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|Includes: BA, DNDN, EOC, Frontline Ltd. (FRO), FXE, GLD, HURN, IAU, NFP, URR, UUP, WBD
Wednesday, 3 November 2010


Here comes the continued Bernanke-financed rally.  Actually, you and I are paying for this stock market rally.  Nothing is coming out of Ben's pocket, although he is doing all of the spending.

What stands between a stock market correction and a stock market rally?  Ben Bernanke and his army of inflationistas.

A US Dollar rally will signal the end of this world stock and commodity inflation -- we can call it a bubble, I guess.  A bubble fueled by a lot of air, a lot of windy anti-Dollarism, and not much else, in truth.  A promise to not let American stocks and bonds fall -- which promise is meant to keep American dollars from fleeing overseas.

The Dollar has been trying to bottom recently.  As soon as it makes noises of a bottom, Dr. Ben steps in and beging cutting (paper cuts?) with his flacid tool again.  Look at a couple charts we have today illustrating the Fed's infectious disattraction for the US currency.

One of our better trading systems (M5 3 ASP ALT LT2a) is giving a shortsell signal on UUP today, the US Dollar Bullish ETF.  A shortsell on this bullish ETF means this system thinks UUP is going lower.

The same trading system is also giving a BUY SIGNAL on FXE, the Euro vs US Dollar ETF.

We are getting about 95% long-trade signals versus short-trade signals.  We are going to show some of our short-sale trade signals, just to be perverse I guess.

A stock rally with a continuing Dollar correction means, for anyone trading in US Dollar denominated issues, money made in stock appreciation is being given away in Dollar depreciation.  So Bernie is using  American Dollars to generate bubbles in foreign stock markets and in commodities -- while American citizens essentially are paying for everyone else's party.  Some might argue that it is about time for America to pay!  And that case can be made.  But why are we allowing this man to do this?  Is this debt-party Bernie is creating for the world, really in America's interest?

Oh, we have another chart suggesting more Dollar weakness against the Euro -- if you needed more such information.

Is a weaker Dollar really going to make the American economy more competitive with the world?  Or is it going to make Americans poorer, as it exports inflationary pressures all around the world and raises the costs of doing business (commodities are anti-Dollar instruments)?  Is the plan to flood the world with so much Dollar-money that the world will turn around and buy American products and put an end to the Greatest Depression?  Is that a fantasy?  Is a world where no one wants to own US Dollar instruments except the Fed really a strong advertisement for investing in America?

Bernanke wants to spent another $500 Billion to get the American economy moving again.  The first trillion and a half didn't do much, apparently, except to save the banks and to provide Wall Street bankers with even higher bonuses -- while millions of suddenly-poor Americans were losing their jobs and being kicked out of their homes.

I guess we know who rules America.


Gold stock issues bottoming.  Gold (Physical Gold) issues topping.

21 Issues bottoming; 64 issues topping.  Two shipping issues bottoming; one shipping issues giving a short-sell signal (see Trading Ideas below).

