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Main Website >>Structured Finance >>Blog >> Tag: Commodities
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Bill Carrigan, Founder, GETTINGTECHNICAL.COM

No Investment Sheep in Sight
Thursday, June 09 2011 | 11:27 AM
Bill Carrigan
Founder, GETTINGTECHNICAL.COM

If I had to pick one commodity that is still out of favour with investors it would be natural gas. When I study a long term chart of natural gas (monthly) I see a bear market low in September 2009 followed by a large 20 month symmetrical triangle. This in turn has printed a series of higher lows and is about to generate a positive 10-month ROC number.

We need to get into the natural gas space before the investment sheep arrive. In this case the investment sheep will likely be those trend following portfolio managers who are currently chasing the utilities, consumer staples and telecom stocks. Now when the sheep take note that natural gas prices have stopped declining (three higher lows since last October 2010) they may begin to accumulate the shares of the natural gas producers.

Some smaller names would be Celtic Explorations Ltd., Trilogy Energy Corp, Birchcliff Energy Ltd, Paramount Resources, Fairborne Energy Ltd., Perpetual Energy Inc, Corridor Resources Inc., Tethys Petroleum Ltd., Delphi Energy Corp. and Vero Energy, Inc. The big go to name is EnCana Corporation (ECA). The long term (monthly) chart of ECA displays the monthly cycle troughs of 2003, 2008 and 2009. Note the pending trough of May 2011 that is about to signal the end of the short 10-month ECA bear. This pending cycle trough is supported by an improving relative reform signal. On a P & F chart ECA needs to break above $35 to trigger a bullish stampede into the name.



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0 Comment | Add Comment(s) | Commodities, Investors, Energy, Natural_Gas,


James Picerno, Editor, CAPITALSPECTATOR.COM

Measuring Inflation
Thursday, April 07 2011 | 04:26 PM
James Picerno
Editor, CAPITALSPECTATOR.COM

Economist Mehmet Pasaogullari at the Cleveland Fed reviews inflation from several angles. If nothing else, he offers a timely reminder that there's more than one way to skin this statistical cat. Inflation comes in a variety of flavors. But while the numbers vary, there's a common trend afoot, he reports, noting that "all measures of short-term inflation expectations we have looked at show an upward trend since last summer."

Pasaogullari continues:

"Some measures showed higher increases, and others were much more limited. Measures of longer-term inflation expectations have also risen in the last six months... However, most of the increase in the market-based measures happened in September and October 2010. The recent increases in food and energy prices have had limited, if any, effect on the long-term expectations. They seem to be well-anchored and are in line with their averages of the previous decade."

The question (as always) is whether the past is prologue? Looking for answers in real time is forever problematic. That said, the inflation forecast based on the yield spread between the nominal and inflation-indexed 10-year Treasuries has inched higher since Pasaogullari's essay was published on April 1. In fact, the Treasury market's inflation outlook is 2.57%, as of yesterday. That matches the previous peak, set back in early July 2008, when oil was near an all-time high.



The last time we hit 2.57%, the peak was short lived. Inflation expectations started falling, and crashed soon after. That's not likely to happen this time, of course. Why? The catalyst isn't likely to make a repeat performance. Massive financial crises of the type that hit the world in late-2008, fortunately, are rare. So what does that mean for the inflation trend this time? Stay tuned...

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0 Comment | Add Comment(s) | Inflation, Oil, Commodities, US_Economy,


Roger Nusbaum, Chief Investment Officer, YOUR SOURCE FINANCIAL (RIA)

Gold ETFs
Tuesday, April 05 2011 | 03:46 PM
Roger Nusbaum
Chief Investment Officer, YOUR SOURCE FINANCIAL (RIA)

There was a comment on some old post of mine from Seeking Alpha where the reader questioned the gold in the vault for the SPDR Gold Trust (GLD). He said something like if you want your gold, will it be there and I think he was implying the same for the other physical gold ETFs. We own GLD for our clients.

This line of thinking is far from original, this has been a matter of doubt for a while with some people. I'm not sure what the origin for this is and I suppose it doesn't really matter the origin, there are people who do not believe there is the proper amount of gold in the respective vaults.

