Friday, August 9, 2013

A Monetary Master Explains Inflation

By Terry Coxon, Senior Economist

One of the best things about being a partner in a research firm employing about 40 analysts is that I have unfettered access to really smart people. While we have a great team with expertise across the spectrum, when it comes to monetary matters, my go to guy is Terry Coxon, a senior editor for our flagship publication, The Casey Report.


Terry cut his teeth working side by side for years with the late Harry Browne, the economist and prolific author of a number of groundbreaking books, including the 1970 classic, How You Can Profit from the Coming Devaluation. The timing of Harry's book should catch your eye, because his analysis that the dollar was headed for a big fall was spot on. Anyone paying attention made a lot of money.

As coeditors of Harry Browne's Special Reports, Terry and Harry made a formidable team for over 23 years. During this period, the two deeply researched the operating levers of the global economy, with a focus on the nature of money and impact of monetary policy. They also looked for ways to apply what they learned about macroeconomics into practical investment strategies, coauthoring Inflation-Proofing Your Investments. On his own, Terry wrote Keep What You Earn and Using Warrants.

Putting his expertise into action, Terry founded, and for 22 years served as the president of, the Permanent Portfolio Fund, one of the top performing funds in history.

Having Terry on the Casey Research team as a senior economist has been a huge personal boon. By the time you finish reading my brief interview with him, I suspect you'll understand why.......David Galland

David: Let's start by defining terms. What exactly is inflation? Most people view inflation as a noticeable increase in the prices of everyday things. How do you define inflation?

Terry: The original use of the term in financial matters referred to money, not to prices. It meant an increase in the total amount of money held by the public. Such a monetary inflation can be engineered by government printing or, under a gold standard, by increasing the official price of gold, as in 1933.

Monetary inflation can also be engineered by inventing a new category of legal tender, as in the case of the silver dollars minted in the 19th century. And inflation of the money supply can happen without government tinkering, such as through the discovery and development of new gold deposits (as in the cases of the California and Klondike gold rushes), or through decisions by commercial banks to operate with thinner cash reserves in order to issue more deposits.

Today "inflation" usually refers to price inflation, which is a rise in the general level of consumer prices. That second use grew out of the public's experience of episodes of monetary inflation being followed by periods of rising prices.

Notice that with either use of the word, there is a little mushiness. During some periods, depending on what you include as "money," you may find either an increase or a decrease in the supply of the stuff. Suppose that the supply of hand-to-hand currency goes up while the quantity of bank deposits goes down by a larger amount. Is that monetary inflation or monetary deflation? And what exactly does an increase in the "general level of consumer prices" mean? There's more than one way to define an index of prices, and there are many ways to tinker with it.

David: In your view, have the US government and the Fed been following an inflationary policy?

Terry: Yes. Since the Lehman swoon in 2008, the M1 money supply (hand to hand currency plus checkable bank deposits) has increased by 72%, so the policy is clearly one of monetary inflation. And the Fed is avowedly committed to avoiding price deflation at all costs. They'll do whatever it takes to prevent price deflation, up to and including sacrificing virgins. That deflation phobia is necessarily a commitment to price inflation, and Mr. Bernanke has indicated that consumer prices rising at a rate of 2% per year would be ideal. So either way you define inflation, the Fed is all for it.

David: Based upon your studies, just how extreme or extraordinary has inflation been since the beginning of this financial crisis?

Terry: A 72% growth in the money supply over a period of five-plus years is a gigantic increase. Take a look at the chart. It shows the annual growth rate in M1 over all five year periods from 1959 to the present (dates on the chart indicate the end of a five-year period). As you can see, the only episode of monetary inflation that comes close to what is happening now is the money printing spree of the high price inflation 1970s and early 1980s.


David: How certain are you that the monetary inflation here in the US is going to ultimately manifest as price inflation?

Terry: You're asking for a lot when you say "certain", certainly more than you're going to get from me. But here's why price inflation seems inevitable. The Federal Reserve can easily create more money. There's no limit to that power, as they've already demonstrated. At any hint of deflation, they will produce more cash. They can never know how much new cash would be enough, but because they see deflation as a vastly more serious problem than price inflation, they always will err on the side of too much new money. That attitude is a guarantee of price inflation.

David: When price inflation begins, how significant do you think it will be? A little inflation? A lot? Hyperinflation?

Terry: Mr. Bernanke will get to visit his ideal world of 2% price inflation, but it will only be a whistle stop. The price inflation that lies ahead will be at least as bad as what happened in the 1970s episode, when the annual inflation rate approached 15%. The money that's already been printed so far may be enough to produce such a 1970s size problem. And more new dollars are coming, because the Fed won't stop printing until price inflation becomes obvious.

Making matters worse is that the devices for paring down the amount of cash that you need for the sake of convenience, such as credit cards, ATMs, and online banks, are now far more widely available and cheaper to use than they were in the 1970s. When price inflation becomes noticeable, people will turn more and more to those devices to reduce their holdings of value leaking cash. That drop in the demand for money will reinforce the price inflation that originated in the Federal Reserve's increase in the supply of money.

David: I know it can only be a wild guess, but based on your observations, how long do you think it will take for price inflation to become obvious?

Terry: Within twelve months after you hear that the economy has at last fully recovered from the recession.

David: What is the biggest flaw with the deflation argument?

Terry: Whatever process someone might have in mind as a driver of price deflation, no matter how powerful that process might be, the Federal Reserve has the power and the will to carpet bomb it with more new money. What the deflationists overlook is that if deflation ever seems to be winning, the Fed will simply extend the game for as many innings as it takes for inflation to win. In a fiat-money system, inflation always gets another chance.

David: What would make you change your view that price inflation is inevitable?

Terry: Brain surgery.

