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David White
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David White is a software/firmware/marketing professional and a long time investor. He has worked in the networking field, the semiconductor equipment field, the mainframe computer field, and the pharmaceutical/scientific instrumentation field. He has bachelor's degrees in bioresource sciences... More
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  • GLD Just Broke Above A Significant Resistance Level
    We have had a lot of good economic news lately. The auto sales in march were better than expected. The jobs numbers were lower than expected, but they did not include as many Census jobs as had been predicted. The "core jobs number" was actually higher than expected. The ISM numbers were great. Bond yields and commodity prices have been going up, but not too much (i.e. some inflation). Plus the EU seems to have come to a more "real" bailout solution for Greece this weekend. This is great economic news for Europe. This would all seem to mean that gold is going higher in the near term. The GLD ETF chart would seem to give credence to this thesis. See below:



    It indicates that GLD has just broken through a significant resistance point. With the good economic news on many fronts (for example, South Korea just upped its GDP estimate for 2010 to 5.2%), there doesn't seem to be a good reason that GLD should not rise higher. The chart would seem to indicate it will. The chart indicates that the next stage of upside should be clear sailing to the $119 to $120 range. You can place a stop at approximately $112 to play this upside move. GLD may go higher than $119 to $120, but we will have to wait to evaluate the GLD situation and the economic news at that time. For now the near term move looks like a good play. If the economic news turns dramatically sour with earnings, that would change this outlook.

    Disclosure: no postion at this time.
    Tags: GLD
    Apr 12 6:02 AM | Link | 3 Comments
  • PMI Data for Trading From the March 2010 ISM Report
    17 manufacturing industries reported growth in March. Plastics and Rubber Products was the only industry reporting contraction in March.
    Most commodities were reported up in price. Notably Steel and Aluminum have been up for 9 consecutive months. Natural Gas is the only commodity that was reported down in price.
    No commodities were reported in short supply.
    ISM's New Orders Index registered 61.5 percent in March, 2 percentage points higher than the seasonally adjusted 59.5 percent registered in February. This is the ninth consecutive month of growth in the New Orders Index.
    ISM's Production Index registered 61.1 percent in March, which is an increase of 2.7 percentage points from the February reading of 58.4 percent (seasonally adjusted).
    ISM's Employment Index registered 55.1 percent in March, which is 1 percentage point lower than the seasonally adjusted 56.1 percent reported in February. This is the fourth consecutive month of growth in manufacturing employment.
    The delivery performance of suppliers to manufacturing organizations was slower in March as the Supplier Deliveries Index registered 64.9 percent, which is 3.8 percentage points higher than the 61.1 percent registered in February (seasonally adjusted). This is the 10th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries (good because more demand).
     
    Manufacturers' inventories expanded in March following 46 months of contraction, as the Inventories Index registered 55.3 percent. The index is 8 percentage points higher than the seasonally adjusted February reading of 47.3 percent.
    The ISM Customers' Inventories Index registered 39 percent in March, 2 percentage points higher than in February when the index registered 37 percent, and the 12th consecutive month the Customers' Inventories Index has been below 50 percent. The index indicates that respondents believe their customers' inventories are too low at this time.
     
    The ISM Prices Index registered 75 percent in March, 8 percentage points higher than the 67 percent reported in February. This is the ninth consecutive month in which the Prices Index has registered above 50 percent. This indicates inflationary pressures.
     
    ISM's Backlog of Orders Index registered 58 percent in March, 3 percentage points lower than the 61 percent reported in February.
     
    ISM's New Export Orders Index registered 61.5 percent in March, 5 percentage points higher than the 56.5 percent reported in February.
     
    Imports of materials by manufacturers expanded in March as the Imports Index registered 57 percent, 1 percentage point higher than the 56 percent reported in February.
     
     
     


    Disclosure: no positions at this time
    Tags: SLX, JJU
    Apr 02 1:42 AM | Link | Comment!
  • Is Gold About To Bounce?

    The 30 year Treasury Bond yield is breaking out. This is a sign of inflation. Many consider gold to be the best hedge against inflation. With the apparent break out on the 30 year Treasury Bond yield chart (see below), gold may find the traction it has been lacking lately.

     



    Aside from just the above chart, a new $1T health care bill has been approved recently. A jobs bill has been approved. A jobless benefits bill has been approved by the Senate (and is a shoe-in to be approved by the House). These latter two bills amount to more than $150B in further stimulus. The US government is still spending parts of the nearly $1T stimulus bill from last year. It is incurring further debt load. The Fed is going to stop buying MBS’s at the end of March. The extra supply of debt instruments that results from this change in policy is likely to raise long term Treasury yields further. The US government budget is growing, but the tax revenues have shrunk from the 2007-2008 period (as the GDP has shrunk). The US government has been effectively printing money. As the Fed slowly withdraws the stimulus, the long term bond yields should rise further. The price of gold will likely accompany them.

    Right now the GLD (gold ETF) chart indicates an oversold condition. It is near its bottom Bollinger Band. The Williams %R indicator shows GLD is oversold. With Trichet’s apparent approval of the joint Eurozone and IMF bailout plan for Greece, the Euro may rise again against the USD (at least in the near term). This should help most commodity prices rise in USD terms. Many if not all of the ducks appear to be in a row. Buying GLD right now may be a good play. Of course, if the market starts falling dramatically, it may be a good idea to abandon this play. Still many feel that the market will continue to chug along until the end of the quarter at least. It may be over bought. It may be over priced. However, the pundits seem to believe the market will go up. If so, GLD will most likely join the market. The 6 month chart of GLD is below.

     



    I have drawn in the support line. If GLD breaches this support line, it may be best to abandon the trade for the near term. I have also drawn in three resistance lines. The upward movement could stop at any one. However, at least one of the upper two resistance lines seems likely to be reached. Some gold mining stocks may follow suit. These may not be quite as pure a gold play as GLD though.

    Good luck Trading.



    Disclosure: no position at this time
    Tags: GLD
    Mar 26 7:52 AM | Link | 5 Comments
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