Wednesday, December 23, 2009

Update 12/23.. Ouch

Copper got up past $3.20 today... this is not how to begin the Holidays.
Total loss is $3,425, putting my account at $9,625.
I'm going to keep my current orders to sell at $3.02 and $2.95 intact.

Happy Holidays !!

Sunday, December 20, 2009

Update 12/20

I've been a tad busy this week; my car crapped out on me as well as the usual Xmas rush, sans transportation of course.
Copper ended the week at $3.138 last Friday, and it was the high for the day. I don't like this rangebound stuff; it did'nt go down as I had hoped, and so have absolutely no reason to be in this market any longer. For the life of me I just can't see how it can stay up here with weak construction, a falling stock market and strengthening dollar, but... I'm going to abandon both of these at $3.10 or $3.20.. lets hope it's the former. I'm giving it a little room on the long side just in case of a spike upwards. I will put in an order to sell one contract at $3.02 should we get there, and another at $2.95.

Greece continues to slowly implode; the rate on their ten year bond has gone from 5.01% to 5.80 just this month, with no end in sight. Two of the three ratings agencies have dropped them below A status; if Moodys follows the other two, Greece then loses the right to have its bonds used as collateral by the ECB. Should this happen (a big if) Greece would likely be in default (or crawl on its knees begging to the ECB) within a week or two. Their socialist PM outlined some cuts and freezes earlier in the week, but the markets apparently had no faith in what he said, and he even said "we did not come to power to cut entitlement programs or public service salaries". We'll see about that one. Ultimately a deal gets done with the ECB that will be painful for the Greeks but avoids outright default. Argentina, Latvia, Ukraine and Mexico are next on the plank. Greece's problem is simple.. it's people demand a lot in the way of free services, it's civil servants strike and riot when they don't get their yearly payraises to ever more ridiculous levels, and the Govt simply borrows and borrows to fund it all.

Friday, December 11, 2009

Update 12/11

I will put in the order to "sell" one more copper at today's opening with a goal of $3.04, using a four cent stop. I'm still one copper contract "short" from $3.13, and I will exit this one also at $3.04. Copper is starting to look really weak.

Update: Copper opened at $3.143, and so now I'm "short" one copper from $3.13 and the other from $3.143. Lets hope for the bottom to fall out !

Wednesday, December 9, 2009

Update 12/9

I took the day off work due to babysitting issues and a nasty blizzard here in Minny and so had a little time to do some homework on copper. There is major support at around $3.14 and resistance is at $3.27.. for the last week, it has looked like it is rangebound between these two technical areas, and so I'm going to amend my order; I will order a "buy" at $3.20, with a four cent goal and a three cent trailing stop. I will also issue a "sell" order at $3.13 with no preconditions.. if it pierces below that level, we could see $2.90 fairly fast.

Update 5pm: Copper ended the day at $3.1235, and so I'm now "short" one contract from $3.13 and as it closed near the low, I expect a lower opening from here..

Also, there are growing rumblings that Greece is in trouble; the interest rates their Gov't has to pay to attract bond buyers is soaring the last week or so; Fitch downgraded them to BBB and their Prime Minister had to hold a press conference to reassure the markets that they will not become the next Iceland. Problem is, that's what Iceland said. We'll see.. at worst, the EU will force a solution on Greece that it won't like, but desperately needs.

Dec. 9 (Bloomberg) -- Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II. “It’s five minutes to midnight for Greece,” Buiter, who will join Citigroup Inc. as its chief economist next month, said in a Bloomberg Television interview today. “We could see our first EU 15 sovereign default since Germany had it in 1948.”

Tuesday, December 8, 2009

Update 12/8

Will put in the order to "sell" march copper at $3.08 with a three cent trailing stop as it took a hard dive today and finished near the day's low (closed at $3.15ish), portending a lower opening. The USD has had a few good days upwards of late, which if it keeps up should weaken copper.

Monday, December 7, 2009

Update 12/6

Well my copper opened at $3.1875, more than the three cent trailing stop, and so a loss of $.0175/lb on 25,000 lbs = a loss of $437. Whoops.. can't win 'em all. This puts my imaginary account at $12,900. Not too sure where we go from here.. markets seem unsettled and ready to do something, but what ?? I'll just hang on the sidelines for the time being.

Friday, December 4, 2009

Update 12/4

Well copper hit my buy at $3.20 and settled at $3.2375. Today the USD strengthened considerably and gold took a terrific tumble, though copper held up well on good economic news. Not too sure where copper is going now if the USD strengthens and the economy improves.. one pulls it higher, the other drags it down. As such, I'm going to be looking into other things to do as there's no clear direction here if these conditions persist. Silver is a possibility.

Yesterday's rumor re: Japanese selling of US treasuries was just that.. a rumor. Still I would expect the Japanese to be net sellers of US debt in 2010 by not "rolling over" some of their short term T-bills, and others could follow suit, notably England, if conditions in their home countries warrant this.

Thursday, December 3, 2009

Update 12/3

Going to change up on the copper order.. today it was down to $3.17, so will put in two orders: one to "buy" at $3.20 and a goal of $3.25 with a three cent trailing stop; second is to "sell" at $3.08, again with a three cent trailing stop.

