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Coal Fired Profits From Oakshire

Written By admin on Tuesday, May 17, 2011 | 12:27 AM







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Wall Street Elite

Coal Fired Profits


A quick trade recap before we start:

Last week's recommendation to buy CALL options on the PowerShares Deutsche Bank U.S. Dollar Bullish Fund (NYSE:UUP) is now up 19%. We're suggesting you hold the trade for the time being. We bought the January 2013 expiry so we've plenty of time value to play, and, moreover, we feel it's time to go with the buck for a while. Here's the way the weekly UUP dollar chart looks:


For the past two years, UUP has climbed with every surge in weekly volume (see red annotations, above). As you can see, volume from two weeks ago came in at the highest level in the fund's history, a combination of massive short covering and new bullish positions being taken on, a full 3x the weekly average volume. We say that's bullish.

Not shown above, but evident on the daily chart, are a number of additional dollar-bullish technicals. Have a look here:


The daily chart shows RSI in bullish territory above its 'waterline', with MACD rising strongly behind. If and when both are situated above their respective mid-point waterlines, the dollar should be moving confidently higher.

See also the convincing drive above both the downsloping trendline (in red) and the short term moving average, an indicator of strength for the next two to three weeks minimum, in our view.


This Week in Purgatory

Yes, the economy looks like hell. Any objective observer could tell you that. The following is what's contributing to one of the ugliest macro pictures we've seen in decades:

  • Rising interest rates – particularly in emerging markets, but coming eventually to a western nation near you.


  • Japanese disasters – global supply chains have been disrupted by Japan's tragic event trio (earthquake, tsunami and nuclear calamity), that dealt a severe blow to the country's manufacturing sector. It's far too early to tell when all lines will be up and running as before.

  • Flagging U.S. housing market –it looks like we're about to go from bad to worse. Any rise in interest rates will certainly put a nail in the national home buying coffin, but in the meantime, there's very little activity in an already depressed sector. Case-Shiller (see below) indicates prices still sliding, National Home Builders Index at a two year low and sales numbers remain depressed.


April Housing Starts will be announced Tuesday morning.

  • $100 Oil – this will no doubt cool global growth.


  • Austerity – already part of the European and U.S. State government equation, and now about to be implemented by the Feds. Could cut into growth. Sure, but how deeply?

  • Corporate earnings slowing –after the solid year-over-year growth of the last two years, driven largely by cost cutting and other operational efficiencies, earnings are slowing. We're now looking at the worst numbers for the last five quarters. Is it the start of a trend or an exception?


The corporate 'beat rate' is also at its worst levels of the current bull market, very possibly because all efficiencies have now been wrung out of workers and systems.

So we go short, right?

Not so fast, swifty. We bring you the bad news because we've now seen enough of it to know that it doesn't make a great deal of difference in the face of a Mississippi juggernaut wave of liquidity that continues to move unrelentingly into the global monetary base. What the bad news does do is keep nervous hands off the bid for equities. And that's fine with us.

Since new highs were achieved on the major market averages, we've turned bullish, and so we remain. Which does not mean, of course, that we won't see any stock weakness over the next week or two; it's still very possible. We've left several shorter term option trades open for that express eventuality. If there's a pullback, we expect it to be deep, swift and scary, forcing the ninnies out of the game and giving us a number of winning trades. Thereafter, we also expect the market to grind its way to new highs.


Finally, we're of the opinion that it's next to impossible to determine the direction oil will trend over the near term. There are just too many intangibles, including the ongoing upheavals in the Arab world, floods and tornadoes in the U.S. Midwest, the likelihood of more natural disasters the world over, and the determination of speculators to drive the price of crude higher.

Make no mistake: oil is critical to the rate of global economic growth and, by extension, the plight of markets. We see the potential for sustained volatility in the energy sector – of the sort we witnessed last week, with 10% daily moves as traders search for the next intermediate trend. And our aim is to exploit that volatility.

We're doing it like this:

We're not going to trade oil itself. We're going into a closely related commodity – coal.

We're doing it for several reasons.

