Market Update Email 2-6-2009

Started to save charts at this point instead of using links. I also added a disclaimer at the end of this email as my audience was getting larger.

To: Friends and Family
Subject: My take on where the wave count is and other technical market observations

Warning: I get pretty technical below, but you should be able to tell by the linked charts where the key areas are and what I expect. If not, just shoot me an email or give me a ring. By the way, the charts should update on a 20 min delayed basis so you can refer back to them as time goes by to see how we progress. I suggest bookmarking as a favorite and I will try to keep updated.

I usually follow the QQQQs, but they are more difficult right now so Id rather show you the cleaner market at this point, the S&P 500. Click the link below, then read away. You will most likely want to flip back and forth between the chart and this email to make it easier to follow.

Link to my chart and you can see we are in a pretty good risk reward area with a possible intermediate term top at $875 last week with an expected big move down imminent...read on.

High Probability scenario (labeled on chart): the highest percentage count is we have a completed wave pattern (labeled gray IV?) as a triangle with the E and final wave completion last week at $875. What this means if count is correct is the fifth and final wave of this move down has started. We will get confirmation with a move into the green area and a break out of the triangle south. A break out of the triangle south will turn me 75% Bearish. A move below $800 will turn me 95% Bearish. I leave 5% open because there is another possibility of breaking down the triangle but only for a shortwhile before a suckers rally move back into it later this month. This will be short lived though at which point I will turn 100% Bearish. Based on my own personal trading account, I am about 60% bearish and 40% cash currently. This count is also supported by many other factors including the VIX (Implied Options Volatility) making higher lows even though the market was doing the same (line chart below wave count). The VIX usually moves opposite to the market and is showing that fear is growing even though the market is rising. Also, the current put/call ratio is at the lowest levels it has been throughout this whole bear market. That link to a second chart is attached below. The put/call also moves inversely to the markets, so a low on it corresponds with a high in the market. Pretty amazing the bullishness considering we are still at prices below our October lows! This put/call chart is very important and I have relied on it all Bear market. You can see the buy and sell signals it has given in the past. Right on. Similar to the vix, it gets lower as fear decreases and higher as fear increases. Right now there is a ton of bullishness and complacency which is a recipe for a brutal move down as this fifth leg should be.

The fifth wave down should be a big move that takes us to new lows below $750. The triangle pattern on the chart measures to a move that is 250 pts or 25% so a breakdown of the triangle will result in a similar sized huge move of $250 pts and/or 25%. That measures to an S&P500 between $618 and $575. Triangles usually go about 66% of their apex, which is the zone we are in now. Breakouts usually occur in that 66% area, so I expect something to happen pretty soon. Hold on to your hats, because what I am seeing, trading, and expecting is the next final (at least for a few months) big move down where we will get our capitulation everyone keeps talking about and everyone will be scared to death. The red boxed area will tell us if something else is going on which Ive outlined in my lesser probability scenarios below.

Medium Probability scenario: the final triangle move up isn't yet completed at $875 and we push higher to the top of the triangle around $900. I can't fully turn bullish until the triangle is broken out to the upside, though, and then makes a higher high above $945.

Low Probability scenario: any movement above $875 would require a reevaluation of the wave count and any move above $945 would require probable bullishness. That is unlikely at this point, though. Translation: Stop Losses at those levels depending on how aggressive you are trading and your time frame.

Bottom line, we should stay in the triangle until we dont! At that point price will tell us where the market is going. Good Luck.

Remember, although this is pretty much my lame life, it is still just my opinion and not trading advice. Only you know your own goals, timelines, risk tolerance, etc.

Chad

Harsco Email 1-30-2009

Sorry, could not get chart flipped 90 degrees.

To: Buddy

Subject: Harsco Chart from your analyst report updated for technicals

Harsco Chart with projected price trend. New lows will be had before new highs. The chart needs a final move down which probably started again this week and should reach at least $16.00. See my attached drawings. You should go sell with the expectation of going neutral/buy due to valuations in a month or two at the new bottom ;-)

Wave one was a 25% drop, wave 3 a 64% move, so wave 5 should at least be 25% which would put price back at $22.5 as a minimum, but I bet it goes further than that to new lows. Cya sunday!

CK

Market Update Email 1-29-2009

To: Friends
Subject: fyi...ive been adding puts this week...think top may be in again


will add more with confirmation of break below $800 on SPX. We should not go above $930 until we see new lows.

