11/29/10

Technical patterns

Interesting day. Very interesting.

The market was very weak since the start. What caught my attention was the price action of JNK. Why was JNK strong when the market was so weak? Was JNK trying to tell us the market was going to surprise us on the upside?

 JNK was right. The market rallied strongly in the last hour of trading.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Observations

Stop. Take a deep breath and think about some of the most meaningful concepts learned in your life. Organize them and share them with others. Just empty a section of the brain and find out what's in there. Experiences. Feelings. Beliefs.

This is how a book, at least in my case, is born. Writing it for McGraw-Hill was a more-than-a-year adventure. The fun part was to write its concept and devise its structure. It took me about four months to write it. At the end of this period I contacted McGraw-Hill to have their feedback about my style and approach. The answer was very positive and encouraging. There was only a "small" problem, they said. It looked like I wrote 46,000 words and they needed 115,000.

I felt lost. It meant that I had to write more than what I already did. I felt "dry" because I wrote everything I wanted to say on the subject -- from my viewpoint, of course. Not from the reader's perspective.

But this was the time when my irreplaceable assistant gave me the encouragement I needed. She went through the whole manuscript, line by line, and where it was needed she wrote: "explain", "why", "example", "define". We worked another four months to expand the material and make it accessible to all types of investors.

After this phase we thought we were finished. To our surprise, and dismay I should add, the word count was only 90,000. We looked again at the whole book and we asked ourselves what was missing, what was really needed for the reader to implement the investment approach I was proposing.

We decided we needed to write three new chapters and make the chapter "Conclusions" more challenging by introducing a concept that would place my main ideas in perspective. After this phase, including all the charts and graphs, the word count was above 115,000. At this point we were almost done. We edited the text several times and by the end of June, almost one and a half years after I started, the manuscript was in the hands of McGraw-Hill.

There is no doubt in my mind I could not have done it without the marvelous cooperation of my assistants Susan and Jan. It was a great adventure. Worth living it.

(This Observations appeared in the issue of 7/10/2000 of The Peter Dag Portfolio)

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/28/10

Thought of the day

If you believe that a big government in any country, as confirmed by considerable research, is associated with slow economic growth, then you should be in favor of lower taxes.

The only way to harness the growth of a government is to reduce the amount of money it controls.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Tough decisions

Nov. 28 (Bloomberg) -- Senator Dick Durbin of Illinois, the senate’s No. 2 Democrat, said negotiations over extending the Bush-era tax cuts also will include prolonging emergency unemployment benefits and other tax credits.

These are tough decisions. At some point, however, we have to stop paying people for not working. Everybody complaints about the huge debt the country has but everybody wants to cut somebody else government giveaways.

Somehow someone (the President?) has to lead and convince the American people that the time has come to pay the piper (read: make sacrifices).

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/26/10

Plain talk from a concerned leader

“We had the Greek tragedy earlier on this year, and now we have the situation in Ireland. I know that the stupidity and greed of Irish politicians has a lot to do with this: they should never, ever have joined the euro. They suffered with low interest rates, a false boom and a massive bust. But look at your response to them: what they are being told as their government is collapsing is that it would be inappropriate for them to have a general election. In fact commissioner Rehn here said they had to agree to a budget first before they are allowed to have a general election. Just who the hell do you think you people are. You are very, very dangerous people indeed: your obsession with creating this European state means that you are happy to destroy democracy, you appear to be happy with millions and millions of people to be unemployed and to be poor. Untold millions will suffer so that your euro dream can continue. Well it won’t work, cause its Portugal next with their debt levels of 325% of GDP they are the next ones on the list, and after that I suspect it will be Spain, and the bailout for Spain will be 7 times the size of Ireland, and at that moment all the bailout money will is gone – there won’t be any more. But it’s even more serious than economics, because if you rob people of their identity, if you rob them of their democracy, then all they are left with is nationalism and violence. I can only hope and pray that the euro project is destroyed by the markets before that really happens.” (Niger Farage, the leader of the UK Independence Party)

He is right. He is absolutely right. Milton Friedman from the beginning said the EU cannot work. It is not working. Mr. Farage is absolutely right when he says that the only thing this disastrous experiment has created is enormous pain and suffering among the European citizens.

