Japan Now

Lately I seem to stumble upon countless conflicting news stories about Japan's economy. Some seem to think the worst is still on the way, others make believe that there will be "growth" and more good things to come. While its export dependence(and stronger yen) made Japan most susceptible to the global downturn, I feel that the Japanese people had/have the lowest expectations about near future prosperity/early retirement/ satisfaction. So even though the economic deterioration is unwanted and inconvenient, it is far from the surprise that the rest of the world seems to be experiencing.

I found this quote in a recent article( http://search.japantimes.co.jp/cgi-bin/fd20090517pb.html ) that I shines some light on today's Japan :

"Last week, during an NHK discussion about the future prospects of people who are presently 35 years old, an announcer casually dropped a statistic that said 82 percent of all 35-year-olds in Japan make ¥2 million or less a year. These are the people who are now supposed to be the core purchasers of first homes, but if we apply the prevailing if outdated wisdom that says the price you pay for a property should be no more than five times your annual salary, then most of the members of this generation can't afford anything more than ¥10 million, which perhaps would pay for a shack on the side of a mountain in Fukushima Prefecture."

Is this the Japan you imagine? 2 million yen is close to $20,000. That is not so hot considering the cost of living in urban or suburban Japan is not cheap. Add in that many Japanese work 6 days a week. I wonder if the Japan optimists have been to Japan lately? And not just in Tokyo and Kyoto...have they been to the rest of Japan lately?

GDP compared to 10 Year Yield

year-on-year percentage change in GDP (blue line) and the 10 Year Treasury Note Yield (black line) from 01/01/1980 to 01/01/2009.



chart courtesy of FRED.

Huge Volume and No Progress

the Wilshire 5000 index had the 10th highest volume day ever on Friday, yet the total trading range on the day was less than 100 points, barely one-third the longer-term average.






the big volume seem to have been centered in smaller Nasdaq stocks, which is an area of the universe I rarely tread. if anyone has an idea what's up, let me Know.

USD/JPY daily chart

chart includes .755 retracements and speedlines, and 151 day moving average. if the rate can hold above the ascending speedline and the 151 dma the next couple days then the proceeding rally couple be substantial. if not then the rate could drop to 91 or 90. I prefer the up scenario, but traders may just want follow the direction of a breakout beyond the triangle formed by the two speedlines.

update: same chart but more time covered:



notice how the descending speedline backs up to the high of last August.

market oddity -- EFA/SPY compared to EUR/USD

the hlc bars are EFA relative to SPY. the line represents the EUR/USD exchange rate. notice the correlation breakdown this morning.



update: this version is even better.

Today in Trend & Value -- LQD, LQD-IEF, 10 Year Note, T-Bond Futures

Bonds are the topic in this morning's Trend & Value Letter (mailed out about an hour ago). at the end of the report I also give brief updates on our price targets for Gold, EUR/USD, USD/JPY, the S&P 500 and the Nasdaq 100. the report was on the shorter side, coming in at four pages. below is an image of the first page. click the image to view full sized.

"we just need that cash now"

via Lew Rockwell:


US To Trade Gold Reserves For Cash Through Cash4Gold.com

Viteri gettin' jiggy -- exclusive video

Trend & Value has obtained exclusive footage of Ecuadorian Finance Minister Maria Elsa Viteri shakin' it on the dance floor this weekend. she's happy with the bond buyback no doubt...

triumph 666 -- search of the day

On Saturday someone googled <triumph 666> and arrived at this post I wrote about about gold a while back. but I noticed that the top result of that search was for a flickr photo called 'triumph 666'



nice pic!

(edit: there is supposed to be a photo on this post but it is not loading for some reason. click here to view the photo on flickr.)

Using your parabolic mirror -- part one

Doug demonstrates how to use a parabolic mirror.

Inverse Head & Shoulders !!!

I have no prediction to make about the resolution of this chart. I simply notice its resemblance to the longer term pattern in gold. it is essentially the same formation. perhaps there is a lesson here for those who obsess over chart patterns when is convenient for them.

my response to an email I received this morning

some day he will be right about his long standing 1650 number. whether that is now or not remains to be seen.

