PMS Weekly Digest for May 10-11

[Guest AssMaster]

A word of caution from the Gold-Eagle goldheart guys.

 

 

Current Interpretation: I have included what I think is a significant observation on the chart below. That chart shows the recent activity of six of seven GoldHeart waves for the last 10 months. Wave 1, the shortest time frame, is not especially relevant to the discussion in that it reflects near term daily action. The significance of my observation involves the similarity of yesterdays wave pattern ( May 7th), to approximately the first week in September 02. On the plot below, these time slices are indicated by dashed red lines. The color coded circles, that correlate to the color coded waves, indicate the proximity of the 6 waves relative to their overbought/Dover Sole positions at each time slice. In addition, note the direction of wave travel. These times slices are for all practical purposes equal. Note the subsequent action of GEGFI shortly thereafter after over the next few months. Although, we continued higher in our Gold bull in the longer term , the shares sold off shortly after based on the increasingly overbought condition of the MT wave.

 

 

The implication is that we again may be set back in the short term by the approaching MT overbought condition! The future correction would present opportunity to increase shares or re-balance trade positions. Gold fundamentals are screaming positively at us right now, so let your instincts guide your decision regarding modifying trade and core positions. I can only show the past! We do know that we have been buffeted continuously by traders and momentum players seizing price opportunity over the last year. Why should they stop now? Examine these wave motions and let your instincts be your guide. GoldHeart ? (May 8, 2003)

http://www.gold-eagle.com/charts/goldheart.html

[stormydaze]

RULES OF LIFE

 

Sometimes we need to remember what the Rules of Life REALLY are:

 

1. Never give yourself a haircut after three alcoholic beverages of any kind.

 

2. You need only two tools: WD-40 and duct tape. If it doesn't move and it should, use WD-40. If it moves and shouldn't, use the tape.

 

3. The five most essential words for a healthy, vital relationship are "I apologize" and "You are right."

 

4. Everyone seems normal until you get to know them.

 

5. When you make a mistake, make amends immediately. It's easier to eat crow while it's still warm.

 

6. The only really good advice that your mother ever gave you was: "Go! You might meet somebody!"

 

7. If he/she says that you are too good for him/her -- believe them.

 

8. Learn to pick your battles. Ask yourself, 'Will this matter one year from now? How about one month? One week? One day?'

 

9. Never pass up an opportunity to pee.

 

10. If you woke up breathing, congratulations! You have another chance!

 

11. Living well really is the best revenge. Being miserable because of a bad or former relationship just might mean that the other person was right about you.

 

12. Work is good, but it's not that important.

 

13. And finally; Be really nice to your friends and family. You never know when you are going to need them to empty your bedpan.

 

Regarding No. 4, I'll only say that "normal people worry me"

 

Regards

[Pee Brain]

unless we get volume to start increasing on the gold stocks, they'll consolidate or go slide south... a big dump in the general market might do the trick... RANGY looks a little better on a weekly basis, and it might be consolidating - look for low volume and a sideways consolidation...

[OldMan]

Charmin:  Is that trending123 guy especially foaming-at-the-mouth bullish on gold at this time or is he always that way when he gets bullish about something?

Who knows ... he may be right.

 

OldMan

[Guest AssMaster]

If we assume that gold, the XAU and the HUI are in a bullmarket, then one would think that there must be some reasonably well defined long term uptrend channel. If so, we just have to define it - then buy as we descend from the mid-channel towards the lower-most trendlines (green) and sell as we ascend from the mid-channel (black( towards the upper-most trendlines (red).

 

In the current psychology, a lot of people will dump when we hit the mid-channel - which would be exactly at the July top. Once they finish dumping, the rally will hopefully continue above mid-channel pwards to one of the upper trendlines. Once this happens, the trend followers will jump on for the final push to one of the upper-most trendlines where we should all sell everything we have to them.

 

Some people could lose money trading in a bull market. That has got to be pretty difficult.

 

Solution: buy the lower trendline and hold. Let time make you look like a genius - if it really is a bull market.

 

Having said that, it is still not out of the question that we might visit the lowest trendline before going above the mid channel trendline. I have some powder dry just in case, but I think we go higher before we go lower.

 

Chart of NEM:

[stormydaze]

In the current psychology, a lot of people will dump when we hit the mid-channel - which would be exactly at the July top. Once they finish dumping, the rally will hopefully continue above mid-channel pwards to one of the upper trendlines. Once this happens, the trend followers will jump on for the final push to one of the upper-most trendlines where we should all sell everything we have to them.[/code]

 

AM, are you referring to the POG topping in July? The 81d cycle should top on June 9or10. The miners have been leading the POG and should top before the POG. If that is the case then I will be a seller prior to that date and take the summer off, or until the yellow stuff gets hammered into the ground, no pun intended, and then reload. I bought the cycle top last year in the spring and just last week sold Bgo for a loss, was an IRA holding along with Drooy which also is a loser from this time last yr., sold Drooy last fall and bought GG and turned the loss into a nice gain. If you were to buy and sell the 81d cycle it seems to me to be a better play than trying to game the golds every day, wouldn't be as much fun though.