Today there was an interesting rumor that Japan was going to sell $100 billion of US Bonds back to the US.. so far unsubstanciated, but the markets did what would've been expected of such a move.. Bond rates went up some, the USD strengthened and the JPYen weakened, which is what Japan wants.. but this must be giving Bernanke and Geithner headaches. Japan is going to do something here, and very soon.. and this would be made to order for the Japanese, but not us. It also puts into question whether the Japanese will "roll over" their shorter term treasuries early next year when there will be a flood of them coming due or whether they'll cash them out. Unfortunately for us, this is exactly what Japan should be doing.

Wednesday, December 2, 2009

Update 12/2

My copper play paid off again.. I "bought" March copper at $3.20 yesterday; it closed yesterday at $3.234; todayit went up to $3.26 and so I was out at $3.24 for another $1,000 profit, bringing my imaginary account to $13,027 now. It also closed near the day's lows, portending another rise tomorrow. I'll put in an order to "buy" at $3.27 with a three cent stop loss and no goal.. just going to let it ride since it's so intent on going to the moon. One day this baby's gonna fall, and hard.. but until it does, I'm aboard the rocket to the moon. I'll also put a "sell" order for $3.00, three cent stop, just in case the bottom does fall out.

Tuesday, December 1, 2009

Outlook for 2010

{FACT #1} Bernanke will NOT allow deflation or a meaningful rise in Bond rates. Period, end of discussion.

{FACT #2}.. if in doubt, refer to Fact #1 for guidance.

1. "Jobs" Bill: Not sure how big, but the politicians are a tad scared
about the unemployment rate (and well they should be lest they
themselves meet that same fate in the next election). Aid to local
governments will also be a part of this to avoid a muni bond implosion. Look for new taxes (trader's tax, etc) to partially pay for this. The healthcare bill might also contain immediate taxes on the wealthy.

2. Another QE: Expect Bernanke to announce another round of MBS
purchases in the $600bln range, and perhaps another round of Bond
purchases depending on how the roll over rates on short term bonds
look. Look for Japan to curtail their rollovers of US debt.

3. The FDIC will get another injection of aid from somewhere, likely
the Fed, to deal with the bank failures.

4. The Bank of Japan will announce QE in some form, perhaps bond

5. The US Gov't deficit will be north of $1.25 trillion.

6. Unemployment will hover around 11%.

7. This printing will have an effect somewhere in the world; the "carry
trade" will, somewhere, inflate someone's stock market and real estate prices to unrealistic levels. Look for a crash somewhere, likely in Asia. Many other nations have begun to restrict the inflow of money; Taiwan and Brazil to begin with, and the list will probably grow.

8. Look for at least one sovereign default in 2010. Ukraine, Mexico and Greece head this list of shame. They'll get bailed out in one fashion or another, but there will be serious damage done to EU banks in the process. Also refer back to point #7 for other candidates in Asia. These panics will not crash the system, but will scare investors out of equities and back into bonds.

9. There will be no recovery back to the good ole days. We are as a
nation still WAAAYY too far indebted for this to happen anytime soon,
and this will continue for the better part of a decade at the very

10. US Bond rates: There is some $3 trillion in short term bondsthat needs to be rolled over in 2010...nevermind the additional $1.25 trillion that Obama will need to borrow. Then we get to the borrowing needs of other nations, other states, other cities all over the world. In short, there is a chance that despite Bernanke's efforts, rates will rise.. unless..
the stock markets take a hit, in which case investors flee stocks and (voila !) begin buying bonds again. A minor panic or two in exotic locales will help encourage yet more investors to once again purchase US bonds.

11. Stock market: Because of #10 (bond rates) I fully expect a dandy
pullback beginning early in 2010; look for the DOW to sink to at least
9000ish at some point. Lets just hope that it does'nt turn into a stampede for the exits, and there exists that possibility, though I think it won't turn out that way.

12. Commodities: Since I expect a stronger dollar and a sluggish economy (and thus demand for commodities) I see commodities having a down year. Gold will cool off, but I would'nt look for it to get much below $900/oz again.

13. Currencies: When the stock market begins to tank, the USD will strengthen some versus both commodities and other currencies. Bernanke will not allow it to strengthen so much as to bring about deflation, but he will allow it to go up some.

Overall, the Fed and the US Gov't cannot forever continue printing and borrowing like this.. in 2010, between Fed purchases of MBS and the "Jobs Bill", another $1.2 trillion or so is being printed/borrowed to support our economy (then we come to the deficit), and this after last year's total of $2.1 trillion (before the deficit). If this continues, slowly but surely, commodities will go up in price to the point where it does serious damage to the US consumer, and shortly thereafter banks as people are forced to choose between their credit card debts or food. If there were to ever be a rise in interest rates of say 3-4%, it would force the US Govt to make some very ugly choices of tax hikes and/or spending decreases. If they were to ever stop their MBS purchases, rates on homes would shoot up. A rise of that same magnitude (3-4%) would force the Japanese Govt into even worse choices, almost certainly including the selling (or at least not rolling over) US treasuries and possibly reducing Social Security and Medicare. In 2011 (my guess) Bernanke will be forced to pull the plug on the QE.. and it's then that the real danger starts.,-Where-Were-Heading-2010.html