A time tested way of protecting wealth is to move it out of one's native currency and into a location that's more economically sound. But is that even possible for US citizens these days? If so, what are the best places to explore for moving wealth offshore, and how is that best accomplished? Should you and your family follow your money and expatriate your home country?

All these questions, and many more, are answered in a new, free report by legendary speculator Doug Casey. Titled Getting Out of Dodge, it offers specific, actionable advice for moving your wealth and your life safely offshore. Get started while you still can: governments around the world are beginning to tighten their nooses.


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Thursday, August 8, 2013

Crude Oil Bulls Continue to Fade Despite Positive News out of China

The U.S. stock indexes closed firmer today. The stock index bulls still have the solid overall near term technical advantage as prices hover not far below the recent for the move highs. Chinese economic data released overnight was bullish for most of the market place and especially for the raw commodity sector. China exports were up a much higher than expected 5.1% year on year in July, compared to a 3.1% drop in June.

Chinese imports rose by a much higher than expected 11%, year on year. The European Central Bank released a forecast Thursday that shows it expects Euro zone economic growth to contract by 0.6% in 2013, citing weak consumer demand worldwide. The ECB forecast Euro zone growth in 2014 at up 0.9%. The ECB report comes out at a time when recent Euro zone economic data has shown generally slight improvement.

September Nymex crude oil closed down $0.87 at $103.49 today. Prices closed near mid range today on more profit taking and weak long liquidation. Bulls still have the overall near term technical advantage but are fading. If prices back off on Friday then a bearish double top reversal pattern would be confirmed on the daily chart.

September natural gas closed up 6.9 cents at $3.315 today. Prices closed near the session high on short covering after hitting a fresh 13 1/2 month low early on today. The nat gas bears have the solid near term technical advantage, but may now be exhausted following the recent selling pressure. Prices are in a steep three month old downtrend on the daily bar chart.

December gold futures closed up $24.70 an ounce at $1,310.00 today. Prices closed nearer the session high and saw heavy short covering and some fresh bargain hunting. A lower U.S. dollar index also boosted the gold market again today. Gold bears still have the overall near term technical advantage. However, a bullish weekly high close on Friday would give the bulls some fresh upside near term technical momentum.

September silver futures closed up $0.682 an ounce at $20.19 today. Prices closed nearer the session high today and closed at a two week high close. Bears still have the near term technical advantage. A weaker U.S. dollar index today boosted the silver bulls.

September coffee closed up 65 points at 121.70 cents today. Prices closed near mid range today and saw more short covering in a bear market. The coffee bears still have the solid overall near term technical advantage.

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Wednesday, August 7, 2013

Doubting your ability to pick the perfect stock?

Our trading partners at Premier Trader University are gearing up for another great free webinar on Thursday. This week we'll be focusing on trading ETF's around earnings season. This is especially interesting if you have been doubting your ability to pick the perfect stock?

Why not skip the pressure. Exchange Traded Funds (ETFs) are traded in a basket so you don't have to pick just one.

In this webinar, we'll tell you our favorite ETFs to trade with Options. With these hidden gems, you'll receive exposure to different countries trading just a single product. Plus, we'll let you in on a little secret, trading ETFs are a perfect for trading around earnings seasons. And we'll show you how it's done.

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See you Thursday,

Ray @ The Crude Oil Trader

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Devon Energy Reports Second Quarter 2013 Results

Devon Energy Corporation (NYSE:DVN) today reported net earnings of $683 million or $1.69 per common share ($1.68 per diluted share) for the quarter ended June 30, 2013. This compares with the second-quarter 2012 net earnings of $477 million or $1.18 per common share ($1.18 per diluted share).

Adjusting for items securities analysts typically exclude from their published estimates, the company earned $491 million or $1.21 per diluted share in the second quarter. This adjusted earnings result represents a 119 percent increase compared to the second quarter of 2012.

Record Production Driven By Strong Oil Growth

Total production increased to an average of 698,000 oil equivalent barrels (Boe) per day in the second quarter of 2013, exceeding the top end of the company’s guidance range by 8,000 barrels per day. This is the highest average daily rate in Devon’s history from its North American property base. Second quarter production benefited from better than expected results from several core development areas, including the Permian Basin and Barnett Shale.

Read the entire Devon Energy earnings report


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Tuesday, August 6, 2013

Third Day Lower for Crude Oil is a Charm.....or NOT!

September crude oil closed lower for the third day in a row on Tuesday as it consolidated some of last week's rally. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. Closes above July's high crossing at 108.93 would renew this summer's rally while opening the door for a possible test of weekly resistance crossing at 110.55 later this summer. Closes below last Tuesday's low crossing at 102.67 would confirm that a short term top has been posted. First resistance is July's high crossing at 108.93. Second resistance is weekly resistance crossing at 110.55. First support is last Tuesday's low crossing at 102.67. Second support is the 38% retracement level of the April-July rally crossing at 100.27.

The September S&P 500 closed sharply lower due to profit taking on Tuesday as it consolidated some of their recent gains. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off June's low, upside targets will now be hard to project with the index trading into uncharted territory. Closes below the 20 day moving average crossing at 1683.15 would confirm that a short term top has been posted. First resistance is last Friday's high crossing at 1705.00. Second resistance is unknown with September trading into uncharted territory. First support is the 20 day moving average crossing at 1683.15. Second support is the reaction low crossing at 1670.50.

October gold closed lower on Tuesday and below last Friday's low crossing at 1282.50 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI remain bearish signaling that additional weakness is possible. If October renews the rally off June's low, the reaction high crossing at 1395.20 is the next upside target. First resistance is July's high crossing at 1348.00. Second resistance is the reaction high crossing at 1395.20. First support is today's low crossing at 1278.40. Second support is July's low crossing at 1208.50.