Some people could lose money trading in a bull market. That has got to be pretty difficult.

It's not as hard as you might think..

 

Regards

[Guest AssMaster]

AM, are you referring to the POG topping in July? The 81d cycle should top on June 9or10. The miners have been leading the POG and should top before the POG. If that is the case then I will be a seller prior to that date and take the summer off, or until the yellow stuff gets hammered into the ground, no pun intended, and then reload. I bought the cycle top last year in the spring and just last week sold Bgo for a loss, was an IRA holding along with Drooy which also is a loser from this time last yr., sold Drooy last fall and bought GG and turned the loss into a nice gain. If you were to buy and sell the 81d cycle it seems to me to be a better play than trying to game the golds every day, wouldn't be as much fun though.

 

It's not as hard as you might think..

 

Regards

Perhaps I misspoke without looking at the exact date. I'm referring to the chart of Newmont and the top earlier in 2002, but it also reflects XAU generally and HUI to a lesser degree. I have some June call options, which I'm also trading. Looking to sell at the same time you mention.

 

I was being facetious about it being difficult to lose money in a bull market. I managed to do so quite handily, until I decided to start learning a bit about trading, technical analysis and all that - so I stopped buying high and selling low. Still working on it.

 

I'm just saying that, in addition to the cycles you could also use the long-term trendlines. And when they coincide, perhaps take a larger than normal speculative position. Use them as a guide to low-risk buy zones whether you have a multi-month time frame.

[stormydaze]

I was being facetious about it being difficult to lose money in a bull market. I managed to do so quite handily, until I decided to start learning a bit about trading, technical analysis and all that - so I stopped buying high and selling low. Still working on it.

 

I knew that You're a bit ahead of me on the TA,like the charts by the way, I'm a work in progress.

 

Regards and good trading,

[OldMan]

Reuters

Snow Says U.S. Committed to Strong Dollar

Sunday May 11, 9:29 am ET

 

WASHINGTON (Reuters) - Treasury Secretary John Snow said on Sunday the United States was committed to a strong dollar and President Bush's tax package was key to strengthening it.

Appearing on the "Fox News Sunday" program to press the president's case for a tax cut package of at least $550 billion, Snow said, "We believe in a strong dollar."

 

He said the value of the dollar would be set by competitive markets.

 

"The important thing to keep in mind is that the dollar's value gets set in competitive exchange rates. There is a market for the dollar," Snow said. "And the best thing we can do to have a strong dollar is to see that the fundamentals of the American economy are strong. And that's why we come back to the president's jobs and growth plan."

===

 

Sounds a little bit like they want to have the cake and eat it, too.

 

??? (Scratching my head.)

 

OldMan

[Guest AssMaster]

A gradual decline is okay by us, but if speculators try to drive it lower they will get whacked on the head in a big way.

[Guest AssMaster]

Okay, here it is as simple as I can make it.

 

Question: What has always happened over the past couple of years when the lowest support is hit simultaneously with the stoch bottoming under 20 and turning up? (See green vertical lines)

 

And the XAU looks very hard to trade based on the daily charts. Looking at the weekly it looks very simple.

 

Perhaps in trending market, one should buy the low-risk, high-reward areas and sell to those who are waiting for confirmation because waiting for confirmation puts you into the high-risk, low-reward buying area.

 

Chart of XAU weekly:

[OldMan]

A gradual decline is okay by us, but if speculators try to drive it lower they will get whacked on the head in a big way.

So, maybe they want to eat the cake slowly. Might be better for the digestive system (i.e., the world economic system that has to digest these changes).

 

OldMan

[SevenOfEleven]

Added a bit. Same problems exist - chart looks bullish in many ways, and cycle seems to be driving higher, yet the overhead seems harsh. This is even reflected in the macd and it's histogram.

 

http://stockcharts.com/def/servlet/SC.web?c=$hui,uu[w,a]daclynay[pb13!b50!b200][iub14!la12,26,9!lah12,26,9!lh14,3][J8854765,Y]&pref=G

 

[OldMan]

Reuters

Snow: Tax Cut Needed for 'Soggy' Economy

Sunday May 11, 3:08 pm ET

By Tom Doggett

 

WASHINGTON (Reuters) - U.S. Treasury Secretary John Snow said on Sunday the United States was suffering from a "soggy" economy that needs to double its growth rate, and President Bush's tax cut package would help solve the problem by creating more jobs.

 

Appearing on four Sunday morning talk shows, Snow said Congress needed to pass close to $550 billion of what's left of Bush's tax cut plan to create more jobs and boost the economy, which has lost 2.7 million jobs since Bush has been in office.