Martin "It's Just Time (Served)" Armstrong seems like an interesting character, but so many people are hyping his cycleisms these days that I am suspicious. unfortunately, the 'wechselwirkung' inherent in human activities makes it difficult for prominent predictions to play out. predicting what will happen is an event itself which influences the historical cycle. (cf. Popper and so on)

for example, if anyone but an obscure blogger had predicted that the S&P would hit 666 months before it probably would not have happened.

but, as I see it, a breakout soon and a run to 1600ish is certainly doable. it just doesn't happen to be what I think will happen. I would take it more seriously if Sinclair wasn't spraying everyone with it.

furthermore, if Sinclair actually took it seriously you would think he would keep mum about it. if it doesn't happen it could well be because he spoiled it.

you don't fuck with the Space/Time continuum like that.

EUR/USD -- Daily Chart

I think the wave crowd calls today 'Phi Day'. I'll play along.

the Euro has held above the 233 day exponential moving average for 21 days now. a sure sign that the Fibonacci Sequence rules the World.

Livestock Prices -- Monthly Chart of $GVX

incontrovertible proof that hyperinflation will take hold before the year is out.

A Different Angle on the Yen

A few weeks back we took a look at the Japanese Yen using the symbol $XJY compared to various currencies. To keep the focus on the yen, we kept $XJY as the numerator and the other symbols as our denominator. Here is a look at Yen/Gold:

The archy thing from this February to June looks a lot like the archy thing from the same time last year. Thats not to say that we'll have a superspike this autumn like last autumn, but a run up to at least the 200 ma at .12 or higher seems possible.

Looking at the weekly chart below we can see that the 2007 pattern was similar to the 2006 pattern. Maybe 2009 will mirror 2008 for a little while longer and on a slightly smaller scale? I would be surprised if the rate made it to .15 or above, although only a few years ago "above" was the norm.

Spot Gold -- Not Just a Simple Trendline

that trendline on Gold (see yesterday's post) isn't as simple as it seems. fiddling with the chart this afternoon I discover that it is actually the .618 speedline of the range between 865 and 990. see the diagonal line on the following chart.



now on the longer-term chart see where the same .618 speedline extends backward.



the more I play around with speedlines - whether Plastic or Golden - the more convinced I become that so-called 'trendlines' are meaningless in themselves, and only proportional speedlines have any significance. or perhaps the only simple trendlines that are significant are those that coincide with speedlines.

more on this later, either here on the blog, or in the newsletter.

update: that line is also the .618 speedline of the rally from 680 to 1007, because, as subscribers have been aware for a while, the rally from 865 to 990 had exact same angle of ascent as the previous rally.

Morning Letter Published at Biiwii.com

this morning's Trend & Value Letter is available for public consumption at Biiwii's News & Analysis page.

here is the direct link to the PDF:

Trend and Value Letter 06_17_2009

but I recommend checking out the main page to which it was posted. . .

http://www.biiwii.com/analysis.htm

thanks Gary.

(oh and an image of the first page of the report is below)

pre-nap post -- Spot Gold Trendline

actually I have almost stopped using simple trendlines (Plastic speedlines are the shit) but this one speaks for itself.

Short Chinese Car Makers

Otto will love this one. from 'Investorazzi' (a site on that link widget at the bottom of the page):

Mark Mobius Big Fan Of Chinese Automakers

when Moby is back to spinning records instead of 'managing' $25 billion in assets then I might take a look at buying interest in a Chinese car company.

morning trendline -- NZD/CAD

lookin' good.



but of course subscribers to the newsletter have Known about the virtues of the New Zealand Dollar since mid-March. it has been slow going against CAD, but it looks like something might be brewing now.

dow gold ratio june 2009 -- search of the day

at the time of this writing, top result on that search was for this:

Dow/Gold Ratio Hits 7; Multi Decade Low | Charting Stocks - [ Tłumaczenie strony ]
In our 2009 forecast, we mentioned that the Dow Jones/Gold ratio would likely hit 5 ... US Money Supply; Updated Chart Since Thursday, June 11, 2009 7:54 ...
www.chartingstocks.net/2009/03/dowgold-ratio-hits-7-a-new-multi-decade-low/ -

either the commenters on that post are shills or that site is home to one of the dumbest audiences on the circuit.

here is my post that turned up second on that search:

Tuesday, February 24, 2009
Dow-Gold Ratio

on-going analysis of the Dow-Gold ratio and much more in the Trend & Value Letter.