September Henry natural gas closed lower on Tuesday as it extends the decline off May's high. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If September extends this year's decline, weekly support crossing at 3.178 is the next downside target. Closes above the 20 day moving average crossing at 3.578 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.463. Second resistance is the 20 day moving average crossing at 3.578. First support is Monday's low crossing at 3.309. Second support is weekly support crossing at 3.178.

COT favorite coffee appears to be stuck in a new trading range. September coffee closed lower on Tuesday and the low range close set the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes above the 20 day moving average crossing at 122.15 would confirm that a short term low has been posted.


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Are Your Bullish Calls Plagued with Divergences?

By now everyone has a prediction about where the S&P 500 Index (SPX) is going to be heading in the future. Most of the sell side and their ilk are all rolling out the green bullish carpet and predicting that a major bull run is right around the corner.

If you are a contrarian investor by nature and tend to sell when others are buying this will be of great interest to you. When retail investors are buying and the professional sell side is quickly reducing their long equity exposure we get increasingly more bearish.

This recent report was accompanied by some eye opening charts...... 

View report and charts courtesy of Bank of America Merrill Lynch


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Monday, August 5, 2013

Atlas Pipeline Partners Reports Second Quarter 2013 Results

Atlas Pipeline Partners (NYSE: APL) today reported adjusted earnings before interest, income taxes, depreciation and amortization ("Adjusted EBITDA"), of $86.3 million for the second quarter of 2013, driven primarily by a continued increase in volumes across the Partnership's gathering and processing systems. Processed natural gas volumes averaged 1,253 million cubic feet per day ("MMCFD"), an 84.0% increase over the second quarter of 2012. Distributable Cash Flow was $58.0 million for the second quarter of 2013, or $0.78 per average common limited partner unit, compared to $32.8 million for the prior year's second quarter. The Partnership recognized net income of $10.1 million for the second quarter of 2013, compared with net income of $74.9 million for the prior year's second quarter.

Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures, which are reconciled to their most directly comparable GAAP measures in the tables included at the end of this news release. The Partnership believes these measures provide a more accurate comparison of the operating results for the periods presented.

On July 23, 2013, the Partnership declared a distribution for the second quarter of 2013 of $0.62 per common limited partner unit to holders of record on August 7, 2013, which will be paid on August 14, 2013. This distribution represents Distributable Cash Flow coverage per limited partner unit of approximately 1.07x on a fully diluted basis for the second quarter of 2013.

Read the entire Atlas Pipeline Partners earnings report
 

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Crude oil falls as most analyst anticipate global slowdown

September crude oil closed lower on Monday as it consolidated some of last week's rally. The mid range close sets the stage for a steady to lower opening when Tuesday's night session begins. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. Closes above July's high crossing at 108.93 would renew this summer's rally while opening the door for a possible test of weekly resistance crossing at 110.55 later this summer. Closes below last Tuesday's low crossing at 102.67 would confirm that a short term top has been posted. First resistance is July's high crossing at 108.93. Second resistance is weekly resistance crossing at 110.55. First support is last Tuesday's low crossing at 102.67. Second support is the 38% retracement level of the April-July rally crossing at 100.27.

The September S&P 500 closed slightly lower on Friday as it consolidated some of Thursday's rally. The high range close sets the stage for a steady to higher opening when Monday's night session begins trading. Stochastics and the RSI are diverging and are turning neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off June's low, upside targets will now be hard to project with the index trading into uncharted territory. Closes below the 20 day moving average crossing at 1677.36 would confirm that a short term top has been posted. First resistance is today's high crossing at 1703.40. Second resistance is unknown with September trading into uncharted territory. First support is the 20 day moving average crossing at 1677.36. Second support is the reaction low crossing at 1670.50.

September Henry natural gas closed lower on Monday as it extends the decline off May's high. The mid range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If September extends this year's decline, weekly support crossing at 3.178 is the next downside target. Closes above the 20 day moving average crossing at 3.596 would confirm that a short-term low has been posted. First resistance is the 10 day moving average crossing at 3.508. Second resistance is the 20 day moving average crossing at 3.596. First support is today's low crossing at 3.309. Second support is weekly support crossing at 3.178.

October gold closed lower on Monday. The low range close sets the stage for a steady to lower opening when Tuesday's night session begins trading. Stochastics and the RSI are bearish signaling that a short term top might be in or is near. Closes below last Friday's low crossing at 1282.50 would confirm that a short term top has been posted. If October renews the rally off June's low, the reaction high crossing at 1395.20 is the next upside target. First resistance is October's high crossing at 1348.00. Second resistance is the reaction high crossing at 1395.20. First support is last Friday's low crossing at 1282.50. Second support is July's low crossing at 1208.50.

And favorite trade for 2013....September coffee closed higher due to short covering on Monday as it consolidated some of the decline off July's high. The mid range close set the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes above the 20 day moving average crossing at 122.36 would confirm that a short term low has been posted.

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Jeff Clark: Poor Economy = Low Gold Price?

By Jeff Clark, Senior Precious Metals Analyst

Despite some positive data, the global economy is showing signs of slowing, a remarkable development in itself when you consider all the money printing and deficit spending that's transpired over the past few years. According to the IMF's overview, global growth was less than expected in the first quarter of 2013, at just over 3%, which is roughly the same as 2012. The lower-than-expected figures were driven by significantly weaker domestic demand and slower growth in emerging-market economies, a deeper recession in the euro area, and a slower US expansion than anticipated. The report concludes that the prospects for the world economy remain subdued.

