We’re going to look at a few items this week. With spring upon us, it seems appropriate to survey the scenery before the heat of summer and that sweaty July madness arrive and make it hard for us to think.
We’ll begin with what could only be considered a schizophrenic trade in silver.
A quick look at the iShares Silver Trust (NYSE:SLV), the most popular equity ETF for the grey metal reveals the following –
And we ask you, as fellow men and women of reason, educated people with a disdain for all things coarse and corrupt – just what the hell is going on here!?
Is it some kind of joke? Is this what they refer to when they say ‘silver’s merely working itself out’?
Or is it a bolt-tight indication that the metal has lost it’s mind?
Look’s whacked from our standpoint.
But before we grind into the nitty gritty, a few general technical observations on the chart above –
- First, all SLV’s major moving averages are trending lower and price is below them all – bad news for the bulls.
- RSI and MACD are confirming the bearish read with their sub-waterline activity over the last two weeks (in black), and
- We’re but five percent from a major support line at $19.25.
All told, not an optimistic picture.
But it’s more the erratic trading in the blue square that’s captured our attention.
Have a look now at a 15 minute chart of that same (blue square) period –
The manic bouncy-bounce that’s been going on for the last ten days – the gapping action higher and lower on an almost daily basis – is a response to… what? Questionable industrial demand figures? Strike negotiations with the Mexican mining union?
No and no.
As we stated above, silver is hopscotching about because investors are schizophrenic regarding which way the precious metals are next headed. It’s a market that’s still dominated by investment money, and at the moment that money is sh@t scared of what’s about to happen.
So, one day they buy. The next they sell.
And it won’t end well.
We already have an open bearish trade on gold, so we won’t be adding any precious metals positions at present. But we do urge caution for those who are still long gold and silver. And we also recommend you keep your eye on silver, the LEADING INDICATOR in the PM realm.
Next up on the Docket
We turn our scorn now from things metallic to those electric. The object of our enmity is once again Tesla Motors (NASDAQ:TSLA), on whom we also have an open trade, initiated two weeks ago in a letter called The End of the Road for Tesla.
There, we anticipated a continued drop for the stock, writing,
TSLA lost nearly a quarter of its value in the last thirty days, and we say it will continue to fall until it hits the 137 day moving average, currently rising in the vicinity of $180. That’s another 15% loss [from here].…
Did anyone catch that drop in Tesla shares last Friday? A drop of over thirteen bucks that sent six percent of the company’s market cap up to money heaven.
And all on the back of our call last Monday to stay the hell away from this puppy.
What Caused it?
Over the last two days the loss has amounted to nearly ten percent, but according to varying mainstream media reports the decline was either the result of 1) a market that’s gotten tired of high flying stocks, or 2) California’s electric vehicle rebate program running out of cash, or 3) Tesla’s so-called gigafactory being a much bigger gamble than most stock watchers previously thought.
All that notwithstanding, we know the real reason for the decline…
What’s more likely is that we’re simply between earnings reports and folks are getting edgy about whether we’ll see Tesla deliver with its coming quarter’s sales and profit numbers.
This week kicks off first quarter earnings. We’ll see what happens.
Face the Facts, Chump!
Let’s get down to this week’s trade by looking at our favorite bull market poster child, Facebook (NYSE:FB).
You’ll forgive us, by the way, if we feel we have to repeat the following bit of investment gospel once again.
We do not use Facebook. We do not believe it has anything to offer us personally or that it in any way enhances the lives of those who do venture its popular portal. And while we are aware of the potential business advantage it offers its users, we’re but simple soldiers in the employ of publishing juggernaut Oakshire Financial, so we leave it to our superiors to figure out its worth for the corporation. To our mind, it remains ‘the world’s biggest time waster’, though that shouldn’t be construed in any way as a comment on the stock’s prospects. There are lots of folks out there with time to spare.
More than that, we believe that this bull market will eventually come to be known as the ‘Facebook Market’. When all is said and done, the history books are written and our flesh is but feed for worms, folks will likely talk about it as such – though we don’t expect any credit for the moniker.
