Stocks rebounded for their best week last week , since March. It seems hard to believe this, judging from the uncertainty, the fear, and the whipsaw. The market tried to go up.
This week I read a classic example of stupidity in motion in the Wall Street Journal, out in print in the letters to the editors to the world. First, the letter:
“Arthur Laffers’s June 7 op-ed “Tax Hikes and the 2011 Economic Collapse” will be ignored or denigrated by the left. Yet Mr. Laffer uses facts of the past to get glimpse of the future. He implies that the current “low growth” for 2010 may be the high-water mark for our domestic economy given the higher tax rates on the horizon in the coming years.
The Reagan economic program was tinkered with and modified slightly, but it resulted in strong growth with minimal inflation from 1983 through 2007. Reagan was not successful in getting Congress to restrain spending,, but the impasse between Congress and the executive branch created with the election of a Republican Congress in 1994 allowed for a government surplus.
Once again America can grow with low inflation, restrain spending and lead the world out of its economic wilderness. The nation that did it once can do it again, but it will have to throw out the Democrat socialists and the Republican accommodations to do so. I hope this in November that process begins.
John L. Sorg McCordsville, Ind.”
Mr. Sorg sounds great, doesn’t he? It’s patriotic, the “we can do “ attitude”, and makes one bypass four key things:
1. Facts from the past are what we learn about the future from. 2. The Reagan economic program, great actor that he was, allowed for the
largest deficit we had ever had as a country for the following
administration. 3. Low inflation and restraining spending will alone NOT lead the world out of
its economic wilderness. Only when greed is regulated will this stop. 4. Democrats are not socialists.
Sarah Palin should be his President. She can make you feel good too.
Arthur Hill with Stock Charts announces Friday:
-- A POSSIBLE BROADENING FORMATION FOR THE NY COMPOSITE -- NASDAQ HOLDS ABOVE FEBRUARY LOWS WITH VOLATILE RANGE -- NY COMPOSITE UNDERPERFORMS NASDAQ -- NYSE AD VOLUME LINE IS WEAKER THAN THE AD LINE -- VIX AND VXN REACH MEDIUM-TERM EXTREMES
This isn’t the beginning of the end of the U.S. inventory cycle. Rather it is the destocking, the recession induced paring back that has largely come to an end. This is why the GDP is up, because manufacturers are building inventory. People are buying more. Retail sales showed a blip, and no one followed the facts, that in general, wholesale spending is up, and companies are doing well.
*There was a 14% increase in the number of millionaire households in 2009, to 11.2 million.
*There are 111.5 trillion dollars of global assets under management in U.S. dollars in 2009
The CEO slime of BP slime is on top of Capital Hill Thursday to talk about slime, to those that took slime to let slime through.
Whether Kroger is able to match Wal-Marts’ massive influx to retail grocery will reflect entirely on price, sadly. Does Kroger have the ability to buy as well as slimy Wal Mart. As Wal Mart cuts, as will Kroger. Margins may be affected for Kroger shareholders.
SanDisk (SNDK) is one to watch. It's getting huge revenue from Apple's ipad, and is being used in digital memory for cameras, Blackberries, and all smart phones.
We typically steer away from semi-conductor stocks because they are so volatile, and have very bumpy and hard to read cycles, but SanDisk has strength, name, and lots of future.
Hereʼs another stock we will recommend, but not track or put in our portfolio. Buy SNDK under $45.00. Set a tight stop loss of 42.00 or 39.00, and hold the position for at least 6 months.
If buying a call option choose a Sept or later ATM call, and expect two buys.
Use the same stop loss as for the stock, or take greater risk and buy the seconds at 39.00 and average cost.
The Gold Rally is far from over. We sold early on GLD, SSRI, and CEF, recommending sale at 1160 to 1190. The market has since rallied Gold to over 1240, and we’ve seen a recent but slight breakdown.
We recommend building new inventory in GLD, SSRI and CEF in stock positions first, buying on all dips, and returning to a 15% minimum allocation to Gold, Silver and Mining. We continue to hold a large position in AU, the largest mining company.
We have a cheap .23. put out on Gld now, hoping to scalp some fast profits on any day that Gold takes a more serious dip, and it will. When we buy again, we will be buying stocks, and then long‐term call options.
Gold will easily hit $2000.00, and should. Buy it, hold it, and hoard it. For those that have access to safe storage we also recommend the buying of Gold Bullion bars, now available at ATMS in Dubai and Saudi Arabia, a sign of what is to come.
I take you back to two realities:
1. Money is not real. Gold is.
2. The earth did not begin with the birth of Jesus Christ, or any such nonsense. It’s been empirically proven otherwise and the babblers that use a book translated 16,000 times and take things out of context , are no better than any fundamental radical group, including those of Islam.
There is a philosophy I take to heart in trading: *I have no enemies. *The only war in trading is within myself *All facts are false until proven facts
*FEAR is false evidence appearing real
*Question all authority and all rules. Do not trust those in uniforms enforcing laws. Do not trust or be willing to have your rights invaded
*Question all rules and regulations to yourself. Do not follow stupidity. Be good, but be human and test boundaries, not human and confined to boundaries. You’ll find those that set the boundaries quite narrow ‐minded. Stay away from all narrow‐ minded people, and all people that are assholes. Life is much easier.
We see Gold, which is now trading equally to Treasuries, a converse reaction, as mildly correcting to 1199, to as low 1140.