Norwegian Krone Chart (USD/NOK)

(click to view fullsize)

now that is a (potential) inverse head and shoulders pattern. pretty neat how the .57 retracement line matches up with the high from a few weeks ago. the .755 retracement right at 6.666! the .755 speedline is of most interest to us though.

today's newsletter -- More on the Dow-Gold Ratio, plus UNG, HNU.to and HND.to

in this morning's Trend & Value Letter (mailed to subscribers about 5:30 AM) I wrote more about the Dow-Gold ratio and gave a very tentative outline of where it could be headed the next several months. additionally there is a short section on Natural Gas and the ETFs -- UNG, HNU.TO, and HND.TO. I conclude with a few thoughts on Currencies and Metals.

below is an image of page five (of six). why page five? well, of all the pages it has the least amount of information.

list of fractions -- search of the day

got a hit to my fractions list post from this search:

list of fractions

the most notable result of that search was,

List all fractions between 2/3 and 1 1/2? - Yahoo! Answers
My daughter is working on advance math homework. …
answers.yahoo.com/question/index?qid=20081023180607AA3HBtM -

so this chick, 'Sherri H' goes on Yahoo!, the White Castle of the Internet, and asks this question:

List all fractions between 2/3 and 1 1/2?

My daughter is working on advance math homework. And the question in list all fractions between 2/3 and 1 1/2. Thank you.

and amazingly several people actually respond. I'll spare you the responses because, well, they are all pretty much what you would have said if you'd bothered to respond, if you weren't all too busy reading investment blogs.

advance math.............. how many dots is that?.

Millennialism in the 13th Century

great post this morning by Gary as a follow up of sorts to my last post:

http://biiwii.blogspot.com/2009/06/nftrh37-out-now-long-post-to-purge.html

and also this morning I got a couple more notes from the esteemed reader (and I use the word with upmost sincerity -- the fellow is extremely bright and has been very supportive of me - and Gary - for a long time) who I quoted in the last post:

On Sun, Jun 14, 2009 at 7:46 AM, [redacted] wrote:
>
> And I am certainly not criticizing your or Gary's work. Far from it. I
> devour it every day, which can not be said for my reading of Sinclair, but I
> get periodic email notices from him, as a former shareholder in TRE. I just
> was looking for what your issue was with Buckler's misuse of the TA pattern.
> Whatever you choose to name that pattern, does it not depict two attempts to
> break through the $1000, a resistance level everyone will concede (all round
> numbers like that are resistance levels), turned back buy selling?
> And BTW $940 is anything but a loss to those who got in at $450. The long
> term price of gold curve from 2000 speaks for itself. Playing the bounce
> since November was a good play for new money, but would be a capital gains
> disaster for long term holders who were not shaken out by the down draft in
> October or by any other correction along the way, and there have been some
> horrifying corrections, notably 2006. For those who believe in the logic
> that you can't print gold, and the chickens of running mega deficits in the
> federal budget have to come home to roost, the grip on gold in unshakable.
> The worst that can happen is that you end up with gold. Not bad.
>
> On Sun, Jun 14, 2009 at 8:16 AM, [redacted] wrote:
>>
>> Remember, my email to you contained two sincere questions: "First re the
>> Buckler "reverse head and shoulders," the question was, "Is that what the
>> bitch is about?"; And second re Sinclair the question was, "Is this
>> completely off the wall?" I realize that Buckler has misused the standard TA
>> formation to emphasize a possible upside breakout. And I realize that
>> Sinclair get his notions from the tea leaves of having been a gold trader
>> for 50 years. Truthfully, these are in themselves not idiotic qualifications
>> for expertise in the field.
>> Both of them are talking about the gold $1000 level and the market's
>> attempts to break through that level. It is clear in the divine light of
>> reason that the market has already made 2 attempts to break through the
>> resistance at the $1000 level. Is it likely that it will never penetrate
>> that resistance, given the obama 2 Trillion per month deficit spending
>> program already undertaken so far?
>>

first off, I kinda take issue with this statement: "Whatever you choose to name that pattern, does it not depict two attempts to break through the $1000, a resistance level everyone will concede (all round numbers like that are resistance levels), turned back buy selling?"