Many investors consider a weak economy to be a bearish environment for commodities, including gold. Doug Casey says we have entered into what will become known as the Greater Depression. That's as bearish as it gets, so should we expect gold to decline if the bears are right?
One of the most rocky economic periods in modern times was the late 1970s. For those who don't remember, the period was characterized by:
  • Unexpected jumps in oil prices, leading to soaring gasoline prices and rationing
  • A falling dollar
  • High and accelerating inflation
  • Record interest rates
  • Bank failures
  • Wars, including the Iranian Revolution (1978), the Iran-Iraq war (1979), the Russian invasion of Afghanistan (1979), and the Iranian hostage crisis (November 4, 1979 to January 20, 1981).
Outside of the Great Depression, it's hard to identify more trying economic circumstances.
Here's a closer look at the three-year period from 1977 through 1979. In the following chart, we looked at the economic indicators that affected citizens and investors the most, showing which were getting better and which, worse. These factors would all have affected market sentiment and the appetite to invest in gold at the time...
You can see that by the time 1979 hit, inflation was rising, gas prices were soaring, incomes were dropping, and mortgage rates were climbing. The S&P was rising, but not so much in real terms. GDP growth was high, but it was clearly not a rosy time for consumers or workers. Key points:
  • Nominal GDP in 1979 increased 10% year over year, but it was 4.5 percentage points less than in 1978, when the economy expanded a whopping 14.5%. Real GDP changes didn't reach those highs but kept to the trend: in 1978 the growth was 5.6%, while during 1979 the economy expanded only 3.1%, notably slowing down.
     
  • Inflation was dramatically accelerating. The '70s was a hard time for the dollar, much of it connected to the energy crisis. Annual inflation grew from 5.7% in 1976 to 7.6% in 1978, and accelerated to 11.2% in 1979. Prices were up significantly, especially those that had energy costs associated with them, squeezing the average American budget tighter and tighter.
     
  • Gasoline prices rose almost 37% in 1979. This obviously impacted spendable income. It would be the equivalent of national gasoline prices hitting $4.54/gallon by December after starting the year at $3.32.
     
  • Real disposable personal income slowed in 1979, growing only 1.2%, compared to a 3.5% growth rate just a year earlier.
     
  • Mortgage rates were already high—and then shot higher. The interest rate to mortgage a home went from 8.8% in 1978 to 11.2% in 1979. Home values were rising dramatically due to inflation, though rate increases cooled the pace, as values slowed to a 14.7% rate in 1979 vs. 15.3% in 1978.
     
  • Real manufacturing and trade sales (listed as Real Trade Sales in the chart) weakened from 7% in 1977 to 2.4% in 1979. This is a broad indicator that includes manufacturing, merchant wholesalers, and retail sales. The likely culprit for the drop was falling personal incomes as prices were rising.
     
  • The S&P 500 went from negative territory in 1977 to logging a 12.3% gain in 1979. As inflation rose, so did nominal stock prices, but the real gain was a mere 1.1%.
     
  • Unemployment was decreasing during this period, from 7.1% in 1977 to 5.8% in 1979. This may seem at odds with a slowing economy, but labor looked cheap since prices were growing faster than wages. Also, unemployment is a lagging indicator—and it sharply worsened later, when another recession hit in 1980.
So how did gold perform during this challenging economic environment?
The gold price rose 23% in 1977 and 37% in 1978, both of which are considered economic expansion years. But as things worsened in 1979, the price accelerated and went into a mania, ending the year with an incredible 127% return.
While there are many variables at play and no two economic time periods will be the same, this history lesson signals that a sluggish economy is not necessarily an obstacle for gold doing well. Indeed, some of these factors directly contributed to the rush to gold, which is not just a commodity, but the single best tool for storing and transferring wealth (money) ever devised.
In short, there is no contradiction between Doug Casey's gloomy global economic outlook and his bullishness on gold. In our view, the former is the reason for the latter, and a very good reason to buy. If the history of the current bull cycle for precious metals even slightly rhymes with what happened in the 1970s, the market mania that lies ahead should bring us the biggest and fastest gains on our investments to date.
Tomorrow's BIG GOLD outlines why we think buying this month will reward investors not just in the long-term but quite possibly in the short-term as well. The bullion discounts we offered last month have been extended for 30 days solely for BIG GOLD readers—this is the time to pounce, so take advantage of weak prices while they're still available.


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Saturday, August 3, 2013

Crude oil post a downside reversal on Friday.....Is this all the bulls have for summer 2013

September crude oil posted a downside reversal on Friday after failing to take out July's high crossing at 108.93. The low range close sets the stage for a steady to lower opening when Monday's night session begins. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. Closes above July's high crossing at 108.93 would renew this summer's rally while opening the door for a possible test of weekly resistance crossing at 110.55 later this summer. Closes below Tuesday's low crossing at 102.67 would confirm that a short term top has been posted. First resistance is July's high crossing at 108.93. Second resistance is weekly resistance crossing at 110.55. First support is Tuesday's low crossing at 102.67. Second support is the 38% retracement level of the April-July rally crossing at 100.27.

The September S&P 500 closed slightly lower on Friday as it consolidated some of Thursday's rally. The high range close sets the stage for a steady to higher opening when Monday's night session begins trading. Stochastics and the RSI are diverging and are turning neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off June's low, upside targets will now be hard to project with the index trading into uncharted territory. Closes below the 20 day moving average crossing at 1677.36 would confirm that a short term top has been posted. First resistance is today's high crossing at 1703.40. Second resistance is unknown with September trading into uncharted territory. First support is the 20 day moving average crossing at 1677.36. Second support is the reaction low crossing at 1670.50.

October gold closed lower on Friday. A short covering rally tempered early session losses and the high-range close sets the stage for a steady to higher opening when Monday's night session begins trading. Stochastics and the RSI are bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1297.40 would confirm that a short term top has been posted. If October renews the rally off June's low, the reaction high crossing at 1395.20 is the next upside target. First resistance is October's high crossing at 1348.00. Second resistance is the reaction high crossing at 1395.20. First support is the 20 day moving average crossing at 1297.40. Second support is July's low crossing at 1208.50.

