Archive for September 2012

Weekend Open Thread   8 comments

You folks know the routine here: open thread…discuss whatever topic you like…I’ll post my portfolio results later.

In the meantime, here is a topic to get you started: My 3 favorite “gold” actors/actresses:

1. Jeff Goldblum: I have liked Goldblum ever since he did Tenspeed and Brownshoe with Ben Vereen (remember that one?). Some of his other notable roles: The Fly, Jurassic Park, and Independence Day. But his most unusual role was in Mister Frost, where he played the title character who is arrested as a serial killer and institutionalized. But he isn’t your typical serial killer. One of the eeriest films ever.

2. Whoopi Goldberg: While she may be as liberal as they come, she is also a darned fine actress. As a Trekkie, I loved her in Star Trek: The Next Generation, but she is probably best known for her role in The Color Purple, for which she won a well-deserved Best Actress Academy Award.

3. Goldie Hawn: Goldie first came to fame in Rowan & Martin’s Laugh-In (remember that one?). Not surprisingly, she has made her acting career mostly from comedies, including Private Benjamin, Protocol, and Overboard. While her movies aren’t what I would call classics, they are usually good entertainment for a few hours.

Have a “golden” weekend folks!

PORTFOLIO UPDATE: My portfolio finished the day down 0.05%. In the immortal words of the Black Knight, “It’s just a flesh wound.”


Posted September 28, 2012 by edmcgon in Open Thread, Portfolio

Buy B2gold Corporation (BGLPF)   5 comments

So Plastronneke was talking about a junior silver miner in the comments, and it occurred to me to check out the junior gold miners. So I did what I usually do when checking out a sector/industry: go to the etf holdings. In checking out Market Vectors Junior Gold Miners ETF (GDXJ), I noticed their number one holding was a Canadian company B2gold Corporation (BGLPF in the U.S.).

B2 isn’t strictly a junior gold miner, as they do have some productive mines (and revenue). But they are also developing several others, so they qualify. They currently have mines in production or development in Nicaragua, Namibia, Costa Rica, Columbia, and Uruguay. So there is some risk.

Financially, they are still in the red in their free cash flow, but their operating cash flow is positive, which is a good sign for their mines in development. With the price of gold going up, they should be in a good position to profit.

Because B2 is a somewhat speculative gold miner, I only added a small position at $4.05. If they dip, I might add more.

Posted September 28, 2012 by edmcgon in Portfolio Moves, Stocks

Update: Silver Wheaton (SLW) and Sandstorm Gold (SAND)   6 comments

Both of my holdings, Silver Wheaton (SLW) and Sandstorm Gold (SAND), are flirting with 30% profits today. Am I selling? Nope.

As my dad told me, ask yourself if you would buy them today? If the answer is yes, then you don’t sell.

The key to both of these is their primary commodities, silver and gold. While both have had good runs, are they about to end? Even if they have some profit-taking in the next few months, I will predict that by next March, we will see both of them, gold especially, start a powerful run. With open-ended QE3, that also means open-ended upside for gold.

On the other hand, silver might be limited. I think it will ride gold’s coattails up to the $40-50 range. Beyond that, it is anybody’s guess unless the economy turns around and gives silver an extra industrial demand boost.

Basically, when silver breaks $40, it will be time to look to get out of SLW. On the other hand, SAND is a good play for as long as “Helicopter Ben” keeps pumping dollars. As of the time of this post, SAND is only 3.7% of my portfolio, while SLW is 11.4%. While I would consider both a “buy” here, I have to call SAND a “strong buy”, and I will be looking to add more SAND on any dips in the next few months.

Posted September 28, 2012 by edmcgon in Portfolio, Strategy

Daytraders Corner   28 comments

Just for reference, here is how the S&P 500 has done on the last trading day of the most recent quarters:

June 29, 2012: +2.48%
March 30, 2012: +0.36%
December 30, 2011: -0.48%
September 30, 2011: -2.50%

What about previous Septembers?

September 30, 2010: -0.26%
September 30, 2009: -0.28%
September 30, 2008: +5.42%
September 28, 2007: -0.33%
September 29, 2006: -0.22%

Based on the history, I would say it is difficult to draw any conclusions based on this information. But the most probable result will be a small drop, most likely to the 1437-1441 support level. However, we could see a drop as low as the 1430-1433 support level at some point during the day.

