

This ETF seeks to replicate the price performance of the NYSE ARCA Gold Miners Index. This index provides exposure to publicly traded companies worldwide involved primarily in gold mining. Main holdings include: Barrick Gold, Goldcorp, Newmont Mining, Kinross Gold, AngloGold Ashanti, Yamana Gold, Eldorado Gold, Cia de Minas Buenaventura, Gold Fields, Agnico-Eagle Mines.

I am buying this ETF to protect my portfolio against paper currency debasement and the associated expected inflation. The Energy Select Sector SPDR ETF (XLE) and the PowerShares DB Multi-Sector Commodity Trust Agriculture Fund (DBA) serve the same purpose.

See the weekly chart below: price has been decreasing to reach the 50 week moving average, which has proved in the past to be a good spot to enter into this position with an advantageous risk/reward ratio.

Portfolio update

2011-01-31T21:06:00.002+01:00

Buying UNG at $5.99

2011-01-31T20:52:00.000+01:00

Buying United States Natural Gas Fund (ticker: UNG on NYSE) at $5.99 for a total of $10,000
Stop loss: $5.70

Publish Post

Oil chart analysis

2011-01-30T18:37:00.001+01:00

On Friday, oil price (West Texas Intermediate) printed a nice bullish engulfing candlestick, at the same time crossing the 50 day moving average to the upside. The Relative Strength Indicator (RSI) broke above the 50 level. This is strongly bullish about what will happen next.

To trade oil price, buying the United States Oil Fund (USO) is one of the possibilities. It tracks what the oil price does. As you can see on the daily chart below, the move of Friday happened with a huge volume of transactions.

Gold chart analysis

2011-01-30T18:24:00.001+01:00

On the weekly chart of gold, the price has reached the bottom of the 2 year up trend-line but on Friday recovered and printed a bullish hammer. This is a signal that the decrease of gold price of the recent weeks may have come to an end. Important will be to check what the next candlestick will be on Monday. If the candlestick is bullish, the probabilities are high that the gold keeps bouncing upwards.

If gold loses support of the trend-line shown on the weekly chart, it will be a long way down to the 200 day moving average at $1280 (see daily chart below).

What will the S&P 500 index do in 2011? Cast your vote!

2011-01-29T19:20:00.000+01:00

2010-2011 Country Stock Market Performance

2011-01-29T18:13:00.000+01:00

The 5 country stock markets that performed best in 2010 were Sri Lanka (+96.01%), Bangladesh (+82.79%), Estonia (+72.62%), Ukraine (+70.20%) and Peru (+64.99%).
Since the beginning of this year, the 5 best performers are Nigeria (+12.11%), Italy (+9.83%), Spain (+9.70%), Greece (+9.53%) and Romania (+9.44%).

Chart: Courtesy of Bespoke Invest (www.bespokeinvest.com)

Natural gas

2011-01-29T16:56:00.004+01:00

Natural gas has been the most hated commodity during the last 18 months. Indeed, contrary to all other commodities, natural gas price has been in a downward trend since mid 2009.
Some signs that a bullish reversal might be on the cards can be seen on the charts below.

On the weekly chart, one can see that the down trend line was broken.

On the daily chart, since November 2010, the price has been making higher highs and higher lows.

Natural gas will be on my radar during the next few weeks to detect a confirmation of the bullish reversal.

Volatility index (VIX) and S&P500 (SPY)

2011-01-29T16:42:00.007+01:00

Yesterday (Friday 28 January 2011), the volatility index went strongly higher. See below the chart of the iPath S&P500 VIX Short-Term Futures ETN (VXX), the ETN ("Exchange-Traded Note") that tracks the Volatility Index (also called the "VIX index").

The Relative Strength Index that was oversold started to curl higher. And the volume spiked up strongly. That can be interpreted as a warning sign about a future reversal of the stock markets.

Buying Ukrainian agricultural company

2011-01-22T20:01:00.008+01:00

To profit from the increase in price of agricultural commodities, I am buying an Ukrainian agricultural company called Creativ Industrial Group.

The company engages in the production of refined deodorized sunflower oil, modified vegetable fats, hard and soft margarine, mayonnaise, melted butter, and confectionary products. It also produces mayonnaises, mustard, vinegar, and tomato paste. The company exports its products to Russia, Belarus, Kazakhstan, Uzbekistan, Armenia, and Georgia. Its products are used in food and dairy industries, as well as for bakery products. The company was founded in 1991 and is based in Kirovograd, Ukraine. It employs over 1700 people.
Website: http://creativ-group.com.ua/en/
Bloomberg code: 4C8A GR

The company is very cheap: its current market capitalization ($139 million) represents 41% of its 2010 annual revenue ($337 million) and only 5 times its net income (which was $31 million in 2010). Its price/earnings ratio (2010) is 4.6.

A management presentation is available here: http://www.eigenkapitalforum.com/092/presentations/f2/Creative%20Industrial%20Group.pdf

Buying for a total of $10,000 at the price of $13.6 per share (or EUR 10 per share). See the stock chart below in euros.

Hat tip: Olivier

Trades of today

2011-01-21T22:04:00.006+01:00

- Selling CAF at $26.50 (stop loss reached). Return on this position: -9.8%
- Selling CDE at $22.56. Return: +42.8%
- Selling GLD at $130.92. Return: +13.6%

- Buying XLE (energy ETF) at $70.0 for a total of $10,000. Stop loss: $63.0
- Buying XLF (financials ETF) at $16.47 for a total of $10,000. Stop loss: $15.0

Portfolio performance in 2010

2011-01-15T21:23:00.007+01:00

Return of the portfolio in 2010: +11.44%

Return since the start of the portfolio on April 10, 2009: +29.94%
The portfolio now amounts to a total of USD 129,941.

Here is what I observe now in the markets:
- Oil price broke out of its consolidation range to go up. Look at the XLE ETF as a proxy for the energy-related companies
- Gold is in a consolidation range and has formed a triple top; watch out for a possible bearish reversal of the precious metals complex
- US markets are on fire: just look at the Nasdaq (ETF: QQQQ) and the S&P 500 (ETF: SPY): they printed new highs last week
- US financial stocks (ETF: XLF) are doing very well
- Inflation is back !! especially in the emerging markets
- the Euro decreased versus all currencies in 2010, especially versus the currencies of emerging countries

Stopped out of SCIN @ $22.50

2010-11-27T16:46:00.002+01:00

I was stopped out of my position in the Indian Small Cap ETF (ticker: SCIN). That's what a stop loss is made for: to avoid big damages to your portfolio. I lost 13% compared to my purchase price.
According to recent news, a corruption scandal in India made the indian ETFs, including SCIN, take a big drop last Friday. See more details here.

