Deep-sea mud in the Pacific Ocean as a potential resource for rare-earth elements
The rare elements theme has been quite hot in the recent months. It now seems that deep-sea mud in the Pacific Ocean has lots of them. I wonder what the extraction costs would be.
[url]http://www.nature.com/ngeo/journal/vaop/ncurrent/full/ngeo1185.html[/url]
2007/2011-- an interesting analysis
When and if the market turns and breaks the 200 DMA, I wonder where and when the Robot will indicate a prime point to enter/jump on.
In the meantime, one might enjoy[URL="http://www.zerohedge.com/article/guest-post-how-equity-market-prices-recession-0"] this simple comparison of 2011 and 2007[/URL].
backtesting and politics and noise
Billy,
I'm very impressed with the analytical minds and training of some of the people here, including Pascal, Paul and you. The complexity is typical of engineers. And it is precisely this type of thinking that makes HGSI and Pascal's book difficult for me. This is not to say I have not taken my math and advanced logic classes and aced the crucial tests. I have. Given a choice, however, I'll see the world as a specialist in qualitative methods.
All my qualitative methods are set against the background of history and geopolitics (probably one reason I like Zero Hedge). As I noted to EB in a seperate exchange, I don't talk politics, culture or religion since I became a speculator. This makes it a little difficult to express my judgments because they can be so easily misconstrued.
That said, I'll make a bold and ugly political statement: the market and the entire edifice on which it stands depends heavily on American military power and its projection. Conservatives know this at least implicitly. And so-called liberals are embarassed by it but must accept it. President Obama understands this point, as did Clinton and every other president in recent memory. There have been no doves in the White House.
From the conquering of the American West to the non war in Lybia, there has not been a time when the USA is not at war somewhere defending its [I]national interests[/I]. This fact may not be taught in American high school history books, but, trust me, people in Asia-- especially China-- know it well. Power comes at the end of a gun, as Mao put it. And every Chinese knows this, too.
So what is my point? [URL="http://www.zerohedge.com/article/cvn-77-ghw-bush-enters-persian-gulf-cia-veteran-robert-baer-predicts-september-israel-iran-w"]Consider this fact[/URL], courtesy of ZH (but ultimately from [URL="http://www.stratfor.com/?utm_source=General_Analysis&utm_campaign=none&utm_medium=email"]Stratfor[/URL], a subscription service to which I subscribe):
[I]Stratfor demonstrates, the CVN 77 G.H.W. Bush has just entered the Persian Gulf, the first time a US aircraft carrier has passed through the Straits of Hormuz in months. What is also notable is that the LHD 5 Bataan amphibious warfare ship has just weighed anchor right next to Libya: this is odd since the coast of Tripoli had been left unattended for many weeks by US attack ships. And topping it all off is that a third aircraft carrier, the CVN 73, is sailing west from the South China seas, potentially with a target next to CVN 76 Ronald Reagan which is the second carrier in the Straits of Hormuz area[/I]
Whoever controls oil, controls the global economy. Can anyone really disagree with this? (I bet some can, and I dread escalations of political aruments). In any case, a lot of power is lined up in that part of the world. By doing so, the president and the military are tacitly supporting a strong American economy and stock market. They know the biggest drag on GDP comes via high oil prices. Moreover, leaders in the USA know that Americans depend on a rising stock market for the retirement and that a poorly performing market will also prove a dead weight on American GDP growth. To me these facts are almost self evident. They are the background against which all current movements must be considered.
In other words, while all the noise inside the market and inside the media is sending confusing signals, the basic message remains: America and its allies are in control. As long as that is the case, the bias of the markets will be sideways to up.
In the meantime, we bit players will continue to make our meal money on volatility and trends, which will occur within ranges. If a carrier ever gets taken out, then all bets are off.
The latest skinny, as of Monday evening.
[url]http://www.bloomberg.com/news/2011-07-18/reid-mcconnell-push-revised-debt-measure-as-obama-seeks-to-avoid-default.html[/url]
Another spin re IASB and European stress tests.
[url]http://seekingalpha.com/article/285737-the-rise-of-financial-terrorism[/url]
Hmm... do we need a robot for accounting regulations...