 

"A soggy economy is what we've got today," Snow said on ABC "This Week" news program. "We're in a recovery, but it's not as strong and robust as it should be," he added.

 

Snow said the economy needs to grow by at least double the 1.6 percent growth rate that was achieved during the January-March period.

 

"You know we should be growing at 3.5-4 percent," he said on NBC's "Meet the Press."

 

To help boost the economy, Bush is urging Congress to pass a 10-year tax cut plan, which Snow said would create 450,000 jobs by the end of this year and 1.5 million jobs by the end of next year.

 

"The economy is under-performing its potential, and as a result millions of people don't have jobs who otherwise would have one. And that's the reason for the president's proposal," Snow said.

 

"If they (lawmakers) pass this one, I'm confident we're going to get back to those growth rates we need," Snow said.

 

The House of Representatives approved on Friday a $550 billion tax cut that is lower than the president's original request of $726 billion, but more than the $350 billion being considered by the Senate.

 

Both chambers will eventually have to hammer out their difference to come up with a final tax cut package.

 

"I prefer 550," Snow said on the "Fox News Sunday" program. "The president has said 550 is the minimum he wants, but somewhere between 400 and 550, you can do a lot of good to create jobs in America," Snow said.

 

Snow refused to speculate whether Bush would accept some 30 other tax increases, such as higher taxes on Americans working overseas and closing corporate tax loopholes, that the Senate may impose to offset some of the bigger Bush tax cut plan.

 

"I'm not yet in a position to really give you a firm view of what is in the offsets, or how we would come down on them," Snow said on CNN's "Late Edition."

 

PAYING FOR TAX CUTS

 

Democrats in Congress are worried the president's tax cut will increase the federal budget deficits to record levels.

 

Senate Democratic Leader Tom Daschle said his Democratic colleagues would not support the tax cuts "of the magnitude" that the president and Republican lawmakers want.

 

"Tax cuts have to be paid for," said Louisiana Democratic Sen. John Breaux.

 

Snow said budget deficits, which are projected to reach several hundred billion dollars a year, would not have much impact on the $11 trillion U.S. economy.

 

"The deficit we have today is manageable," he said.

 

Separately, Snow said that the United States was committed to a strong dollar, as the value of the euro is at a four-year high against the dollar. "We believe in a strong dollar."

 

Snow added: "The best thing we can do to have a strong dollar is to see that the fundamentals of the American economy are strong, And that's why we come back to the president's jobs and growth plan,"

 

===

 

??? (Shaking my head - and wondering how this will end.)

 

Yes, it may eventually turn out to be good for PM and PM stock prices; but will it be good for the country and its citizens?

 

(A somewhat worried) OldMan

[SevenOfEleven]

Reuters

Snow: Tax Cut Needed for 'Soggy' Economy

 

...

 

??? (Shaking my head - and wondering how this will end.)

 

Yes, it may eventually turn out to be good for PM and PM stock prices; but will it be good for the country and its citizens?

 

(A somewhat worried) OldMan

Some (if not many) state governments are talking about large tax increases. Put together it makes no sense. Increase the deficeit with tax cuts that are countered by local tax increases; net effect == increased deficeit, increased red tape.

 

I've read that a devalued dollar would help our trade deficeit, yet threaten our position as the world's reserve currency. If true - quite the dilema to iron out as the rise or fall of the dollar seems to be a damned if you do and damned if you don't proposition.

 

I see on the good old television very often lately how the education system seems to be one of the sacrificial lambs to budget cuts. I hear nothing of wage cuts for government (local or federal) bueracrats. We already suffer from a country loaded with an ever increasing youth lacking severely in education. My opinion is that we're destroying our future by degrading our children's educations on the whole, and more importantly we further polarize rich from poor.

 

In the end I don't see how tax cuts such as proposed can possibly generate more jobs in any sustainable manner and 'generated' inflation in a job suffering environment, IMO, can lead to nothing but eventual hyperdeflation.

 

I am every hopeful that I'm wrong or that there's a bigger and better picture I'm not seeing. But as I do see it - a huge crane is being manuevered over the economy in attempt to lift it to it's former self yet funding for that crane is already trillions in debt.

 

Unlike some, I don't necessarily see this as good for gold. I'm still of the belief that there are absolutely massive amounts of gold around and that most of what we see regarding gold market action derives from - derivatives. The collapse of such derivatives may spike the metal up in the short run yet an abundance of the metal in an environment where nobody will be able to afford much of it (even if it goes dirt cheap) isn't a recipe for sustained high value. I could be wrong - it's an open and widely/hotly debated argument (deflation vs gold) and this is my take on it. Once collapse is complete and economies begin to rebuild an expand (in earnest) I'd expect normal inflation to lend value to gold. At that point you'll have businesses that use gold (tech) expanding, wealth (think - jewelry) expanding, and a lot of mines that have been closed for some time due to depressionary crashes.

 

JMO