USD index chart analysis: anticipated reversal

2010-11-11T19:48:00.001+01:00

Let's examine the weekly chart of the US Dollar index to get the long-term view:

1) the USD index is in a rising wedge technical formation

2) it was at 88 last June and from there started to go down

2) it has now reached the bottom of the rising support at around 77

2) my gut feeling is that we might now get a reversal

Let's now turn to the daily chart:

1) the 20 daily moving average has not crossed the 50 daily moving average to the upside. According to the system I am using, there is no buy signal yet

2) a bullish divergence exists between the price and the MACD technical signal: this is a signal that a reversal is coming

Previous posts regarding the US Dollar index:

- US Dollar index (August 12, 2010)

- US Dollar index: SELL signal triggered (July 14, 2010)

- US Dollar index: an update (May 20, 2010)

- US Dollar index (May 9, 2010)

- US Dollar index chart analysis (April 18, 2010)

- US Dollar index chart analysis (February 7, 2010)

- US Dollar index chart analysis (December 23, 2009)

- US Dollar index chart analysis (November 29, 2009)

Buying today the Uranium ETF (URA) @ $19.39

2010-11-09T19:00:00.002+01:00

entry price: $19.39
total position : $10,000
stop loss: $16

Uranium

2010-11-07T20:08:00.002+01:00

I am willing to bet on uranium price appreciation in the next few months. From its high of $300/kg reached in 2006-2007, price is now at around $120/kg. Stocks active in the uranium sector have been making new yearly highs (see example of UEX Corporation below). If you look at UEX weekly chart, one can see that the resistance was recently broken.

Fundamentals are good:
- Growing populations and ongoing urbanization in many of the world’s emerging markets will likely lead to drastic increases in demand for both uranium and electricity.
- Several countries (China, USA, France,...) plan to increase their nuclear power in the next future. China is expected to have as many as 150 new nuclear power reactors become operational over the next 10 years and India plans on doubling the share of nuclear power on its grid over the next 20 years.

UEX Corporation is a Canadian uranium exploration and development company formed under agreement between Cameco Corporation and Pioneer Metals Corporation. UEX began trading on the Toronto Stock Exchange in July 2002 and is an active explorer in the Athabasca Basin in northern Saskatchewan, which is the most important uranium-producing district in the world, accounting for approximately 20% of global primary uranium production in 2009.

A new ETF was launched last week to invest in uranium stocks: the " Global X Uranium ETF (ticker: URA on the NYSE). See factsheet here. It will be the first ETF to focus exclusively on this industry.
Top 10 holdings include: Cameco, Paladin Energy, Uranium One, Denison Mines, Hathor Exploration, Energy Resources of Australia, ...

I plan to buy a position in this ETF for my portfolio in the next few days..

Buying the India Small Caps ETF (SCIN)

2010-11-04T23:44:00.000+01:00

The Emerging Global Shares Indxx India Small Cap ETF (ticker: SCIN, listed on the NYSE) was launched at the end of July of this year. This fund invests, not in ADRs traded on the NYSE, but in small-cap equities listed on Indian stock exchanges. Top 10 holdings include: Indian Bank, UCO Bank, Patni Computer Systems, Godrej Industries, Dish TV India, Amtek Auto, Vijaya Bank. The ETF covers a broad array of industrial sectors: software and computer services, banking, food producers, real estate, travel & leisure, metals & mining, chemicals, industrial engineering.

The investment thesis behind this trade is that of the expanding middle class in emerging markets. India's middle class is expected to grow from around 5% of the population in 2005 to more than 40% in 2025 according to a McKinsey study. This class will demand cars, electronics, cell phones and other consumer products as standards of living increase. India should exceed China's population within the next 25 years and, contrary to China, is a democracy.

A lot of ETFs offer exposure to the Indian market but are invested in large capitalization companies. SCIN offers an opportunity to tap into the small Indian companies that can grow at a much higher pace than large companies.

Detailed information on this ETF can be found here.

I am buying SCIN today at a price of $25.89 for a total of $10,000.
Stop loss: $22.5

Buying the Brazil Infrastructure ETF (BRXX)

2010-11-04T23:29:00.000+01:00

Brazil is one of the countries I have been following closely for the past 6 months. Brazil is preparing for the 2014 World Cup and the 2016 Summer Olympics. This will require the country to engage in lots of infrastructure projects. An ETF launched in February of this year precisely tracks the infrastructure industry in this country by investing in 30 leading companies from various sectors (electricity, gas, water, utilities, industrial transportation, telecom, metals and mining,...): the "Emerging Global Shares Indxx Brazil Infrastructure Index ETF" (ticker: BRXX, listed on the NYSE).
Top 10 holdings include: Cia de Concessoes Rodoviarias, Ultrapar Participaoes, Vale, Empresa Brasileira de Aeronautica, Tractebel Energia, Weg, AES Tiete, Cia Siderurgica Nacional.
Detailed information here.

I am buying this ETF today for my portfolio at the price of USD 25.1 for a total of USD 10,000.
Stop loss: $22.5. I am buying for the long-term (several years).

Portfolio update

2010-10-12T22:24:00.000+02:00

Selling SGG @ $80.60

2010-10-12T22:22:00.001+02:00

Selling the sugar tracker SGG at $80.6 with a return of 86.6% compared to my purchase price of $43.2 four months ago.

Review of current positions & portfolio performance

2010-09-26T13:39:00.010+02:00

Let's review the current positions in the portfolio and the performance of each of them. I updated the stop losses on all my positions. The new level of the stop loss is visible on the chart of each stock below.

For the "Agricultural tracker" DBA (PowerShares DB Agriculture Fund ETF), I entered at a price of $25.99 on November 24, 2009. See my post of November 22, 2009 on investing in agriculture. The price is currently at $27.9, generating a performance of +7.3% in 10 months.
I raise my stop loss from $20.0 to $26.5.

