Friday Morning 04/17/2009

April 17, 2009 · Posted in Weekly Posts

We have seen GOOGLE, GE, and CITI post earnings in the last 12 hours or so that beat estimates. That should be bullish for the market. We do have options expiring today though so there could be some volatility.

Gold dropped nicely yesterday, well nicely if you are short and we expect this downward move to continue. We showed the bear flag formation before and one can see for the chart below that gold has now broken down through that. We remain sort and expect we will get into the low $800s. The gold mystics will tell you that gold has a historical pattern of making a significant low every 8 - 81/2 years which, if that pattern continued, would put gold at some kind of important bottom before August.

GOLD 04/16/2009

The S&P continues in its rising bear wedge making everyone nervous. We would like to see a decided push upwards to shift that top line into a more parallel position with respect to the lower line. Or just a pause or moderate pull back would be healthy here. Anecdotal evidence says that the big money players are still on the sidelines and this rally is largely about traders. The big money will not get in until we have a pull back. We are not adding any new positions at this point though we increased our Fortescue Metals Group (FSUMF) position once again. We will continue to accumulate this.

S&P 04/16/2009

We had hoped to get our Members Only Post on Brazil by today but that didn’t happen. Brazil will be posted this weekend along with a substantial week end blog covering charts of all of the commodities and stocks we own. In addition, early next week we will have our update on the US Dollar as a Reserve Currency

No change in our positions yesterday and none expected today. We hold the following positions as of 04/16/2009:

Long oil through DXO

Long Natural Gas through UNG

Long Brazilian mining and China supplier through RIO

Long Brazilian Oil and China supplier through PBR

Long Chinese Petrochemicals through SHI

Long Australian Iron Ore Supplies to China through Fortescue FSUMF

Long AgFeed Inc FEED

Short gold as a hedge against physical holdings through DZZ

The following posts are relevant:

China Part 4 - Playing the Dragon

China Part 3 Global Hard Assets

Commodities

China: Part 2 - Bonds, Dollars, and Inflation”.

“The Fed and The Bond Market - Will Intervention be Effective?”

“The Coming Bond Debacle”

Fundamental Trends

“How a Reserve Currency Collapses”.

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