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Michael Clark
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Michael J. Clark was born and raised in Sinclair, Wyoming. He is a poet, novelist, artist, historian, and market analyst. His fine arts portfolio can be found at the following address: http://www.hoalantrangallery.com/MJC2.htm His writing portfolio can be found at:... More
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  • WEEKLY PORTFOLIO UPDATE: HOW LOW WILL WE GO?

    Weekly Portfolio Update

    We want to show our updated weekly portfolio. We are predominantly short, of course. We added to our short positions in Dow Jones Transports, Semiconductor Index, S&P 500, Swiss Index, and the Amex Computer Index.

    Our favorite long positions are defensive American names like IBM, MMM, MSFT, JNJ, and KO, Coca Cola. We see money flowing into industrial materials, and this is boosting stocks in the commodity countries. We really like the Australian Dollar here. We like Australian and Canadian banks; and we also like coal (KOL, ETF) and aluminum (JJU, ETF).

    Why do we like these? This affection seems to suggest we believe in the global 'recovery', which we do not. Hot money is moving, that's all.

    We don't believe in the recovery. The entire globe is trying to pretend that growth can occur when the economy is strapped down with figuratively 'tons of debt'. One cannot fly with dead weight strapped to his back; one has to, first, throw off the debt, which is what the deflation cycle is all about. Instead, the world is trying to pretend that the deflation cycle isn't real, just by ignoring it. Foolisness.

    We still have a long way to go before we get back to GO, and can start over again. Higher rates, default and bankruptcy is the only road back to GO. Always has been; always will be.

    We also really like Brazil, the Bovespa Index. Again, why? Clearly, that's where hot money is going. Pump and dump?

    BVSP is trying to pull back, but can't really find it in itself to put its heart into the decline.

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    We also like palladium, PALL, ETF.

    Here's our portfolio:

    CGTS PORTFOLIO UPDATE 4/11/14 
    SHORT PORTFOLIO  
    CLOSESTOPSYMBOLCOMPANY
    7,362.397590.78^DJTDow Jones Transport Index
    481.22503.052^DRGPharmaceutical Index
    1,815.691841.13^GSPCS&P 500 Index
    192.795212.844^HGXPhiladelphia Housing Sector Index Daily
    225.566233.086^HUIGold Stock Index Daily
    3,446.853600.438^NDXNasdaq Index Daily
    1,111.441205.039^RUTRussell SMall Cap Index Daily
    560.34587.721^SOXSemiconductor Index
    8,298.828484.21^SSMISwiss Index Daily
    92.54695.782^XAUPhiladelphia Gold and Silver Index Daily
    1,331.091380.89^XCIAmex Computer Index Daily
    18.6220.91ABXAmerican Barricks Gold
    60.569.92ADBEAdobe Daily
    3134.84AEMAgnico-Eagle Mines
    6.377.84AFFXAffymetrics Inc.
    52.6160.61AKAMAkamai
    111.94127.47AMGNAmgen
    29.934.44AMTDAmeritrade Corp
    311.73346.15AMZNAmazon
    27.4933.22APOApollo Global Management
    27.1234.47APOLApollo Group
    18.8622.05ARUNAruba Networks
    1.451.9AVEOAVEO Pharmaceuticals
    122.07141.9 WKBABoeing Daily
    15.7717.44BACBank of America Daily
    7.289.05BBRYBlackberry (RIMM)
    8.9110.67BCRXBioCryst Pharmaceuticals
    51.854.48BENBen Franklin
    149.74184.64BIDUBaidu
    274328.75BIIBBiogen Idec
    274328.75BIIBBiogen Idec
    35.0840.16BNNYAnnie's Inc
    12.1214.39BYDBoyd Gaming
    45.6854.72 WKCCIT Group Daily
    29.4132.385CAComputer Associates
    14.5315.7CDNSCadence Design Syst
    1.82.04CDXSCodexis Inc
    136.9153.69CELGCelgene Corp
    54.8754.64CHRWCH Robinson Worlwide
    1.721.93CNTFChina Tech-Faith Wireless
    1.311.61COCOCorinthian Colleges
    46.3255.38CPHDCepheid
    52.8759.63CRMSalesforce.com
    58.0563.24CSCComputer Sciences
    4.275.52CSUNChina Sunergy Daily
    3.174.1CTICCell Therapeutics
    12.7613.15CVVCVD Equipment
    35.3740.3CYHCOMMUNITY HEALTHCARE
    2.382.96CYTXCytori Therapeutics
    18.7324.87CZRCaesar's Entertainment
    12.616.94DANGDangdang E-Commerce China
    63.1792.04DATATableau Software
    48.0762.99DDD3D Systems
    29.832.77DGPGold ETF leveraged
    21.6124.87DHIDR Horton Daily
    80.7885.93 WDOVDover Corp
    3.13.59DRYSDry Ships Daily
    31.534.93DTOShort (Double Short) Oil
    26.6730.24EAElectronics Arts Daily
    26.3629.84EDUNew Oriental Educations and Technology
    3.333.86ELNKEarthlink Inc
    57.3374.28ENDPEndo Pharmaceuticals
    25.9830.2ESIIntl Educational Svc
    19.7924.67ETFCE-Trade Financial Daily
    3.07163.2825EURBRL=XEuro/Brazilian Real
    10.811.72EWJJapan Index ETF
    77.4171.17EWVShort MSCI Japan ETF Daily
    24.0725.28EZCHEZChip Semiconductor
    58.5372.03FBFACEBOOK
    103.01113.46FFIVF5 Networks
    9.2211.88FIOFUSION-IO
    65.378.62FXPShort FTSEChina Index ETF Daily
    36.5444.83GDXJGold Junior Minors ETF Daily
    530.6605.63GOOGGoogle
    6.958.6GRPNGroupon INc
    152.72168.18GSGoldman Sachs Daily
    0.67510.78GSSGolden Star Resource Gold
    51.4858.83HLFHERBALIFE
    3.23.77HMYHomestake Mining
    112.43120.17HSICHenry Schein
    57.8266.48HURNHuron Consulting
    12.7713.4IAUGold Daily
    215.45262.22IBBBiotechnology ETF Daily
    0.941.45IDISearch Media Carry-Trade ETF
    13.5815.72IGTIntl Gaming Tech
    135.24164.72ILMNIllumina Corp
    10.6111.15 WIMMRImmersion Robotics
    53.1563.01INFYInfosys
    9.8513.74IRWDIronwood Phama
    12.9113.91JDSUJDS Uniphase
    16.5318.72KBHKBH Home
    95.54wklyKSUKANSAS CITY SOUTHERN
    77.6493.962KWTSolar ETF
    38.5644.31LBTYALiberty Global
    153.82166.84LMTLockheed Martin
    52.0852.91LULULululemon
    68.6878.92MAMASTERCARD
    15.7819.43MDRXALLSCRIPTS HEALTH SOLUTIONS
    23.9126.79MGMMGM Mirage
    1.862.01MTLMechel Open Joint Stock Company
    6.767.95MWWMonster Worldwide
    16.3418.75NANONanometrics Inc
    13.0817.52NBIXNeurocrine Biosciences
    326.71454.98NFLXNetflix
    33.836.47NILEBlue Nile
    71.2579.64NKENike Daily
    14.1915.1299 *NOGNorthern Oil and Gas
    10.411.41NVMINova Measuring Instruments
    41.4342.44ORealty Income Corp
    37.9540.69OCNOcwen Financial
    5.137.55OREXOrexigen Pharmaceuticals
    25.3135.54PPandora
    40.6943.68PCLPlum Creek Timber
    1,156.211304.4301PCLNPriceline.com
    18.7119.71PHMPULTE GROUP HOUSING
    31.0332.8799PPAAerospace and Defense ETF
    84.1187.82QQQPowershares QQQ
    32.0633.91RAVNRaven Industries
    10.1511.15RBSRoyal Bank of Scotland Daily
    14.0415.65RDNRadian Group (Mortgage Insurance)
    12.2212.9REMNA REIT Motgage Plus ETN
    66.0471.94RGLDRoyal Gold Inc
    49.3654.7RHTRed Hat
    23.523.51RSXRussian Index ETF
    18.8120.18RVBDRiverbed Technologies
    58.75356.71SBBShort Small Cap 600 S&P ETF Daily
    30.5234.71SEICSEI Investment Corp
    55.5657.66SGGSugar ETF
    32.6247.97SHLDSears Holdings
    52.4668.83SINASINA CORP
    22.2726.72SLWSilver Wheaton
    22.1828.67SRPTSarepta Therapeutics
    10.2411.7SSRISilver Standard Resources
    61.6457.26STJSt. Jude Medical
    8.8910.54STNGScorpio Tankers
    55.8862.62SYNASynaptics Inc
    40.0649.06TANGlobal Solar Energy ETF
    66.2484.81TNADirexion Daily Small Cap Bull
    34.7337TOLToll Brothers
    203.78216.93TSLATesla Motors Daily
    40.0558.18TWTRTwitter
    41.4944.52UALUnited Continental Holdings
    30.3332.19USGUSG Corp
    118.79144.18VRXValeant Pharmaceuticals
    4.846.1VVUSVIVUS Inc
    40.1441.64WMBWilliams Companies
    13.1415.75WPRTWestport Innovations
    31.2533.3XHBHomebuilders ETF
    4.1456.4XOMAXOMA
    81.1184.62XRTRetailers ETF
    3.885.91YGEYingli Green Energy China
    32.868439.45YHOOYahoo Inc.
    28.0132.03YNDXYandex NV
    24.7830.74YOKUYouKu China
        