For the "Gold tracker" GLD (SPDR Gold Trust), I entered at a price of $115.2 on July 30 of this year. Current price is at $126.69, which means a performance of +10% in 2 months. I raise my stop from $111 to $120.5.

For the "Sugar tracker" SGG (iPath Dow Jones-UBS Sugar Total Return Sub-Index ETN), I entered at a price of $43.2 on June 11 of this year. See my post of June 8 on sugar. Current price stands at $71.20, generating a return of +64.8% in 3.5 months. I raise my stop from $48 to $60.

The price of sugar, as well as other soft agricultural commodities (coffee, cotton, rice, corn, wheat, soybeans), has increased a lot in the last 3 months.

For the gold and silver mine CDE (Coeur D'Alene Mines Corp), I entered at a price of $15.8 on May 19, 2010. Currently the price stands at $19.61. Return: +24.1% in 4 months. I raise my stop loss from $14.0 to $18.5.

For CAF (Morgan Stanley China A Share Fund), my entry price was $29.38 on August 17, 2010. Current price is at $28.49, generating a loss of 3% in 1 month. I raise my stop loss from $22 to $26.5.

As of today, I reach an overall portfolio performance of +7.4% year-to-date.

Let's benchmark this performance with the S&P500 index: this index a made a performance of +3.01% year-to-date.

On the table hereafter is a recap of open positions and the revised stop loss levels highlighted in yellow.

Portfolio performance

2010-09-13T21:31:00.000+02:00

Performance of my portfolio as of today:

Return in 2010 (year-to-date): +4.7%
Return since portfolio inception on April 10, 2009 (17 months ago): +21.3%

Portfolio update

2010-08-17T19:18:00.002+02:00

Buying Morgan Stanley China A Share Fund (CAF)

2010-08-17T19:07:00.003+02:00

I refer to a previous post dated August 2, in which I said that I was getting prepared to buy the Morgan Stanley China A Share Fund (CAF). This time has come. I am buying CAF today for my portfolio at a price of $29.38 for a total of $10,000. Stop loss: $22.0

US Dollar Index

2010-08-12T09:16:00.002+02:00

The US Dollar index moved sharply higher yesterday. It rebounded on its support at $80.
A bullish divergence had been building between the price and the MACD, announcing this move higher. Additionally the USD index was very oversold and a retracement made sense. However, according to my system, as long as the 20 day moving average will not cross the 50 day moving average to the upside, I stay bearish.

S&P500 index: buy signal

2010-08-03T20:42:00.011+02:00

I use a simple system to tell me whether it is time to buy or sell the S&P 500 index (this index is a good proxy for the stock markets in general):

1) First filter: I go long only if the price is above the 200 day moving average (MA), i.e. the blue line on the chart. And I only go short if the price is below the 200 day MA.

2) Second filter: If the 20 day MA (pink line on the chart) crosses the 50 day MA (yellow line on the chart) to the upside, it is a buy signal. To the opposite, if the 20 day MA crosses the 50 day MA to the downside, it is time to sell.
This system worked pretty well in the past as you can see on the chart above

Yesterday the S&P500 index moved above the 200 day MA: first condition met. And two days ago, the 20 day MA crossed the 50 day MA to the upside: 2nd condition met. Buy signal was therefore activated.

Morgan Stanley China A Share Fund (CAF)

2010-08-02T22:47:00.000+02:00

I refer to my previous post on the Shanghai stock market, where I mentioned my interest to invest in China at this point in time. To gain exposure to this market, I am planning to buy for the portfolio the Morgan Stanley China A Share Fund, Inc (ticker: CAF) listed on the New York Stock Exchange. The Fund invests at least 80% of its assets in A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges.

Below a weekly chart of the Shanghai Se Composite index.

And here the weekly chart of Morgan Stanley China A Share Fund:

The price of CAF has broken the 40 week (= 200 day) moving average to the upside. I am getting prepared to buy...

Portfolio update

2010-08-02T17:43:00.000+02:00

Buying SPDR Gold Trust ETF (GLD)

2010-07-30T19:57:00.001+02:00

I am buying for my portfolio the Gold tracker SPDR Gold Trust ETF (ticker: GLD) on the New York Stock Exchange at a price of $115.20 for a total of $10,000. Stop loss: $111.00 (a bit below the 200 days moving average).

Sugar tracker (SGG): an update

2010-07-29T16:44:00.004+02:00

Since I bought SGG for my portfolio on June 11 at a price of $43.2 (link to post here and here), this ETF is already up 25% and is now priced at $54.07.

I am raising my stop loss from $38 to $48.

See the above chart: next target is the 200 day moving average at a price of $58.

Stopped out of VXX @ 24.30

2010-07-22T21:50:00.002+02:00

Portfolio update

2010-07-15T19:33:00.002+02:00

Buying today VXX @ $26.75

2010-07-15T19:28:00.001+02:00

Buying today the iPath S&P500 VIX Short-Term Futures (ticker: VXX) on the New York Stock Exchange.
Buy price: $26.75
Stop: $24.30
Take profit: $30.0
Risk/Reward ratio: 1.3x
Goal: short-term speculation on a rise of the volatility index (VIX) in the next few days
Total position: $10,000.00

Shanghai Stock Exchange Composite index (SSEC)

2010-07-14T19:56:00.000+02:00

The above chart represents the evolution of the Shanghai Stock Exchange Index in the last 20 years. As you can clearly see, we are in a secular bull market since 1994. The index has now rebounded on its green support and is now at 2450. I see it as an opportunity now to buy Chinese stocks for the long-term.

USD index: SELL signal triggered

2010-07-14T19:20:00.000+02:00

On the above chart, you can see that the 20 day moving average is crossing the 50 day moving average to the downside: my system tells me that this is a sell signal on the US Dollar index. This system proved to be right in the past 2 years.

At the same time, the EUR/USD is making new highs and has reached 1.2750 after having reached a low of 1.1880 in early June. The trend is still bearishbut the inverted "head and shoulders" technical formation might signal a trend reversal in the EUR/USD. During the next few days it will be crucial to monitor what is happening to this currency pair, especially if it can cross the bearish trendline and stay above it for at least a week to know if the EUR/USD can continue its race higher.

