Peter Dag & Friends

5/7/10

Interesting pattern

You know by now I like to look at volume pattern. This is another interesting example (click on the chart to enlarge it).

Last December GLD spiked with above average volume. It was a sign GLD was doomed and was likely to go nowhere for a few months.

Above average volume appeared again as GLD went through a 12% correction. It signaled the correction was close to the end.

Now GLD spiked again as investors panicked because of the European crisis. Volume soared taking GLD close to the December high.

It is going to be interesting to see if GLD is going to pause again as it did in December.

Stay tuned.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 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 money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

Disclaimer. No material here constitutes "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 are your sole responsibility.

5/6/10

The human predicament

It is not what Larry Kudlow called "the unions protest" in Greece. It is the human predicament.

I am absolutely shattered by what is going on in Europe and watching the Greeks fighting in the streets for something they never could afford.

We bailed out GM and the financial system. We are in the process of bailing out California, New Jersey,... Now we are moving to bailing out whole countries and regions of the world.

What is sad about the human predicament is that the populace does not understand, and no one makes an effort to explain the real issues.

We (a company or country) have to earn the benefits we receive. If we do not earn and able to pay for the benefits, we are doomed. This is what happened to GM and Greece.

The politicians, instead, hide behind the stupid concept of "ideology" and give everything we need and we want. This is the real social injustice.

Now, as in the ad on TV (showing the kid disappointed because he/she was never told), the people of Greece are facing reality. They never afforded all the benefits they enjoyed. An ugly and unneeded shock.

Now the Greek government has to attract industries to produce the wealth they failed to generate.

We do not realize it, but it is also happening to us. The steady, slow, and gradual loss of purchasing power is a sign that we are paying out of our pockets for all the bail outs and benefits we do not afford.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

If the global economy is so strong ....

It is a fact that commodities rise when the economy is strong helped -- initially -- by easy monetary policy.

How come then that the CRB index is at the same levels as of August of last year (click on the chart to enlarge it)? Maybe this is the reason Treasury bond yields are going nowhere.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

5/5/10

Interesting chart from Bespoke Investment Group -

The market corrected 4.41%, in line with previous corrections since March 2009 (click on the chart to enlarge it).

I like to look at trading volume to tell me if the correction is over. The recent above average volume following the decline may suggest we are close to a bottom.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

5/4/10

Poor Europe! I feel sorry for you.

Europe. I have been writing for years about your problems. I lived in Europe for many years. I know the different European races and what drives their achievements. You cannot put together Germans and Spanish people, or Greeks, or Italians.

They will be crushed by the focused Teutonic prowess to produce efficiently with awesome precision.

In other words, productivity differentials between the northern and southern countries of Europe is too big to make it possible for Europe -- as it is conceived -- to survive.

Why should businessmen go to Greece when they can invest their money in a much more productive country as Germany?

Today the equity markets "celebrated" the end of the European dream. They crashed. I knew it. Milton Freedman told us the European experiment could not last the test of time.

The domino effect will probably continue, dragging the global economy down.

I know. I sound pessimistic. But I am witnessing the collapse of the "social experiment" so much touted in Europe. This is the main reason I moved to the USA.

Are we trying to do the same thing here?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

A chart pattern revisited

The point I made yesterday was that trading volume can provide (not always) useful trading opportunities.

Strong volume following a sharp correction or a spirited rally may be a signal that we are close to a turning point.

The volume pattern of XME was suggesting "distribution" (click on the chart to enlarge it). What happened is history.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

5/3/10

Thought of the day

Markets love crises (Portugal, Spain, Italy, Greece, Ireland, the oil spill in the Gulf).

Politicians are busy during crises showing they are really concerned. As they should be. The only thing they can do, however, is to throw a lot of money at the problem hoping it goes away.

And the market loves money sloshing around.

This time is no different. Enjoy!

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

Chart patterns

I enjoy looking at charts and finding patterns. I particularly like to study trading volume (click on the chart to enlarge it).

Volume increased sharply in September, November, December, and February, signaling the end of a correction and the beginning of a strong rally.

Strong volume, however, happens close to a top. What caught my attention is that we have experienced spirited trading activity but the market did not move higher.

My question is: Is this a distribution pattern which typically takes place ahead of a correction?

You guessed it. Time will tell.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

5/2/10

Confusion about yields and inflation in the USA

Analysts continue to be baffled by our low inflation and the stability of yields.

There is only one answer, I have been mentioned this issue for some time. Inflation and interest rates cannot rise because people are losing purchasing power at an alarming rate.

The unemployment rate remains close to 10%. Unemployment claims have stalled and are not declining anymore. Taxes are slowly rising. Business people are frustrated by surging regulations and government involvement in the economic affairs of the country.

Inflation and interest rates cannot rise until there is solid growth in the global economy. This is not happening. On the contrary, there may be some evidence suggesting the economy is likely to slowdown in the coming months.

Time will tell, of course.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

5/1/10

It is so sad!!!!

News. May 1 (Bloomberg) -- Greeks protested “unprecedented” budget cuts as euro-region countries and the International Monetary Fund move toward agreement on a 120 billion-euro ($159 billion) bailout package for the debt-stricken nation.

Thousands of demonstrators in Athens used the May Day holiday to call for job security and the defense of worker rights, prompting the deployment of riot police around government buildings including the finance ministry. Isolated clashes took place, some involving tear gas.

My view. You have to feel sorry for all those people who were so naive to think that they could get away with great government programs without being able to pay for them. This is an important lesson for all us, Unfortunately history suggests we fail to learn it.

The lenders, now, want to make sure they get their money back. Greece will stay alive just enough to be able to pay the interest on the loans.

They have no escape. It is time to pay the piper and there is no light at the end of the tunnel. They sun, beautiful sea, and gorgeous islands. Not much more.

Now they have to encourage foreign investors to come to Greece and entice them with great incentives. They need to put the people to work.

The financial markets are suggesting that Portugal, Spain, and Italy are next.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.