Gold Rush

by Newsweek

The metal's price is at a record high. But some things are worth more than their weight in gold.

 

Infographic by Column Five Media; Research by Lauren Streib 

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Silver at its peak, what should be the ideal strategy?

By Amrita Mashar

In 2010, Silver performed much better than other precious metals in the international market with prices rising by an surprising 80% rise which is two and half times the rise in price of Gold

In the first quarter of 2011, Silver’s price has increased at a steady 40 percent. Along with being considered a safe investment, the relatively low supply of the metal as compared to the high demand has also contributed to the firm increase in Silver prices.

Main reason for investment in Gold and silver is the continuous stability witnessed in the global market. Liquefaction is also an easy process for Gold or Silver bars, jewelry, ETF and coins. Do note that purity of the mineral is of utmost priority and should be given its due importance in ongoing time.

In market reports it has been observed that due to strong Industry demand in US and Asia will be key factor for driving growth in worldwide market. Healthy developing country demand especially in Asian market such as China and India will also be important factor.

China’s silver consumption already accounts for 70% of the global total of industrial use, and its middle class isn’t even close to reaching its spending potential. Fundamentally, Silver has strong upside momentum till 100 Dollar. Industry demands are key driver for movement in Silver price. Silver uses of total consumption in 53 % in electronic equipment, 24 % jewelry, 7 % coins, 13% photos and as 2% as investment purpose .

The talk is there in market that Silver is technically overbought and it may correct any time. But from last few months it have been observed that short term correction can be emerge as opportunity for long term buying.

My view is there in current environment its best option for return is to invest your money is silver. Bullion commodities provide protection again the inflation and also with higher return in long run. Those who are in short from 40 Dollar since beginning of year 2011 can clear out their position in next month. Silver price expected to correct till 41 Dollar before reach to all time high levels in coming months.

The price ratio of Gold versus Silver has been dropping in the last couple of years in favor of the white precious metal. Although the drop seems overdone and the ratio set for upward recoil, the technical damage caused by breaking through the 40 level has been done. Analysts are now predicting silver prices can reach as high as $100 in 2011 and $250 by 2015. In conclusion we can say that for coming months “Gold is strong and Silver is strongest”.

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Stock Market Elliott Wave Patterns, Quick Primer on OEW

By: Tony_Caldaro

We received a request over the weekend to provide a bit more detail about OEW labeling. OEW applies most of the same terminology as standard EW with one major exception. We added a Major wave between the Primary and Intermediate degrees. It makes more sense, to us, that a Minor wave should be complemented by a Major wave with an Intermediate wave in between them. Our labeling scheme is provided below:

Labeling: LEGEND
tentative labeling … green
Supercycle … shocking blue … SC
Cycle … light blue … C
Primary … blue … I
Major … black … 1
Intermediate … purple … i
Minor … dark blue … 1
Minute … dark green … i
Micro … orange … 1
Nano … gray … i
Pico … red … 1

We provide an example of OEW labeling in a bull market with the chart below. This is the Supercycle wave between 1932 and 2007: labeled SC1. Notice Cycle waves [1] and [2] completed between 1937 and 1942, then Cycle waves [3] and [4] ended between 1973 and 1974. Cycle wave [5] completed at the Supercycle wave SC1 top in 2007. Now notice, Cycle wave [1] was simple, and Cycle waves [3] and [5] both subdivided into five Primary waves. In each of these extended Cycle waves, both Primary waves I and V were simple but Primary wave III subdivided into five Major waves. The last observation is that Major wave 3, of Primary III, of Cycle [3] subdivided into five Intermediate waves. While Major wave 5, of Primary III, of Cycle [5] subdivided into five Intermediate waves. This chart offers an example of how bull markets unfold over short and very long periods of time.

The next chart displays the typical OEW bear market labeling. It has been our observation that all bear markets are corrections to larger bull markets and thus unfold in ABC patterns. Simply put, bull markets consist of five wave advances, and bear markets consist of three wave declines. There are no five wave bear markets, nor three wave bull markets. Illustrated in the chart below is the 2007-2009 bear market consisting of three Cycle waves [A], [B] and [C], (which ended at the SC2 low). Cycle waves [A] and [C] each divided into five Primary waves. Therefore the entire bear market was a zigzag (5-3-5) of Supercycle degree. Naturally this bear market could have formed a flat (3-3-5), a triangle (3-3-3-3-3), or a complex three … which are all standard correction EW patterns.