SYMBOL CLOSE T11 Diff M4 Sum Plus Issue Name
^HGX_D 97.24 -0.09 1 Philadelphia Housing Sector Index Daily
^HUI_D 527.17 1.376 1 Gold Stock Index Daily
^VIX_D 21.57 0.399 1 CRB Volatility Index Daily
^XAU_D 206.31 0.37 -1 Philadelphia Gold and Silver Index Daily
ABX_D 48.74 0.128 1 American Barricks Gold
ANV_D 25.27 -0.137 -1 Allied Nevada Gold Corp
CDXS_D 11.15 0.76 1 Codexis Inc
CPA_D 50.8 -0.146 1 Copa Holdings SA-A
DHI_D 11.06 0.022 1 DR Horton Daily
DV_D 48.51 0.566 1 DeVry INC
FRO_D 28.85 -0.024 1 Frontier Limited Shipping
GAZ_D 7.89 0.079 -1 Natural Gas ETF
GG_D 44.99 0.093 1 Gold Corp
GGB_D 13.38 -0.037 1 GERDAU S.A.
GGCRF.PK_D 0.54 0.029 1 Genco Resources
GMR_D 4.23 0.203 1 General Maritime Shipping
GSS_D 5.12 0.016 -1 Golden Star Resource Gold
HMA_D 7.93 0.038 1 Health-Management Assoc
HMY_D 11.57 0.023 1 Homestake Mining
HURN_D 20.12 -0.11 -1 Huron Consulting
KGN_D 8.01 0.109 1 Keegan Resources Gold
NANO_D 14.18 -0.051 1 Nanometrics Inc
NILE_D 44.2 -0.12 1 Blue Nile
NXG_D 2.85 -0.022 -1 Northgate Minerals
PPD_D 61.47 0.656 1 Prepaid Legal Services
QLTI_D 5.77 -0.018 1 QLT Inc (Biotech)
RGLD_D 50.07 0.105 1 Royal Gold Inc
SAN_D 95.63 0.323 1 Banco Santander Chile SA
TNK_D 12.18 0.014 -1 Teekay Tankers Ltd.
TOL_D 18.52 0.03 1 Toll Brothers
USSIF.PK_D 0.531 0.011 1 US Silver Corp
VVUS_D 7.25 0.164 1 VIVUS Inc
VZ_D 32.8 0.079 1 Verizon Communications
WPRT_D 18.55 0.059 -1 Westport Innovations
X_D 44.85 -0.096 1 US Steel Corp
TOP WATCH        
SYMBOL CLOSE T11 Diff M4 Sum Plus Issue Name
^DRG_D 311.607 0.424 -1 Pharmaceutical Index
^SMSI_D 1,104.40 2.098 -1 Madrid General Index Daily
ACN_D 44.99 0.084 -1 Accenture PLC
AMSC_D 36.555 -0.11 -1 American Superconductor
ARO_D 24.02 -0.275 -1 Aeropostale Daily
AXPW.OB_D 0.57 -0.017 -1 AXION
BCRX_D 4.88 0.006 -1 BioCryst Pharmaceuticals
BMI_D 41.45 0.097 -1 Badger Meter
BP_D 41.42 0.15 1 British Petroleum Daily
BSX_D 6.44 0.03 1 Boston Scientific
CAB_D 22.07 0.141 1 Cabela's Inc
CHOP_D 6.01 0.024 1 China Gerui Adv Materials
COL_D 59.71 0.085 1 Rockwell Collins Daily
COP_D 59.34 0.124 -1 Conoco Philips Daily
CYTX_D 4.77 -0.112 -1 Cytori Therapeutics
ELY_D 7.04 0.018 -1 Calahan Golf
ENDP_D 35.36 0.146 -1 Endo Pharmaceuticals
EQR_D 48.9 0.103 -1 Equity Residential
EUFN_D 23.064 0.06 -1 Euorpean Financial Index
EWJ_D 9.99 0.008 -1 Japan Index ETF
EWP_D 42.9 0.144 -1 Spain Index
FDX_D 87.03 0.194 -1 Federal Express
FISV_D 54.67 0.129 -1 Fiserve Inc
FITB_D 12.44 0.035 1 First Third Bancorp
FNMA.OB_D 0.385 0.009 1 Fannie Mae Daily
FSLR_D 137.64 -4.503 -1 FIRST SOLAR
GES_D 39.91 -0.285 -1 Guess? Inc
GNK_D 16.42 0.036 1 Genco Shipping Corp
GNW_D 11.69 -0.303 -1 Genworth Financial
HAL_D 31.4 -0.368 -1 Haliburton
HLF_D 62.75 0.187 -1 HERBALIFE
HMC_D 34.25 0.067 -1 Honda Motor Company
HME_D 54.92 0.14 -1 Home Properties Inc
HOT_D 54.81 0.206 1 Starwood Hotels
HQS_D 3.35 0.016 -1 HQ Sustainable Maritime
HSIC_D 57.02 0.078 -1 Henry Schein
IO_D 4.97 0.035 -1 Ion corp
ITMN_D 13.48 -0.118 -1 Intermune Inc
JJM_D 43.38 0.108 1 Industrial Metals ETN
JOSB_D 42.85 0.146 -1 JOS A. Bank Clothiers
KGJI_D 7.05 -0.134 -1 Kinggold Jewelry
LXRX_D 1.64 0.01 -1 Lexicon Pharmaceutical
MMM_D 84.8 0.097 -1 3-M Daily
MRK_D 36.61 0.043 -1 Merk Pharmaceuticals Daily
NIB_D 40.5 0.072 1 Cocoa ETF
NKE_D 81.75 0.173 1 Nike Daily
O_D 34.24 0.058 -1 Realty Income Corp
PDLI_D 5.39 -0.01 -1 Protein Design Labs
PFE_D 17.45 0.039 -1 Phizer Drugs Daily
PTP_D 43.91 0.05 1 Platinum Underwriters Insur
RRGB_D 20 0.055 -1 Red Robin Gourmet Burgers
RY_D 53.66 0.155 -1 Royal Bank of Canada
SAP_D 52.27 0.092 -1 SAP
SHLD_D 72.27 0.216 -1 Sears Holdings
SLG_D 67.32 0.201 -1 SL Green Realty
SNE_D 32.71 0.107 1 Sony Daily
STD_D 12.56 0.022 -1 Banco Santander
TLCR_D 23.61 0.073 -1 Talecris Biotherapeutics
UPS_D 68.3 0.136 -1 United Parcel Service Daily
URR_D 31.57 0.087 -1 Double Long Euro
VCI_D 33.38 -0.258 -1 Valassis Communications
VLO_D 18 0.05 1 Valero Corp
VTAL_D 13.46 0.036 -1 Vital Images