CK

$USD Update Email 1-23-09

To: Friends
Subject: Good technical chart of the $USD

Looks like a resumption of the dollar downtrend with a sweet retest of support now acting as resistance. This chart is technical analysis 101. Basically it implies that those who bought above support are all now losers and will sell at any hint of getting back close to even. That is why support becomes resistance because everyone that bought above that line is now losing money (Since November) and will take any chance to break even.

I will be watching Gold and the gld to confirm a renewed downtrend in the USD. If the dollar can get back above support then the bulls will win out. That is where you put your stop...around $86 on the USD.

Market Update Email 1-15-2009

To: Friends and Family
Subject: Stock Talk - Short term rally in process - try not to get sucked into buying yet

I have used a lot of technical jargon, so I will summarize at the end as well...

Ill be out of town in Phoenix next week and not sure when Ill be able to give an update, but it looks like today's bounce is kicking off the last move up (last chance?) before another huge move down begins (looking to set up the 3rd wave of the 5th wave down, which should be a pretty powerful move down and at least as large as the 124pts (14%) we have lost in the last 7 trading days).

The bottom today was a very very pretty practically perfect 61.8% (a fibonacci retracement) of the up move from the $741 Nov low to the $943 Jan high (943high-741low=202 pts*61.8%=124pts; 943high-124=818 target=today's low).

A few things to keep in mind on this bounce. Tomorrow is options expiration. Recently, that hasn't meant much, but historically OPEX Fridays are significant up days. Max Option Pain on the SPY is currently at $90 which implies that those people with the most at stake would do best to get the market as close to $900 as possible by tomorrow close. Also, markets are closed on Monday and Obama is inaugerated Tuesday. This is Obama hope rally time. So, I am calling for a 2-3 day bounce to correct this 7 day 14% selloff.

Picking price targets is never easy, but today's bounce can possibly be considered move one of a three wave corrective move up. Using equality ratios that would give a minimum target of $867 for the end of this bounce. There is also a very nice gap from Wednesday that would be filled at $867. Finally a 38.2% (fibo) retrace of the move down would be 47 points, or $865. So, that is the first primary target for this move up.

Price certainly can move higher than that, and in fact could get as high as 942 before invalidating my count, so I am going to slowly get into my shorts and/or move to cash over the next week. Once a new low below today's low ($818) is hit, we can really get comfortable that the move down is well on its way, but I am more aggressive and will be phasing in my shorts tomorrow and Tuesday hoping to get as much short as I am comfortable by the end of next week. I expect price to top somewhere in the $865 to $895 and that is my sweet spot to get short. Any much movement above $895 and I will have to reevaluate, but the risk/reward seems to be very good in that range. It is quite possible we only move up into this sweet spot range for a few hours before reversing downward to kickoff the next big move down. Of course things can change quickly and I will try to let yall know if something different is happening.

For portfolio protection, I suggest dabbling in some TZA as a hedge mechanism (3x levered russell 2000 bear). Also the banks have been very weak and once again leading us down so some FAZ (3x financials bear) or SRS (2x real estate bear) might be nice as well. These three etfs will get you some good short/hedge exposure. You buy them just like you would any other stock.

SUMMARY: I expect an up day tomorrow with ideally another up day Tuesday, then a reversal on Wednesday similar to the 2 day huge selloff after the November election. I would suggest protecting your portfolio and/or getting short during this time. I would save some dry powder for the icing on the cake when we make new lows again below $818 on our way to at least the Nov lows of $741. Getting short below $818 would be the least risky choice, but I see no problem adding some as we move higher the next few days.

Good Luck and shoot me an email if you have any questions.

Market Update Email 1-11-2009

To: A few friends
Subject: elliott wave update - time to phase in shorts.

Vindication!

For months Ive been talking about that November Move down and how it was bugging the $#%^ out of me. This link is the latest Elliott wave international count (Prechter www.elliottwave.com) which is considered to be the premier Wave analysis site and they have recently revised their count to correspond with pretty much what I have had. Not that I am a pro, but elliott wave has been working in this bear market. 5 down 3 up! Right now we are in wave 4 of a 5 wave move down. Waves 1,3, & 5 are down moves with waves 2 & 4 corrective. Expect a big move down at the conclusion of this triangle...maybe inauguration time (remember the 10% 2 day decline after election).

Bottom line is the price high may be in. If this count plays out, then we will get one more good chance to load up on the shorts, but I see no problem phasing in right now. A reevaluation needs to happen if price makes a new high above $9500 on the Dow.

http://globaleconomicanalysis.blogspot.com/2009/01/s-500-crash-count-wave-four-triangle.html

Good Luck.
Chad

Market Update Email 12-28-2008

Unfortunately, I don't have the chart saved that this email refers to, so this may be pretty confusing looking back. I wrote this at a time before I saved my charts and instead just kept annotated ones on stockcharts with links in the email. I have since started saving all my charts so I don't have this issue.