1. Coal miners, as a group, have seen even more exaggerated moves than most companies in the energy complex.

2. The supply/demand picture for coal, though complex, is somewhat easier to project than that of crude oil, with all its attendant geopolitical vagaries.

3. There are several options strategies that avail themselves at this juncture that we feel could prove immensely profitable.

That said, here's coal for roughly the last two and a half years:


The current price action for coal is situated about midway between the trend channel lines that have prevailed for the last two and a half years, and the gain for the period was in the neighborhood of 25%.

Now have a look at the Market Vectors Coal ETF (NYSE:KOL) plotted against one of the industry laggards, Arch Coal (NYSE:ACI), over the same two and a half year time frame:



ACI has had a tough go of it, and after a recent downgrade by, among others, Standard & Poor's Equity Research, we say the underperformance will continue.

We are setting up a zero premium trade that works like this: buy CALLS on KOL and sell them on ACI. The trade will be profitable if KOL rises faster or falls slower than ACI

Wall Street Elite recommends buying in equal numbers the KOL October 51 CALLS for $2.25 and selling the ACI October 31 CALLS for the same price.


With kind regards,

Hugh L. O'Haynew
, Analyst, Oakshire Financial

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Copyright © 2011, Oakshire Financial, All Rights Reserved

The information transmitted is intended only for the person or entity to which it is addressed and may contain material that is confidential, privileged and exempt from disclosure under applicable law. Any review, re-transmission or other use of, or taking of any action in reliance upon the information by persons or entities other than the intended recipient is prohibited. If you receive this in error, please contact the sender anddelete the e-mail and its attachments from all computers. Oakshire Financial does not accept liability for any errors, omissions, corruption or virus in the contents for this message or any attachments that arise as a result of e-mail transmission.




MORTAGE FOR HAPPY LIVE

Written By admin on Monday, May 16, 2011 | 12:08 AM

We all know that we will love the feeling of having something that's all ours - a home where we can decorate the way we want. A nice garden in your backyard, a comfortable living room.We can do it all your way when you own! There are more advantages to owning a home than personal satisfaction, for example, you can deduct the cost of your mortgage loan interest from your Federal Income Taxes, and usually from your State Taxes too. And interest will compose nearly all of the monthly payment, for over half the number of years you will be paying your mortgage. This adds up to hefty savings at the end of each year. Also, we are allowed to deduct the Property Taxes you pay as a Homeowner. In addition, your property's value usually will go up through the years.If you rent, we pay your monthly payment and it's gone forever.

Using a Real Estate Broker is a good idea. All the details involved in home buying can be mind-boggling. A professional Real Estate Broker can guide you through the whole process and make your life easier. He or She will able to answer you many important things that you may be considering in the neighborhood, for example, the quality of schools, population, and crime rate, etc. The Real Estate Broker will help you evaluate the price range you can afford, search the classified ads, and multiple listing services for the homes you'll like to see. He or She can explain the cons and pros of different types of mortgages, walk you through the paperwork, and answer any related questions when you sign the papers at the closing. And it is FREE or you don't have to pay anything to the Broker because the payment comes from the Home Seller!
Sometime we ask: How much money will I have to prepare for buying a Home? Ok, there are many things you need to consider, for example, the cost of the house, the loan amount, and type of mortgage you are getting. Basically, you need to prepare enough money to cover Three Costs:

* Earnest Money: the deposit you make when you submit your offer (8 - 20% of the purchase price)
* Down Payment: a percentage of the cost of the home that you pay when you go to settlement (10 - 20% of the purchase price)
* Closing Costs: the costs for processing the paperwork to buy a house (3 - 6% of the purchase price)

Mortage is something usually avoided by someone who do't brave enough to have something.You will have to pay the monthly utilities bills, for example, gas and electricity. You will also have Property Taxes, and you may have City or County Taxes. Taxes usually rolled into the mortgage monthly payment. You can consult the Real Estate Broker regarding these cost.

So, What will the Mortgage cover? It usually covers four parts:

* Principal - repayment of the amount you borrow
* Interest - payment to the lender for the money you borrow
* Homeowners Insurance - monthly payment to insure the property against loss from free, theft, and other hazards required by the lender
* Property Taxes - Annual City or County Taxes assessed on the property (divided by number of mortgage payments you make a year). That is enough. You can go now to your mortgage broker near your way..document,. You may want to consult your Attorney to make sure what you are signing.