    LONG PORTFOLIO  
    CLOSESTOPSYMBOLCOMPANY
    51,867.2944965.68^BVSPSao Paolo Brazilian Index
    8,908.058273.14^TWIITAIWAN WEIGHTED INDEX
    535.76506.491^UTYUtility Index
    1,519.411490.1999^XOIOil Stock Index
    33.8532.6387ANZ.AXAustralia/New Zealand Banking
    48.835618BMYBristol Meyers
    12.2710.97CHIXChina Banks ETF
    19.5819.97CLFCliffs Natural Resources
    23.5821.44DUSTGold Miners Bear 3x ETF
    28.5827.2DXDShort Dow Industrial ETF
    46.641.72ECHENCANA CORP
    46.5143.67ELDEmerging Market Local Debt
    19.1917.73EPIIndia ETF
    49.3646.2EPPAsia (No Japan) ETF
    15.715.05EWMMalaysia Index ETF
    13.2912.37EWSSingapore Index
    77.4166.52EWVShort MSCI Japan ETF Daily
    77.4169.27EWVShort MSCI Japan ETF Daily
    47.3939.11EWZBrazil ETF
    1.831.7FSTFOREST OIL
    9487.05FXAAustralian Dollar ETF
    36.1434.1291FXIFTSE/XINHUA China 25 Index ETF
    3.12232.93GAZNatural Gas ETF
    311.6301.27GLEN.LGlencore International
    40.5237.61GMEGameStop
    1.921.44GNKGenco Shipping Corp
    5.664.2201HGSHHGS Realty China
    195.19182.21IBMIBM Daily
    25.0123.8IDXIndonesian Index ETF
    102.5799.57IEF7-10 Year TBond Fund
    49.4547.83JJGGrains ETF
    19.44517.47JJUAluminum ETF
    96.8791.11JNJJohnson and Johnson
    39.979934.4JOCoffee ETF
    38.6337.1KOCoca Cola Daily
    18.6317.42KOLCoal ETF
    95.5496.6KSUKANSAS CITY SOUTHERN
    52.0846.7799LULULululemon
    52.0846.7799LULULululemon
    99.2996.1MCDMc Ddonalds Daily
    606.71597.34MKLMerkel Daily
    132.39129.83MMM3-M Daily
    37.6535.97MOAltria Group
    53.1452.64MOOAgribusiness ETF
    39.20937.7MSFTMicrosoft Daily
    16.4515.66MTArcelor-Mittal Steel
    1.861.66MTLMechel Open Joint Stock Company
    18.5718.2767MYYShort Midcap Index Short
    53.7750.33MZZShort Midcap Index ETF Daily
    32.0427.53NFXNewfield Explorations
    39.270135.52NIBCocoa ETF
    6.635.88NTENam Thai Electronics
    78.3474.772PALLPalladium ETF
    14.1514.15PEIXPACIFIC ETHANOL
    83.1581PEPPepsi Daily
    80.7675.7PGProctor and Gamble Daily
    81.1478.43PNCPNC Financial Svc Daily
    18.7818PSQShort QQQ Index ETF
    114.2298.07PTRPetroChina
    78.0174.74QCOMQualcom Daily
    63.1658.131QIDShort NASDAQ Index ETF
    21.13119.82REWShort Technology ETW Daily
    23.521.05RSXRussian Index ETF
    24.5122.86RXDShort Healthcare ETF Daily
    66.363.85RYRoyal Bank of Canada
    19.4818.18SCCShort Consumer Services ETF Daily
    30.0527.1SCCOSouthern Copper
    27.5324.94SCHNSchnitzer Steel Indust
    49.4146.27SDDShort Small Cap Index ETF Daily
    25.3924.64SHShort SP 500 ETF
    17.8716.72SKFShort Financials ETF Daily
    18.3817.15SNESony Daily
    166.38159.94SPGSimon Property Group
    61.0455.86SPXUShort S&P 500 Index
    54.3552.2SSLSassol Ltd S Africa
    46.4545.58TDToronto Dominion Bank
    18.8919.74TERTeradyne INC
    73.7371.73THDThailand ETF
    66.2163TOTTotal S.A.
    52.0743.66TURTurkey Index ETF
    50.6446.61TWMShort Russell 2000 Index ETF Daily
    17.9915.95TZADirexion Daily Small Cap Bear
    78.9575.7UNHUnited Healthcare Daily
    14.7612.42VALEVALE S.A.
    32.5230.29WBKWestpac Bank Corp (Aus)
    48.0847.4WFCWells Fargo
    76.574.28WMTWalmart Daily
    26.8724.05XUS Steel Corp
    4.654.37XINXinyuan Real Estate China
    71.7568.03XOPSpider Oil Gas Exploration ETF
    11.0610.6XRXXerox

    One of the big questions we have at this point is what to do with gold and gold stocks. They seem to be in a quandary. Gold itself (GLD or IAU) look quite positive, having held above support in the recent decline and seem ready to move up. But gold stocks are very mixed. In fact, the XAU Gold Index (as is true with the HUI) seems poised to break lower again. Homestake Mining seems good; American Barracks Gold does not.

    We all know that central banks have been playing havoc with the gold markets. I find this behavior unacceptable. The Fed has essentially attempted to weaken the US Dollar to spur asset bubbles; and they have also targeted gold for destruction by direct attack, with strategies such as naked short-selling of gold ETF paper, which has kept gold off-balance, and has protected all currencies from a rival currency in gold. No one says the Central Bankers aren't smart.

    Central bankers have been targeting the old, the poor, and the gold-centered political conservatives for destruction with their monetary policies. What kind of political directorate targets the weakest members of their own society for marginalization.

    American monetary policy and foreign policy have long supported the rich of the world, and punished the poor. It is a paradox: America is a beacon to the world's poor, as a haven representing a new start, a chance to escape poverty; but, in truth, American political gravity has almost always been toward protection of the world's rich. Nothing shows this more clearly than recent central bank policy. The American war against communism in the 1960's and 1970's was always a disguised favor of the rich around the world, disguised by words like 'freedom' and 'democracy' -- but the American military supports the status-quo in almost every case.

    America honors winners; and does not like losers. And the world's poor are losers, are they not? The world's 99.99% are losers. Isn't that the truth?

    Why is gold not roaring higher, if this is a true full-blown 'correction' in stocks? I wonder this also. Of course, Fed policy is anti-gold. If the Fed is audited some day in the future, the manipulation of the gold markets will make for very interesting reading.

    (click to enlarge)

    American banks seem to be breaking down. JP Morgan shocked investors yesterday with a report of earnings some 18% below expectations, slowing bond trading losses and mortgage weakness. Perhaps Jamie Dimon was spending too much time this year in the courtroom, answering questions about his abuses of power, or even criminal behavior. If your firm needs to break the law to make a profit, then you need a new CEO.

    Bank of America finally seems to be wheezing. BAC broke support at 16.2 and should be coming down now for a while.

    (click to enlarge)

    What about Tesla? Tesla just tried to rally; but the rally was decidedly weak. See the T11 Sunmarry indicator (second pane down, blue line) to see the textbook description of a failed rally. Tesla should go lower.

