Thursday, July 12, 2007

BUY Revlon For A Potential Killer Move!!

Revlon is a BUY in the $1.19 - $1.25 area, with a very close stop at $1.15 on a close only.


Gander Mountain has once again come through in a pinch for us.

I continue to look for the stock to challenge $22 over the next 12 months.
However on a short term basis is you want to tale the 10% plus profit and buy back later after the market corrects, there is nothing wrong with that either.

I do stress however that this is for short term traders and those who are in it for the long term should continue to hold the position.

Sugar - Get Ready to Ride

Sugar appears to have finally put in a low of some substance.

The current wedge that is forming on the daily chart indicates that it wants
to move lower on an intermediate term basis.

We will be buyers on the weakness in the 8.90 to 9.20 area!

Corn has Rewarded Us Well

The question remains.... Is the Decline in Corn Over?.... The Answer is NO!!

However, it is very close to the point of covering our shorts. We have some massive profits and another 8-10 cent rally and we will be forced to cover, so keep your stops tight.

The True Measure Of Inflation - A Little Know Secret

Keep this information in your battle chest as there are very few who know what I am about to share with you.


Don't waste your time with Core PPI or Core CPI or PPI Ex this and that and the other.
It is useless!!

The true measure of pricing pressures is the change and growth in the monetary base.
This is an all encompassing piece of data and covers everything you could possibly need to know
about the liquidity of the economy.

So it is as simple as this. Compare the Monetary Base of the Last 2 Weeks to the most recent 2 Weeks and multiply by 26. This is one stat. Now here is the most reliable and the toughest.
Take the current Monetary Base and compare it to the Monetary Base from a year ago and Viola, you have the inflation rate. You will be the envy of economists and wall street when you see how accurate you are with these numbers, but keep the secret to yourself.

By the Way, the current reading of the monetary base is a very tame 1.73% yearly inflation rate, so all the doomsday advocates who think the inflation rate is going to spiral out of control are way off the mark and you are smart enough to know it!! So use it to your advantage and know that once this market corrects on an intermediate term basis and the sky is falling crowd is out in force, then it will be time to purchase quality equities and quality leaps.

Caution Continues to Be The Word

The Moving Average on the Three Line Break sentiment chart has clearly rolled over and we all know what follows such an event.

As hard as it may seem right now, you must resist the temptation to increase your equity exposure. If anything a reduction in equities is the most prudent course.

Weaker and Weaker Equities Become

There is much fanfare about the huge rally today, as the markets posted their biggest one day rally in over 4 years.

Now had this come after a prolonged contraction in prices then I would be very excited about the prospects. The fact remains however that equities are in a very dangerous position on the intermediate term and the longer it takes to move lower and get rid of the many intermediate term excesses then the more painful the decline will become.

The chart below shows yet another negative divergence in the equity markets with the S&P 500 moving to a new high, but the cumulative Advance to Declines does not confirm.

The most telling momentum picture that shows the weakness of this market is the Summation Index, which has been making lower highs for better than a year now as the market continues higher. The reason I say this is the most telling sign is the fact that this anomaly is ALWAYS rectified and this time is no different.

Keep your hedge in place and do not get sucked into this blow off rally, it will only bring your portfolio pain in the near future.

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