If you are playing SPXU today, try to get it as close to yesterday’s close of $37.85 as possible, preferably no more than $38 if you can. In the pre-market, it is currently trading above $38.10, which could still be profitable, but your best bet for a profit in this will be at $38 or less. The futures are pointing to an opening drop, and the longer target price is at 1437, which would make for a 2% profit from yesterday’s SPXU close (SPXU would rise to about $38.63). But at a $38 purchase price, you are “only” making a 1.65% profit. I will take it if I can get it, so I put in a pre-market limit order for SPXU at $38.

The S&P 500 levels to watch today:

UPSIDE: 1449 (September 20th’s low), 1450 (September 27th’s high), 1452 (September 24th’s low), 1454 (10 day moving average), 1456-1461 (8 data points), 1463-1465 (4 data points), 1467 (September 21st’s high), 1474 (September 14th’s high), and 1482 (top of the Bollinger Bands).
DOWNSIDE: 1437-1441 (7 data points including the 20 day moving average), 1435 (September 13th’s low), 1430-1433 (5 data points), 1426 (August’s high), 1422 (April’s high), 1415 (May’s high), 1410 (50 day moving average), 1403-1409 (4 data points), and 1396-1401 (3 data points, including the bottom of the Bollinger Bands).

UPDATE 8:19 am EST: As you can tell, this was written early in the morning. At this point, the S&P futures are pointing to 1434. I would ignore SPXU now, and actually take a look at UPRO as a play for later. If the S&P 500 ends up in the 1430-1433 range, UPRO would be the play, and look for a rise up to the 1437-1441 range later today.

Posted September 28, 2012 by edmcgon in Daytrading, Market Analysis

Ed’s Daily Notes for September 28th   10 comments

If you ever need a good reason to check what an etf is holding before you buy it, consider the Market Vectors Preferred Securities ex Financials ETF (PFXF). In theory, this is a great idea for an etf, because preferred stock etf’s tend to hold a lot of bank preferred stocks. If you don’t want to hold bank preferred stocks, what do you do? Buy PFXF! Until you look at the holdings, and see General Motors’ preferred shares are almost 10% of the etf. Maybe AIG isn’t so bad after all…

CNBC: Spain Reveals Sweeping Budget Cuts to Fight Crisis

It looks like Spain is close to getting it:

Spain announced a crisis budget for 2013 based mostly on spending cuts on Thursday in what many see as an effort to pre-empt the likely conditions of an international bailout.

Ministry budgets were slashed by 8.9 percent for next year and public sector wages frozen for a third year as Prime Minister Mariano Rajoy battles to trim one of the euro zone’s biggest deficits.

“This is a crisis budget aimed at emerging from the crisis … In this budget there is a larger adjustment of spending than revenue,” Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after a marathon six-hour cabinet meeting.

…The central government sees budget savings of 13 billion euros in 2013, with spending down 7.3 percent — not including social security and interest payments — and income rising 4 percent thanks to a 15 percent leap in value-added tax take.

Now for the bad news:

The budget goes to parliament on Saturday and debates could last weeks. The country’s 17 autonomous regions still must present budgets and find an additional 5 billion euros in adjustments to meet overall public deficit reduction goals.

I am reminded of an old saying: A camel is just a horse built by a committee. I have a feeling the budget won’t be quite as pretty when the 17 regions are done with it…

Seriously, you can cut the spending now, or you can cut it later after the bond markets kick you to the curb. But using tax increases as an excuse to avoid budget cutting will only speed up the need for budget cuts sooner, as tax increases will weaken your economy and reduce your revenue.

However, I shouldn’t be so quick to praise Spain…
Bloomberg: Rajoy Makes 1st Raid on Reserve to Pay for Higher Pensions

There is always a catch with politicians, isn’t there?

Spanish Prime Minister Mariano Rajoy will raid for the first time a decade-old pension reserve fund that invests in government debt to pay for an increase in retirement payments.

The Cabinet agreed to use 3 billion euros ($3.9 billion) from the 67 billion-euro reserve, financing a rise in pensions announced yesterday, a month before regional elections. Retirees will get a 1 percent increase in 2013 and may be compensated for above-forecast inflation.

Their budget is a mess, and they decide to give retirees a 1% increase next year? Really? Time for the bear…

Bloomberg: Hollande Readies Tax-Raising Budget in Bid to Cut French Deficit

Maybe I should have saved the bear for French President Francois Hollande?