    (click to enlarge)

    ETrade looks horrible here:

    (click to enlarge)

    If this selloff is for real, then why aren't the inverse ETFs showing up on our screens as buy signals? Well, many of them are now. Look at the chart of TZA, and look especially at the strength of the trends throughout the past year, all down, lower highs and lower lows....until now. Look at the ruptured resistance (marked with an "A" in the third pane down) and the rounding bottom and rising support levels. TZA is a small cap bear ETF that gains when small caps falter.

    If(click to enlarge)

    We like quite a few inverse ETFs finally: MZZ, MYY, PSQ, REW, RWM, SBB, SCC.

    I've written enough. Have a good weekend. Forget about stocks for a day or two. Take a nice walk in the warm breeze.

    Michael J. Clark, CGTS

    Hanoi, Vietnam

    Apr 12 9:34 AM | Link | Comment!
  • BUY THE DIPS? NOT ALWAYS. MORE SELLING COMING.

    A LESSON IN POLITICAL HISTORY, BY MY ACCOUNT; FOLLOWED BY A DESCRIPTION OF THE CGTS STOCK SELECTION PROCESS

    Yesterday a fresh wave of selling hit the markets. This did not surprise us. We are overwhelmingly short this market.

    I read on the second day of the selloff a story on the web: "Capitulation Already?" The gist of the article was that after two days of selling 'reason' had returned to the markets; the bull rally would continue. I truly believe that today REASON IS SELLING THIS MARKET.

    I don't wish to re-hash all the reasons this market should not be appreciating. Earnings are being fixed, staged. First you dumb down earnings expectations as much as you can. Then when you beat expectations, it is taken as a positive. This is unreason (I was going to say insane, but that word is misused too often).

    The Fed has spent $4 trillion dollars to keep this so-called Bull Market going. The Fed has spent more than $4 trillion, its balance sheet, because it has also fixed interest rates at zero for four years, essentially donating to Wall Street free money to buy back shares and to refinance debt. At the same time the Fed has been buying all the bad loans the banks have wanted to sell (this is where the original $4 trillion comes in), which includes US Treasuries, in order to steer people into stocks and housing. It's a giant ponzi scheme.

    An audit of the Fed would also show the Fed as having given billions of Americans' money to banks and bankers all over the world. This would be justified in many noble intentions, I'm sure -- we are all one world; saving the global economy is saving America too. The truth of the matter seems to be that a global elite wants to transfer sovereignty away from individual countries to international banking. True, individual counties do not have such a great record of trusteeship of the Earth, having chosen war, genocide, cruelty, theft, slavery and many other forms of tyranny in the name of national sovereignty. I remember the movie 'Network' from the 1970's -- and the message was, essentially, if the corporations are in charge there will be no more war because war will not be good for business and business (making more money) is ALL that corporations care about.

    The transfer of national sovereignty from individual nations to international banks has been happening under all parties, communist and capitalist, Islamic and Christian, democrat and republican. Why? Well, banks pay terrific bribes to gain power. It's all about bribery. And our banks better stewards of world health than individual nations? We remember similar political structures during the heyday of feudalism. Feudalism wasn't so great for the peasant class. We read about the rich .1% and the poor 99.99%. That is feudalism.

    The Democratic Party in America was always, during my life, since 1950, at least, the party of the poor. The Democrats always defended to have-nots, the weak, the broken, the unfortunate. But that all changed after Ronald Reagan's election. Suddenly the American Dream was re-phrased into a picture of entrepreneurial heroism. The conservative businessman (capitalist) was the hero, the agent of God; the liberal 'thinker' (communist, labor unionist) was not only weak, a weakness bordering on treason, but they were also failures under the terms of 'the American Dream' contract. If one was noble, heroic, conservative, worked hard, believed in the dream, one would succeed -- it was really a matter of positive thinking. The loser as a negative thinker; and he, as a failure, a shadow of the Day-Light figure, deserved no help from the society. God helps those who help themselves. Sinners do not deserve help until they become winners; convert to conservative entrepreneurialism. Capitalism and Christianity were somehow linked.

    This, however, suggested that getting rich, the American Dream, and the contract with God were all the same. This created an equation where Greed was equivalent to both America and to religion. This suggested that getting rich was the end; and the American Dream was the means. Ethics turned a shade of gray. Cheating to get rich was suddenly a more practical expression of 'how things work' on the Earth. If you were rich, God was blessing you. We remember Lloyd Blankfein's claim that "Goldman Sachs was doing God's work."

    Apparently Jamie Dimon at JP Morgan was not doing God's work. Here is a list of crimes that Dimon and Morgan essentially admitted committing in order to general billions of dollars of profits, through cheating and stealing, including fines in the billions of dollars to make these charges (and crimes) go away:

    Dec. 4, 2013 - $110 million (€80 million) - As part of a settlement between the EU and six banks, J.P. Morgan agreed to settle for its alleged role in the manipulation of the Japanese yen version of Libor in 2007.

    Nov. 19, 2013 - $13 billion - J.P. Morgan settled civil claims with federal and state agencies over its underwriting practices and its sale of mortgages before the financial crisis, as well as what was sold by Bear Stearns and Washington Mutual. $4 billion of the settlement was set aside for distressed homeowners. The bank admitted to deceiving investors about the quality of its mortgage underwriting.

    Nov. 15, 2013 - $4.5 billion - The bank paid $4.5 billion to a group of 21 institutional investors including BlackRock and Allianz SE to settle losses from mortgage-backed securities that J.P. Morgan sold them before the crisis.

    October 16, 2013 - $100 million - The bank paid the Commodity Futures Trading Commission to settle charges related to its so-called London Whale trades.

