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I mean the stock market...
Judging by the way the ferociousness of charge, there may not even be the chance for a double bottom...
this guy say take bank yrs to recover...read
  
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How Much of Banks' Earnings Are Real?Thomas Tan May 5, 2009 Last month, many banks reported strong earnings. Market sentiment has changed substantially. Only a few months ago, the collapse of the whole US banking industry threatened to bring the whole global economy down. Now, suddenly, the picture looks rosier than ever and this financial crisis seems to be over. Or is it? With very limited transparency of bank earnings, there are several so-called earnings areas investors should question whether they are sustainable, and a few other areas investors should ask whether they are even real. They are as follows:
Many people argue that banks will eventually 'earn their way out' of their losses. First of all, the record lower interest rate, thus the huge spread earned by the banks today, might not be sustainable. Interest rate will go high, and spread will shrink to squeeze any such earnings left. Even at the best case scenario for banks, the interest rate and spread stay this way forever, the current debt is still about 4 times of our GDP. If we use 3.5-5.5% losses estimated by Michael Mayo, the total losses are about 14-22% of our GDP. In order to fill this giant hole, a fund manager made a quick calculation with the best scenario of record corporate profit margin and zero consumer savings, like the good old days, and it will still take over a decade for banks to complete this so-called 'earn their way out' process. In my previous article here, I indicated that the banking industry will stay flat at this level at range bound for the next 20 years, which now doesn't seem to be far-fetched at all. May 4, 2009 Thomas Tan, CFA, MBA email: thomast2@optonline.net www.investorwalk.com  Disclaimer: The
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Yes, I had read this writeup before, note his disclaimer:
This implies that we may (no guarantees here) see lower prices in the precious metals in the following days.
Of course the market might prove me wrong, as nobody can be right 100% of the time
cheongweee ( Date: 05-May-2009 04:25) Posted:
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To richtan...this may of interest to u and some ppl here..
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Precious Metals Correlations - Next Step in the Multi-market Analysis |
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As you already know, it is usually best to analyze many markets, even if you are really interested in only few of them. After all, given today's level of globalization in the world economy and in financial markets, it is not uncommon to see most (!) markets plunge or soar at the same time. I've written about this phenomenon in the essay dedicated to gold market's fundamentals, so I don't want to repeat myself here.
Analyzing many markets already gives us advantage over most investors, who focus on gold or silver only, but I don't want to stop just there. In order to make this multi-market analysis even more efficient, I try to estimate the strength of "influence" that particular non-PM market has on gold, silver and corresponding equities. Consequently, I’m able to pay greater attention to markets that are more important at particular moment. One of the ways to measure the strength of the aforementioned "influence" is to use the linear correlation coefficient. I have put "influence" into quotation marks, because the correlation coefficient does not tell us which market influences which - still, we have the common sense to know that the price of gold determines earnings and therefore share prices of gold mining companies, not the other way around.
What this number really tells us, is "how much" have the markets moved together in the past, without telling us why this has taken place. This "correlation number" takes values from -1 to 1. If it has a negative value it means that this correlation is negative - two markets on average move in the opposite direction. If the "correlation number" is positive, then it means that these two markets move in the same direction on average.
Before I continue, I believe a technical digression is needed. I would not recommend using correlation coefficients to calculate the exact sizes of one’s positions or to estimate the size of the position that one would want to hedge. Most statistical coefficients (including the one mentioned in this essay) are biased as a result of assuming normal distribution of returns. It does not pose a serious threat as long as you only use the results for comparison or to as an additional technique. One should also check the raw data for rare (but significant) events.
To better understand the concept of the correlation coefficient, please consider the following example. I suppose that nobody will argue with the fact that gold and silver move in the same direction on average. If we calculated the value of correlation coefficient for gold and silver it would certainly be positive. You can tell the strength of the correlation by looking how far it is from 0. For example during last year (+/- 250 trading days) gold and S&P Index have moved rather independently from each other and the correlation value is very close to 0 (it equaled 0.08 on April 24th). On the other hand, HUI Index has moved rather in tune with the price of gold, so the correlation coefficient for the previous year equaled 0.67. Please take a look at the table below.
I have calculated values of correlation coefficient for gold, silver and PM stocks with USD Index and the general stock market (S&P Index). I have grouped the results into columns, depending on how much data I have used to calculate a particular number. The first one has been calculated for the previous two weeks (10 trading days), whereas the last one has been calculated for the previous year (+/- 250 trading days)
The column, which one should analyze depends on what one wants to know. If you're a long-term Investor who wants to analyze the long-term trends, one should go with the last column that is created by calculating data from the previous 250 trading days (about a year). On the other hand, Day-Traders should focus on the 30-day long column or even the 10-day one (though this one is not statistically significant, but that is another matter).
The point is that not only do the prices on various markets change and should be analyzed in different time-frames, but the same applies to the way markets influence each other. The important thing here is that prices and correlations don't necessarily change at the same time. Therefore, when we see that we are getting closer to a particular turning point in gold, silver or corresponding equities, we may check what the key markets are - at that particular moment. This will tell us what might serve as a catalyst for either breakout or breakdown, which consequently increases our chances of making a correct decision. In other words, analyzing these key markets should provide us with more information about future prices and trends, than analyzing other, non-key markets.