Focusing on the Four G's - Gold, Guns, Gas, Grub

Written By admin on Thursday, May 12, 2011 | 5:57 PM







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Bourbon & Bayonets

Back Country Buying Binge

There's a structural change now taking place across the western world that will likely shape our future as much as any other phenomenon or development we've encountered in our lifetimes. It goes without saying that it will also affect the future of our investments. It's a development that very few are currently speaking about.

The depopulation of major urban centers has already begun. We're not talking here about the flight from inner city crime, the challenges of educating children in such an environment or the social instability that's part and parcel of modern urban America. These phenomena are well documented and have existed for well over half a century. The flight to the suburbs is actually a relatively old story that's left a gap which has been filled largely by newer immigrant communities – a role they've fulfilled astoundingly well. But that's not likely to continue forever.

What we are referring to a genuine depopulation that results from cities becoming unliveable in the truest sense of the word. It's a negative feedback loop that begins in economic contraction, leads to fewer work opportunities and growing crime, is magnified by a swiftly dwindling government safety support net, that then further reduces retail spending, destroys more jobs and ultimately sends people little by little out of the urban arena altogether, to the countryside in search of:

  • work opportunities,
  • more affordable living spaces,
  • plots to grow one's own,
  • cover from the dangers of a decaying urban social atmosphere, and/or
  • old fashioned charity (something the folklore indicates is more readily available in the country).

The jobs lost in the last several years are not coming back. We are as a country simply no longer competitive with the rest of the world. Blame unions if you want; it doesn't matter. The same products are now available to us cheaper because they're produced overseas. There's no reason for this trend to stop.

More than this, the economy at large is a train wreck in waiting. There will be no soft landing from the mess that will, at some point, hit us full frontal lobe, and send literally millions into the streets looking for gainful employment.

The intelligent are already starting to venture beyond the 'burbs and are planning for more difficult times. The latecomers will be less prepared. Everyone will be in search of the basics: medicine, seeds, fertilizer and canned goods. Those who are interested in profiting from the spectre of this wholesale migration to the wilds will focus on the four G's: Gold, Guns, Gas and Grub, those items that are certain to be bid higher under such circumstances.

In the time leading up to that upheaval everything will appear to function as normal. The early birds (those 'nutcases' who see the writing on the wall and start making their way toward the rural but-nutter lifestyle) will get the pick of the land and will therefore be best situated to survive the mess. But outside of the silly speeches these 'wackos' sometimes make, all will be business as usual.

Markets will rise on a wave of printed currencies the likes of which has never been seen. The banking system will heave and groan, this way and that, but is unlikely to buckle until the very last moment – and that event could still be a decade away. Wars will come and wars will go, politicians will deceive and athletes and actors, indeed celebrities of every stripe, will continue to be admired for everything but their characters.

And investors will be duped into believing that business as we've known it in America will continue just as it has long, long into the future.

Would that it were so.

Alas, we at Oakshire Financial are in the business of not only correctly forecasting trends and events, but of profiting from the same in the markets. And so in the next few weeks we are suggesting you take a closer look at a few investments that fit with the scenario we've discussed above.

The depopulation phenomenon has already started and could kick into high gear should the real estate market take another leg down. At that point, Amerco (NASDAQ:UHAL) , the stock holding company of U-Haul International Inc., should begin trucking in all four gears. U-Haul is one of America's premier do-it-yourself moving and storage companies.


Technically, the pennant forming (in blue) is a bullish continuation pattern. And with all its moving averages rising, there's much in Amerco to be bullish about. The only worry we have is that the price action is now 60% above both the long term moving average and rising trendline.