    Sept. 19, 2013 - $920 million - In settlements with the OCC, the SEC, the Fed and the U.K. Financial Conduct Authority, J.P. Morgan agreed to pay a total of $920 million to settle all claims about its management and oversight of traders involved in the London Whale debacle. The bank also admitted wrongdoing in the matter, a trade that cost the bank more than $6 billion.

    Sept. 19, 2013 - $389 million - The bank paid $80 million in fines and refunded $309 million to credit-card customers to settle regulators' charges that it harmed consumers by allegedly making errors in hundreds of thousands of debt-collection lawsuits and leading more than two million credit-card customers to buy services they didn't want.

    July 2013 - $410 million - FERC alleged J.P. Morgan Ventures Energy Corp. traders gamed rules that help set the cost of electricity in California and the Midwest with 12 manipulative trading schemes starting in 2010. The DOJ is now investigating the claims. The $410 million included a $285 million fine and the bank agreed to give back $125 million in profits.

    January 2013 - $1.8 billion - In two separate agreements, the bank contributed $1.8 billion to the nationwide bank settlement on allegations the banks improperly carried out foreclosures during the housing crisis, including employing so-called robo-signers. The bank also agreed to contribute $3.7 billion in aid to troubled homeowners and nearly $540 million in refinancing. The first part was reached in a nationwide settlement in February 2012.

    November 2012 - $269.9 million - The bank settled with the SEC over the creation and underwriting of mortgage-backed securities.

    August 2012 - $1.2 billion - The bank disclosed in a filing its share of a broad settlement over interchange allegations against the banks and Visa and Mastercard.

    Of course, Goldman Sachs has been paying fine/bribes to the government to let it continue operating also. Corporations that chronically break the law should lose their license to operate. This seems obvious to me. When one steals $100 billion, why not pay $1 billion or even $10 billion in punishment, if that is the only punishment.

    I am clearly off on a tangent again, something for which I was banned by Seeking Alpha in the past. Tangents are not acceptable to good journalism, I realize. I am a poet, not a journalist. And tangents are the very nature of poetry. That is my argument.

    To make a short story even longer: in the 1980's President Bill Clinton went to the Wall Street banks and offered to sell his soul to the devil for enough money to compete with the Republics in the political football game of democracy. Unions had financed Democratic wins in the elections from the 1960s through the 1980s; but Reagan had changed things. The unions were being dismantled; good-paying manufacturing jobs in America were being shipped to China, to Vietnam, to South America, to Mexico. Not only were the Republicans winning this war to destroy the unions, they were also winning the war to destroy the American worker. The American worker was the enemy of Wall Street. The more power the American worker had, the less power Wall Street had, to constrict costs and to expand profits.

    Clinton sold the Democratic Party to Wall Street, working to destroy the Glass-Steagle separation-of-powers act between banks and hedge funds and investment banks and insurance companies. This was Wall Street's dream. Now, suddenly, after nearly 70 years of no depressions, of no banking catastrophes (except, of course, that little Savings and Loan crisis under Reagan, which resulted in massive losses for ordinary Americans, and massive gains for individuals in the savings and loan business), Wall Street could begin to operate as a giant casino, even being allowed to buy insurance companies who could insure the parent company against investment losses.

    The best part for Wall Street was that they now owned both parties. It no longer mattered which party won the White House or the Congress. Wall Street owned both parties.

    I am not suggesting that this process is 'unnatural'. In fact, it seems to be very natural. Marx and Hegel, before Marx, suggested that mental and cultural development followed/follows this process. There is a thesis, an idea, a political party or an individual embodying an idea, who or which creates its opposite out of its own nature, and through the law of duality or dialectic. These opposites resist one another until they eventually merge and become one, united -- so similar as to be indistinguishable. This is what the 2001 Day-Cycle apex was also about. Unity of an idea; the opposites uniting.

    The next stage will be a new duality, a new division. A party will splinter from this unity. Perhaps the Tea Party is that splinter party. It will be young and energetic and will steal life from the old unity, establishing a new duality which leads again to opposition and division, very much as a cell divides in biology. Life starts over again.

    We remember when the Democratic Party was the conservative party of mostly southern land owners. And the Republican radicals and the anti-slavery party were led by Abraham Lincoln.

    ****

    So, that is how we ended up in this mess we are now in. Short story long.

    How low can stocks go? Very low. Let's not forget that Japanese stocks lost over 80% after their Housing Bubble burst.

    Will that happen to us? We are clearly doing some things differently than the Japanese did. But we are also doing much of the same things the Japanese did. Japan had about five iterations of QE (Quantitative Easing). We have had three versions of QE. Now we are backing away from QE. But that doesn't mean more won't come.

    The chart below suggest that the Nikkei is topping again. Prime Minister Abe's revolution (that is a laugh! a revolution to do what, to keep Japanese people spending money they don't have!) is a failure. Debt is the issue. Debt needs to be destroyed. Attempts to protect the 'rotting debt' in Japan -- bad debt is very much like a body rotting with disease -- in order to protect the society from negative change -- this protecting of the status quo by throwing money into the black hole DOES NOT WORK. In the end this will be apparent to everyone. If we choose our hour in the Sun, if we choose to be the Hero that builds the prosperous world, we must also experience the death of this world. The clock is exact. Every 36 years we have a deflation/depression that lasts for 18 years. After these 18 years of destruction, we get to start over, and build a better version of the last model.