It should collapse and it will collapse. The main issue is that its demise will continue to create unbelievable volatility in the financial markets. Enough is enough!

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Technical patterns

Gold (click on the chart to enlarge it).

These chart seems to tell us two main things. One. The trend is up over the long term. The moving average is clearly rising.

Two. In the near term, volume may be telling us that gold is going to consolidate. Volume has spiked following a sharp rise in gold and this is usually a sign traders are selling.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/25/10

The human drama

These pictures upset me (click here). The human drama of what is happening is of historic proportions. Yet we worry about what I consider diversions.

No one talks why these protests take place. What is at the origin of all this discontent. Why there is discontent. Why people are upset. Why the press does not expand and explains these issues. Why Europe is in turmoil.

The people that you see in these pictures are all hard working people. With their dreams and hopes. Now all this is being shattered. Why? No one explains to them what really happened. I find a strong parallel with what really happened to GM.

I read on a magazine the word "corporatism". I was surprised because this is a fascists word. When corporations and the government become the dominant players in an economy. When economic and social engineering are accepted as the solution.

The financial markets are saying that these programs have failed miserably in Europe with wealth transferred to special power groups.Studies (reported here) show that economic growth is closely related by how much the government is the dominant player.

We worry about income differentials. Yet the government sponsors so many programs to be implemented by corporations such as ethanol or electric cars or green energy .......with our taxes.  We pay for these programs and no one talks about how you and I gain from them while the Euroopean politicians occupy medieval royal palaces.

These pictures show the human drama which is the result of decades of government intervention in the economic system and corporatism.

To understand what I mean try to open a pharmacy or sell newspapers as a private citizen in Italy. It is impossible unless you belong to a very special power group. I know a retired director of chemical research of a major chemical company who wanted to open a pharmacy. "George", he told me, "it is impossible. The major pharmaceutical groups control where the next pharmacy is going to be and who will own it".

Again, the pictures show what happens when the system stops working because of the failure of absolutely wrong policies. But no one talks about these policies and how to correct them. They only talk about raising more taxes and transferring more wealth to special power groups.

I know, this is the way the world has always worked. My skin is probably too thin.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/24/10

The US dollar

The dollar may be close to a bottom. Watch the moving average. It provides a good idea about the direction of the greenback (click on the chart to enlarge it).

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Austerity programs are a way to pay back the piper.

Ireland’s government announced sharp public spending cuts and tax rises to dry out its debt-soaked economy, but failed to dispel the fears of European politicians that the eurozone’s turmoil is spreading to Portugal and Spain.


In a four-year austerity plan without parallel in Ireland’s recent history, the government will cut the minimum wage by almost 12 per cent, slash welfare expenditure, reduce public sector pay and lower the rate at which earners start to pay income tax. (Source: FT)

In one country after another politicians are implementing "austerity programs". Translation: we gave you more than you deserved. Time to pay.

Is this what is going to happen in the USA?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

An interesting pattern repeats itself

Today the stock market was very strong.

JNK was strong.

But LQD was weak.

In a down market these trends are exactly the opposite.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Do they know what they are doing?

The euro is not in trouble but there are big imbalances in the euro area that need to be addressed, the Eurogroup's president Jean-Claude Juncker told CNBC Wednesday.

The imbalances should be remedied by structural reforms, while a macroeconomic debate regarding the competitiveness of countries in the euro zone should have taken place "more intensively" over the past few years, he added.

What amazes me is the politicians always sound they know what they are doing in finding solutions to yesterday's problems. The only discipline we can rely on is that of the markets. Everything else is plain nonsense, no matter how smart they sound or look.

The reason may be that they are prey of special interest groups (I call them power groups) acting for their benefit.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Main trends

These are some of the problems and challenges facing us.

Nothing new. The big question is why did we allow it. Why didn't we do anything about it. With all the Nobel prize winners in Washington.

Do we need someone to tell us convincingly..."this is how we are need to do to get out of this mess".


George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/23/10

The markets always win

Nov. 23 (Bloomberg) -- Michigan taxpayers foot the bill for the most generous movie subsidies in the U.S. Since 2008, the state has allotted $282 million to lure the filming of Hilary Swank’s “Conviction,” Clint Eastwood’s “Gran Torino,” George Clooney’s “Up In The Air” and more than 120 other productions.