well... if you are just looking at the spot price, perhaps, though even there it depends on what basis you are looking at. basis PM Fix, Gold fixed above $1000 three days in a row in March 2008 and has since been repelled on three different occasions in the 980s.

basis spot or near month futures, the metal hit a high of 1033.90 in March of '08, then hit 989.60 that July, then hit 1004.90 this February, and the latest high came in at 990.30

but then there is one more way of analyzing Gold, which is to use a distant futures contract. the price movements of a far out contract take into account the 'real' return of Gold since it prices in prevailing interest rates. here is a chart of the December 2009 Comex contract:



so far here all I see is a series of declining tops (or higher lows since we are looking at it upsidedown). the top price for GCZ09 in March '08 was 1060, then there was 1028, then 1015, and most recently 993.60.

now that Dec '09 chart could be interpreted as bullish, no doubt, but a head n shoulders it ain't. if the series of higher lows is interrupted then the bull case will gain more validity, but for the moment it shows me the market's propensity to accept incrementally fewer Dollars per ounce of Gold on each occasion.

as I have said over and over, I believe the Gold/Dollar exchange rate is in a 'flat'. I have given a downside target for Gold (666), but I don't pretend to Know for sure that the price will hit my target or even come close for that matter. what I do Know is that I will start buying Gold again when voices as equally shrill as Mr Sinclair's start proclaiming that the 'charts' say Gold is heading for 450 or whatever.

as far as the end game goes, I am more bullish on Gold than Sinclair and probably most of the other loud voices in the Gold Community. but this here is not the end game (in my opinion) or even the 7th Inning Stretch. this is like inning 3 or 4 of one of the greatest games ever played.

in other words we are in the midst of Wave Two of a massive Five Wave super-duper bull market in Gold (paper asset bear market).

hold yer 450 Gold tight as you can and enjoy the show.

Gary Biiwii -- head n shoulders above the Crowd

got a note from a reader today:

>
> Hey Kyle,
> The TAs, notably Gary, badmouth and even laugh at the "reverse head and
> shoulders pattern" noted first and foremost by Bill Buckler of The
> Privateer. I assume that the basis for the complaint from the TAs is that a
> reverse H&S pattern is a bottom formation, not the predictor of an upside
> breakout. Is that what the bitch is about?
> Terminology aside, whatever you want to call it, Sinclair says gold will
> make 3 attempts at $1000, and on the 3rd it will break through never to look
> back. It has already made 2. He suggests that the final reckoning at this
> level will occur by the end of this month. That means a permanent break
> through $1000 level. Thereafter $1000 will be support, not resistance.
> Is this completely off the wall? Or what, I mean WTF?!
> Thanks,

first off, in the terminological dispute, I take Gary's side. in fact we both independently made this point the last couple weeks. I in the newsletter and he on his blog. (chronologically he beat me to it, but I didn't realize that until later...)

is the terminology important? depends how you look at it. to me it is just kind of comical that Buckler, et al are using an erroneous term. kind of like if someone who presents himself as musical theorist were to constantly call a work a fugue, when it is actually a sonnet. or a football commentator calling something a nickel defense when it's actually a dime. I am sure we have all cringed in embarrassment when a supposed authority in a discipline reveals his ignorance of his subject by employing erroneous terminology. as I said, it's comical, no more, no less.

that aside, Jim Sinclair and the other prominent voices of the 'Gold Community' have had a pretty pathetic track record forecasting the Gold/Dollar exchange rate. why people still listen to them is beyond me. it reminds me of a blog post I wrote last August, entitled Jim Sinclair, Oil, and a look at USO. here's an excerpt:

I very rarely read Gold Guru Jim Sinclair's site (in fact I rarely read anything relating to current opinion -- Books, Not Blogs!) but I've found myself there twice in the last two days. I must have been interested in seeing how the perma-bull camp's been coping with the recent price collapse. especially since I remember him saying on a radio show back in April that gold would bottom the first week of May. he musta thought he made a pretty good call there for a while!

