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| Monday Sep 11, 2006
Remembering 9/11Taipan Group's Dynamic Market AlertBy J. Christoph Amberger-- Remembering 9/11 On June 30, 2006, at 11:41 AM EST, a one-page news release from a small Texas company put the oil industry on notice. That bunch of good ‘ol boys let it fly that they teamed up with China’s $23 billion oil monopoly. --------------------------
Remembering 9/11by J. Christoph Amberger Five years ago to the day, we watched horrified as well-organized, well-financed psychopaths committed an act of unprecedented brutality against American civilians going about their daily business. That morning, more Americans were killed than have died in the almost five years of hot war in Afghanistan and Iraq combined. But this war had been declared a decade ago or more. It was not the first act of brutal aggression against the American and Western way of life. But in our limited vision, we had allowed our politicians to declare terrorism a matter for the justice system -- not all that much different, in principle, from cow tipping and purse snatching. This is at core of the asymmetrical war we are entangled in. It is not cruise missiles against improvised explosive devices; it is feral disregard for life, law and rules against human rights and the rule of law. Unfortunately, we do not seem to learn from our failures. In recent months, our intelligence-gathering capabilities have been crippled by the same emphasis on criminalizing terror. Members of a previous administration have even succeeded on bullying the docudrama of a major broadcasting network into self-censoring passages that depict their handling of the brewing crisis in a less-than-flattering way. Watching campaign spots on television is like turning over a rock to have the emerging creepy crawlies smile at you, bragging about how they have “stood up” to President Bush. I can’t help but think how different the world would be had they done that standing up six years earlier to a different president. What does this mean to us as investors? With every intelligence-gathering tool our politicians eliminate, the threat of a new terrorist attack rises incrementally. But what is worse for us, the perceived risk rises. And in the markets, perceived risk is more powerful than the actual crisis. We see economic factors align in favor of a sustained rally of the U.S. stock indices this year and next year. But knowing the short memories of our politicians and their electorate, I advise to account for the downside… with strategic long-term puts on the major indices. -- We’ve got something new for loyal Dynamic Market Alert readers: This Monday, we launched a new video-on-demand financial news show made just for you and yours to view free of charge at www.taipanfinancialnews.com. Our 15-minute show is anchored by Sandy Franks and this week features blue-chip expert Todd Schoenberger with his turnaround story of the decade, resources analyst S.R. Nunnally with her take on who’s going to make the real money on the mega oil find in the Gulf of Mexico, and well, yours truly will also be saying a thing or two. Just check it out at www.taipanfinancialnews.com and let us know what you think. (Cut us some slack, though: This is our first “dry run”... our Weekly Edition will soon be supplemented by daily and intra-day interviews, commentary and analyses from your favorite gurus. --”The mega-run for commodities has run its course,’’ said Stephen Roach, chief global economist at Morgan Stanley, in an interview last week. We have been saying pretty much the same for months: The speculative froth that has powered asset bubbles in real estate, emerging markets, and resources, has been popping worldwide since last February. Oil fell into the $64 per barrel vicinity today. Brent crude dipped close to $63. Decreasing growth rate of consumption has popped up here and there to explain the decline. (OPEC expects North American oil consumption to increase by just 90,000 barrels per day (b/d) in 2006. In both 2005 and 2004 consumption had increased 230,000 b/d and 520,000 b/d, respectively.) So have higher inventories. And the current event guys like to look at “progress” in talks with Iran to explain it. Applying the basic laws of our Dynamic Market Theory, I’d be tempted to blame it on the lack of realistic upside potential. Money, after all, flows where it can create the largest profits in the shortest amount of time with the least possible downside risk. And oil at this point has more downside risk than upward potential. But every dollar shed is a potential dollar in profits when the tide turns. And when it comes to oil, the speculative mood can turn on a dime... on terrorist activity, on regional conflicts, on natural catastrophes. I think it’s too early to start enjoying prospects of $50 barrel oil again -- we remain committed to our energy plays in our portfolios until further notice. -- I never know how to calculate losses in gold prices these days: Since most gold bugs like to pick all-time highs from early 1980 as their true value peg, did they lose $150 per ounce since last Friday or just $35? Spot gold prices crashed through the $600 line for the second time in three months, dipping to almost $584. Speculators who hitched their cart to the notion that world commerce would be conducted in pieces o’ eights again and bought at gold’s 26-year high of $732 an ounce in mid-May are out over $150 an ounce -- or $600 in “true value” currency. Yikes. Talk about safe haven and “hedge against rising inflation.” You’d have to live in Zimbabwe to have the kind of inflation that would make it worth bunkering gold. Every drop below $600 per ounce will increase the perceived risk of holding this particular asset. We’ve had two of them in three months. Which in turn leads me to believe that the gold bubble is indeed done for. Our speculative upside for the metal remains around $650, although I believe we will be seeing levels below $550 before the year is over. -- If you’re ever tempted to bewail the sad state of the American educational system, take comfort in the fact that our neighbors to the north apparently don’t have much to brag about, either: An Ipsos-Reid poll found that 22% of Canadians, and 26% of young Canadians, agree with the conspiracy theory that the events of Sept. 11, “including the thousands of American citizens who lost their lives on that day, were actually orchestrated by a group of highly influential Americans and others as part of a wider global conspiracy to profit from and gain power and who are actually protecting Osama Bin Laden from being captured.” A whopping 32% of Quebecois agreed with the statement. If you find a company that’s been doubling revenue over the last year, carries no debt, with plenty of upside momentum in a red-hot sector, like oil drilling, you’d buy it. Right? -- We’ve been experimenting with some new trading patterns at Extreme Volatility Speculator. We noticed, for example, that after announcing earnings in July 2006, Safeway (SWY) gapped up about 9%. Each day of the run-up from 28, SWY closed above the 10-day MA. In fact, until Aug 30 it traded entirely above that line. On Aug 30, the 10-day MA was touched intra-day, a hammer was formed, and SWY opened the next day almost down to the 20-day MA, only to recover and again close above the 10. The next two days gave us the apex of the run, with Wednesday’s gravestone doji confirming the beginning of the end. True to form, Thursday opened below the 10-day MA, failed at that line, then fell on heavy volume to breach the 20-day MA and close there. Today’s action is forming another doji at the 20-day MA on muted volume. There’s also a price/volume divergence. The theory is the 20-day MA will also fail, dropping SWY to the 50-day MA at $28. A drop to $28.50 values the October 30 puts at $1.50 for a 30% gain. Risk takers could hold for a continued drop to $26. ---------------------------- Earnings Announcements for Monday, September 12, 2006 Best Buy Company Inc, Energy Conversion Devices, Fleetwood Enterprises Ltd, Goldman Sachs, and Pall Corporation are releasing earnings. Brought to you by your FREE American Capitalist. Sign up here.
Unlock Dates for September 2006 9/20/06 – Clayton Holdings Inc is unlocking 7.5 million shares. Keep an eye on Tim Hortons Inc. and Himax Technologies for significant sell-offs. You may want to short shares or buy puts on these two positions. Brought to you by Extreme Volatility Speculator Brought to you by GRESSOR.com
---------------------------- Quote of the Day “People were playing gold up in the past two months on the basis of oil, and now it’s on the way down.” - Mark Pervan, research head at Daiwa Securities SMBC, Sept. 11, 2006
P.S. How a Colorado Man Turned a $7 Mistake into $100 Million Fortune!
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