President Francois Hollande will begin making good on his deficit-cutting promises today in France’s first Socialist budget in a decade, with a blueprint weighted toward tax increases and a minimum of spending cuts.

Hollande has promised to raise taxes by 20 billion euros ($26 billion) next year, including a levy of 75 percent on incomes over 1 million euros, as he squeezes more out of the wealthy and big companies. He aims to reduce the deficit to 3 percent of output from 4.5 percent in 2012.

…France’s economy has failed to grow in four of the past five quarters. In the third quarter of last year, the only one to show an advance, the gain was 0.3 percent. Hollande’s government currently predicts growth of 0.8 percent next year.

And Hollande thinks raising taxes is going to help his budget? How long before “PIIGS” becomes “PFIIGS”? I give France a few years before they join the rest of Southern Europe’s problem children, maybe sooner.

Bloomberg: Japan Heads for GDP Contraction as South Korea Weakens

As much as I like South Korea’s potential, and don’t like Japan, both of them are in the same boat:

Japanese and South Korean industrial production fell more than economists estimated last month as slowdowns in China and Europe weighed on exports, building the case for more monetary easing.

Japan’s output fell 1.3 percent from July, the biggest decline in three months, a Trade Ministry report showed in Tokyo today. South Korean production slid 0.7 percent, partly on a strike at Hyundai Motor Co.

Posted September 28, 2012 by edmcgon in Economy, Investing Education, Market Analysis, News

September 27th (and 26th): Ed’s Daily Portfolio Summary   Leave a comment

Today, you get a special 2-day portfolio summary. 2 for the price of…ok, it’s free, but you get the point…

BAC: 0.05 to 8.98 (0.56%, 12.96% overall)–bought at $7.95
CSCO: 0.13 to 18.80 (0.70%, -1.57% overall)–bought at $19.10
IAU: 0.17 to 17.31 (0.99%, 4.91% overall)–bought at $16.50
LINE: -0.18 to 41.19 (-0.44%, 4.25% overall)–bought at $39.51
NNVC: 0.05 to 0.66 (8.20%, 10.00% overall)–bought at $0.60
RSX: 0.35 to 29.27 (1.21%, -5.31% overall)–bought at $30.91
SAND: 0.50 to 12.69 (4.10%, 24.78% overall)–bought at $10.17
SLW: 1.41 to 39.42 (3.71%, 28.20% overall)–bought at $30.75
YHOO: 0.36 to 16.04 (2.30%, 5.74% overall)–bought at $15.17

OVERALL: +1.06%

For the sake of comparison, here are the three major indexes for the last 2 days:

S&P 500: +0.42%
Nasdaq: +0.61%
Dow: +0.21%

Posted September 27, 2012 by edmcgon in Open Thread, Portfolio

Daytraders Corner   25 comments

When I look at the S&P 500’s technicals, the one thing that stands out to me is the 50 day moving average (currently at 1409). If we drop below that, I would be very concerned that this correction is severe, since that would already be a 4.4% drop from the last high at 1474. But the key is how the market reacts if it does reach that low: As long as it doesn’t close below the 50 day MA, the S&P should remain bullish, and may even bounce back strongly. The last time the S&P closed below the 50 day MA (when it was trading above it) was in May, and it proceeded to drop below the 200 day moving average within a month, from 1415 to 1266. However, a lot of that was driven by Euro worries. While we still have them, I don’t think we are in as bad a situation as we were back in May (which is not to say the EU won’t collapse. It just won’t be in the next few months).

The S&P 500 levels to watch today:

UPSIDE: 1435 (September 13th’s low), 1437-1439 (5 data points including the 20 day moving average), 1441 (2 data points), 1449 (September 20th’s low), 1452 (September 24th’s low), 1455 (10 day moving average), 1456-1461 (8 data points), 1463-1465 (4 data points), 1467 (September 21st’s high), 1474 (September 14th’s high), and 1481 (top of the Bollinger Bands).
DOWNSIDE: 1430-1432 (4 data points), 1426 (August’s high), 1422 (April’s high), 1415 (May’s high), 1403-1409 (5 data points, including the 50 day moving average), 1396-1401 (2 data points), and 1393 (bottom of the Bollinger Bands).

Posted September 27, 2012 by edmcgon in Daytrading, Market Analysis