    In 1911-1929, we built a better model of the world. From 1929 to 1947, we devoted all our energy to destroying that world we had created. In 1947-1965, we build a better model of the world. There is an evolution in form, driven by the creative model of the machine, man's vehicle for change. From 1965-1983, we destroyed that world also. Levity (anti-gravity) is a metaphor for creation; the power to rise up, as a plant rises during growing season, as cities rise up into the air -- as the Tower of Babel rose in to the heavens. Gravity is a metaphor for the 18 years of deflation, destruction; war and the destruction of cities is another one. The plant that gives up its fruit and returns to the Earth is another metaphor, burying its seeds, preparing for the next growing season.

    Agrarian cultures understand the natural philosophy of the Wisdom Religion. This wisdom is alien to Urban cultures, which see everything is terms of will, science, reason, and choice. A metaphor of the Growth Cycle is the city, the plant bearing fruit, the male erection. A metaphor of the Death Cycle is nature, and the Wisdom Religion itself.

    The Reagan rebirth era, creation, evolution, ran from 1983-2001. The Creators panic when their time ends. They hoard. They keep interest rates down too long. They will do anything to avoid the appearance of Mephistopheles, who claims his right to the Soul of Faust and all those creators who signed the contract allowing them to become rich and powerful during the Growth Cycle.

    In 2001, Death re-appeared. Death is always with us. But creation, or incarnation, seems to push Death away from Life. The creation of the city is an act of this: walls around the city to keep Death/Nature out. Then, suddenly, Death appears in the city, in the form of a violent attack on the Twin Towers buildings, on the Pentagon, on the White House. This is a fact, a historical event; but it is also a symbol of something.

    I WILL outline what America needs to do to survive the next 6 years. This survival is NOT guaranteed. We are heading into the most difficult period of darkness. 2010-2019 will be the darkest of the three seasons. 1983-1992 is the rebirth stage, the birth of the Hero; Reflation in economic terms. 1992-2001 is the growth stage, the triumph of the Hero, who becomes the King; Inflation in economic terms. 2001-2010 is the harvest stage, the death of the hero; Disinflation in economic terms. 2010-2019 is the underworld experience of the hero, Hades, Hell, the triumph of Darkness. 2019 is Midnight, the darkest part of the Day; it is the beginning of Winter, the darkest part of the Year. 2001 was Noon; 2001 was the beginning of Summer.

    Japan has done all the wrong things, for many of the right (moral, compassionate) reasons. Japan is now desperate. It has the highest debt levels in the world (in the history of the world?). It has tried one last round of easing (Japan should have begun slowly tightening in 1989), in an attempt to find the easy way out. There is no easy way out.

    (click to enlarge)

    *****

    CGTS MARKET TIMING SIGNALS: WHAT IS THE PROCESS WE USE?

    Let's change pace. Each day we update our 500 issues we follow with high, low, close, and volume data. Our process is simple. Since our most important indicator is our T11 Sunmarry indicator, we want a list of stocks that are either appreciating or falling in terms of T11 Sunmarry.

    T11 Sunmarry is an intermediate-term trend reading. We have configured it so that it moves between -10 (negative) and 10 (positive). We tell our computer to find any issue that is moving either up or down. This is the kind of list we get.

    SYMBOLCLOSET11 SunT11 Sun difCompany
         
    1288.HK3.36100Agricultural Bank of China LTD.
    1398.HK4.78100Industrial and Commercial Bank of China
    3968.HK14.4100China Merchants' Bank
    3988.HK3.47100Bank of China
    ACH10.22102Aluminum Corp of China
    AXPW0.176102AXION
    CBPO36.7100China Biologic
    CYH36.46100COMMUNITY HEALTHCARE
    ELNK3.43102Earthlink Inc
    FRO3.79102Frontline Limited Shipping
    GSS0.68100Golden Star Resource Gold
    IMMR10.5102Immersion Robotics
    SRPT23.22100Sarepta Therapeutics
    SSRI10.59100Silver Standard Resources
    CSUN4.6782China Sunergy Daily
    CAAS8.3862Chinese Auto Daily
    GNK1.9560Genco Shipping Corp
    NVTL1.9762Novotel Wireless
    QLTI5.8142QLT Inc (Biotech)
    ^VIX15.8922CRB Volatility Index Daily
    JO40.9922Coffee ETF
    SHLD34.42-2Sears Holdings
    ILMN135.74-2-2Illumina Corp
    MTL1.87-2-2Mechel Open Joint Stock Company
    SLGLF0.001-20Silverado Gold Daily
    YGE4.15-2-2Yingli Green Energy China
    CZR18.87-42Caesar's Entertainment
    DANG13.18-42Dangdang E-Commerce China
    CDXS1.85-100Codexis Inc
    DUST22.62-100Gold Miners Bear 3x ETF
    NDLS35.64-100Noodles

    We sort this list according to the T11 Sunmarry indicator. And we include the T11 Sunmarry day-to-day differential to see if it is rising or falling.

    The T11 Sunmarry rises from -10 to 10 in a bull move. It can then stay at +10 for many days.

    We look at the charts of all these stocks. Several issues jump out at us. VIX. The VIX is very difficult to trade. It is an index composed of option ratios puts versus calls. It tends to be very volatile and very short-lived.

    T11 Sunmarry (blue line, second pane from the top) is clearly rising, which is a positive for VIX -- and probably a negative for stocks. Note how the short-term trend is bending up, because of the volatile buying of put options (and the dearth of buying of call options) in the options markets.

    (click to enlarge)We look at our list of stocks for new positions. T11 Sunmarry is always correcting itself. It is a perfect indicator, is always perfecting itself. So one always loses a few days on either side of a T11 Sunmarry change of direction. Our scan looks at a full week of changes, since we know its turn-accuracy is limited.