Portfolio update

2010-07-08T19:33:00.001+02:00

Bought today SGG (Sugar tracker) @ 43.2

2010-06-11T18:31:00.000+02:00

I refer to my previous post of June 8.
I am buying today the tracker following the price of sugar, the iPath Dow Jones-UBS Sugar Total Return Sub-Index ETN (ticker: SGG) at a price of $43.2 on the NYSE for a total of $10,000.
Stop loss: $38.0

Sugar

2010-06-08T08:12:00.014+02:00

Since the beginning of this year, sugar is the commodity that decreased the most in value. See the graphic below.

On the weekly chart below, we can see that the price of sugar decreased by about 45% from its high of 25 to its current level of 14.

Sugar prices fell on speculation that favorable growing conditions in Brazil, the world's largest sugar producer, will yield a record crop, thereby increasing supply on the markets.

Such decrease triggers my attention and tells me to start looking for a value buy. Sugar price cannot stay low for a prolonged period of time. Farmers looking to maximize their earnings will tend to plant less of crops fetching unattractive prices and more of those that have seen an increase in price.

An investment in sugar can be made by using the iPath Dow Jones-UBS Sugar Total Return Sub-Index ETN (ticker: SGG) listed on the New York Stock Exchange. SGG is an Exchange-Traded Note comprised of futures contracts on sugar.

The curve for sugar futures contracts traded on the NYMEX slopes slightly upward. This contango situation (contango happens when the price of the commodity for future delivery is higher than the spot price) may cause an investment in SGG to face some slight headwind as the costs to roll over the futures to the next month contract (known as "negative roll yield") may reduce somehow the return of the overall investment.

On the weekly chart below you can see that the price is currently lying on a strong support level and that the stochastics indicator is clearly oversold: two bullish signals.

On the daily chart below one can see a bullish divergence between the price and the MACD: that is a bullish signal.

Keep in mind though that SGG is a very volatile instrument.

Revisiting the Nasdaq Composite Index

2010-05-25T21:11:00.007+02:00

I refer to my post of March 11 where I mentioned that the Nasdaq index was at a critical juncture: the index had to break out above the downtrendline that had started in 2000 to be able to continue its move higher. We are now seeing that a fake breakout occurred: the index went above the trendline for about a month but then reversed its rising trend. See the monthly chart above. We are now getting the indication that the secular bear market that started in 2000 might be on its way to continue.

Portfolio update

2010-05-20T19:38:00.001+02:00

Sold VXX at $34.23

2010-05-20T19:27:00.004+02:00

I refer to my post of May 19. I had bought VXX (the tracker that follows the performance of the VIX, the CBOE Market Volatility Index, that reflects the "fear" present in the market) at $28.38. Today the price of VXX jumps higher; I sell it at $34.23, making a 20.6% return in just 2 days and increasing the portfolio with $2,062.
I believe the VIX is due for a pullback tomorrow. I may decide to enter again in VXX later. Stay tuned.

The VIX index now stands at 44.61 (see weekly chart below). During the October 2008 crisis, the VIX had reached a level of 83.

US Dollar index: an update

2010-05-20T18:30:00.012+02:00

I refer to my post of May 9. I mentioned that my profit target for the USD index was $86-87, corresponding to the upper side of the rising wedge technical formation: see weekly chart above.
We have now reached that price level as the US Dollar index is currently at $86.28 and even reached a high of $87 two days ago.

On the daily chart below, we can see that the stochastics and relative strength index (RSI) technical indicators are in the overbought zone and are starting to go down: this is a potential sell signal. I know some of you have bought the PowerShares DB US Dollar Index Bullish Fund (ticker: UUP), an ETF that tracks the USD index. I think the time has now come to take some of your profits off the table. This sell signal would be deactivated in the event the USD index would break out above the resistance that appears on the weekly chart and stay there for some time.

If the USD index starts to go down in the weeks to come, this would help the price of commodities (energy and agricultural) to start to rebound. Commodities (to the exception of precious metals) have indeed been in a bearish trend lately as they are inversely correlated to the US dollar.

Note that the US dollar and gold - contrary to what typically happens - have been moving together the past few weeks as more countries pop up on the radar for serious financial issues. This is helping to boost both the US Dollar and gold as investors around the world start buying what seems to be safety.

Portfolio update

2010-05-19T21:19:00.001+02:00

Bought CDE at $15.8

2010-05-19T21:07:00.006+02:00

Buying a position in Coeur d'Alene (CDE) on the NYSE at a price of $15.8 for a total of $5,000. Stop loss: $14.0

Coeur d'Alene (www.coeur.com) is one of the world's leading silver mining company. It is also a significant gold producer. It has mines in Bolivia, Mexico, Chile, Argentina, Alaska and Nevada.

CDE is trading below its book value of $24.82, has over $300 million in revenue and revenue growth last quarter of over 147% on a year-to-year basis.

I am betting on a continuation of the increase of silver and gold prices this year that would then benefit to Coeur d'Alene stock price.

Bought VXX at $28.38

2010-05-19T20:47:00.005+02:00

I bought yesterday on the New York Stock Exchange the iPath S&P500 VIX Short-Term futures (ticker: VXX) at $28.38 for a total of $10,000. Stop loss: $21.0.

The entry signal was given by the two moving averages (20 and 50 days) crossing each other with a high volume.

Goal is to make some profits out of the increased volatility currently affecting the stock markets by taking a position in an instrument that provides access to equity market volatility through the CBOE Volatility Index (the "VIX Index"). More info on VXX here.

Stopped out of MOO at $38.0

2010-05-19T18:31:00.000+02:00

Video predicting hyperinflation in the USA

2010-05-15T21:01:00.004+02:00

Gold, silver and goldmines

2010-05-13T13:48:00.011+02:00

Daily chart of the SPDR Gold Trust ETF that follows the price of gold:
1) Resistance of $1200 was broken. Price is now at $1235
2) Gold is already 26% higher year-to-date
3) The parabolic rise of the past few days makes it very risky to buy gold now: a sudden and powerful decline could occur at anytime. I will wait a price pullback before considering an entry.

Such price increase reflects inflationary expectations further to European Central Bank's decision to purchase government bonds to try to solve the Greek crisis, future potential sovereign debt crisis in other countries of the EU, and in general decline of confidence in paper currencies

Not only private investors are amassing gold bullions, the central banks around the world also continue to buy gold: see article in the Businessweek of May 13.