What’s the upshot, y’old fool?
In our view, it means that as the fortunes of Facebook go, so, too, the fortune of the market as a whole.
And how does that relate to our current investment position?
It means that Facebook’s current pullback is emblematic of a market that has also pulled back – and, indeed, if you look at Facebook’s retreat against the broader indices, you’ll see an exaggerated move that’s wildly out of proportion to what’s happening with the major market averages.
Indeed, the broad indexes, after retreating briefly, have in the last few days set new highs, both the Dow and the S&P 500. The transports, too, have seen new highs in the last week, as have a number of other sectors, including the telecoms.…
New paradigm-shifting industries like 3D printing always give birth to huge stock market winners, with 3D Systems (DDD) and Stratasys (SSYS) as the current sector torchbearers. While the competition among big-cap market leaders usually grabs the spotlight, related businesses invariably emerge with innovative ways to leverage a breakout technology’s growing acceptance and success. Today I want to bring your attention to one of those companies in the 3D printing space — 3D Pioneer Printing, Inc.— trading under the symbol DPSM.
By way of background, 3D printing refers to the process of making a solid three-dimensional object from a digital model, also called “additive manufacturing.” With 3D printing, an object is created using successive layers of material, laid down in different shapes to form the final product. Beyond the flashy headlines about guns and human skin being 3D-printed, it has already become an especially “disruptive technology” for a wide variety industries. In fact, it can completely restructure the way products are made, leading to efficiencies—along with bigger profits— for those companies adopting this revolutionary new approach.
According to Wohlers Associates, a consultancy firm, the market for 3D printers and services was worth $2.2 billion worldwide in 2012, up 29% from 2011. Ultimately, however, the size of the 3D printing marketing is expected to dwarf those numbers relatively quickly, because the technology has such a wide-range of applications. Some of these include engineering, healthcare and a rapidly expanding, diverse array of manufacturing tasks. Even the bellwether financial publication Forbes has said that 3D printing will ultimately have a “radical impact” on every industry.
Following the meteoric rise of 3D printing companies that have targeted the manufacturing needs of big businesses, several young companies began battling to bring 3D printing into the home. One of those is 3D Pioneer Printing, Inc., which has developed a simple “plug and play” software application for consumers to be able reap the benefits of this breakthrough technology either at their own businesses, or in their homes.
With the goal of bringing 3D printing to the mainstream consumer, the company has developed a flagship product called Appaloza. The Appaloza application, developed by company Chief Technology Officer Mark Flores Martin, is a cloud-based platform that allows users to manage a 3D printer from anywhere there is internet access. Just like iTunes allows you to buy songs, movies and games, Appaloza allows you to print the 3D products of your choice, remotely.
If you’re thinking how great that would be, but asking how you might actually be able to “manufacture” the object, 3D Pioneer Printing has the answer. They’ve developed a printing machine called the Wyatt, specifically designed to seamlessly interface with the Appaloza application — for which the patent alone could put this company on the 3D printing map for good.
It’s hard to grasp the game-changing economic impact a 3D printing system like this could have. In essence, individuals and smaller businesses would be able to “manufacture” what they want, ending their reliance on overseas exporters. Especially in light of the fact that 3D printers can already forge tennis racquets, shoes, belts, golf tees, pens, screwdrivers, hammers, knives, and yes, even functional guns.…
We’re going to get to our weekly trade involving Tesla Motors (NASDAQ:TSLA) in just a moment.
But first a word on Ms. Martin.
Indulge us, Willard.
Ahh, Ms. Martin.
Just the thought of the old wrinkled wretch is enough to make us want to careen off Cliffside Ridge on our way home from work.
She was a woman without sympathy, that Clementine Martin. A high school English teacher to whom we owe so much, and yet whose very name conjures in us a chilling dread.
Who was Lady Clementine Martin?
It must be said that, to her credit, the old widow was steadfast in her demands, and refused to take any half-arsed effort from any of her students. She had an uncanny ability to know if one was working at full stride, or merely cruising on native ability. And that’s probably why I despised her. She called me out regularly for not revising, rewriting, reworking or otherwise thinking a second or third time about what I’d written.