Many happy returns,

Matt McAbby, Senior Analyst, Oakshire Financial

 HOME / ABOUT US / CONTACT US / INVESTMENT NEWSLETTERS / FOREX & FUTURES / EDUCATION

Copyright © 2011, Oakshire Financial, All Rights Reserved

The information transmitted is intended only for the person or entity to which it is addressed and may contain material that is confidential, privileged and exempt from disclosure under applicable law. Any review, re-transmission or other use of, or taking of any action in reliance upon the information by persons or entities other than the intended recipient is prohibited. If you receive this in error, please contact the sender anddelete the e-mail and its attachments from all computers. Oakshire Financial does not accept liability for any errors, omissions, corruption or virus in the contents for this message or any attachments that arise as a result of e-mail transmission.


Fw: Where the Money is in 2011 [NEW VIDEO]

Written By admin on Sunday, May 8, 2011 | 6:13 PM


John Thomas, the Mad Hedge Fund Trader, founding father of the international hedge fund industry and one of 2010's top-performing traders reveals:
 
Where the Money is in 2011:
Where top hedge funds are betting the money is, including little-known "frontier" & emerging markets, secular bull markets in commodities, currencies, hot ETFs and more.
 
 
I'll keep this short and sweet. Today I have a webinar showing you where the money is in global markets and why. I don't care what your trading style is; this information will make you money.
 
Click here to register - it's free. It's by John Thomas. Who is he and what does he know? You're going to love that answer to that question.
 
First, he runs one of the hottest hedge funds in the world right now. He's one of the top-performing hedge fund traders in the world today. He's been in the financial markets for 40 years.
 
His experience includes 10 years as a trader and hedge fund consultant at Morgan Stanley, where titans like Paul Tudor Jones and George Soros paid to have him consult on their hedge funds.
 
John was there when Tudor Jones got famous from his trades in 1987s Black Monday, while John's equities desk made $75 million trading against Soros that same month!
 
In 2010, he published 49 free trade recommendations in the last five months. 48 have been winners.
 
John is not your average trader, either. Wall Street Titans like Paul Tudor Jones and George Soros have hired him to consult with their hedge funds.
 
And get this: John founded Wall Street's first-ever dedicated international hedge-fund.
 
And right now, today, he's one of the top-performing hedge fund traders in the world, based on performance. He knows where the money is and he lays it all out for you in this webinar.
 
 
Yes, you have to enter your email address, but that's not exactly a big deal since you can "unsubscribe" from his email list afterward if you want to.
 
I give you my word: The quality of his content will blow you away. It's 100% content with ZERO sales pitch of any kind.
 
Sincerely,
Barry Boswell, Chief Trader of Wealth Insider Alliance

 

Wealth Insider Alliance ("WIA") is not a registered investment adviser. We do not and will not provide personalized investment advice. We publish opinionated information about finance and trading that we believe our subscribers may be interested in.

 

Wealth Insider Alliance and its officers, directors, partners, affiliates, contributors, consultants or employees may hold positions in sec urities mentioned on the Wealth Insider Alliance website. 

 

ALL CONTENTS OF THIS LETTER ARE COPYRIGHT 2010 WEALTH INSIDER ALLIANCE ALL RIGHTS RESERVED: REPRODUCING ANY PART OF THIS DOCUMENT IS PROHIBITED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE WEALTH INSIDER ALLIANCE Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}: Infringements can be punishable by up to 5 years in prison and $250,000 in fines. 

 

LEGAL DISCLAIMER: This work is based on government filings (like SEC filings and announcements like the "Non-Farm Payroll"), current events, recent interviews, company press releases and what we've learned over the last 10+ years as financial journalists. We may have made mistakes and you shouldn't make any investment decision based solely on what you read, see or hear here. It's your money and your responsibility. The Wealth Insider Alliance expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. 

 