Gold accounts for only 1.6% of the Chinese central bank $2.4 trillion reserves, which is a lot less than the percentage of reserves held at other central banks around the world. So expect to see an increase of gold reserves by China central bank in the years to come. Gold consumption in China may increase a lot within the next 10 years due to demand from investors and jewelry industry. Chinese consumers are high savers and are looking to gold to protect their wealth. See article of March 30 in The Independent.

Gold in various currencies:

The charts of the silver ETF (ticker: SLV) and the goldmines ETF (GDX) look similar to the gold ETF described above. However for GDX, the resistance has not been broken yet.

Performance of stock market indices around the world

2010-05-13T13:10:00.011+02:00

Below we highlight the year to date performance of the major stock market indices for more than 80 countries around the world. The G-7 countries have black borders while the BRIC countries are shaded in blue.

After trading higher for the first 4 months of the year, global markets started going down in late April and early May on sovereign debt concerns.

Some emerging markets have done really well in 2010. Ukraine is the best performing country with a 52.92% increase. Other countries in the top 3 include Estonia (+46.64%) and Nigeria (+33.59%).

Source of this ranking: bespokeinvest.com

Some readings this week

2010-05-09T22:09:00.008+02:00

- Rogers, Faber advise paring investments as US stocks slump (Bloomberg, May 7): Investors should “be very careful and cut back” on their holdings if they have any “doubt,” Rogers said. While a bankruptcy for Greece will be a “good thing” for the country and the euro, it may result in “great instability” for markets as investors worry about contagion in other economies including the U.K. and the U.S., he said. Faber also advised investors to consider reducing their positions on any rebound in share prices.
Rogers, who predicted the start of the global commodities rally in 1999, favors so-called hard assets including silver on expectations of further “currency turmoil” in 2010 and 2011

- Computer trading is eyed. Debate turns to absence of circuit breakers, market makers as mystery plunge is probed (Wall Street Journal, May 8):
Traders parsing the mystery of Thursday's stomach-churning stock-market plunge are focusing on whether rapid-fire computer trading, coupled with the market's complex trading systems, triggered a free fall that appears to have begun with an order to sell a single stock.

- Gold and silver: the only game in town 2010-2011 (Financial Sense, May 12)
There are numerous reasons both fundamental and technical as to why the precious metals complex will surge over the next 18 months. The sector’s surge will be reinforced by the lack of an obvious trend in most other markets. Gold, Silver and the mining stocks will surge while other markets languish.

Civil And Criminal Probes Launched Against JP Morgan For Silver Market Manipulation

2010-05-09T18:26:00.003+02:00

I refer to my previous post of April 21, 2010 related to a whistleblower exposing JP Morgan's silver manipulation scheme.

Last week, US federal agents have launched parallel criminal and civil probes of JPMorgan Chase and its trading activity in the precious metals market.

The probes are centering on whether or not JPMorgan, a top derivatives holder in precious metals, acted improperly to depress the price of silver, sources said.

The Commodities Futures Trade Commission is looking into civil charges, and the Department of Justice's Antitrust Division is handling the criminal probe, according to sources, who did not wish to be identified due to the sensitive nature of the information.

Market Volatility Index (VIX)

2010-05-09T17:38:00.004+02:00

Fear is back in the markets: the past week, the volatility index surged higher (+86% in 5 days !) and is now above its 40 week moving average.
It is possible to trade the VIX index using the iPath S&P500 VIX Short-Term Futures (VXX). See chart below.

SPDR Gold Trust ETF (GLD)

2010-05-09T16:34:00.011+02:00

I refer to my posts of September 22, 2009 and November 11, 2009: At that time gold price had made a break out above $1000. My target was $1200-1300 at the time.

Today gold trades at $1208 and has gone up in parallel with the dollar index. Current fear in the financial markets about sovereign debt crisis in some European countries acts as a catalyst to boost gold price.

Above is the weekly chart of the SPDR Gold Trust ETF (GLD): this tracker acts as a proxy to the price of the gold bullion.

EUR/USD chart analysis

2010-05-09T13:18:00.005+02:00

Monthly chart of the EUR/USD: the "big picture"
The euro is in a downtrend; next support? around 1.25. If it breaks below, next target is the parity with the dollar.

S&P500 index

2010-05-09T11:54:00.011+02:00

I refer to my post of April 30, 2010: I had raised a red flag because of the price divergence between the Shanghai index and the S&P500 index. The past week has seen a big drop of the markets around the world: the S&P500 index lost 6.4% in the week and is now touching its 200 day moving average. The resistance stands at the level of 1200.
On Thursday the panic was in the market as the S&P500 lost 9% in almost 10 minutes before recovering to a loss of 3.2% at the end of the day.

Weekly chart:

Daily chart:

As you can see on the daily chart above, the S&P500 now stands at the same level it was at the end of last year. After trading up more than 9% year-to-date on April 23, it took only a couple of days to get rid of months of hard-earned gains.

The situation on the European stock markets is much worse: the Eurostoxx 50 index lost 11.2% during the week and is now 16.5% below the price it had reached at the end of last year.

This panic caused the US dollar and Gold to raise strongly as they are seen as the safe heavens in the current circumstances.

US Dollar index

2010-05-09T11:44:00.004+02:00

I refer to my posts of February 7, 2010, December 23, 2009, and November 29, 2009.
I gave a buy advice on December 23, 2009, when the USD index was at 75 with a target of 86-87. Four months later, the USD index now stands at 84.59 (see above chart).

S&P500 index and Shanghai index

2010-04-30T09:47:00.007+02:00

Let's look at the two weekly charts above: one is the S&P500 index (500 biggest market caps in USA), the other is the Shanghai index.
The Shanghai index has acted in the past as a leading indicator as China is seen as the economic motor nowadays : it is the country with the highest GDP growth in the world. However this index is now lagging compared to the S&P500 index: the S&P500 is above the 40 week moving average whereas the Shanghai index started going under this moving average 2 weeks ago. This raises a red flag: a price divergence between these two indexes is a concern for any trader.