for one thing, I don't Know how anyone could pick dates for a bottom or a top. I've tried that before and the results proved pretty embarrassing. and then there was the awfully widespread consensus, at least among the public commentators on the net, that 850 was clearly and obviously the ultimate low. how convenient! the majority has never been and never will be cognizant of price extremes and trend shifts. impossible. that's just a basic principle in the Phenomenology of Finance. I didn't make it up, it's been recognised for centuries. go talk to Baron Rothschild, or Dick Watts, or Jesse Livermore, or Mr Baruch, or Mr Neill, or Harry Browne.

but just because Sinclair has hardly ever been right in the past (aside from his long-term bullishness on Gold, which I have no beef with), doesn't mean that he will be wrong about this too. past performance not necessarily indicative of future results and all that.

all I Know is that people who have acted on Gary's analysis since I became acquainted with him could have made a good deal of money. can the same be said of Jim Sinclair? I doubt it.

welcome to the post-guru era.

update 6/15: okay no more terminology for now on at Trend & Value. from the comments section:

Lucas,

'terminological' was already beyond the boundaries of my vocabulary, but, since I get the impression the post was about accurate terminology you might want to reconsider 'call a work a fugue, when it is actually a sonnet.' A Sonnet is a literary form, but I'd give full and due praise for Sonata, or even a tiny Sonatina.

Great blog by the way.

Timothy

A000930 -- The Middle Sequence

as a follow up to this morning's post, I am pleased to inform you that Neil Sloane at ATT has added this comment to sequence A000930*:

Might be called the Middle Sequence, since it is a cross between the Fibonacci sequence A000045 and the Padovan sequence A000931. - Kyle Ledbetter Lucas, Jun 13 2009

thanks Dr Sloane!


--------
* 1, 1, 1, 2, 3, 4, 6, 9, 13, 19, 28, 41, 60, 88, 129, 189, 277, 406, 595, 872, 1278, 1873, 2745, 4023, 5896, 8641, 12664, 18560, 27201, 39865, 58425, 85626, 125491, 183916, 269542, 395033, 578949, 848491

13 yr market cycle -- Search of the Day

someone from California just found my 666 post via this search:

13 yr market cycle

at the time of this writing the top result on the search was this:


13-year-old boy killed in cycle accident. - Harborough Mail ...
13-year-old boy killed in cycle accident. - A 13-YEAR-OLD was killed when his bicycle was involved in an ... Harborough Mail (Market Harborough, England) ...
www.encyclopedia.com/doc/1G1-183020455.html

just think if the googler had clicked the "I'm Feeling Lucky" button. . .

in any case, if you are reading this post in search of info on 13 year cycles in the Stock Market, here is the definitive word on the subject:

Saturday, November 8, 2008
666 - S&P 500 and the 13 Year Cycle

I also noticed that today is the 13th day of the 6th month of the year of the 9th year of the decade (or century even). bored as I am here on a Friday night/Saturday morning, since here in Quito it is "Ley seca", dry weekend because there is some obscure election on Sunday, effectively shutting down all the night life, I thought to search for 6 9 13 at The On-Line Encyclopedia of Integer Sequences to see if anything cool came up. first result was for this sequence:

1, 1, 1, 2, 3, 4, 6, 9, 13, 19, 28, 41, 60, 88, 129, 189, 277, 406, 595, 872, 1278, 1873, 2745, 4023, 5896, 8641, 12664, 18560, 27201, 39865, 58425, 85626, 125491, 183916, 269542, 395033, 578949, 848491

then I realized that I had seen this one before. the formula is a(n) = a(n-1) + a(n-3), so 4 + 9 = 13 and then 13 + 6 = 19 and so on. like a cross between the Fibonacci Sequence (a(n) = a(n-1) + a(n-2)) and the Padovan Sequence (a(n) = a(n-2) + a(n-3)).

the limiting ratio for this sequence is 1.46557....

that's pretty much right in the middle of the Plastic Number (1.32471) and the Golden Number (1.618). and since, as far as I can tell, this sequence and its limiting ratio are unnamed, I propose that we just call them the Middle Sequence and the Middle Number.