It is time to pay the piper. Make no mistake about it. We lived in never never land in the past 30 years. Borrowing and spending without creating the wealth to pay for it.

The markets always win. They have a special way of catching up with what we have done wrong. Time to be humble. Time to work hard. Time to save for the future. Time to get educated.


George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Technical patterns

The market was sharply down today. JNK was sharply lower. But LQD was higher. This pattern seems to be repeasting. It provides interesting ideas on how to hedge your portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/22/10

My concern

In Italy, the government passes laws that are not publicly debated like here in the USA. The newspapers talk about the bickering among politicians. In most other counties it is the same story. European people are not involved. The politicians do not want them involved. They are not even elected by the European people.

Eventually people realize that what was given by the politicians was an illusion.

We are becoming numb to what is happening. We do not understand. We just want to survive. Until a spark ignites a revolt.

This is the real danger of what is happening in the world.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/21/10

Observations

The challenges of Europe. Europe is facing unprecedented challenges and the European people do not seem to have the slightest idea of what is happening.

The sharp, intense Mediterranean sun is shining as I think about what I have seen during the few days I spent in Rome. Colors are everywhere in the dry climate of central Italy. The airplane is now at the end of the runway. The engines are roaring. Everything is shaking. After a few minutes the golden coast of Italy will be below, leaving Rome behind. It seems already so far away.

I spent a few days there visiting my parents, jogging under the majestic pines of Rome, walking through streets totally unknown to tourists. The façade of most buildings have been completely renovated with pastel and earth colors. Some bright, others more subdued. The effect is really exciting. Of course I went to see the exquisite “Fontana delle Tartarughe” (The Fountain of the Turtles). Put it on the your absolutely-to-do list when you are in Rome.

As I walked through the streets of Rome, thoughts began to surface about the people of Italy and Europe. Stories in the magazines had a constant bias, hard to ignore. Somehow the picture was not a pretty one.

The airplane is now heading decisively toward France. Europe seems already so far away, in many respects. There is no doubt Europe is going through a major transition. But I am not sure if this transition has a positive or negative flavor.

The US is definitely the great power the Europeans have to deal with, are afraid of, and are trying desperately to copy. I say “desperately” because they know they have to drastically change their economic and political system. With an unemployment rate of about 10% and unskilled, hungry immigrants flocking in from Albania, Africa, Philippines and other poor Asian countries, Russia, Poland, and Eastern Europe, Europe is under stress.

The markets are blind and they march to their own tune. They are forcing the European power structure to make tough choices, not easy to make after decades of socialism and communism. The bureaucracy does not want to give up the power and prestige it has struggled to achieve. Fascist corporativism (the control of specific sectors of the economy by guilds, government enterprises and large industrial cartels) is too difficult to dismantle when maintaining power is considerably more important than building wealth.

But the markets are slowly and steadily forcing government industries to privatize, not by choice, not because this is what is good for the people. They have to privatize because their finances are in shambles. In the meantime old alliances are crumbling. New ones are forming and more often than not American companies are important players in shaping the outcome. Because of the total lack of direction of what is going on in Europe, American companies have a stupendous opportunity to dominate the continent.

This evolution in the power structure is scaring Brussels, where the un-elected political leaders shaping the future of Europe reside. No one knows who they are, but they are dictating what should or should not be done. These leaders, fearing the possibility of loss of power, are concocting new solutions to the problems they have created as reflected by the sad decline in the value of the Euro since it was introduced in 1999.

The European Monetary Union was supposed to be the solution to all European problems. The collapse of the Euro has proved that the union has created a new set of problems as countries with different cultures and productivity were brought together. The outcome is that average European GDP per capita is 25% below that of the US! And they still believe that in order for Europe to grow faster, governments have to spend more money, rather than creating the climate for innovation and allow a friendlier climate for new companies. Now you understand why a confused Europe is trying to imitate the US. As best as they can. As fast as possible.

European rigidities are well known. They cannot be dismantled easily. But have no fear. The unknown leaders of Brussels are planning new solutions for a sclerotic continent. The issue, they say, is that the economic problems Europe is facing cannot be solved without a political framework. In other words, Europe has to unite not only economically, but also politically. It is the only way for these leaders to maintain and enlarge their sphere of influence and hide their incompetence.