The table above tells us several obvious things (thus indicating that this type of analysis makes sense), and several new ones. As far as the former are concerned, please note that the correlation between gold and gold stocks is always positive, meaning that gold and gold stocks tend to move in the same direction - which is obvious, and that does not add much to what we already know. On the other hand, we see several interesting points.
Gold has been lately (30- and 90-day correlation) trading rather in tune with the general stock market (naturally in the opposite direction), but it seems that gold is going to trade more independently in the future. The 10-day correlation equaled mere 0.07 which means that in the very recent past gold moved rather independently from the general stock market. As I've mentioned earlier, 10 days is not enough data to make any detailed claims, but it's enough for us to be suspicious regarding the previously prevailing correlation.
In the April 3rd Premium Update, I wrote:
It is difficult to say, when will markets stop perceiving U.S. Dollars as a safe haven, but I will monitor this situation and report to you accordingly. For now, the direct implication is that for now, signals for the USD market do not automatically translate into signals for gold/silver.
At the moment, it (once again) seems that gold is resuming its normal, negative correlation with the dollar (as measured by the USD Index). This, accompanied by already strong negative correlation USD - silver and USD - HUI, is more than enough to make me get back to my regular USD analysis. Although, this is not yet certain, not-analyzing the USD market may be costly.
Summing up, there is no strong proof yet, but it seems that the precious metals market is once again looking more at the USD Index, than at the general stock market. This does not mean that "from now on, the dollar market is all there is to the precious metals market", but it indicates that divergences between the dollar market and the precious metals market should once again be viewed as important. The general stock market is still relevant in our analysis, but we may need to look at the dollar market for more meaningful signals. Since USD Index has not broken down through its rising support trend line, the short-term trend remains up. This implies that we may (no guarantees here) see lower prices in the precious metals in the following days.
Of course the market might prove me wrong, as nobody can be right 100% of the time. To make sure that you know my thoughts (including information not mentioned here) on the market as soon as I post them, I suggest signing up for my free mailing list. Sign up today and you’ll also get 24 hours of access to the Premium Sections on my website (including tools and charts dedicated to PM investors and speculators). It’s free and you may unregister easily.
Additionally, you will be able to see the correlation table with up-to-date coefficients.
P. Radomski
Editor
Sunshine Profits
From: http://www.preciousmetalstockreview.com/downloads/May%202,%202009%20pdf.pdf
Gold fell only 3.27% on the month which on the surface is respectable.
On this log scale monthly chart all trend-lines are solid and strong. There
aren’t too many other markets or stocks you can say the same about. The two
lines on top denote the neckline of the massive head and shoulders pattern.
Certain technicians could use either line as the neck so they are both there for
your viewing pleasure. Basically the $1,000 line is the where gold will either
blast o
The lighting bolts that hit gold this week still have the hair on the back of
my neck upright. I don’t often publish charts showing intraday movements but
this week was among the most blatant weeks that gold was obviously taken
down at the same time, to the same degree on two days.
For years now it’s been an obvious, disingenuous trend that gold hasGATA but not many others are willing to admit itfficial mentors, Bill Murphy, get so
risen in the east and fallen in the west. Many times at the exact moment the NY
markets open. This week the Tuesday and Thursday trading was pretty sick to
keep it publishable. Why would the price be taken down the day before and
after the FOMC meeting at the exact same time to the exact same degree? I
know the answer and so does
yet.
The other thing I would like you to look at in the chart is the end of the
NY trade where no other world markets are yet open. You have to have a pretty
big line and either be an institution or have very good connections to trade this
thin market. So many times over the course of this bull market the price has
traded well all day only to be moved around, usually lower, in the Globex
market where volume is low.
So many including one of my uno
aggravated by this type of action. To me its inevitable that gold and silver will
continue their bull markets and I am actually grateful for more time to buy at
low prices. But so many do take it personally and get upset even some of my
subscribers and correspondents want action now. I can’t move the market and
or it is being forced upon it matters not. Too many want riches now
and today. Patience is a virtue and makes life easier and less stressful. Gold
and silver will go much, much higher and shake out the many weak hands who
jump in as it roars and complain and sell losing money when it contracts. We
are years from the blow o
right and sit tight.
That’s been my motto for years now and I am sticking to it. Gold has
risen on average over 16% a year for the last eight years. Last weekend I had
the pleasure of hitting the road on two wheels with a few friends to a friends
cabin on the lake. After the day exploring the area, over steak and a few beers I
had to ask if anyone knew of an investment that has appreciated at 16% a year
over the last eight. Of coarse the dentist among us knew as we talk about such
things but nobody else knew. The others kind of looked cockeyed at me when I
said physical gold in your hand. The pulp mill worker didn’t care much to talk
about anything but bikes, the retired cop is broke but the dentist knew and
knows where to put his money, the CSI investigator gave me a look only a true
investigator could. I am sure he’s on the case and will have to see that for
himself.