To: A few friends

Email Subject: My Elliott Wave update

Fellas, I have spent the last month racking my brain on the current elliott counts. Up until mid October, they were pretty obvious, but the Thanksgiving bottom has really messed with my (and most everyone else's) interpretations of the waves. Most conclude that Thanksgiving was the bottom of the 3rd leg down (as I have labeled on the link below). I have yet to be fully convinced. There are many reasons why this could be the bottom of wave 3 and a few reasons that make it a stretch. Regardless, at this point, I think I have to give it the benefit of doubt and concede that Thanksgiving was the bottom of the 3rd wave down. This matters greatly in our near term picture, but not as much in the longer term picture. But, no matter if the 3rd wave ended the end of October or Thanksgiving, we are currently in a 4th wave correction, with a 5th wave move down to follow after this correction completes. After the 5th wave down (most likely to new lows) we will correct this entire 1.5 year down bear move (prolly 3-8 months) with another larger bear market rally, then the next (and possbily final) crushing bear market move down (new lows again) following in late 2009. Remember, the 2000 bear market was 2.5 years long (we are barely 1 year into this one). The question right now is, when will that more recent 5th wave down start? And, that is why labeling the end of wave 3 is so important. So, near term, finish 4th wave, then 5th down, then big B correction up for half a year, then a final C leg down to new lows thru at least 2010.

Besides price, the 2nd most important aspect to the markets is time. Right now, if the 3rd wave bottom did indeed occur on Thanksgiving, that means we are currently only 1 month into this bear market rally. For the size that that the count says we are in, this corrective wave four should last at least 2 months. So far we are only one month into it. To give you some perspective, the last move of this size was the correction from July to September of 2008 that lasted almost 3 months and corrected a much smaller 1st wave move down. I would expect this 4th wave that is correcting the brutal move from September 1 to Thanksgiving (556 $SPX points or 43%) to either correct at least 38% (to $1029+) or at least be as long as the previous correction of similar size (2.5 months). That is why I favor my current count in the attached with the black B ending this last week and a final decent move up into the first few weeks of Jan (labeled blue a?, b? and black C?) possibly to $SPX $1000 with a similar look to the move off the Thanksgiving low.

I must admit though, that there still is certainly the possibility of this correction having ended the week before xmas, even if it is only 1 month old. The waves allow it at this point. Also, many of the indicators are rolling over and becoming bearish. And, one other indicator, which I have come to follow a ton, the put/call ratio, is very bearish right now. The ratio is at its lowest point of the bear market (low amount of puts outstanding compared to calls). Bull markets are kicked off with everyone being bearish, not the other way around. It seems like I have been saying it to myself a lot lately, but this week is very important in the markets. Basically the market desides this week if we will have another bull leg up or the continuation of the 5th wave that should take us to new lows (which I have also labeled as blue 1?, 2?, 3?, 4?, black 1?)

I know I have said a lot, but hopefully the chart lays it out better. I am slightly short, but primarily in cash waiting for better confirmation from price. Just look at the chart and how weak the move since Thanksgiving has been. That is not a bull market move.

One final thought, I know I remember the bottom of 2002 and at its climax everyone was saying sell sell sell. We have never reached that point yet. Everyone is still saying "stick with your strategy"; "Don't sell now"; "Historically now is the time to buy". All the magazines have "top picks for 2009". I am even getting letters from USAA, my 401k account holder, saying to stick with the market and my long term goals. That as a contrarian indicator is not what a bull market is made of. The bottom of this bear will have everyone disgusted with the stock market and sold out, just like in 2002 (but in all likelihood probably even more so).

Ill be in Reno/Tahoe new years shredding it up. Hope you all get piss drunk and have a great night!

Good Luck
CK

GMR Email Dec 22, 2008 - Suspicions Correct Part 2

An email I sent to a larger audience...

Subject: GMR Update...new post merger trading valuation occured today

Please see my emails from Wed and Thursday as reference. We nailed it. My suspicions last week were correct. The selloff did finally occur, as we knew it would/should; luckily we were smarter than the market and knew that it should have occured simultaneously as the share increase (dilution), but it didn't. For some reason it took the shareholders a few days to do the analysis, and thus was an all out gift to us by them last week. I sold a majority on Thursday and saved myself a few $s. Today's price is roughly equal to the pre merger price of $15.00. From a valuation standpoint we are at the same level we were early last week ($15.00/1.34 more shares we received).