“Now, Huey,” she’d say with a cruel little smile, “you’re not the same lad today that you were yesterday, are you…?”
“No, Ms. Martin…”
“Well then, how can you live with what you wrote yesterday, little Huey? Why don’t you take another look at it, and give it back to me tomorrow with another 200 words appended.”
“Yes, Ms. Martin…”
“Yes, Ms. Martin?”
“Please make it better.”
“Yes, Ms. Martin.”
It’s from old Ms. Martin that we first learned the virtues of thinking twice – maybe of thinking at all (if we can be accused of that). The old gal was the first to apprise us of the virtues of “thinking about what we thought” simply by taking a piece of our writing, circling a sentence or two that we’d scribbled and writing “see me” in the margin.
It was later, in her office that the barbarity of the woman was fully exposed.
She’d point to the sentence in question, look at us with the same querulous smile and say in a whisper,
“Huey… do you really believe this?”
“Huey, is this sentence at all sensible? Look at it.”
What generally followed was several minutes of tortured silence (in which the old orange blossom no doubt revelled), followed by a sack of sixteen-year-old stammering, a minute or two of intense brow furrowage, some squelched tears (when I thought the writing was already lucid) and then my discovery, or Ms. Martin’s revelation, of what needed to be changed.
In the end, of course, the ‘humiliation’ was good for all concerned, despite how it was then received by a know-it-all teen who preferred to be out at football practice. It gave us our first exposure to the notion that one must regularly examine and be ready to reconsider everything one previously thought or believed. But perhaps more importantly, Ms. Martin was the first to instill in us that most cherished of life lessons – that an openness to being wrong and making mistakes is only worthwhile if one commits to changing course and navigating in the right direction.…
Hate to tell it to all our good friends and readers, but gold and silver are now careening headlong into the crapper.
And no, we take no great delight in saying we told you so.
But before we address the matter head on and offer another in a long line of money-making precious metals trades, there are a number of smaller items that need tending.
The first is this –
We made money on a couple of trades that closed with last week’s March options expiry
The first was last week’s sale of five (5) TBT March 67 PUTs for $0.38 each, for a total credit of $1.90.
No contest. We pocketed the full purse (100%).
Next was our trade from the third of March in a letter called, As the World Wars, Wall Street Waxes. There we urged you to sell ten (10) GLD March 140 CALLs, then trading for $0.16 each, for a total credit of $1.60.
And there, too, we loped the pony to the deep freeze for a 100% gain.
Now Back to Gold (GLD)
We start with good friend and long time reader, Ennio, who wrote to us on February 13th regarding our warnings on the precious metals. He wrote,
Re your call on gold, it would appear that you do not understand the fundamentals. That’s OK. As an American, you wouldn’t understand. I bet you still believe that there is gold in Fort Knox. While Yanks keep selling paper gold the Far East keeps buying the physical gold. The Far East is not interested in silver. Consequently silver is lagging gold. Look at your history. Silver always lags gold and then overshoots.
Ennio, Ennio, my dear friend… crack open a cold one and tell me – do Canadians and Irishmen know more or less than Americans about gold?
And what about Italians?
That’s right, brother. Good trading, like fine beer, knows no borders. It also matters little whether there’s gold in Fort Knox, or anywhere else. It matters none, too, who’s East and who’s West and who’s lagging and whose leading at any given moment. It matters only that you made money on the trade.
So we ask – did you make money, Ennio?
Next up is a man who identifies himself as a female bodybuilder. He’s not a well chap, to be sure, but everyone has his lot in life, and we don’t pretend to know the divine plan.
His “name” is piper marie. And he would like us to think of him like this –
[The Piper in the oh-so turgid flesh]
The poor shuck wrote the following literarily gifted comments on February 14th and March 14th (apparently the 14th is the day his government check arrives, he feels uplifted and runs to the computer to write) –
Looking pretty STUPID with your never-ending gold short. Try substituting intelligence for arrogance.
Still short gold? STUPID and ARROGANT!