THE TESTIMONIALS CONTAINED HEREIN WERE PROVIDED WITHOUT COMPENSATION. WHILE THE EXPERIENCES DESCRIBED ARE BELIEVED TO BE TRUE, THEIR CLAIMS HAVE NOT BEEN INDEPENDENTLY VERIFIED, NOR HAS ANY ATTEMPT BEEN MADE TO DETERMINE THE EXPERIENCE OF THE INDIVIDUALS AFTER THE TESTIMONIALS WERE GIVEN. TESTIMONIALS ONLY PROVIDE THE PERSPECTIVE OF INDIVIDUALS WHO WERE SUCCESSFUL AND SATISFIED WITH THEIR EXPERIENCE. THE AVERAGE TRADER MAY OR MAY NOT EXPERIENCE SIMILAR RESULTS. PEOPLE CAN AND DO LOSE MONEY TRADING OPTIONS. THE EXAMPLES GIVEN IN TESTIMONIALS MAY HAVE LIMITED APPLICABILITY TO WHAT PURCHASERS OF THE PROGRAM ADVERTISED MAY GENERALLY EXPECT TO ACHIEVE, AND THE PERFORMANCE EXPERIENCED BY THE PERSONS GIVING TESTIMONIALS IS NOT WHAT PURCHASERS SHOULD EXPECT. SOME TESTIMONIALS MAY BE BASED ON PRODUCTS OR SERVICES OF CHUCK HUGHES OTHER THAN THE SPECIFIC ONES ADVERTISED HERE.

 

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

 

Government Required Disclaimers: 

Risk Disclosure Statement:The risk of loss in trading foreign exchange can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. 

 

Unique experiences and past performances do not guarantee future results! Results are non-representative of all clients; certain accounts may have worse performance than that indicated. Trading spot foreign currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. Because the risk factor is high in the foreign exchange market trading, only genuine "risk" funds should be used in such trading. If you do not have the extra capital that you can afford to lose, you should not trade in the foreign exchange market. No "safe" trading system has ever been devised, and no one can guarantee profits or freedom from loss. Trading involves high risks and you can lose a lot of money. Past performance is not necessarily indicative of future results and individual returns may vary amongst participants. Investment return and principal value will fluctuate so that an investor's account, when redeemed, may be worth more or less than their original investment. All performance figures assume the reinvestment of realized gains and capital gains. There is considerable exposure to risk in any foreign exchange transaction, including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. This is not a solicitation to invest. Please consult a licensed investment advisor and read all risk warnings before committing funds. 

 

Forex, Futures and options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. 

 

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Urgent: A buyout by Apple may send AVVC shares up 1,978 pct.

Written By admin on Thursday, May 5, 2011 | 8:26 PM



Imagine Owning APPLE, RIM and GOOGLE Combined For $1 A Share... Now's Your Chance!

In A $6.1 Billion Industry With
Over 234 Million Customers - AVVC Could Return You 1,978% Profits
By August 1st!

Haven't heard of them yet? That's because they just
came public. That's why you need to act now!

By acting today on AVVC, you could easily grab
1,978% profits as the mobile application
(or 'app' for short) industry triples again in 2011!
As this forward thinking company secures a huge
chunk of this $6.1 Billion pie, you could watch as...

Your meager $5,000 investment jumps to $103,900 or - your $10,000 rockets to $207,800 - all by August 1st, 2011!

Greetings!

Before we begin, you need to understand how rare it is to be at the birth of an industry...

When an event like this happens - fortunes are built, new pathways to profits are discovered and regular, ordinary people become legends.

Andrew Carnegie did it with steel...

The Rockefellers did it with oil...

Flagler did it with the railroads.

And we're about to see it happen again.

You see, the cyber age has brought about another technological revolution... no, more like an evolution as the new generation of computers is upon us...

As over the past few years, "Smart" technology has risen to prominence, changing the way people use cellular phones forever.

Blackberry may have been the first of this new generation, but it wasn't until Apple's iPhone was introduced that these mobile mini-computers took center stage.

iPhones introduced the idea of apps, tiny computer programs designed to allow the user practically millions of options and ways to use their phones...

In fact, you no doubt are already taking full advantage of what apps can do for you.

Apps are big business...

This year alone, it is estimated that Americans will download 17 Billion apps, as compared to 10.9 Billion in 2010 - that's an increase of over 55%!

It's no wonder why mobile apps have become a booming, $6.1 Billion industry.

But we're only seeing the beginning of what's to come...

Because by 2012, some experts are predicting the industry to hit $17.1 Billion, and just three years later, the app industry could be a whopping $25 Billion mega-market!

And Avatar Ventures (AVVC) is leading the charge to not only profit in the long term, but could very well return you 1,978% by August 1st, 2011!

