Signs point to a turning point in values of many risk-oriented securities.
Those securities, indicators of global willingness to embrace risk/reward, include emerging markets (NYSE: EEM), basic materials (NYSE: UYM), the anti-dollar (AMEX: UDN) and several individual entities. Please see the ThomWatch RISK LIST.
A poll of my usual strategists turns up a unanimous YES, RISK TAKING IS POISED TO RETURN … with an equal amount of BUT I HAVE NEVER SEEN ANYTHING LIKE THIS.
Hence:
- Marc Faber in Asia agrees emerging markets should rebound sharply after the relentless selling of the past days/weeks/months. “… but maybe we are not in normal times,” he tells me. Faber, based in Hong Kong, needs no introductions.
- Joe Duarte in Dallas says to me: “Under normal conditions, the October 10 bottom would have been good enough to launch a good rally. New lows mean that we have reset our expectations for a few days and see what happens.” He’s a money manager and author.
- Ben Johnson in Oregon says, “My research and indicators suggest that we may now be at a turning point. The changes in my indicators, over a short/intermediate time frame (three months or so), are now showing: Bearish: U.S. Dollar, gold/silver ratio; Bullish: S&P 500, base metals, CRB index and probably oil, gas, and gold stocks. But it’s hard for me to emotionally believe the above, with the underlying fundamentals terrible and weakening, however this is what my research is telling me. Probably because sentiment indicators are showing extremes.” Johnson is a money manager and commodities oriented broker and speaker.
- And Glenn Cutler, a Southern California investor and former newsletter author and mutual fund manager: “In this once in a lifetime worldwide liquidation, there come once in a lifetime opportunities,” he says. “Historically, the smaller cap stocks tend to be the first to start a recovery, and there is no shortage of high quality small caps these days. The trick is to find Special Situation with unique characteristics.”
For my part, I am no big believer in sentiment, as in – “throwing in the towel” and volatility indexes measured by put-call ratios. Instead, I watch the risk list of ETFs, such as EEM, UDN, UYG and UYM, for signs of life. Until today (Friday), these have been hammered as investors run for the pills. (Yes, generic will do – one of the few categories to defy the selling in recent days and weeks.)
One other risk indicator to watch is Central Fund of Canada (AMEX: CEF, Stock Forum). Since it is a closed end fund representing a repository of gold and silver, it can sell at a premium or discount to the price of its metal. The premium on the security has been all over the place lately, indicating perhaps a looming flow into gold and silver assets.
Van Simmons, a rare coin dealer from Newport Beach in southern California, tells me today he is mystified and intrigued with the plunge in the prices of platinum, rhodium and other metals used in industrial concerns. Well, not mystified. Platinum, lithium, rhodium and other metals get used in various ways by the automobile industry, which is in headline land right now.
At any rate, platinum one-ounce coins seem about to experience the same shortages and high premiums that gold coins were experiencing this autumn, Simmons says. He runs David Hall Rare Coins.
That is it for now. I am busy on the Ticker Trax.
I wanted to congratulate Gil Morales in Century City, near Los Angeles, for sticking to his short selling guns. What a story there! See ThomWatch for more.
Gil’s track record with two funds he runs at Gil Morales & Co., along with his investing history at William O’Neil & Co., is extraordinary. Morales, a 49-year-old former cartoonist and Stanford University graduate, now scripts a letter called www.gilmoreport.com.
Not everyone is on the broiler, so to speak. "Out of the blue oversold rallies notwithstanding, I still see many indications of complacency out there on the sentiment front," says Bernie Schaeffer, one of North America's premier market strategists. "And I see yet another concern now on the technical front – Thursday's market plunge sliced through the 788 level on the S&P 500, which represents half of the October 2007 peak at 1576. There is often significant support at these half-high levels after major declines, and the jury may not yet be out on the 788 level still holding as support. But should it not hold, we are likely to have some very serious additional pain ahead especially in light of the less than compelling sentiment backdrop."
On The Ticker Trax
The first issue of Ticker Trax By Thom Calandra is available – for free. Please click here for the actual newsletter. In the next week or so, issue No. 2 will cost money, sorry to say. Still, I am fairly certain I can deliver in that letter a bombshell for subscribers.
It has been many years since my last service, The Calandra Report, put me at center stage. I hope to repeat the success of that service, and I expect to follow every legal and ethical principle in the investment world. I recognize and have paid for the shortcomings that led to my U.S. Securities & Exchange Commission civil settlement some four years ago.
Thank you for the chance to do what I love doing most: sharing ideas with the garage-loft investors who have made my career a beautiful, just a cherished thing. I still get goose bumps when I view the thanks the Gold Antitrust Action Committee handed to me more than six years ago, in this 2002 note.
Ticker Trax By Thom Calandra will explore planet Earth for those few stakes that offer the prospect of excellent, in some cases cosmic, returns. It is for those who are entirely at ease with stratospheric levels of risk and potential losses. As we complete our investment research, we fully hope and expect, but cannot and do not promise, stratospheric returns.
HOLDINGS: Thom’s cosmos of holdings is listed on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. He and his family also own gold coins. He does not own any of the securities listed in this column. CLICK HERE FOR ALL THOMWATCH ARTICLES.
THOM’S STORY: Thom Calandra helped his audience find value in a quagmire of investment choices. He settled a valid complaint with the U.S. Securities & Exchange Commission in 2005. Thom co-founded CBS MarketWatch, MarketWatch.com and FT MarketWatch in Europe. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom fancied sub-$300-ounce gold before that metal became an investment rage. Thom visited bioscience companies, metals mines and scores of thin-crust pie joints across the planet in a search for profit, fashion and pizze de trippa gorgonzola. Thom's novel PABLO BY NUMBERS awaits full publication.