Citigroup chart analysis

2010-04-22T13:19:00.008+02:00

Weekly chart analysis of Citigroup (the "big picture"):
Settings used: the 40 week exponential moving average (equivalent to the 200 day exponential moving average)
For the first time since mid 2007, the price of Citigroup is crossing this moving average to the upside. That's a buy signal for the long term.

Let's now look at the daily chart (to identify when to buy):

Since the bottom of March 2009 (price stood at around $1.0), the price has been making higher lows in July 2009 and February 2010: that's another bullish signal.
Price is now trying to break above the August 2009 resistance at $5.23.
Price is however still in overbought zone: look at the stochastics indicator. So a pullback might be expected over the next few days/weeks.

The fundamentals of Citigroup are improving: it announced on April 19 a net income of $4.43 billion in the last quarter. More info here.

What am I doing? I am already buying some shares now. I will buy more after the price breaks above the resistance of $5.23. My stop is below $3.10 which is the last higher low made in early February. This is a long-term investment: I plan to hold this stock for several years.

Whistleblower Exposes JP Morgan's Silver Manipulation Scheme

2010-04-21T20:49:00.008+02:00

Interesting story about Andrew Maguire, a London-based precious metals trader, exposing JP Morgan's silver manipulation scheme to the US Commodity Futures Trading Commission.
Let's see whether the CFTC Enforcement division will decide to start an investigation against JP Morgan.

The next story coming after the SEC vs. Goldman Sachs lawsuit announced last Friday?

Read also this related article.

Gold stocks index

2010-04-20T19:10:00.008+02:00

The Amex Gold BUGS Index is a basket of 14 major gold mining companies (Anglogold Ashanti, Barrick Gold, Goldcorp, Kinross Gold, Randgold, Harmony Gold,...). "BUGS" stands for "Basket of Unhedged Gold Stocks". The Index is designed to give investors significant exposure to near term movements in gold prices - by including companies that do not hedge their gold production beyond 1 1/2 years.

On the chart, you can see that gold stocks are trending up and are now nearing the support line. I will be closely watching several gold stocks in the next few days to potentially make some purchases for my portfolio. I will also be watching the price of the Market Vectors Gold Miners ETF (GDX) that tracks gold stocks.

What is interesting to note is that despite the uptrend in the US Dollar index that occurred since early December 2009, the Gold Bugs index has been remarkably resilient, which indicates that the market is still very bullish on gold. A reversal of the uptrend of the USD index would act as a trigger to boost the gold stocks to the upside.

US Dollar index chart analysis

2010-04-18T12:14:00.003+02:00

I refer to the post I made regarding the USD index on December 23, 2009, when I gave a buy signal. This buy signal is still valid today as the 20 day moving average is still located above the 50 day moving average. As long as no crossing of these two moving averages occurs, I stay long on the USD index which closed on Friday at 80.79. My target? 86-87.

Nasdaq Composite Index

2010-03-11T18:38:00.006+01:00

On this monthly chart of the Nasdaq Composite Index (the index of the US technology stocks), you can see:

1) that we are in a secular bear market since the burst of the tech/internet bubble in 2000
2) that within the secular bear market, there was a cyclical bull market from 2003 till 2007
3) in 2008 the market went down strongly and reached a bottom in March 2009
4) we are now at a critical juncture: will the Nasdaq index break out above the downtrend line? if yes, it would mean an end to the secular bear market; if not, a continuation of it.

Video on Goldman Sachs

2010-03-08T18:49:00.004+01:00

This video is a visualization of Matt Taibbi’s article “Inside the great American bubble machine” on how Goldman Sachs has engineered every major market manipulation since the Great Depression. Click here for Taibbi's article.

SPDR Gold Trust ETF (GLD)

2010-03-07T22:49:00.003+01:00

This is the ETF of gold.
1) "Head and shoulders" technical figure? If yes: bullish
2) Resistance level is clear: $112. If price breaks above it, it's a buy signal
3) If price falls below 109, it would cancel this technical figure and is therefore our stop loss

Portfolio update

2010-02-07T20:59:00.001+01:00

BUY Market Vectors Agribusiness ETF (MOO) at $40.0

2010-02-07T20:52:00.004+01:00

I refer to my previous post dated November 22, 2009, in which I introduced a buy order of the tracker Market Vectors Agribusiness for a limit price of $40.0. That price was reached last Friday (February 5, 2010) and the buy order was therefore executed. Stop loss at 38.0, right below the 200 day moving average.

The portfolio is now 80% in cash and invested for 20% in DBA and MOO, two trackers both targeting the agriculture sector.

US Dollar index chart analysis

2010-02-07T20:46:00.004+01:00

I refer to my previous post of December 23, 2009 on the subject. Since my advice to buy the USD, the USD index has been going from 75.0 to 80.4 today. Target stays the same: 86 to 87. We are in a rising technical wedge formation.

At the same time, the EUR/USD has been decreasing from 1.51 to 1.38 today. I stay short on the EUR/USD with a target of 1.30.

Stopped out of EWZ @ $66.0

2010-01-27T18:22:00.000+01:00

Portfolio update

2010-01-26T19:01:00.001+01:00

Stopped out of SLV @ $16.55

2010-01-26T18:27:00.000+01:00

Stopped out of BZF @ $25.6

2010-01-23T09:27:00.000+01:00

Portfolio situation as of 31 December 2009

2010-01-04T19:42:00.010+01:00

First of all, I wish a happy New Year 2010 to all my readers!!! May this year increase your prosperity and get you lots of success in your investments!!!

We have now reached the end of the year 2009. The portfolio has reached a return of +16.6% since it started on April 10, 2009. It started with an initial capital of USD 100,000. The total portfolio now amounts to USD 116,635.

We currently have 4 positions in the portfolio:
- BZF: a tracker on the Brazilian Real
- EWZ: a tracker following the Brazilian stock exchange
- DBA: a tracker following agricultural commodities
- SLV: a tracker following the price of silver

64% of the total is currently held in cash.

US Dollar index chart analysis

2009-12-23T19:11:00.000+01:00

I refer to the post I made on November 14, 2009, in which I warned about a bullish divergence that had been building over the past months between the USD index and the RSI and MACD indicators. I said that "this kind of technical divergence can lead to a sudden and powerful rebound of the US dollar at anytime, which would lead to a violent decline of the equity and commodities markets".