Does anyone have an opinion? Should one of us on the board be trying to follow this stuff and report on it? Pretty arcane stuff...
Or is it already baked into the 20DMF cake?
Interview with George Soros
Soros on Euro bonds, Germany, USA, China:
[url]http://www.spiegel.de/international/europe/0,1518,780189,00.html[/url]
Ed Hornstein's report of Sept. 5.
In my August 18, 2011 market commentary, I wrote the following:
"The major indices have quickly dropped approximately twenty percent with the
market showing very little ability to stage any rallies on meaningful volume.
What little leadership remained during the past week has gone by the wayside
such as former leaders PCLN, AMZN, BIDU, LULU, CMG, WYNN, DECK, FOSL, GMCR, CRM
and SODA. Other former leaders that topped out weeks or months ago have
continued to see incessant distribution such as APKT, PNRA, NFLX, ISRG, RVBD,
TZOO, OPEN, and TIF.
Simply put, we are in a bear market for stocks. This means that maintaining
high levels of cash and preserving capital are key. "
* * *
During the past two weeks, the market staged a classic "jam" rally off the lows,
with little leadership to speak of. Such a rally was not surprising given that
the major indices had seen historic selling off their highs. Indeed, the Nasdaq
Composite managed to rally into the 2600 level, which had marked key support for
the index in March and June of this year. Unfortunately, that support level has
now become key resistance, and that index failed its first test of that level
miserably.
The "jam" rally had little, if any, characteristics of a sustained uptrend,
other than a suspect follow-through day on August 23. That follow-through day
lacked clear and unequivocal volume to indicate that institutions were putting
money back to work in the market. In addition, in the days after the
follow-through day the major indices rallied on below-average volume, somewhat
reminiscent of the "jam" rally we saw in late June through July before the sell
off began. Third and most importantly, was the clear lack of leadership and
strong basing patterns in the market.
The few stocks that managed to make new highs recently were mostly illiquid or
defensive-related names, and not the high-quality liquid growth names that are
associated with new market uptrends.
Stocks such as PMST, MAKO, and ARCO are not exactly the type of liquid growth
names that would lead the markets by themselves out of a bear market. While
these stocks could be future leaders down the road -- without other liquid
names showing strength at this time -- they are merely illustrative of the
smaller, illiquid stocks that may buck the trend during a countertrend rally.
This reminds me somewhat of the August 2008 countertrend rally before the
historic market debacle in 2008. As my personal journal entry from August 28,
2008 reads:
"The only stocks I see breaking out or leading now are smaller illiquid names
that do not give me confidence the big money crowd is putting money back to
work. While it is nice to see a name like AVAV or AFAM buck the trend, those
stocks appear to be the exception to the bear market, and not stocks that would
lead us out of this nasty market environment. For this reason, I fear this
rally does not have a long way to go."
* * *
Although I wrote that journal entry three years ago, the fact that I could
simply substitute PSMT, MAKO, or ARCO for AFAM or AVAV, is anything but
inspiring. Again, perhaps these stocks are future leaders, but without other
liquid names making new highs and leading, the rally we saw does not correlate
well with a new sustained market uptrend at this time.
Similar to today, the often-defensive medical space in August 2008 was showing
good relative strength. At that time names like CELG and AMGN were going into
new highs only to eventually get crushed during the great crash in the fall of
2008. Similarly, during the "jam" rally, medical stocks like ATHN, MAKO, and
CERN have shown superior relative strength. Without other groups leading the
charge however, precedent tells us that rotation into the medical area can often
be a sign of a "risk-off" or defensive mindframe for the big money crowd.
Faced with suspect illiquid leadership, rallies led by defensive stocks, and
virtually nonexistent superior basing patterns in growth stocks, the "jam" rally
appeared somewhat suspect from the start. And, late last week, the indices may
have begun to tip their hands, as they turned rather swiftly to the downside
after running into logical resistance.
While our markets were closed for Labor Day, the European markets continued
their sell-offs yesterday, with the major European bourses down anywhere from
3.5-5%, and the major European banks trading to 29-month lows. This certainly
does not bode well for our markets, and coupled with last week's sell-off
certainly leads one to conclude that "jam" rally appears to have ended.