Chances are there is no convincing someone who believes the vaults are deficient that the correct amount is there. This is very simple however. Do you believe the gold is in there? I think this is a straight forward yes or no question. It is for me, I believe it is in there without hesitation. You either think it is there or you don't. If you don't then you clearly should not even consider owning the fund. There is no need to take on this type of worry in your portfolio. I have zero doubt the correct amount is there and so we own the fund.

People seem to get very worked up about this which is ok I guess other than it seems like wasted negative energy. Perhaps there is something similar with my opinion about Chinese reverse mergers. While I certainly don't think all of them are frauds the potential goes up in this realm and I simply don't want to take on that type of worry/risk. Simple avoidance without negative energy. This makes investing and life in general much easier.

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0 Comment | Add Comment(s) | Gold, ETFs, Commodities,


Bill Carrigan, Founder, GETTINGTECHNICAL.COM

Action and Reaction
Wednesday, March 30 2011 | 06:30 PM
Bill Carrigan
Founder, GETTINGTECHNICAL.COM

The Japan event of March 11, 2011 is probably going to be stimulative. Japan unlike Haiti is a large modern economy and the re-build will be a priority for the Japanese people. We know that Japan will need a lot of “stuff” – commodities, machinery, and infrastructure along with complicated transportation needs.

Technical analysts tend to believe that for every negative event there is a positive event somewhere else – sort of like Newton’s laws of motion – one being action and reaction. The negative Japan event should boost the price of coal, copper, wood and natural gas. Now the one big commodity laggard over the past several years has been the price of lumber – likely due to the depressed U.S. housing starts. We need to watch lumber closely. Note the weekly chart displaying lumber’s intermediate cycle along with a very slow %K and %R stochastic. Note the current down cycle and the bullish flat price, a sign that the intermediate cycle will turn up above the zero line. If we break above that 5-year level we need to buy the beneficiaries – action and reaction



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0 Comment | Add Comment(s) | Japan, Commodities, Infrastructure,


Bill Carrigan, Founder, GETTINGTECHNICAL.COM

The 'Echo' Tech Boom
Friday, February 18 2011 | 10:54 AM
Bill Carrigan
Founder, GETTINGTECHNICAL.COM

As noted before our anticipated A-B-C correction is postponed as the U.S. FED continues to throw dollars at the capital markets with QE causing the U.S. to export food inflation which will likely end with a bubble. The hot commodity space has pushed the Reuters/Jefferies CRB Commodity index above the pre-crisis 2008 peak. Don’t let the hot commodity space distract you from other opportunities out there

Did you know that the Nasdaq 100 index is also trading above the pre-crisis 2008 peak?

This recovery beats the Dow Industrials, the Dow Transports, the S&P500, the TSX Composite and the Russell 2000 and the red hot TSX Small Cap Index. Our monthly chart of the Nasdaq 100 displays the first technology boom & bust of the late 1990’s and now the second or “echo” boom. Note the break up from that huge 2008-2010 inverse Head & Shoulders bottom.

The recovery price target of 2860 is 61.8% retracement of the first boom and bust. That gives us about 20% upside from here – have fun but be nimble



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0 Comment | Add Comment(s) | Commodities, Indexing, Inflation,


Bill Carrigan, Founder, GETTINGTECHNICAL.COM

Cheeseburgers, KFC & Copper
Friday, February 04 2011 | 04:25 PM
Bill Carrigan
Founder, GETTINGTECHNICAL.COM

No doubt we have to credit the Chinese growth story for the big 2010 gains in the North American stock markets. The broadest measure of U.S. equities, the Dow Jones Total Stock Market Index (formerly the Wilshire 5000) gained 15.34% in 2010, or approximately $2.3 trillion in market capitalization. The index has gained 44.99% since 2008. Most notable was the index gain of 23.35% during the third and fourth quarters.

Investors in the commodity space were the big winners with the price of crude, gold, silver, cotton, copper, uranium and potash all soaring in response to the China story.

Our chart displays two direct beneficiaries of the China story – the big fast food players McDonalds (MCD) and YUM Brands (YUM). Look at the price action over the past several weeks – down is the face of a late December rally the took most of the broader stock indices to 52-week highs. Clearly these Chinese consumer bellwethers are predicting a Chinese slowdown – if you love the copper / Chinese story MCD & YUM may give you indigestion.



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0 Comment | Add Comment(s) | Indexing, Commodities, China,


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