September Henry natural gas closed lower on Friday as it extends the decline off May's high. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If September extends the aforementioned decline, the June 2012 low crossing at 3.294 is the next downside target. Closes above the 20 day moving average crossing at 3.616 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 3.616. Second resistance is July's high crossing at 3.833. First support is Wednesday's low crossing at 3.341. Second support is the June 2012 low crossing at 3.294.

And of course....our new favorite trade. September coffee closed higher due to short covering on Friday as it consolidated some of the decline off July's high. The high range close set the stage for a steady to higher opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. Closes above the 20 day moving average crossing at 122.55 would confirm that a short term low has been posted.

Are you ready to start trading crude oil? Advanced Crude Oil Study – 15 Minute Range


Friday, August 2, 2013

The Market Trend Forecast....Our Latest Market and Gold Views

The staff at TMTF have continued to correctly project the wave patterns for months now for their subscribers in the SP 500 Index. Their latest views were to look for a minor wave 3 top at 1698 with a pullback minor wave 4. They hit that on the nose with a 23.6% fibonacci retracement of minor wave 3 as the index hit 1676.

Since that point, TMTF outlined a Wave 5 pattern that should take the SP 500 to 1736-1771. Several weeks ago they patterned out 1768-1771 as a perfect target for a Major wave 3 high. This will be followed by a 125-200 point SP 500 correction if we are correct.

Below is the latest chart update outlining what we project ahead. A run to 1736-1771, followed by a 120-200 point correction for Major Wave 4 in the SP 500. Subscribers get multiple updates each week.

Click here to join us today for a 33% discount at Market Trend Forecast

81 tmtf


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Chevron Reports Second Quarter Earnings.....Misses by $0.21, Beats on Revenue

Chevron Corporation (NYSE: CVX) today reported earnings of $5.4 billion ($2.77 per share – diluted) for the second quarter 2013, compared with $7.2 billion ($3.66 per share – diluted) in the 2012 second quarter. Sales and other operating revenues in the second quarter 2013 were $55 billion, compared to $60 billion in the year ago period.

"Our second quarter earnings were down from the very strong level of a year ago,” said Chairman and CEO John Watson. “The decrease was largely due to softer market conditions for crude oil and refined products. Earnings were also reduced as a result of repair and maintenance activities in our U.S. refineries.”

“We continue to advance our major capital projects. An important milestone was achieved in the second quarter with the loading of the first cargo of liquefied natural gas at the Angola LNG project, one of the largest energy projects on the African continent.” Watson continued,“ This marks an important step in the development of our LNG business. Additional LNG growth is expected in the coming years from our Gorgon and Wheatstone projects in Australia.

Read the entire Chevron earnings report


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Thursday, August 1, 2013

It's show me time for the crude oil bulls.....108.93 becomes the "line in the sand"

Thursdays close in crude oil above the 10 day moving average is giving crude oil bulls fresh momentum. What will they do with it? You know how we love Fridays, it tells us so much about the "will" of commercial traders.

September crude oil closed higher on Thursday following Wednesday's Petroleum Inventory that showed declining Midwest diesel supplies. Today's close above the 10 day moving average crossing at 105.80 confirmed that a short term low has been posted. The high range close sets the stage for a steady to higher opening when Friday's night session begins. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If September extends this week's rally, July's high crossing at 108.93 is the next upside target. Closes below Tuesday's low crossing at 102.67 would confirm that a short term top has been posted. First resistance is today's high crossing at 108.06. Second resistance is July's high crossing at 108.93. First support is Tuesday's low crossing at 102.67. Second support is the 38% retracement level of the April-July rally crossing at 100.27.

The September S&P 500 closed higher on Thursday and posted a new high for the year. The high range close sets the stage for a steady to higher opening when Friday's night session begins trading. Stochastics and the RSI are diverging and remain neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1673.69 would confirm that a short term top has been posted. If September extends the rally off June's low, upside targets will now be hard to project with the index trading into uncharted territory. First resistance is today's high crossing at 1702.00. Second resistance is unknown with September trading into uncharted territory. First support is the 20 day moving average crossing at 1673.69. Second support is the reaction low crossing at 1670.50.

October gold closed lower on Thursday while extending the trading range of the past eight days. The low range close sets the stage for a steady to lower opening when Friday's night session begins trading. Stochastics and the RSI are bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1292.70 would confirm that a short term top has been posted. If October renews the rally off June's low, the reaction high crossing at 1395.20 is the next upside target. First resistance is last Wednesday's high crossing at 1348.00. Second resistance is the reaction high crossing at 1395.20. First support is the 20 day moving average crossing at 1292.70. Second support is July's low crossing at 1208.50.

September Henry natural gas closed lower on Thursday as it extends the decline off May's high. The mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If September extends the aforementioned decline, the June 2012 low crossing at 3.294 is the next downside target. Closes above the 20 day moving average crossing at 3.630 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 3.630. Second resistance is July's high crossing at 3.833. First support is today's low crossing at 3.341. Second support is the June 2012 low crossing at 3.294.

And how much lower can coffee go? September coffee closed lower on Thursday and below June's low thereby renewing this year's decline. The low range close set the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes above the 20 day moving average crossing at 122.70 would confirm that a short term low has been posted.

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How To Find The Right Timing Techniques To Trade Crude Oil

Hello traders everywhere, Adam Hewison here coming to you from the digital studios of MarketClub.

Today I want to share with you how you can trade in the crude oil markets using MarketClub's Trade Triangle technology for timing.

It's a short lesson that visually illustrates how and when you should use this successful timing technique..... 