Certainly a retest of the August 8 lows, and another leg down in this bear
market appears likely at this time. For now, the only small positive is that
some of the higher quality liquid names have shown a bit of "stubbornness"
during last week's selling, as stocks like AMZN, PCLN, ISRG, MA, AAPL, BIDU,
and CMG continue to show exceptional relative strength. These "sexy seven"
should be watched carefully as they will offer an important clue as to the
duration and severity of this bear market. Should they come under heavy
distribution and break lows from last month, the odds of a further sell-off
would be increasingly likely.
In summation, faced with the negative environment described above, high levels
of cash and capital preservation remain of high import. Other than gold and
gold miners, being long in this market continues to be a recipe for disaster.
And only the fool will make useless predictions of how long this bear lasts, or
attempt to trade every wiggle and tick on the tape, shorting and going long
almost at random while masking his or her incessant need to always trade.
Just as the best poker players play only a strong hand and know to throw away
weak ones, the skilled speculators understand to only play their strong hands in
the market. And the beauty of investing, is that we never have to ante until we
see the opponent's cards -- in this case -- the cards of mother market.
Remain patient and defensive for it is an absolute certainty that sooner or
later a new bull market will be born. And like every new bull market, most will
miss it as they will be too busy shorting it or refusing to commit capital once
it begins.
Ed Hornstein's email of Sept. 6
I wanted to put out a brief update to my commentary from last night.
The one positive I noted was that a few large liquid growth leaders were acting
"stubborn" and showing excellent relative strength. Indeed, these stocks bucked
the trend once again today, and led the major indices to close well off their
lows in somewhat of a positive reversal day. While the market continues to
sell-off, these stocks continue to base build and, at least for the time being,
are resisting the general market's distribution.
I noted that these stocks' behavior would offer a key clue as to the duration
and severity of this bear phase. I cannot underscore this point enough. Simply
stated, the seven stocks I noted, and a few others (listed below), will let us
know whether the bear phase ends soon, or whether the indices break recent lows.
As I noted, it would be foolish to prognosticate on the outcome and I will leave
that for others to banter about. For now, I note that it remains a positive
that these stocks continue to base-build, resist the selling pressure, and show
excellent strength.
In light of this, I am providing my first watch list in quite some time. This
is not a buy list, but merely a list of companies with superior fundamentals and
that are showing the ability to resist high levels of distribution in the
market. Should the market embark on a sustainable uptrend, many of these stocks
likely will be "go to" leaders. Of course, any continued selling in the general
market likely takes many of these stocks much lower. One should exercise
patience, for there will be ample opportunity to be aggressive on the long side
should the market decide to resolve itself to the upside.
AMZN, PCLN, ISRG, MA, AAPL, BIDU, CMG, GMCR, CROX, UA, LULU, HANS, MAKO, PSMT,
ARCO, CF, POT, NTES, ATHN, CERN, NUS, PANL, V, Z, LVS, WYNN, LNKD, AWAY, ALXN,
VRUS ,JAZZ, QCOR, PRGO, CPHD, SBUX, WFM, SBH, AZO, JCOM, CPA.
Bloomberg editorial re European banks and underlying accounting tricks to conceal losses
[url]http://www.bloomberg.com/news/2011-09-15/european-bank-blowups-hidden-with-shell-games-jonathan-weil.html[/url]
foreshadowing changes in the regulatory framework governing HFT
Speaking of robots: [URL="http://www.computerworlduk.com/news/networking/3302464/algorithmic-stock-trading-rapidly-replacing-humans-warns-government-paper/"]http://www.computerworlduk.com/news/networking/3302464/algorithmic-stock-trading-rapidly-replacing-humans-warns-government-paper/[/URL]
"Algorithmic stock trading rapidly replacing humans, warns government paper
"Regulatory framework needs to be updated to keep pace with effects of technology"
UK report by The Foresight Panel, led by Dame Clara Furse, the former chief executive of the London Stock Exchange, found "'no direct evidence' that the computer trading in itself increased volatility,... but in specific circumstances it was possible for a series of events with 'undesired interactions and outcomes' to occur and cause massive damage."