This is exactly what happened as we have seen the USD index going from 75 to 78 today and the EUR/USD decreasing from 1.50 to 1.42 today. My system tells me now to go long the US dollar as the 20 day moving average has crossed the 50 day moving average to the upside (see above chart).

I also refer to my post of November 29, 2009, in which I mentioned that the US dollar index was in a rising wedge technical formation and that it would either go below the support at 74.0 or strongly rebound above that level. The latter occurred. We now have a clear target price for the USD index around 86-87.

Stopped out of FXA @ $88.5

2009-12-21T22:55:00.000+01:00

Portfolio update

2009-12-12T15:59:00.004+01:00

US Dollar index chart analysis

2009-11-29T20:45:00.009+01:00

Let's examine the weekly chart of the US Dollar index:
1) the USD index is still in a rising wedge technical formation.
2) it tested the lower trendline last week (point n°4) and bounced around the 74.0 price level.
3) if it does not go higher than 74.0 in the short-term, it will likely fail. And if it fails, lots of people will scramble for taking the exit door.

Pay attention to the price of gold: it acts as a leading indicator as to what happens to the US dollar. If gold rises, the USD goes down, and vice versa. And the USD is now inversely correlated to the stock markets: when the USD goes down, the S&P500 goes up and vice versa.

S&P500 chart analysis

2009-11-29T16:20:00.011+01:00

The above weekly chart of the S&P500 index shows that we are facing a strong resistance at around 1100 which corresponds to the test of the downward trendline from the October 2007 highs.

Now let's zoom on the daily chart of the S&P500 index.
We can see that:
- we are still making higher highs and higher lows, which is the definition of a bull market.
- the pullback from the highs is each time getting bigger: -3.5%, -4.5%, -5%, -6.5%,...
- each green arrow on the chart shows a bear trap where the market started to rebound
- the RSI (Relative Strength Indicator) is showing a bearish divergence.

However, before calling it a bear market, I would wait for the S&P500 to go below the dotted line and for the 50 day moving average to start trending down.

Some readings this week-end

2009-11-29T15:04:00.005+01:00

- China 2009 Gold Demand, Output May Gain to Records: China overtook South Africa to become the world’s largest producer in 2007 and the World Gold Council said in July that the nation may pass India as the biggest consumer.

- Mark Pittman, Reporter Who Foresaw Subprime Crisis, Dies at 52 : The award-winning investigative reporter whose fight to open the Federal Reserve to more scrutiny led Bloomberg News to sue the central bank and win, died Nov. 25 in Yonkers, New York. He was 52. Pittman suffered from heart-related illnesses. The precise cause of his death wasn’t known. Pittman’s fight to make the Fed more accountable resulted in an Aug. 24 victory in Manhattan Federal Court affirming the public’s right to know about the central bank’s more than $2 trillion in loans to financial firms.

- Strauss-Kahn Says Half of Bank Losses Are Undisclosed : Banking systems “remain undercapitalized” in many advanced economies with “far from normal” financial conditions, Strauss-Kahn said in a speech to the conference. The IMF said in September that banks may have $1.5 trillion in toxic debt remaining on their books, which may hurt credit markets and stifle the global economic recovery. “Probably a little more has been disclosed in the U.S. and a little less in Europe, but it’s almost half and half,” Strauss-Kahn said. “So, we still have a long way to go.”

- Mobius Expects 40% BRIC Stocks Gain, Says Buy on Dips : Mark Mobius said stocks in Brazil, Russia, India and China are likely to rise by 30 to 40 percent within three to four years as higher economic growth and lower government debt spurs corporate earnings.
Mobius, chairman of Templeton Asset Management Ltd., said he’s increasing holdings in all emerging markets, with particular focus on the four biggest developing-nation economies collectively known as the BRICs.
Mobius said he’s buying bank stocks in Thailand and technology companies in Taiwan. Among so-called frontier markets, countries including Vietnam, Kenya and Nigeria are “very interesting now,” he said.

Marc Faber sees big financial bust leading to war

2009-11-29T14:54:00.002+01:00

Marc Faber, the Swiss fund manager and Gloom Boom & Doom editor, said eventually there will be a big bust and then the whole credit expansion will come to an end. Before that happens, governments will continue printing money which in time will lead to a very high inflation rate, and the economy will not respond to continued stimulus.

In one of his Gloomiest predictions, Faber, referred to as Dr Doom, said "the average family will be hurt by that, and then in order to distract the attention of the people, the governments will go to war".

"At some stage, somewhere in future, we will have a war - that you have to be prepared for. And during war times, commodities go up strongly,” said Faber.

"If you want to hedge against war, you don't want to own derivatives in UBS and AIG, but you have to own them physically, like farmland and agricultural commodities.

In a Bloomberg Television interview in Singapore Wednesday, Faber said "What will continue to happen is that the S&P 500 and the Dow Jones will go down relative to gold.

In a May interview with CNBC, he said central banks will continue to print money at full speed, but long-term this strategy will lead to a fall in purchasing power and living standards, especially in developed countries.

Unless the system is cleaned out of losses, "the way communism collapsed, capitalism will collapse," according to Faber.

"I repeat what I have said in the past," Faber said. “No decent citizen should trust the Federal Reserve for one second. It’s very important that everyone own some gold because the government will make the dollar (in the long term) useless."

Source: "In his gloomiest prediction yet, Marc Faber sees big financial bust leading to war" (Business Intelligence Middle East)

Buying today DBA @ $25.99

2009-11-24T18:54:00.003+01:00

I refer to my previous post.
Buying the PowerShares DB Agriculture Fund ETF (DBA) at $25.99 (stop loss: $20)
total invested: $10,000

Investing in agriculture

2009-11-22T21:38:00.015+01:00

Many reasons point to the agricultural sector as a good long-term investment:
1) worldwide population keeps growing, increasing the demand for food
2) the surface of agricultural lands is the same, keeping the offer at the same level
3) population of developing countries (in Asia, Latin America, and Africa) is increasing its standards of living and wants to eat more diverse and higher quality food, increasing the demand for agricultural products.
4) increasing use of food as an alternative energy resource (bio fuels) also increases demand for agricultural products
5) the quantitative easing policy set up by USA and Europe will lead to inflation, possibly even hyper-inflation. People lose faith in paper money and increasingly turn to hard assets and commodities.
6) human beings will always need to eat! Hence the demand for these products will never disappear.