I still feel the same about the long term prospects of GMR...a buy. I will be looking to buy again once the next market sell off occurs. $2.00 divy is still their target and should be easier now with the new acquisition (yield of 20%+). At lower levels GMR will also be a takeover target as its price approaches the value of the fleet on its books.

Good luck.

GMR Email Dec 22, 2008 - Suspicions Correct

An email I sent one of my buddies...

Subject: My ahha moment

My call last week on GMR was genius. Just wanted to let you know. Last week was literally a gift. I should have bought some puts on top of my cashing out. Stock down 25% in 3 days working its way back to the 34% dilution from the merger. It was just too obvious that the stock's price did not adjust with the new shares that I received. It should have acted just like a stock split, but didn't. I literally received $2500 in GMR shares last week and the price only went down $500 worth; I got a $2000 xmas gift.

I'll buy more when this move down ends. Long term all these prices are too low. $2.00 divy on a $9.80 stock.

GMR Email Dec 18, 2008 - Suspicions Abound

It looks like my suspicions were correct. GMR added 34% more shares to our accounts yesterday, but only took a 10% haircut in price. It is now down another 6% today. In theory the price should have fallen the same 34% as the increase in shares, but it hasn't yet. I expect the market to realize the dilution that occured and adjust down by that 34% level.

That is why the stock is down 6% today. The market will figure it out. I just think we have figured it out quicker.

I am going to sell a few more lots and buy back cheaper in a few weeks.

I still think this is a wonderful long term stock. I actually read somewhere that oil is now in a "Contango" in the futures market, which means it is now profitable to buy pysical oil, store it and then sell it a future point. The Feb/March futures are trading at like $60 with the current oil price around $40. There are stories that people are actually leasing ships (like GMR's) to just store the oil, not ship it.

Good luck.

Give me a ring if you have questions.

CK

Market Update Email 11-11-2009

Dividend Yield is simply the amount a company pays out in yearly dividends divided by its current share price. (For example GMR yields roughly 14% which is $2.00/$13.95)

Based on the attached historical chart, we need at least a doubling of the dividend yield to get back to the long term average of 4.5% and at least a tripling to 6.5% to get back to the historical market bottoming points. Notice the historical change since 1991, the bubble years? This date marked when the ratio left its historical precedent between 3.0 and 6.0% average yield and went to no man's land below 3.0% for 10+ years. As recently as the early 80's yields were 6.0%+. In the 1932 bottom yields rocketed to 16%!

In order to double the dividend yield, you either have to have an increase in dividend payouts (not even close to beginning to occur--in fact the opposite is occuring; businesses are cutting dividends), a drop in the stock market by 50%+, or a combination of both. In all liklihood both will occur, but we are far away from dividends being raised.

This chart is another very bearish indicator if history can be trusted.

Another way to think about this is the period since 1991 has been a statistical anomaly and needs to be corrected.

Enjoy!

GMR and Market Update Email Oct 15, 2008

This is an email I sent to my dad.

Subject: Market moved 20% in 2 days - another good chance to lighten up on stocks.

That was a nice bounce on Friday afternoon/Monday morning. Unfortunately I think that may be all we will get until election time. I will know more after tomorrow, but basically if we sell off tomorrow, I am expecting a continuation of the downtrend with new lows in site. A bounce tomorrow may give us a better opportunity for another rally higher, but after that, the next move is still to at least a double bottom of last week, but most likely to new lows. No need for us to try to time this thing perfectly. The prevailing trend is still down--by far.

I would suggest getting a lot of your stocks into cash this week with a plan of keeping it that way for awhile. You should have over 70% of your assets in non equity anyways (bonds, cash, land, homes, gold coins, etc) if you are within 10 years of retirement. Bonds are on the verge of breaking down too, though, so cash, money market, annuities, land, high yielding stocks (dividends), etc.

Stocks like GMR I see no harm in holding, as long as you are comfortable continuing to dollar cost average for the next few years (the dividend will do this for you as well). It won't be immune necessarily from a market selloff, but it should hold up better than the market in general and obviously has the ability to turn around quickly as we saw this week. Plus a 15-25% yield (which also equates to a 15-25% increase in your stake every year if you roll into purchasing new shares) will be incredible when the markets finally do turn. Anything below $10 on GMR is a firesale price. And nothing like cash continuously in your pocket.

Right now is not a time to worry about taking losses, etc; it is a time of preserving capital. Remember, the bear market of 2000 lasted over 2 years...this one is barely 1 year old and by most calculations this one will and should be larger than the one in 2000 (it already is by pretty much every measure); that implies at least another 20% down move from here to under $780 on the S&P500.