What is even more mind boggling is that, they say, Europe needs to include more countries, by enlarging its reach to a huge concoction of cultures. Since the current 11 country union is creating unmanageable problems, you can imagine what will happen when the union will include Cyprus, Czech Republic, Estonia, Hungary, Malta, Poland, Slovenia, Latvia, Lithuania, Slovakia, Bulgaria, Romania and eventually Turkey.

As I was admiring an old, small, elegant 600 year old building near Piazza Navona, I was asking myself what is the sense of all this. Finally an impertinent thought just flashed through my mind:

The USSR is dead. Long live the EUSR, the European Union of Socialist Republics.

The Soviet Union collapsed under the weight of bureaucracy and central planning. Western Europe is trying to rebuild exactly the same empire and exclude Russia. West Germany is still having problems in absorbing East Germany after more than ten years. You can imagine what will happen to Europe when all these countries are put together.

Who is going to pay the bill? Brussels will make sure there is money for everybody. The bottom line is the socialist idea and state meddling with its citizens is alive and well in Europe. This will create tremendous opportunities for American companies with their advanced level of organization and financial depth. And then you wonder why the Euro is so weak.

By this time I saw the Atlantic Ocean. Going home.

(This Oservations appeared in the issue 6/20/2000 of The Peter Dag Portfolio)

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/20/10

Increased correlation equals increased risk

News. In the past few years, many investors have concluded that commodities like oil, corn and gold offer independent returns that can diversify away the risks of stocks. But the correlations between stocks and commodities—the extent to which their prices move together—are in many cases the highest they have been in nearly 30 years.

This year, about 40% of the weekly movements in the S&P 500 index can be explained by weekly fluctuations in energy prices, says Michele Gambera, head of quantitative analysis at UBS Global Asset Management. That is twice the level of similarity over the past five years and roughly 20 times the level of the past two decades.

My point. I believe that because of this increased correlation, it is becoming crucial investors use a market timing model to understand and evaluate risk.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/19/10

Interesting pattern

I like to watch how various types of bonds behave relative to each other.

Somehow the relationship between LQD and JNK is capturing my attention. Today JNK was weaker than LQD in a relative flat market.

 A strong LQD may imply a weaker equity market because of rising risk.

Something to watch.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/18/10

Technical patterns: gold

Is the price of gold in the process of forming a head and shoulder pattern (click on the chart to enlarge it)?

It could be a very bearish sign for gold and all commodities.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Technical patterns - commodities

While stocks seem to be stuck in a range (see previous post), commodities have a nice uptrend (click on the chart to enlarge it).

Could this nice trend be interrupted by a weaker global economy?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Technical patterns - stocks

Is the market trading in a big range?

It looks like 1050-1220 is a big consolidation area (click on the chart to enlarge it). Or, a big double top is shaping up? 1220 is an important obstacle.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/17/10

What is going on?

Ireland. Portugal. Greece. Spain.

And now municipal bonds in the USA. These closed end funds investing in municipal bonds collapsed in major way (click on the chart to enlarge it). They declined even more than JNK, the junk bond ETF.

Is the Fed printing money to bail out municipalities' pension funds? Is this the reason equities are correcting?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

An interesting forecast

Based on momentum and sentiment extremes achieved at the nearby highs, it seems likely that the stock market will be on a declining path, at least through year-end. In turn, further meaningful increases in market interest rates are unlikely. (Source: gluskin sheff)

Bearish on stocks. Bullish on bonds. Interesting.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Technical patterns

Yesterday the markets sagged. LQD, however, rose.

Weak stocks, strong high-quality bonds is an interesting "pair trading".

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/16/10

Did you notice ....?

Today is a bad day for the financial markets. What is disturbing is that all assets classes are slumping.

With one exception. High-grade corporate bonds (LQD) is actually up, green in an ocean of red. This is what it should happen. weak equities, strong bond market.

Why are the Treasuries under pressure? QE2?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/15/10

More money being printed

The ECB stepped up its bond purchases last week as Irish yields soared in the resale market, and Greece and Portugal issued new debt at inflated yields (FT).

The central banks of the US and Europe are buying bonds to solve our problems. European bond yields, as those in the US, have been rising.