To take advantage of this expected scenario, I will invest in two ETF's:

- the Market Vectors Agribusiness ETF (ticker: MOO, listed on the New York Stock Exchange) that invests in companies that derive their revenues from the business of agriculture. Its top 10 holdings include: Potash Corp, BRF Brasil Foods, Deere Co, Monsanto, Syngenta, Mosaic Company, Kubota Corp, Archer-Daniels-Midland, Yara International. I will buy MOO for the portfolio for a total of $10,000 at a limit price of $40. Stop loss: $29.
See the weekly chart below: MACD shows strong momentum. The 20 week moving average recently crossed the 50 week moving average to the upside, a bullish sign.

- the PowerShares DB Agriculture Fund ETF (ticker: DBA, listed on the New York Stock Exchange) that invests in futures contracts on some of the most liquid and widely traded agricultural commodities: corn, wheat, soybeans and sugar. I will buy DBA for the portfolio for a total of $10,000 at a limit price of $26.0. My stop loss is at 20$.
See the weekly chart below which shows a bullish divergence between the price and the MACD histogram, which means high probability of upside for the coming weeks/months.

I plan to hold both ETF's for the long term (several years).

Readings today

2009-11-22T19:28:00.006+01:00

- Stiglitz Says U.S. Is Paying for Failure to Nationalize Banks (Bloomberg):
Nobel Prize-winning economist Joseph Stiglitz said the world’s biggest economy is suffering because of the U.S. government’s failure to nationalize banks during the financial crisis.
“We have this very strange situation today in America where we have given banks hundreds of billions of dollars and the president has to beg the banks to lend and they refuse,” Stiglitz said. “What we did was the wrong thing. It has weakened the economy and has increased our deficit, making it more difficult for the future.”

- John Paulson Making Big New Bet on Gold (Wall Street Journal): John Paulson, who scored about $20 billion of profits between 2007 and early 2009 wagering against the housing market and financial companies, is launching a hedge fund dedicated to buying up shares of gold miners and other bullion-related investments, according to investors.

- The benefits of quantitative easing have flowed to Wall Street: "The benefit of quantitative easing has essentially flowed into Wall Street, into investment banks, into the banking sector but it hasn't flowed into the typical household in the US. Unemployment is still horrible at the present time with a lot of people being either unemployed or under employed. As a result, we have a very strange economy. We have booming financial markets, but at the same time the average household – the man on the street is basically suffering." (Marc Faber)

Portfolio update and raising stop losses

2009-11-18T22:32:00.004+01:00

Raising the stop losses on all my positions:
- BZF: from $25 to $25.6
- FXA: from $85 to $88.5
- GLD: from $99 to $109
- SLV: from $15 to $16.6
- EWZ: from $63 to $66

Changes are highlighted in yellow in the above table.

My readings today

2009-11-15T00:26:00.005+01:00

- Gold Price Won’t Drop Below $1,000 an Ounce Again, Faber Says (Bloomberg, Nov 11, 2009)
“We will not see less than the $1,000 level again,” Faber said at a conference today in London. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.” China will keep buying resources including gold, he said. “Its demand for commodities will go up and up and up,” he added. “Emerging economies will grow at the fastest pace.”

- John Paulson Buys Huge Stake In Citi, While Dumping Goldman Sachs:
The world's hottest hedge fund manager John Paulson has acquired 3 million shares of Citigroup (C), acquired more shares of JPMorgan (JPM), while completely dumping his holdings in Goldman Sachs (GS) and Bank of America (BAC). As before, Paulson's number one position continues to the be GLD with 31.5 million shares.

US dollar index

2009-11-14T23:32:00.006+01:00

Let's examine the chart of the USD index:
1) The USD index managed to come back above the 75.0 important support: it is now at 75.23.
2) The 50 day moving average has been playing the role of a key resistance: the USD index never managed to get above it during the past 6 months. But for how much time still?
3) There is a bullish divergence that has been building over the past months between, on the one hand, the USD index and, on the other hand, the MACD and RSI indicators: the slope of the USD index is going down whereas the slope of the MACD and RSI is going up. This kind of technical divergence can lead to a sudden and powerful rebound of the US dollar at anytime, which would lead to a violent decline of the equity and commodities markets.

Gold chart analysis: update

2009-11-11T13:59:00.014+01:00

On a previous post dated October 12 (see related chart above), I was writing the following:
"Gold last week went strongly up, way above the psychological level of $1000. My gut feeling? gold will boost to $1300 in the next few months. US dollar is losing its credibility as worldwide reserve currency. Central banks are divesting their dollars to have more euros and yen. China wants to get rid of its dollars. This will probably further contribute to the rise of the price of gold."

Let's look at today weekly chart below: gold is now priced at $1115, a 10% move up in less than a month. The momentum (see the MACD indicator) is supporting the current uptrend.

From a fundamental point of view: There is huge suspicion about paper money around the world and this suspicion is increasing every day. Furthermore, gold mines have depleting reserves and central banks are increasing their gold reserves: this is supporting the current increase in the price of gold. Additionally if you adjust gold price for inflation, the price should be around $2000 an ounce today.

--

I am currently in Bogota, visiting the "Museo del Oro", the most important collection of gold art works in the world with 35,000 pieces exhibited.

US dollar index ; chart analysis update

2009-11-11T13:40:00.003+01:00

Daily chart: The US dollar is still in a bearish trend. The support of 75.0 was broken today.

Weekly chart: Next target for the USD index: 72?

I'm now on Currensee

2009-11-09T15:31:00.008+01:00

I have now joined Currensee (www.currensee.com), an online worldwide community of Forex traders. My nickname there is "Trader Blastradius" and I am sharing my "Tarantula" strategy, trading mostly the EUR/USD, AUD/USD, and GBP/USD currency pairs. If you join this community, don't forget to add me to your Virtual Trading Team and tell me that you knew me through my blog.

Currently on holiday in Barranquilla (northern coast of Colombia). 35°C and the sun is shining. See some pictures below.

What will the SP 500 index do in 2011?
	decline more than 20%
	decline 10% to 20%
	decline 0% to 10%
	gain 0% to 10%
	gain 10% to 20%
	gain more than 20%

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