I am buying puts this week to capitalize on the next major down move. If you don't necessarily want to sell out and/or you want to try to capitalize on the next move down, then I would suggest buying some SDS, QID, or DDM. These are those ultrashort ETFs I was telling you about. They move opposite the market at a two times rate...so if you buy $10,000 worth and the market moves down 10%, then these things go up 20% providing you with portfolio protection. I would definitely suggest putting some of these in your portfolio, if nothing else but to add some insurance.

And finally, one thing to think about is there are already a lot of boomers who are closer to retirement than you are. I don't think they will be putting their money back in this market with the kind of risk they've taken the last year. That will be a BIG headwind for the upside in the next 20 years+. If they do, it will be at much smaller percentages of their total portfolio.

Sorry for the long email, but it is time to get bearish again...the rally after the bailout announcement in mid sept. was only 2 days long, and it looks like this one may only be 2 days long as well. There will be longer ones down the road, but unfortunately I think they will be at lower prices.

Buy and hold was a product of the 80's and 90's bull markets. It is not a viable strategy anymore.

Good Luck
Chad

GMR Email Oct 12, 2008

Email Subject: good signs for GMR

On a day when the markets got hit pretty hard again and the oil tanker industry was down, GMR posted a 17% gain on heavier than normal volume. I don't want to speak to soon, but those are signs of a bottoming process. UP on higher than average volume and relative strength within the sector. Yield still at least 18%. An 80% move would get this yield back to 10%. One day does not make a trend, but Im seeing signs of life. Scroll down on the link to see the competitors

http://finance.google.com/finance?client=ig&q=GMR

Good luck.

GMR Email Oct 9, 2008

Email Subject: GMR Yield now at 19% even before acquisition

Yield will be 20-25%+ after the merger...my suggestion is to dollar cost average and ride out this wave of selling which must be someone selling who needs cash badly! Fidelity is a large holder and so is Allianz. I wonder if they are seeing massive redemptions from investors. It also is a small part of a few small index funds which can add to the downward spiral. At current prices ($334MM Market Cap), this thing is trading almost at book value ($334+ Debt of $655 on assets of $865MM (85% PP&E) is 1.1x book value)...and that assumes the 10 year old ships and steel on their books is at market value! The company reiterated its dividend policy of $2.00/share just in August, so I do not expect that to not happen. Dividend announcement should be mid-end of this month...hopefully the price is still this low so we can roll it into these firesale prices. There should be a 50 cent dividend announcement in the next few weeks. This thing is a steal at this price. No stock will stay at 20% yields for very long.

GMR Email Oct 6, 2008

This is an email I sent to friends and family on Oct 6, 2008 concerning GMR. I will try to figure out if I can backdate or achive these previous emails.

As you all prolly know GMR has been tanking along with the other tankers out there. It is down about 50% in 2 months, yet nothing has changed from a financials perspective. It is getting hit with oil, although the lower oil prices are actually better for the company since that is its largest expense (Duh! It's a tanker!).

What you may not know is GMR announced a merger on August 5th that looks pretty attractive. I have put together a summary of what's going to happen, but all in all existing GMR shareholders will get 1.34 shares in the new company. The big news out of the deal is that the combined company will keep its $2.00/share dividend. I missed this when I glanced over the news report in August. See the spreadsheet attached.

The new company will have roughly $57MM shares outstanding. At current prices the combined company will have a market cap of roughly $617MM, or 7.6x EBITDA. Divide the $617 by $57MM and get a $10.74 combined new company share price. This makes sense considering existing GMR shareholders will get 73% of the new company (73% times todays stock price of $14.55 is roughly $10.60 and is made up by the 1.34 shares we will get ($10.60*1.34=today's share price).

The BIG NEWSis that the $2.00 divy will continue. Do the math: $2.00/$10.74 combined company share price equates to an awesome 18.6% dividend yield. Since GMR's time charters cover the dividend alone, there is very little risk that they will lower their Dividend (unlike Bank of America who just lowered there's 50% tonight!) About 80% of the combined company will be under time charter contracts until at least 2010 with the other 20% at the more volatile spot rate which has actually been taking a hit lately.

I dont think people have picked up on the new Dividend yield...either that, they don't care, or they don't expect it to continue. I added some more GMR to my 401k today and will probably liquidate something else to add into GMR tomorrow. I plan on holding this one and rolling the Divi into more shares for as long as possible, hopefully until im 100 years old!!!