NYTimes Gretchen Morgenson column re Europe crisis
[url]http://www.nytimes.com/2011/09/18/business/economy/as-europes-crisis-grows-over-there-is-over-here.html?_r=1&ref=business[/url]
Ed Hornstein's message of 9/18
Despite a large percentage move for the major indices last week, the tape leaves
much to be desired. While the Nasdaq and Nasdaq 100 climbed slightly above some
resistance levels last week, and a few select breakouts have succeeded, there
appears much more wrong than right with this tape:
First, the major indices lack any accumulation. Other than Friday's options
expiration -- which caused volume to surge -- and Thursday's higher volume
churning action on the Nasdaq, volume has been absent when the indices have
moved higher. This underscores the lack of demand for stocks from the big money
crowd. Moreover, the Russell 2000, NYSE Composite, Dow, and s and p 500 have
lagged considerably and created divergences that do not correlate well with a
market seeing high levels of money flows. Until this changes, caution is
warranted.
Second, leading stocks continue to form late-stage faulty bases. While
late-stage bases can work if the patterns are constructive, most of the leaders'
basing patterns have fundamental flaws such as wedging handles, low levels of
accumulations, or v-like structures. At a minimum, these stocks need more time
to correct these flaws and build proper bases.
Third, stocks that have attempted to breakout have acted rather sluggishly.
While a few names like ATHN and PSMT have broken out and advanced, larger liquid
leaders such as GMCR, MA, V, and PLCN have struggled when they have attempted to
breakout. In strong markets, liquid leaders will breakout and give a patient
investor little chance to buy them as they will advance rather quickly. The
sluggishness of these breakouts argues that -- at the very least -- the market
needs more time to base-build.
Fourth, the few stocks that are leading come from industry groups that are
rather defensive in nature, such as the auto-replacement part stocks, gold
miners, utilities, discount retailer and "dollar stores", medical stocks (which
tend to be of a more defensive posture), and large-cap consumer stapes like
Procter and Gamble and Colgate. When recession-proof defensive names are
leading the market, it does not bode well for a sustainable uptrend.
Fifth, stocks that are economic bellwethers have absolutely lagged this rally.
Names like Federal Express and Caterpillar have acted extremely weak and refuse
to rally with the broad market.
Sixth, emerging markets -- which have lead rallies the past few years -- refuse
to do so. The charts of Brazil, Hong Hong, mainland China, or the other Asian
emerging markets remain in horrid shape.
Seventh, the financial stocks still act highly distributive. While most of the
large banks have held their August lows, they cannot gain much traction and lack
any volume to the upside. While banks do not have to lead a rally, continued
deterioration in the technical patterns of these stocks does not correlate well
with a sustainable uptrend.
Despite the negative characteristics I described, it is always possible that the
market is in a "repair stage" similar to what we saw in the summer of 2010.
In 2010 (after a severe intermediate correction from May to July), the market
bottomed on July 1, followed-through, and had a similar rally to today's rally
with little power or leadership from growth stocks. Then, for the last three
weeks of August, the indices sold off aggressively, but did not undercut the
July 1 low. During those three weeks, the stocks that would provide leadership
for the fall rally began to tighten up and act constructively such as AMZN,
RVBD, CMG, SINA, and PLCN. The market staged a lasting follow-through on
September 1. Unlike the July follow-through, leaders broke out almost
immediately and began monster moves. The power from breakouts early in
September was the key ingredient that was missing from the July rally.
The recent rally has similar characteristics to the "flawed" July 2010 rally,
which ultimately set the stage for the "real" rally in September 2010. If that
is the case, we should watch closely for a wave of selling similar to August
2010, where the leadership tightens up, coils, and sets up to break out in a few
weeks.
Of course this is just one possibility and trying to predict where the market
goes or what course it will take is fool's gold. But, by examining the weight
of the evidence, I am left to conclude that the market's recent rally is
somewhat feeble, and not the "fat pitch" where the prudent speculator would want
to be aggressively long and expose large amounts of capital. THAT CAN CHANGE IN
A MOMENT'S NOTICE, but until powerful breakouts succeed (other than a few
exceptions), and quality liquid growth stocks break out of proper bases, the
prudent speculator should remain patient and be ready to seize this opportunity
when it occurs, whether it's next week, next month, or next year.