I have no idea yet if this has any numerological significance for markets analysis, but I'll let you Know if I turn up anything.

Today's Newsletter Features Nasdaq Analysis

this morning's Trend & Value Letter is devoted to the Nasdaq 100. as a public service I have made an image of the first page available to the public below. click the image to view full size.

Page One of this morning's Trend & Value Letter

below is an image of the first page of this morning's newsletter. the topic of the day is Wal*Mart (WMT). there is some actual analysis and a price target on the subsequent pages on the report. if you are interested in that type of thing subscribe with the button at the top of the blog. the button doesn't bite, it just takes yer money.


(click image to view full size)

oh, and here is a long-term chart of WMT that I omitted from the newsletter. subscribers may find this helpful to put some of the analysis in context.

ECU 2 - 0 ARG

eom

investment letters using equivolume charts -- Search of the Day

a couple hours ago someone in the UK arrived to Trend & Value via this query:

investment letters using equivolume charts

well, you came to the right place, my good chap. I analyze securities using equivolume graphs practically everyday in the Trend & Value Letter.

the newsletter is mailed out to subscribers as PDF attachment every business day. sign up with the payment button at the top of the blog or email me to request a free sample issue. (I will send you tomorrow morning's letter. I haven't written yet and I don't Know that there will be any equivolume charts included, but I do Know that the main topic will be the Dow-Gold ratio.*)

trendandvalue [at] gmail [dot] com



---------
*it will be something of a follow up to this blog post:

Tuesday, February 24, 2009
Dow-Gold Ratio

5 Minute Charts -- Sector SPDRs (XLB, XLV, XLP, XLY, XLE, XLF, XLI, XLK, XLU)

the charts below show the movements of the nine 'Sector Select SPDR' ETFs over the past few weeks. while the overall market (eg S&P 500) continues to hover near its highs, I see that only one of the sector funds here has touched a new high this week: XLK (Technology).

In the newsletter we have been monitoring the situation in the Stock Markt very closely the last couple weeks as the S&P has come very near my preferred price target.* for what it's worth, the Nasdaq has exceeded my target zone somewhat, the Nikkei is right in the heart of its target zone, and the Wilshire 5000 poked a whole 14 points above my target of 9750 last week.

So the question now is whether the targets I've come up with the last couple months prove too conservative or whether I have gauged the conditions of the market accurately (again). with this in mind I am monitoring all kinds of different indicators and ratios.

tracking the positions of the various SPDR ETFs should prove helpful in this regard. for the moment it looks like we have a hung jury, so we await another round of deliberation.


--------
* the 05/04/09 letter in which I detail the S&P target is actually available to the public at this URL:

http://sites.google.com/site/trendandvalue/old-reports

(I have started to put some older letters that I have referenced back to on that page. you are welcome to check back to the page occasionally for new additions.)

EUR/USD Rate of Change (ROC) on 3 Hour Chart

I have had my eye on this one for a while:



pretty good indication that the uptrend has broken down. now we wait to see how much follow through the Dollar has in it.

Equivolume Chart of GLD (Gold Bullion ETF)

a chart from this morning's newsletter, on which I have included my latest wave count.



previously, I was trying to find an ABC or seven wave pattern in last winter's rally and then thinking that more recent fluctuations were part of a new set of bearish waves. but it seems pretty clear to me now that it all can be considered a single ABC correction.

as for the scenario penciled in, yes, I do think something along those lines is possible. but I also recognise that my scenarios rarely play out with any precision. only when a market starts to follow along with my conception do I start to take the scenarios seriously.

20 years

While we're being briefly reminded that the Chinese tanks rolled into Tiananmen Square 20 years ago to break up peaceful demonstrations for change, I wonder if the media/masses will/can connect this group to the gang that buys all this American paper-debt? Has our perception of China's leadership changed, has the CCP changed, or are we finding compromises with reality?

Panic Ratio ($VIX:$IRX)

it has been a while since I felt the need to monitor this great indicator, but mentioned it in this morning's newsletter, so I figured I'd post the chart to the blog too.

Fly Now, Pay Later -

- 6 Months No Payments, No Interest

car repossessed? don't worry! EveryOne is flying these days anyways.