I'll give you all of the amazing details in my latest Special Report - follow this link now!

Sincerely,

Eric Dickson
Editor, Breakaway Stocks

PS. While I believe strongly that AVVC will be trading at $3.35 (as you'll see in a minute) it's entirely possible it can be trading north of $20.78 by year's end, that's anywhere from between 300% to 2,000% returns on a stock you can buy now for only $1.

PPS. By the time you read my attached report, 3 Million apps will be downloaded. Don't waste a moment longer, the time to get in is now, your timing is perfect.



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Bourbon & Bayonets

Investors Shifting Gears

Are we about to witness a bond breakout?

We've been watching the long bond (represented by the iShares Barclays20+ Year Treasury Bond ETF (NYSE:TLT)) quietly build a base for the last three months. During that time it has made a series of higher lows and higher highs and now appears poised to challenge the last high at 95. Look here:


The technicals for TLT paint a picture consistent with a sustained bull move, though not without a few hurdles to overcome.

Current resistance comes in at 95, where the long term moving average (in yellow) sits. It also happens to be the level of the last retracement high, so the selling could be significant should the market rally to that level. We think it will.

The Relative Strength Index and MACD indicators are both bullish, having climbed above their respective waterlines over the last few weeks.

The only thing missing from the move is volume. Any breakout above the 95 level should be accompanied by larger than average volume to be considered conclusive and tradeable.

What's more, the weekly chart on the bond is also looking bullish. Take a peek here:


Just last week RSI surfaced above its 'waterline', offering further proof that a bullish breakout may be in the offing. If and when MACD confirms (still could be a couple of weeks off), we could have a genuine long-bond 'buy' on our hands.

What's Behind it All?

In our opinion, the Treasury market's recent success bespeaks a growing defensiveness on the part of global investors, who are also running out of sovereign fixed-income alternatives. U.S. bonds may not be as safe as they once were, but for the average investor, is there a safer destination?

The stock market, too, has been witness to an increasing investor defensiveness. Though the whole market has been climbing, a look at some of the more successful sectors of late speaks of a clear urge to avoid risk.

Here are charts of recent action in the Utilities, Health Care and Consumer Staples sectors:


Add 9.6% to your utility dividend and you're doing quite well. Here's Health Care:


Even better returns here.


These three defensive sectors have surged as the market processed the latest earnings and economic data. That doesn't bode well for the market in general – nor does the parabolic nature of the above three charts bode well for the sectors in question.

Should a very long-awaited correction now begin, it will have been forecasted by both the long bond and these three defensive sectors.

And Silver?

Silver, too, has been doing some forecasting of its own, both regarding the price of commodities in general and of the price of silver itself.

To put it bluntly, the magnitude of the silver selloff we've just witnessed, however you want to account for it (wild margin requirement raises, for example), is a sign of sideways movement (at best) or a more significant retracement for the intermediate term.

Here's silver's latest action:


The fall below the 50 day moving average occurred with hardly a day's hesitation and puts immediate overhead resistance on the metal at $43. Anyone trading silver would be wise to consider bailing at any counter-trend rally to that level.

We're now in line with premium newsletter writer, Hugh L. O'Haynew, who pens our weekly Wall Street Elite , when he says the days of commodities and precious metals market excitement will now take a back seat to equities, where liquidity flows have yet to create the same elevated risk profiles we've seen in commodities like silver over the last half year.

Hugh recommended buying ZSL CALLS two days before silver's most recent top was put in, and subscribers are cleaning up on the trade. ZSL is a double inverse leverage ETF, moving up $2 for every buck lost in the silver pits. The options only add to the leverage.

To Sum, Friends

As we suggested in last week's instalment of Bourbon & Bayonets, it may not be about economic fundamentals anymore. With corporate earnings offering a reasonable show of growth, we've very likely begun to witness a shift in money flows, out of once hot commodities, into bread and butter, big cap stocks.

Time for you to shift, too?