The point is not many people yet are investing in the metals market, but
they will. God knows they wish they had already, but that is besides the point.
The real moves are yet to come, and no matter what happens day to day I care
don’t care to. This market is taking it’s sweet time moving, whether that be it’s
not, for the trend cannot be a
Great News, Plus China, Asia, Gold …
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| The Chinese are spending like crazy! Retail sales shot up 15.2 percent for the first two months of this year. |
2. Unlike U.S. and European consumers, China’s consumers are spending. China’s retail sales for January and February jumped 15.2 percent overall, with urban sales up 14.4 percent and rural sales up 17 percent.
Total first-quarter retail sales jumped 15 percent in the urban areas and 17 percent in the rural countryside. Auto sales for March surged an amazing 27.2 percent!
Meanwhile, there are also signs that China’s property markets are picking back up. Luxury property prices are on the rise again, climbing 2.1 percent so far this year, while property transactions overall jumped nearly 60 percent over February’s pace.
Home sales in Shanghai totaled 1.5 million square meters in March — a whopping 91 percent increase over January.
3. Unlike the rest of the world, China’s (and most other Asian countries’) reserves continue to grow. Despite a slump in exports, almost all of Asia continues to see growth in their monetary reserves, with China’s piggy-bank just recently hitting $2 trillion.
Moreover, from China to Thailand … from South Korea to Indonesia — taxes are being cut virtually across the board … massive fiscal stimulus is being applied … and domestic consumption is being stoked, big time.
My view: If you acted on my suggestions and have some long positions in Chinese stocks or funds, hold! I expect further gains in Asia.
Gold News …
Did you see the news on China increasing its gold reserves by a whopping 76 percent, or 654 metric tonnes (23,069,171 ounces) since 2003?
It’s amazing to me that so many investors and analysts are surprised by this. I stated as early as 2002 that China would be drastically upping its gold reserves … that it would not tell anyone it was doing so for quite some time … and that eventually, China would come to own probably the largest gold reserves in the world.
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| China is stocking up on gold and could end up with the largest gold reserves in the world. |
And in the same October 9 issue of Money and Markets that I referenced above, I stated that “the authorities in Beijing are no dummies. They also know the U.S. dollar is in a long-term downtrend. So, they have only one choice: Bolster the country’s gold reserves while they’re investing in U.S. Treasuries.”
Seems like that’s exactly what they’ve been doing — for years. And likely will continue to do.
While I suggest you stay out of U.S. Treasury notes and bonds, my position on gold remains the same: It’s one of the best investments you will ever make.
Best wishes for your health and wealth,
Larry
Bullish Gold market commentary by James Turk |
GoldMoney Alert - 26 April 2009
Gold's Strong Technical Position
The outlook for gold remains bullish. Central bank 'printing presses' are running at full steam trying to keep up with those governments around the world that are spending more money than they have or are likely to collect in taxes. China's announcement on Friday that it has increased its gold reserves by 76 percent to 1,054 tonnes is yet another important piece of bullish fundamental news for gold. It is therefore not surprising that gold is in a strong technical position too, as we can see from the following chart.
This chart shows that gold remains in an uptrend. In fact, this uptrend is accelerating. Note that the green line marking the uptrend is curving upward, indicating that momentum is building.
Gold is also above its 200-day moving average, which is always a positive factor. But there is another fascinating development that needs to be considered. Gold is forming a 'head & shoulders' pattern, which can be clearly seen on the following chart that presents gold's daily New York close since the beginning of 2007.
H&S patterns normally indicate a reversal of a trend. After a long bull run, a H&S top will form to reflect distribution. In other words, buying power has been exhausted and is being overtaken by selling pressure. Prices are simply too high and cannot be sustained because they no longer represent an acceptable value.
A reverse H&S pattern (with the neckline above the head and shoulders) forms at a bear market bottom. Selling pressure is exhausted and is being overtaken by buying power, which is the result of the numerous bargains that become available at the end of the bear market.
Here is the fascinating development in gold. It is forming a reverse H&S, but gold is in a bullish uptrend, not a bear market bottom. The reverse H&S is appearing as a continuation pattern, which is very rare.
The only logical interpretation of this reverse H&S pattern is that gold represents exceptional value, as if it were at a bear market bottom. A bold interpretation would be that a 3-digit gold price will soon be an historical artifact, just like the 2-digit gold price.
Take a close look again at the chart immediately above. The neckline of the reverse H&S pattern is approximately $1,000. The left shoulder and head are complete. The right shoulder is now forming.
What's more, note the red downtrend line in the right shoulder going back to the February 2009 high. When that line is hurdled, it would be logical to expect that gold will continue higher and complete the right shoulder. The next logical step would be for gold to immediately thereafter break above $1,000.
Maybe I should say "if" that red downtrend line is hurdled because nothing is certain when it comes to markets. But it seems that there is a high probability the red downtrend line will be hurdled soon, possibly this week. So perhaps $1,000 gold may be just around the corner.
Published by GoldMoney
Copyright © 2009. All rights reserved.
Edited by James Turk
tirami ( Date: 03-May-2009 13:22) Posted:
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