 
Watch "How To Find The Right Timing Techniques To Trade Crude Oil"


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Decoding the mystery behind Shell's shale write down

The Market Currents staff at Seeking Alpha is shedding some light on the huge write down by Shell this week. Is the U.S. oil boom over hyped?

Shell's (RDS.A) $2.1B write down on its North American shale oil exploration acknowledges some of its spending there will not prove economically viable, and that hitting its cash flow targets could get tougher. Adding to the mystery is Shell's refusal to identify which shale formation has taken the write down or to explain the charge.

Shale skeptics might take the write down as first evidence the U.S. oil boom is overhyped, but WSJ's James Herron thinks it more likely that Shell has "just failed to get lucky" - Eagle Ford, where Shell has significant operations, is well known for its “sweet spots,” which yield greater volumes of the prized liquids compared with gas.

Start trading crude oil today, here's where you start.


Shell profit plunges after $2.2B charge on North American shale assets

Royal Dutch Shell’s [RDS.A] second quarter 2013 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $2.4 billion compared with $6.0 billion in the same quarter a year ago. Second quarter 2013 earnings included an identified net charge of $2.2 billion after tax, mainly reflecting impairments (see page 6).

Second quarter 2013 CCS earnings excluding identified items (see page 6), were $4.6 billion and included a combined negative impact of $0.7 billion after tax related to the impact of the weakening Australian dollar on a deferred tax liability and the impact of the deteriorating operating environment in Nigeria. Compared to the second quarter 2012, CCS earnings excluding identified items were also impacted by higher operating expenses and depreciation as well as increased exploration well write-offs. Second quarter 2012 CCS earnings excluding identified items were $5.7 billion.

Basic CCS earnings per share excluding identified items decreased by 21% versus the same quarter a year ago.

Cash flow from operating activities for the second quarter 2013 was $12.4 billion, compared with $13.3 billion in the same quarter last year. Excluding working capital movements, cash flow from operating activities for the second quarter 2013 was $8.4 billion, compared with $9.5 billion in the second quarter 2012.

Capital investment for the second quarter 2013 was $11.3 billion. Net capital investment (see Note 1) for the quarter was $10.9 billion.

Total dividends distributed in the quarter were $2.8 billion, of which some $0.8 billion were settled under the Scrip Dividend Programme. During the second quarter some 56.2 million shares were bought back for cancellation for a consideration of $1.9 billion.

Gearing at the end of the second quarter 2013 was 10.3% (see Note 2).

A second quarter 2013 dividend has been announced of $0.45 per ordinary share and $0.90 per American Depositary Share (“ADS”), an increase of 5% compared with the second quarter 2012.

Read the entire Royal Dutch Shell earnings report


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EIA: Natural Gas Reserves Rose by Almost 10 Percent

U.S. proved crude oil reserve additions in 2011 set a record volumetric increase for the second year in a row, according to U.S. Crude Oil and Natural Gas Proved Reserves, 2011, released today by the U.S. Energy Information Administration (EIA). Natural gas proved reserves rose also, but by less than 2010's record increase. Nevertheless, natural gas reserve additions in 2011 rank as the second largest annual increase since 1977.

"Horizontal drilling and hydraulic fracturing in shale and other tight rock formations continued to increase oil and natural gas reserves," said EIA Administrator Adam Sieminski. "Higher oil prices helped drive record increases in crude oil reserves, while natural gas reserves grew strongly despite slightly lower natural gas prices in 2011."

Proved oil reserves, including both crude oil and lease condensate, increased by 15 percent in 2011 to 29.0 billion barrels, marking the third consecutive annual increase and the highest volume of proved reserves since 1985. Proved reserves in tight oil plays accounted for 3.6 billion barrels (13 percent) of total proved reserves of crude oil and lease condensate in 2011.

Texas recorded the largest volumetric increase in proved oil reserves among individual states, largely because of continuing development in the Permian and Western Gulf basins, while North Dakota had the second largest increase, driven by development activity in the Bakken formation in the Williston Basin.

Natural gas proved reserves, estimated as wet gas that includes natural gas liquids, increased by almost 10 percent in 2010 to 348.8 trillion cubic feet (Tcf), the 13th consecutive annual increase.

Pennsylvania's proved natural gas reserves, which more than doubled in 2010, rose an additional 90 percent in 2011, contributing 41 percent of the overall U.S. increase. Combined, Texas and Pennsylvania added 73 percent of the net increase in U.S. proved wet natural gas reserves in 2011. Proved reserves in shale gas plays accounted for 131.6 trillion cubic feet (38 percent) of total proved reserves of wet natural gas in 2011.

Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. EIA's estimates of proved reserves are based on an annual survey of about 1,100 domestic oil and gas well operators.

U.S. Crude Oil and Natural Gas Proved Reserves, 2011 is available at: http://www.eia.gov/naturalgas/crudeoilreserves.

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Exxon Shares Fall after Big Earnings Miss

ExxonMobil's (XOM) $1.55 EPS, which fell far short of expectations, was the company's lowest EPS since Sept. 2010. (Q2 results)

Earned $6.86B on revenue of $106.47B billion after earning $15.9B on revenue of $127.36B in the year ago quarter when results were inflated by the sale of the Japanese lubricants division; removing those effects, net income fell 19%.

Upstream earnings were $6.3B, down 24.5% year over year, downstream earnings were $396M, down from $6.6B a year ago which included a $5.3 billion gain related to the Japan sale. Oil and gas production fell 1.9%.

Read the entire ExxonMobil earnings report



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Wednesday, July 31, 2013

Short Covering Gives Crude Oil Bulls Hope.....Bears Still in Charge Here

September crude oil closed higher due to short covering on Wednesday as it consolidates some of the decline off July's high. The high range close sets the stage for a steady to higher opening when Thursday's night session begins. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If September extends the decline off July's high, the 38% retracement level of the April-July rally crossing at 100.27 is the next downside target. Closes above the 10 day moving average crossing at 105.82 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 105.82. Second resistance is July's high crossing at 108.93. First support is Tuesday's low crossing at 102.67. Second support is the 38% retracement level of the April-July rally crossing at 100.27.