This email was sent by Edward Hornstein, 60 east 42nd street, suite 1144, ny,
Things Apple is worth more than
Quite impressive:
[url]http://thingsappleisworthmorethan.tumblr.com/[/url]
Re Pablo's link to interview with trader.
[url]http://www.huffingtonpost.co.uk/2011/09/27/alessio-rastani-hoax-on-bbc_n_983156.html[/url]
Stay tuned.
Ed Hornstein's message of 10/4
I will have a full market update this weekend. However, I wanted to put out a
quick note to underscore two points.
First, and most important, is that high levels of cash and preserving capital
are key. In my past report, I discussed the characteristics that led me to
believe the market's rally off the August 8 lows was anything but a "fat pitch"
and lacked the power associated with a new uptrend. Since then, the market
indices have traded sideways, while institutions have rotated from sector to
sector distributing stocks en masse. It now looks plausible that the August 8
lows will be taken out and that another down leg in this bear phase is upon us.
While the mass media is now admitting this is a bear market, the market has
given us plenty of clues over the past few months that its tone was anything but
healthy. In fact, the tape is much worse than what the indices tell us- many
former leaders have fallen 50-75 percent while many financial and commodity
stocks are selling at levels not seen since the crash of 2008-09.
The bottom line is that we are in a bear phase for stocks, the market's trend is
down, and there continues to be serious damage and distribution almost every
day. Faced with these indisputable facts, preserving your capital, and
psychological capital is of utmost importance.
Second, while it is fruitless to predict how long the downtrend will last, the
good news is that this bear phase will end too. As we move lower, and selling
picks up, the doomsdayers will grow louder and louder that the world is ending.
The market has an incredible ability to forecast the future, so do not be
surprised when the market ultimately bottoms while all the news is bad. I can
promise you it will. I always maintain that these bear phases are a prudent
speculator's best friend- as they lay the foundations for future bull markets.
Our economy has survived many wars, political unrest, economic hardship, panics,
stock crashes, depressions etc. So to will it survive the various problems
facing it today. While significantly lower prices could be in store for the
market in the near future, a strong bull opportunity could arrive sooner than
people realize. (I will outline this over the weekend). While the negativity
is rampant as stocks go lower, remember the importance of preserving capital to
take advantage of the next giant opportunity that will most certainly emerge
from the depths of this bear market.
As always, please email me with any questions or comments.
This email was sent by Edward Hornstein, 60 east 42nd street, suite 1144, ny,
NY 10165, using Express Email Marketing.
Malaysia, Indonesia,Thailand the New Frontiers of Asia
Some interesting data about Indonesia, Malaysia, Philippines, Thailand, Vietnam:
[url]http://asia-jobs.fins.com/Articles/SBB0001424052970203388804576614813439419154/Malaysia-Indonesia-Thailand-the-New-Frontiers-of-Asia[/url]
China Global Investment Tracker Interactive Map
Chinese investments, what and where:
[url]http://www.heritage.org/research/projects/china-global-investment-tracker-interactive-map[/url]
Quantifiable Edges on FTDs
[url]http://quantifiableedges.blogspot.com/search/label/IBD%20Follow%20Through%20Day[/url]
GLD breaks trend line according to Tim Knight
[URL="http://www.slopeofhope.com/"]Slope of Hope. [/URL]
HFT, Volatility, Correlations, Leveraged ETFs, New Regulations
[url]http://www.schwab.com/public/schwab/resource_center/expert_insight/todays_market/sonders/sonders_101711.html[/url]
Key Points
Market volatility has spiked, starting with 2010's flash crash and culminating in this year's wild August, bringing asset-class correlations up with it.
High-frequency trading and the use of leveraged exchange-traded funds (ETFs) are the primary culprits, but the impact isn't all bad.
What are regulators doing and saying about the phenomenon?
Billy
Humorous look at bank derivatives
[url]http://club.ino.com/trading/2011/10/a-simple-humorous-look-at-bank-derivatives/[/url]
Little humor on bank derivatives ..... thought I would share with EV group.
Enjoy!