Many happy returns,

Matt McAbby, Senior Analyst, Oakshire Financial

 HOME / ABOUT US / CONTACT US / INVESTMENT NEWSLETTERS / FOREX & FUTURES / EDUCATION

Copyright © 2011, Oakshire Financial, All Rights Reserved

The information transmitted is intended only for the person or entity to which it is addressed and may contain material that is confidential, privileged and exempt from disclosure under applicable law. Any review, re-transmission or other use of, or taking of any action in reliance upon the information by persons or entities other than the intended recipient is prohibited. If you receive this in error, please contact the sender anddelete the e-mail and its attachments from all computers. Oakshire Financial does not accept liability for any errors, omissions, corruption or virus in the contents for this message or any attachments that arise as a result of e-mail transmission.


Back to Big Caps?







_______________________________________________________________________________________
To unsubscribe, please click the unsubscribe link at the bottom of this email - Thanks :)

Bourbon & Bayonets

Investors Shifting Gears

Are we about to witness a bond breakout?

We've been watching the long bond (represented by the iShares Barclays20+ Year Treasury Bond ETF (NYSE:TLT)) quietly build a base for the last three months. During that time it has made a series of higher lows and higher highs and now appears poised to challenge the last high at 95. Look here:


The technicals for TLT paint a picture consistent with a sustained bull move, though not without a few hurdles to overcome.

Current resistance comes in at 95, where the long term moving average (in yellow) sits. It also happens to be the level of the last retracement high, so the selling could be significant should the market rally to that level. We think it will.

The Relative Strength Index and MACD indicators are both bullish, having climbed above their respective waterlines over the last few weeks.

The only thing missing from the move is volume. Any breakout above the 95 level should be accompanied by larger than average volume to be considered conclusive and tradeable.

What's more, the weekly chart on the bond is also looking bullish. Take a peek here:


Just last week RSI surfaced above its 'waterline', offering further proof that a bullish breakout may be in the offing. If and when MACD confirms (still could be a couple of weeks off), we could have a genuine long-bond 'buy' on our hands.

What's Behind it All?

In our opinion, the Treasury market's recent success bespeaks a growing defensiveness on the part of global investors, who are also running out of sovereign fixed-income alternatives. U.S. bonds may not be as safe as they once were, but for the average investor, is there a safer destination?

The stock market, too, has been witness to an increasing investor defensiveness. Though the whole market has been climbing, a look at some of the more successful sectors of late speaks of a clear urge to avoid risk.

Here are charts of recent action in the Utilities, Health Care and Consumer Staples sectors:


Add 9.6% to your utility dividend and you're doing quite well. Here's Health Care:


Even better returns here.


These three defensive sectors have surged as the market processed the latest earnings and economic data. That doesn't bode well for the market in general – nor does the parabolic nature of the above three charts bode well for the sectors in question.

Should a very long-awaited correction now begin, it will have been forecasted by both the long bond and these three defensive sectors.

And Silver?

Silver, too, has been doing some forecasting of its own, both regarding the price of commodities in general and of the price of silver itself.

To put it bluntly, the magnitude of the silver selloff we've just witnessed, however you want to account for it (wild margin requirement raises, for example), is a sign of sideways movement (at best) or a more significant retracement for the intermediate term.

Here's silver's latest action:


The fall below the 50 day moving average occurred with hardly a day's hesitation and puts immediate overhead resistance on the metal at $43. Anyone trading silver would be wise to consider bailing at any counter-trend rally to that level.

We're now in line with premium newsletter writer, Hugh L. O'Haynew, who pens our weekly Wall Street Elite , when he says the days of commodities and precious metals market excitement will now take a back seat to equities, where liquidity flows have yet to create the same elevated risk profiles we've seen in commodities like silver over the last half year.

Hugh recommended buying ZSL CALLS two days before silver's most recent top was put in, and subscribers are cleaning up on the trade. ZSL is a double inverse leverage ETF, moving up $2 for every buck lost in the silver pits. The options only add to the leverage.

To Sum, Friends

As we suggested in last week's instalment of Bourbon & Bayonets, it may not be about economic fundamentals anymore. With corporate earnings offering a reasonable show of growth, we've very likely begun to witness a shift in money flows, out of once hot commodities, into bread and butter, big cap stocks.

Time for you to shift, too?

Many happy returns,

Matt McAbby, Senior Analyst, Oakshire Financial

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