The September S&P 500 also closed higher on Wednesday. The high range close sets the stage for a steady to higher opening when Thursday's night session begins trading. Stochastics and the RSI are neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1669.72 would confirm that a short term top has been posted. If September renews the rally off June's low, upside targets will now be hard to project with the index trading into uncharted territory. First resistance is last Tuesday's high crossing at 1695.50. Second resistance is unknown with September trading into uncharted territory. First support is the reaction low crossing at 1670.50. Second support is the 20 day moving average crossing at 1669.73.

September Henry natural gas closed higher due to short covering on Wednesday as it consolidates some of this decline off May's high. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If September extends the aforementioned decline, January's low crossing at 3.350 is the next downside target. Closes above the 20 day moving average crossing at 3.645 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 3.645. Second resistance is July's high crossing at 3.833. First support is Tuesday's low crossing at 3.418. Second support is January's low crossing at 3.350.

October gold closed lower on Wednesday while extending the trading range of the past seven days. The mid range close sets the stage for a steady opening when Thursday's night session begins trading. Stochastics and the RSI are bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1290.30 would confirm that a short term top has been posted. If October renews the rally off June's low, the reaction high crossing at 1395.20 is the next upside target. First resistance is last Wednesday's high crossing at 1348.00. Second resistance is the reaction high crossing at 1395.20. First support is the 20 day moving average crossing at 1290.30. Second support is July's low crossing at 1208.50.

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10 Reasons Why Obamacare Is Going to Ruin Your Medical Care… and Your Life

By Elizabeth Lee Vliet, M.D.

Of course you've heard of "liar loans"—in the heyday of subprime mortgages, unscrupulous lenders handed out mortgages to practically everyone with a pulse. "So you're saying you make $100,000 a year? Great, check this box titled 'McMansion.'"

We all know how this charade ended. Now Dr. Elizabeth Lee Vliet, M.D., an acclaimed expert on the subject of Obamacare, warns that the delay of the employer mandate by one year will force Americans into a single payer system, raising insurance premiums and encouraging "liar subsidies" that might prove fiscally devastating. Not to mention that under the new health care system, you may well end up dead…

Dan Steinhart
Editor, Casey Research

Obamacare is a hodgepodge of new regulations, requirements, and penalties. I'd like to start by defining three terms, which, while obscure today, should begin to enter our everyday vocabulary as Obamacare continues to take effect:

Health insurance exchanges are the basket of qualified insurance policies that meet the new healthcare law requirements for expanded coverage. These may be set up by the states (many are refusing to do so, due to high cost and fear of bankrupting the state) or the federal government. The Exchanges are supposed to be fully operational by October 1, 2013, but it is questionable whether they will actually be in place by that deadline.

The individual mandate requires that individuals purchase health insurance that meets the new, expanded federal requirements. Individuals who do not comply face a financial penalty. Individuals who fall below minimum income levels will be eligible for taxpayer-funded subsidies to buy health insurance.

The employer mandate requires that businesses with more than 50 full-time employees must provide health insurance for all employees, and that insurance must meet the new standards set forth in the new law. Businesses that do not comply must pay a financial penalty for each employee, which for large companies can run into the millions of dollars annually. This is the piece of Obamacare that has been delayed by one year.

Selective Enforcement

Why delay one component of Obamacare and not the others? More specifically, why delay the employer mandate but not the individual mandate?

To answer that question, we must first understand this fact: Obama wants a single payer healthcare system in the US.

This is not a secret:
Barack Obama, 2003: "I happen to be a proponent of a single payer healthcare system for America, but as all of you know, we may not get there immediately."

Barack Obama, 2007: "But I don't think we will be able to eliminate employer-based coverage immediately. There is potentially going to be some transition time."

These quotes are not taken out of context. Anyone who has been paying attention knows that transitioning to a single-payer system has been Obama's and his cohorts' ultimate goal all along:

Rep. Jan Schakowsky (D-IL), 2009: "Next to me was a guy from the insurance company who then argued against the public option. He said it would not let private insurance companies compete. A public option would put the private insurance companies out of business and lead to single payer. My single payer friends, he was right. The man was right!"

Here, Rep. Schakowsky is suggesting that the "public option" will lead to their desired goal of a single-payer healthcare system. Single-payer proponents no longer use this term, since the public has clearly and consistently opposed it.

The "public option" has been renamed "Medicaid expansion," which serves the public-relations purpose of confusing the public and avoiding calling taxpayer-funded healthcare "single payer."

Jacob S. Hacker (Yale Professor), 2008: "Someone once said to me this is a Trojan Horse for single payer. It's not a Trojan Horse, right? It's right there! I am telling you. We are going to get there. Over time. Slowly. But we are going to move away from reliance on employer-based health insurance, as we should, but we will do it in a way that we are not going to frighten people into thinking they are going to lose their private insurance. We will give them a choice of public or private insurance when they are in the pool. We are going to let them keep their private insurance as long as their employer continues to provide it."
Hacker nicely sums up the underlying goals of Obamacare: not to increase competition or patient choice, but to drive people out of private insurance as a stepping stone to a government-run, single-payer system.

 

Stepping Stone to Single-Payer

Knowing Obama and his cohorts' goals, the purpose behind the delay of the employer mandate seems clearer: to hurry the "transition time" away from employer-based health insurance and to a single-payer system.

By forcing individuals to purchase compliant healthcare plans but not forcing employers to provide those plans, Obama is creating a swell of 10-13 million workers that must enroll in health insurance, but cannot obtain it from their employers. These workers thus have no choice but to use the government-controlled health insurance exchanges, or else pay a financial penalty.