    JO (Coffee) is a buy.

    (click to enlarge)There are four Chinese banks at the top of our list. We like all of them as trades. We are catching them a bit late; T11 Sunmarry is already at +10. This means we have missed the true bottom by a few days. This is not usually an issue. We like to look at stocks as they hit +10 (or -10) for this often gives the stock a change to settle into a pattern. When this happens, we then check 1) accompanying trends to make sure the patterns are bullish (or bearish) -- higher highs and higher lows (or the opposite) -- and 2) check where the price is relative to the Bollinger Bands. The Hong Kong back below looks to be wonderfully place for appreciation.

    (click to enlarge)ELNK, Earthlink, provides us an example today are a shortsell signal engendered from a rising T11 Sunmarry reading. When the T11 Sunmarry rises and all the trends are negative, this is signaling what we expect to be a failed and a short-term rally, inconsequential. This can be acted on as a short-sell signal.

    (click to enlarge)SEARS (SHLD) is again a short.

    (click to enlarge)Best picture of the day is probably this shortsell reading for ILMN, Illumina. T11 Sunmarry is topping, after a dismal rally attempt. See the broken down trends in the third pane from the top.

    (click to enlarge)

    One could buy September puts on ILMN if one were interested. Let's price which put options is cheapest.

    ILMNOptionStrikePriceStrike DiffReal Cost
    135.74sept puts12511-10.7421.74
    135.74sept puts13013.57-5.7419.31
    135.74sept puts13517.2-0.7417.94
    135.74sept puts14019.764.2615.5
    135.74sept puts14522.59.2613.24
    135.74sept puts1502614.2611.74
    135.74sept puts15525.1119.265.85
    135.74sept puts16034.7324.2610.47

    Out-of-the-money options seem cheaper. They are not. They have no value when one buys them and they only gain value if the issue moves a lot. For instance the ILMN 125 Sept Put only costs 11 points ($1100 per put) -- but it is worthless when you buy it. It only has time-value, which decays instantly.

    In-the-money options seem more expensive. But, in truth, the September 155 put is the cheapest. It costs 25.11 ($2511) but it is worth 19.26 at purchase, and in fact costs only 5.85 points or $585 per option when one buys it.

    I think one always wants to buy the cheapest option possible. Note how the cost goes back up for Sept 160 puts, back up to 10.47 points.

    Ok. You've probably had enough. There will be a market bounce. But, at the moment, US stocks are decidedly bearish.

    Best trading,

    Michael J. Clark, CGTS

    Hanoi, Vietnam

    April 11, 2014

    I have received no payment from Seeking Alpha nor from anyone else for this article.

    Apr 11 11:52 AM | Link | 2 Comments
  • DEFENSIVE STOCKS; AND EMERGING MARKETS LOOK GOOD. BUY RELIANCE STEEL; SHORT INFOSYSTEMS.

    We have been writing about our recent re-balancing of our portfolio toward a decidedly bearish position, with shortsells outnumbering long positions by about 8-to-1. We have shown charts of the issues we like most as shorts yesterday. Today we would like to look at issues we like now on the long side of the trade. And most of the issues we like can be described as 'defensive' stocks and emerging markets.

    We like China here. We don't really like China. China is a mess. China's debt problems are immense. China, at least, seems to understand that a big part of the problem comes from governmental bailouts of criminal and/or degenerate business models. Low interest rates bailout those with more debt than they should have and/or less earnings than they need to have. Low interest rates, in fact, are the blessing to crooks, frauds, con men and cheaters. The longer that interest rates stay low, the more crime and collusion and graft a nation has. China is now allowing dysfunctional companies to go under, three in the last three weeks, after attempting to bailout failed companies in order to save face with international investors and with rating agencies.

    I am not anti-Chinese. When I write that China is a mess, I am saying that China allowed herself to be pulled into the Western mess, and now she is struggling to detach herself from the Western quicksand. Everything I write about China above also goes for America, the UK, and Europe, and Japan. Low interest rates are the fuel of untalented con-men and rattlesnake oil salesmen everywhere. Cheap money always brings out the crooks and the gangsters in suits and ties.

    So, why do we like China? Simply because that seems to be where the hot-money is flowing, no other reason. Of the four indexes we currently like long, two are Chinese, one is Taiwanese, and the fourth is the US Utilities Index (defense!).

    The Shanghai chart below (SSEC) shows a pretty perfect picture of a consolidation. However the last leg down tested support successfully. Now it should begin to move up.

    The Hang Seng chart is almost a perfect replica of the SSEC; because of this we did not run this chart.

    (click to enlarge)

    The Taiwan Index chart (TWII) is one of the strongest charts we follow. Note that the trends are all bullish, making higher highs and higher lows. Nothing negative here.

    (click to enlarge)The UTY, Utility Index, is also the picture of health. See how the price line is hugging the top of the Bollinger Band channel.

    (click to enlarge)Not all Asian indexes are attractive. Japan is not attractive. EWV, the MSCI Short Japan ETF, is long, and seems ready to run up. Note the new support level that has been tested and left behind.

    (click to enlarge)

    The UTY, Utility Index, is also the picture of health. See how the price line is hugging the top of the Bollinger Band channel.

    (click to enlarge)

    We have a couple more interesting index charts. BKX, Bank Stock Charts, is laboring (note the breaking down short-term trend on the chart below). The chart IS NOT negative. But my prediction is that we will see selling come in here, especially since the pulse in the bottom pane shows sellers (green) active and buyers (red) inactive.