Do they know what they are doing? If they knew, would we be in this mess?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

The verdict

The bond market does not seem to respond favorably to QE2. The sharp rise in bond yields of the past few days will create a negative environment for the economy.

Rising yields are bad news for investments, consumer borrowing, and financial assets.

One more item. Yields have a distinct seasonality: down in summer and up in winter.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/14/10

China's slowdown

Nov. 13 (Bloomberg) -- The worst plunge in China’s stocks in more than a year is a buying opportunity for investors as the country’s benchmark index may advance as much as 15 percent by June, according to HSBC Private Bank’s Arjuna Mahendran.

“The medium-term outlook is good,” said Mahendran, the head of investment strategy for Asia in Singapore at HSBC Private Bank, a unit of Europe’s largest lender overseeing $460 billion globally. “The momentum of the economy is strong. The question is whether it’s too strong.”

The indicators followed by The Peter Dag Portfolio have been pointing to a pronounced slowdown in the Chinese economy for the past several months.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

The US version of the European problems

Concern over the increasingly strained finances of states and cities and a growing backlog of new bonds for sale overwhelmed the market last week. After performing so well for so long, munis and funds that invest in them fell hard. One big muni fund, the Pimco Municipal Income Fund II, for instance, lost 7.5 percent. (NYT)

This is America's equivalent of the crises in Ireland, Greece, Spain, and Portugal. The markets are very efficient in finding where the problems are.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Thought of the day

No one knows. Only the immediate trends count.

Given the repetitive nature of the problems faced by the world, the above idea could be right. If true, how do you use it to make money?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/13/10

Is Germany running the show?

Nov. 14 (Bloomberg) -- Germany is pressing Ireland to seek aid before a Nov. 16 meeting of European finance ministers to calm market volatility and win agreement on making investors help pay for future bailouts, a German government official said.

In the good old days there used to be exchange rate battles in Europe. Now the disagreements are about yields and risk.

It is always the same issue. The weak countries lose. The strong countries dictate how to play the game.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Observations

I challenge my students by beginning my class with what seems an absurd statement. They look at me as if I were crazy. “What is the old man up to now?”, their eyes seem to say. One of these statements is that all political systems are the same. There is no distinction between democracy, socialism, or dictatorship.

I ask them to tell me the difference between all these systems. The more they explain the more it is clear the various systems have the same institutions, rules of law more or less developed and enforced, political bodies, a bureaucracy, an army, etc..

But what makes them really different? Or, are they different? I believe the only difference between political structures lies in the number of power groups in control of the national system. Otherwise there is little difference between them.

When a nation has few power groups, they tend to control the country to satisfy their needs, the needs of a few people. In this case the country does not grow rapidly and does not generate much wealth. The reason is that the power groups in control do not need much wealth because the wealth has to be shared by few.

On the other hand, countries with a large number of power groups (democracies) need a fast growing country to create the wealth to be shared by all the various power groups.

The bottom line is that all political systems are the same. The same can be said about religions. But this will be the subject of another commentary. Power is the unifying parameter of political systems. However, the evidence shows that countries with a large number of power groups (Europe and US) experience faster and more stable growth than those countries with a smaller number of power groups in control of the system (Africa, Japan, Russia). How you label these systems is irrelevant.

(This "Observations" appeared in the issue of 4/20/2000 of The Peter Dag Portfolio)

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

Does it matter?

Fed Efforts to Revive Economy Find Critics (NYT).

My sense is that if they knew what they were doing we would not be in this mess. The best assumption from an investment viewpoint is not to pay attention to what they are saying or doing. It really does not matter,

They know history very well. They wrote great research papers. They speak eloquently. It does not matter. History keeps repeating, or so it seems, with all these famous scholars at the helm. It is so tragic that it is almost funny.

This century has been plastered by long periods of recessions, inflation, soaring interest rates (the 1970s), depressions (the 1930s) and bubbles (1998-2010). Just count the number of years we had to navigate difficult times and then you see we had more "bad" times than "good" times (1982-1998).

Then what to do? Watch carefully the trend of short-term interest rates.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/12/10

Interesting day

What impressed me the most about today's market action is that all asset classes tumbled.