We include a few charts below of issues we think especially interesting.

Black Line: M4 Accumulation: primary momentum indicator.
Red Line: M5 3 Test Momentum Indicator: leading momentum indicator, showing future direction of trend.
Orange Line: M5 3 Test Average (Moving Average of M5 3 Test Momentum Indicator).
Black Line: M4 Sum Plus Spike: +1 to zero: positive; -1 to zero: negative.  Two consecutive days at +1 generally are bullish; two consecutive days at -1 are bearish.
Red Line: Intermediate-Term Trend.
Brown Line: M2F ALT: overbought +80; oversold-20.
Red Line: Short-Term Trend.


BA, Boeing.
Topping.  Everything is tilting down.  It would be a good time to take profits here.

DNDN, Dendreon Corp.
Seems ready to take off.  Old high is within shouting distance. Trends are negative but trends always move last.

EOC, Empresa National De Elect.  Chile.

Have to love this chart.  An old high is ready to be shattered in this move.

GLD, Spider Gold Shares.
What's going on with GLD?  M4 Accum says its going lower.  M5 3 Momentum (red line, Top Pane) is trying to put in a bottom.  M2F Alt (Bottom Pane, brown line) is overbought, and declining, suggesting lower prices.  Gold has a wonderful power of its own today; and it's very hard to bet against.

IAU, Gold ETF.
Almost the same picture as GLD above.  Should come down; but may not.

NFP, National Financial Partners Insurance.
NFP doesn't look good here.  Seems to be breaking down.  M4 Sum Plus is now negative.  An attempted rally in M2F ALT (bottom pane, brown line) was pathetic.

WBD, Winn-Bill-Dann Foods
Price hasn't broken down yet.  But it should (I hesitate to say 'it will', given the HUGE and unprecedented governmental support for the markets here).  Should be selling today and for the next few days.

HURN, Huron Consulting.
We've been shorting HURN for much of the year.  Another short-sell signal today.  But, in terms of the M4 Accumulation Indicator, we should get a bit of a push up here.  T11 is still negative (Middle Pane, red line) -- we can't have much of a rally until that turns up.

XAU, Gold/Silver Stock Index.
IAU and GLD above represent physical gold prices.  They both suggest a top.  XAU represents gold and silver shares.  It seems to be bottoming here.  Although it is short-term overbought and might come down a bit before it challenges new highs.



We had about 50 BUY SIGNALS today for every SHORTSELL SIGNAL.  Why are we highlighting the shortsell signals?  Sheer perversity perhaps.  As I stated, we are about 95% long this market.

FRO, Frontline Limited Shipping.
More fallout from Shipping Terror or just more questions about the recovery?  At the top of a tight trading range and ready to start down again.

So, all the bad news in housing is not out yet.  Please, never let us lie to ourselves and create another housing bubble.  Stock market bubbles are hard enough to deal with -- but housing bubbles cripple a society for nearly two decades.

More information on the CGTS systems can be found at:

Clark's Gate Timing System
Hanoi, Vietnam
84 4 221 92210


Disclosure: Nothing to disclose.