    (click to enlarge)

    The DAX (Germany) and the FTSE (UK) are both weakening, the FTSE especially so. Note the down-slope of the DAX short trend and what appears to be an absolute breakdown in the FTSE; the latest attempt to rally has failed utterly (note the top pane EMV MJC indicator is topping out without even challenging the old high). Compare these with the Chinese charts, and one gets a sense of where the money is going.

    (click to enlarge)

    (click to enlarge)

    The HUI, Gold and Silver Stock Index, is quite interesting. T11 Sunmarry (blue line, second pane from the top) has broken down to the sell rating level. However, trends have already bottomed, above last support, suggesting the gold stocks may be ready to rise.

    (click to enlarge)

    ***

    We have two 'favorite' trades for today. We like RS, Reliance Steel, as a long position. There is no question that money is flowing back into industrial stocks, at least at this moment. We also really like INFY, Infosystems, as a short position.

    RS is giving a buy signal on one of our most reliable trading systems. It has tested recent support successfully at 68.84. The bottom pane shows a key element (two key elements) of this trading system. A stock needs to have all the trend elements in place that we have been discussing. But it also need to be positive intermediate-term and oversold short-term: the bottom pane shows both of these measurements. M4 21, the red line, is the intermediate-term momentum indicator; M2F alt, the brown line, is the short-term momentum indicator, which is reading "oversold".

    The pulse (second pane up from the bottom) is what we want: red line (buyers) becoming active; green line (sellers) becoming inactive.

    (click to enlarge)

    INFY, Infosystems, the Indian IT mega-company, in the throes of a corruption scandal sweeping the Indian subcontinent, is a horrible picture technically at the moment. We like this stock short. It has had a big selloff. Now it has attempted to rally and has achieved nothing in this rally (note red pulse below has seemed to break down. The shortest trend (red line, second pulse down) has already turned back down again. INFY has earnings coming up on the 15th.

    From Business Today:

    Infosys CEO and Managing Director S D Shibulal said muted growth in the fourth quarter of 2013-14 may spill over to the next financial year also.

    "At the beginning of the quarter (Q4) we gave guidance for FY 2014, several factors may result our revenues to be near the lower end of guidance," he said at a Barclays investor meet.

    "At the broad level some of our clients have seen slowdown in their business, these are across various verticals leading to unanticipated project ramp downs and cancellations in Q4.

    "We have also seen some challenges in skill miss-matches between skills that clients need and what we have which has led to slowdown in ramp-ups. These factors are leading to decline in business momentum for us during the quarter," Shibulal added

    Infosys had raised revenue growth forecast to 24.4-24.9 per cent for the financial year ending March 31, 2014 from 21-22 per cent estimated earlier.

    "Many of the factors that have led to the recent slowdown will continue to impact client spending at least in the initial part of fiscal year 2015," he said.

    (click to enlarge)

    The weekly chart shows this breakdown even better. Note the broken trend in the third pane down. Also note the recent attempt to rally back has not moved the Red Pane (buyers) off its death line.

    (click to enlarge)

    We have other stocks we like. We like LULU, Lululemon. It has put in strong support at 46.78; and it is hugging the top channel of the Bollinger Bands, a very good sign.

    (click to enlarge)Russia is about to go to war with Ukraine, and perhaps the EU, and perhaps the US. But RSX, the Russian ETF, does not indicate this.

    RSX has just reversed from a selloff, and put in new support and looks to be ready to join other New World Brics and take off. Look what hot money recently did to the Bovespa.

    (click to enlarge)We like NTE, Nam Thai Electronics, an Apple Computer supplier. It has also reversed and is soaring. When it pulls back we will get support level in place; and this will be where we place a stop loss. We will demonstrate this in a subsequent post.

    (click to enlarge)******

    A final note for tonight. What do we do when the weekly charts of an issue and the daily charts don't agree? This does happen frequently; and, generally speaking, the daily chart has the preference over the weekly -- but not always. Let us demonstrate.

    (click to enlarge)OCN, Ocwen Financial, does not look so bad in the daily chart. T11 Sunmarry (blue line, second pane down) -- if one follows only one indicator in these charts, T11 Sunmarry is the one -- has turned back up. This is positive -- but not always. A T11 Sunmarry rally can be very brief. That is why trend confirmation is important. Trends (pane #3 from the top) are trying to pop back up. In the bottom pane, Pulse Green (sellers) is returning to a quiescent state; and Pulse Red (buyers) is waking up.

    However, look at the OCN weekly chart. It shows a much different picture. T11 Sunmarry is negative; in the third pane down, trends are negative; a positive trend is seeming to try to turn itself into a negative. It has flattened out significantly. And the recent attempt at a rally seems to have been inconsequential. The price is hovering still at the low channel of the Bollinger Band.

    In this instance the weekly chart seems to be the most influential.

    (click to enlarge)We have recently been negative on KSU, Kansas City Southern. But the daily chart is positive, with a new support in place, and with T11 Sunmarry positive. The price is chasing the top Bollinger Band. And the Red Pulse (Buyers) in the bottom pane is moving.

    (click to enlarge)

    (click to enlarge)

    The weekly chart of KSU is negative: T11 Sunmarry is negative; the trend pattern in the third pane down is also negative. The Green Pulse (Sellers) is raging; however the Red Pane (Buyers) has just had a slight tick up. The first pane, EMV MJC, shows an issue that is oversold however, an issue that should be trying to have a rally here. KSU has resistance at 105.95 in the weekly chart. So this is the number to watch for KSU.

    Tomorrow we want to talk about our process for analyzing which stocks to look at. It's really very simple.

    Best trading,

    Michael J. Clark, CGTS

    Hanoi, Vietnam

    Apr 10 12:27 PM | Link | Comment!
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