The meaning? It looks like the 1220 resistance levels for the S&P 500 is important -- for stocks, bonds, precious metals, technology, commodities.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

A crazy world?

Bubbles. Financial crises. Banks too big to fail are now even bigger. Deep recessions. Markets going nowhere for 10 years. Leaders lacking experience in leadership. Countries revolting to planned austerity programs. Same leaders at the helm during the crisis are trying to convince us they can solve our problems. A Fed chairman writing he is trying to push stocks and bonds higher for our good. Pension funds underfunded. Governments owning shares in car companies and financial institutions and nationalizing the mortgage industry.

Am I getting old or we have never seen a string of issues of this magnitude before? Risk management seems to be essential in this type of environment.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/11/10

This is the real risk

"Wednesday's largely peaceful march by tens of thousands of students opposed to planned increases in tuition fees was the first major protest directly linked to austerity measures announced by the coalition government last month.(Reuters)

In Europe people are revolting to governemnts' austerity programs. The politicians have to be very careful when they implement programs that cannot be financed.

Unfortunately, this is not what is happening. Hopefully we are going to be more "controlled" and we will not experience the discontent we see in Europe.

The Tea Parties may be the beginning.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

A naive comment

"The United States would never deliberately weaken its currency to grow its economy, U.S. Treasury Secretary Timothy Geithner told CNBC on Thursday."

He knows better. Currencies do not become weak or strong because a politician says so. Currencies depend on government policies and above all on productivity growth between countries.

And this is not easy to change. Even for a US Treasury Secretary.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/10/10

Thought of the day

Investors should buy bonds for capital gains. Not for their interest.

An investor who does not understand this simple concept should not buy bonds. He may want to read chapter 9 of my book Profiting in Bull or Bear Market -- now being launched also in Mandarin in China by McGraw-Hill.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/9/10

Problems ahead?

Interest rates rise in Portugal, Ireland, and Greece. The ECB is forced to buy bonds.

Oops! Trouble ahead?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.


 

QE2 is not inflationary

“Now, what these reserves are is essentially deposits that commercial banks hold with the Fed, so sometimes you hear the Fed is printing money, that’s not really happening, the amount of cash in circulation is not changing. What’s happening is that banks are holding more and more reserves with the Fed.” (Bernanke)

Be careful. The only thing the Fed is doing is trying to lower yields on some Treasury bonds, thus encouraging business to borrow and banks to lend. No more. No less

This is not inflationary. The reason commodities are rising, in my humble view, is because short-term interest rates are close to 0% encouraging carry trade transactions.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.

11/7/10

Observations -- Something different

Dinner with Carl. Clemson University has been inviting me to speak at one of their successful conferences for several years. The topic: the impact of financial cycles on management decision-making.

This year, as in previous years, Carl called me from Chicago and invited me to have dinner with him the evening before my scheduled talk. Carl is a seasoned marketing executive and has the enthusiasm and personality of a person with important sales responsibilities.

At dinner he told me about his family and his several children. Some are doing very well. Others still need some assistance and backing. His eyes were looking far away as he was thinking what needed to be done. His family has been and still is his main focus. It gave me a nice, warm feeling about the man in front of me.

By the time we finished the wine and chose dessert the conversation shifted to caring for people and the meaning of it all. I suggested we behave in a way that helps to achieve peace of mind within the laws of society. A task difficult to accomplish, but worth the effort. Some people can do it alone. Others have to find refuge in the structure of a group, or a formal religion, with its rules, ideological schemes, rituals, and pageantry.

The end result is the same. Piece of mind. A sense that we have reached a state of tranquility. We are relaxed, almost in a condition of stillness, because we finally seem to understand the meaning of things. We have gained a perspective, a mature way to look at the world.

We are enlightened because we feel we have found God. But there is the risk of confusing piece of mind with

God. Or is God the same as piece of mind? If I achieve piece of mind without God, then does God exist? Do people need a formal religion because they cannot find the path (“Tao” in Chinese) by themselves and need the assurance and comfort of belonging to a group?

Carl and I explored some of these questions. When we left we had a sense that we learned from each other and we welcomed the opportunity to tackle challenging issues.

Thanks for inviting me. Until next year, Carl.

(This "Observations" appeared in the issue of 4/9/01 of The Peter Dag Portfolio)

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site.