This represents a doubling of the number of workers forced to get health insurance on the exchanges.
Importantly, the IRS has ruled that if workers have access to affordable health insurance through their employer, their dependents are not eligible for taxpayer-funded subsidies on the Obamacare health insurance exchanges.

Now that businesses will not be required to offer health insurance until 2015, workers and their dependents will be eligible for taxpayer-funded subsidies to purchase health insurance on the exchanges.
This will cost taxpayers an estimated $60 billion dollars in 2014 alone to cover the increased costs of subsidies—and the loss of revenue from employer penalties.

This $60 billion figure is before we take into account the "liar subsidies" that will invariably occur now that the administration has quietly removed eligibility verification for taxpayer-funded subsidies.
Community organizers are already being hired around the country to sign people up for the health exchanges. There are no penalties for failing to verify eligibility, and no penalties for signing up people who cannot afford to pay the monthly insurance premiums.

It is set up for disaster, much like the "liar loans" that helped topple the mortgage industry when people were not required to verify their income to qualify for a mortgage.

Remember, by enacting the dual mandates, Obamacare ostensibly was designed to ensure that its costs were borne by businesses, not taxpayers. But when the president decided to enforce only certain portions of the healthcare law and delay others, he shifted the cost of health insurance onto the backs of taxpayers.

This is all on top of the burdensome costs Obamacare has already created. Various studies have projected that private insurance premiums will rise between 20 to 60% in 2014, and some as much as 100%.
How long will the private-insurance market survive with such exploding costs? People will not be able to afford such massive premium increases. That seems to be the point: drive up costs and drive everyone into the arms of government-controlled medical care.

Jeff Smith from Seattle summed it up nicely in a Wall Street Journal letter on June 12:

"I was going to leave my job… to start a business until I shopped around for a healthcare plan: At Group Health, a health-maintenance organization in Seattle, I was given a quote of $842 per month for me and my family. But that would increase to $2,320 starting in January 2014 when Obamacare kicks in—a 276% increase. Why? Because I would be forced to carry coverage I don't want and don't need, such as maternity care. Welcome to the world of socialized medicine, courtesy of the Un-Affordable Care Act."

 

How Obamacare Affects You and Your Medical Care

The delay in the employer mandate is but one of dozens of negative impacts Obamacare will have on your medical services. As an independent physician, I've been discussing these issues with my patients for the past few years, helping them to prepare for what's ahead.
Here are the ten most important points that I tell my patients:
  1. Your private insurance premiums will cost more and more each year.
  1. You will lose the choices and flexibility in health insurance policies that we have had available up until now.
  1. As reimbursements continue to drop, fewer and fewer doctors will take Medicare (for those 65 and older) or Medicaid (people younger than 65).
  1. Fewer doctors accepting Medicare and Medicaid causes an increase in wait times for appointments and a decrease in the numbers and types of specialists available on these plans. Consumers would be wise to line up their doctors now.
  1. Studies from various organizations and states have consistently shown that Medicaid recipients have longer waits for medical care, fewer options for specialists, poorer medical outcomes, and die sooner after surgeries than people with no health insurance at all. Yet an increasing number of Americans will be forced into this second-class medical care.
  1. As more people enter the taxpayer-funded plans (Medicare and Medicaid) instead of paying for private insurance, the costs to provide this increased medical care and medications will escalate, leading to higher taxes.
  1. With no eligibility verifications in place, millions of people who are in the US illegally will be able to access taxpayer-funded medical services, making longer lines, longer wait times, and less money available for medical care for American citizens… unless taxes are increased even more.
  1. Higher expenditures to provide medical services lead to rationing of medical care and treatment options to reduce costs. This is the mandated function of the Independent Payment Advisory Board: to cut costs by deciding which types of medical services to allow… or disallow.

    If you are denied treatment, you have no appeal of IPAB decisions; you are simply out of luck, and possibly out of life. This is a radical departure from the appeals process required for all private health insurance plans. Further, the IPAB is accountable only to President Obama, and cannot be overridden by Congress or the courts. IPAB is designed to have the final word on your health.
  1. Under current regulations, if medical care is denied by Medicare, then a patient is not allowed to pay cash to a Medicare-contracted physician or hospital or other health professional. Patients who need medical care that is denied under Medicare or Medicaid will find themselves having to either: 1) look for an independent physician or hospital (quite rare these days); or 2) go outside the USA for treatment.
  1. Expect a loss of medical privacy. Beginning in 2014, if you participate in government health insurance, your health records will be sent to a centralized federal database, with or without your consent.
The bottom line is that Americans are losing more and more of their medical freedom. By 2015, so many workers will be trapped in the government-run health insurance exchanges that there will be no going back to the private plans we have today. At this rate, single-payer proponents will drive private insurance companies out of business, which has been their intention all along.

Americans need to become far more proactive about taking charge of their health. The healthier you are, the less vulnerable you are to our degrading healthcare system. It's also wise to consider proactively planning for medical treatment options outside the US.

Dr. Vliet will share her thoughts on what Obamacare will do to medical freedom and privacy—and the steps Americans can take now to preserve both—at the upcoming Casey Research Summit 3 Days with Casey, October 4-6 in Tucson, Arizona.

Aside from Dr. Vliet, our blue-ribbon faculty includes keynote speaker Dr. Ron Paul, economic and investment experts Catherine Austin Fitts, Lacy Hunt, James Rickards, John Mauldin, Rick Rule, Chris Martenson, and many more. Most of the speakers have agreed to attend the conference for the entire three days and mingle with the participants.

This is one conference you don't want to miss, but seats are filling up fast.

Get all the details now—if you sign up today, you can still get our $100 first-come, first-save discount.


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