To summarize, OEW added a Major wave in between the Primary and Intermediate waves. OEW also states that all bear markets are three wave corrections to larger bull markets. Finally, we state all waves are determined quantitatively by OEW, and the appropriate label is placed at the point of wave termination. We can only place final labels at the end of completed waves, not where we think they have ended. In other words, we do not use the market waves to fit our count, we count and label the waves the market creates. Best to your trading/investing.

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Monetary System is Like a “Drunken Sailor”

The below is an excerpt from Richard Russell’s excellent daily newsletter, Dow Theory Letters.

“A clearer picture is seen in the precious metals market. The bull market in the precious metals is underscored by the ominous weakness in the Dollar Index. I say “ominous” because the dollar weakness is setting off international demands for a new reserve currency. If the US dollar loses its status as the world’s reserve currency, it will be a disaster for the US, which can print “money” in the same currency that its debts are denominated in. If the US has to borrow foreign currency to cover its debts, interest rates will head higher.”

“Once the US mountain of debt is subject to rising interest rates, the game is over, and the compounding cost of carrying the Federal debt will throw the nation into virtual bankruptcy, an emergency that the US can’t print itself out of.”

The chart that no one wants to look at…It’s the Dollar Index, heading inexorable lower, perhaps to test it record low of 70.50. At stake — the reserve currency status of the “almighty dollar.” Already there are plans for a new reserve currency made up perhaps of the euro, the French franc, the renminbi and gold.

Russell prediction — sooner or later (probably sooner) gold will re-enter the world monetary system.

The current monetary system based on competing fiat currencies is like a drunken sailor who is unsteady on his feet while trying to adjust the ship’s broken compass.

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Sector Relative Strength: Days of Outperformance

by Bespoke Investment Group

Typically when we look at the relative strength of sectors, we compare the performance between a sector and the S&P 500 over a period of months or years. While this is generally the preferred way to look at relative strength, it does have its shortcomings. For example, if a sector has a big move on one day, that day's move will skew the overall relative strength measurement for as long as the day is included in the time frame analyzed. It's a minor issue, but one worth noting nonetheless.

With that in mind, we analyzed the relative strength of sectors using a slightly different approach. In this method we looked at the number of days (in percentage terms) over a 50-day rolling period where a sector's single-day return was greater than the one-day return of the S&P 500. In the charts below, we have provided the relative strength charts under this method for each of the ten S&P sectors. For each chart, high readings indicate that the sector has frequently outperformed the S&P 500 on a daily basis, while low readings imply that the sector routinely underperforms the S&P 500 on a daily basis.

Interestingly, as of today eight sectors have outperformed the S&P 500 on a daily basis at least 50% of the time over the last 50 trading days. The only two sectors that have underperformed the S&P 500 more often than they have outperformed are Financials (38%) and Technology (32%). However, given the fact that these are the two largest sectors in the market, any weakness certainly makes its presence felt. While Technology currently has the weakest frequency of outperforming the S&P 500 over the last 50 days, Energy and Health Care are tied for the highest rate of daily outperformance at 62%.

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Customize Your Earnings Season Calendar

by Bespoke Investments Group

While earnings season has been going on since last Monday, only 3% of total US companies have reported their quarterly numbers. As shown below, earnings season will really kick into gear tomorrow, however, when 101 companies are set to report. Only 78 companies have reported thus far. Next Thursday and Thursday, May 5th will be the biggest earnings report days with 324 and 349 companies reporting, respectively.

Below are the key companies set to report for the remainder of this week. As shown, IBM, INTC, ISRG, and YHOO all report after the close today. ISRG has historically been the best of this bunch in regards to earnings reports. Since its IPO, ISRG has beaten earnings estimates 93% of the time and averaged a whopping gain of 6.93% on its report days. Intel, on the other hand, has averaged a decline of 1.02% on its past earnings report days.

Over at Bespoke Premium, we provide members with an in-depth earnings season calendar that shows all of the companies set to report throughout earnings season. For each stock, we provide info on earnings and revenue beat rates, guidance, and historical price reaction to past reports. The calendar is a very useful tool for regular market followers. Premium Plus subscribers have the ability to request a custom earnings season calendar for stock in their portfolios or on their watch lists.

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