Showing posts with label Frank Barbera. Show all posts
Showing posts with label Frank Barbera. Show all posts

Thursday, January 24, 2008

Counter-Trend Rally

Counter-Trend RallySocialTwist Tell-a-Friend
Frank Barbera

Primary Wave (A) to the downside of a developing cyclical bear market that is likely bottomed over the last two days. From here, we expect a sizable counter-trend rally in stocks moving the S&P back up into the 1400 zone, with the daily news flow improving over the next few weeks taking away some of the negative gloom overhanging the credit crisis. For a time in the weeks ahead, it may well appear as though the skies have cleared and the sun is out shining once again in the land of financial markets.

This is the job of Wave B, to move the herd back to the center of the boat. That said, stocks have been, and are very likely to remain in bear market mode for some time, even if one or two market averages were to record a matching or token new all time high, unlikely, but not impossible. Commodities look toppy and are expected to weaken as the US and the world deals with the deflationary trend now emerging in the global economy...

Wednesday, December 19, 2007

Housing, US Dollar, Gold, PPI and Inflation

Housing, US Dollar, Gold, PPI and InflationSocialTwist Tell-a-Friend
Frank Barbera

The current downturn in Housing, the worst since the Great Depression has along way to run, with home prices likely to experience downside pressure well into 2009. Overall, a 30% to 40% price decline in high end homes is needed to bring prices back into line with incomes and clear the market. At the same time, the mortgage loan problem, goes far beyond Sub-Prime and will likely end up running into the Trillions of dollars, with the best estimates between2 to 3 Trillion dollars of defaulting bad paper. That's more than enough downside risk in the credit market to bring the US Financial System to the tip of a very deep solvency crisis, where several large institutions will probably fold. As a result, we continue to see the large scale credit contraction now underway deepening throughout 2008 with the Federal Reserve likely forced to continue to lower ratings despite a stagflationary economic condition, one in which yr/yr PPI is now running at the highest levels seen since 1981. The US Dollar is likely heading for a major currency crisis, with a devaluation likely in the year ahead. Gulf State PetroDollar currencies have now moved well off their pegs, as has the Chinese Yuan and HK Dollar. A currency crisis of epic proportions lies ahead, and with it will come soaring long term rates and crashing US Stock Market. For the S&P, a collapse back down toward the 2002-2003 lows near 800 is very likely the next primary direction, with all sectors of the equity market including Gold Stocks vulnerable to this decline. Post a crash type outcome, Gold Stocks are very likely to become the next great capital market mania, as broad scale monetization will be needed to reinflate both the capital markets and the US economy, which is already in a recession. The final outcome, over the next few years,will be more money printing, more currency debasement and in the end, most likely runaway inflation which will help Uncle Sam eliminated his bad debts. Gold and Precious Metals will be one of the few investments able to protect valuable savings and hard earned capital during this time, and we see the price of Gold heading for $10,000 or higher in the next 5 to 7 years, with price of Silver likely to move toward $500 to $1,000 per ounce. The upside explosion in Precious Metals following a serious banking collapse will leave onlookers with a truly once in a lifetime, -- jaw dropping experience, once the metals go higher, they will be going, going gone, right out of the park, as all central banks will also need to print money to keep currency relationships in some degree of balance and protect export advantages. Today, the world is confronted with a camouflaged 'fixed' global currency system masquerading as thematically free floating currency system, held together by currency derivatives and unchecked financial leveraging. The current death of high end Wall Street Finance signals the end of the leveraged speculating era and financial engineering.As the world lurches toward a truly floating exchange rate mechanism, currency volatility will infect consumer prices for basic manufactured goods which in time, will morbidly begin moving around as if tradeable using RSI and that climate, the only asset one will want to truly own, will be precious metals. It is very regrettable that the excess of the last decade is likely to create these kinds of extreme economic conditions, and probably at no time in decades, has the average individual been at greater economic risk.The entire universe of paper money is sure to continue debasing against the universe of scarce and depleting commodities in a theme that will likely continue to play out over the next 10 to 15 years, while I hope I am dead wrong,I fear we are heading into very trying times...

Monday, June 11, 2007

Outlook on Gold, US & Global Equities

Outlook on Gold, US & Global EquitiesSocialTwist Tell-a-Friend
Frank Barbera

Our medium term Outlook on Gold is now bearish, and we are bearish on Gold Stocks. Over the next few months, we expect Gold to fall below $550 to the low $500 area, where another long term bottom should develop.

The US and Global Equity markets are also completing major topping patterns, but should manage to hold up on the current rally for another 5 to 7 days. The S&P has a near term target of 1525-1530, and massive resistance at 1540-1550. We believe that within a few short weeks, the Chinese Shanghai Composite Index will begin an extended, multi-week collapse on the order of 40% or more. That decline, when it unfolds should trigger heavy selling in US Cyclical stocks, and in stock markets around the world, with Brazil, Mexico and Germany especially over-extended. The S&P could tumble initally on the order of 10 to 12%, bringing the index back down to the vicinity of the mid-March lows near 1360, possibly somewhat lower. Readers are advised to assume maximum defensive positions and seek the safety of cash.

Friday, March 2, 2007

Flash Update on SPX & Gold

Flash Update on SPX & GoldSocialTwist Tell-a-Friend
Frank Barbera

We are issuing this brief flash update, as we see a great of evidence continuing to mount that both the S&P and the Gold market are near an important short term low. In the case of the S&P 500, prices spiked down violently yesterday morning marginally taking out the prior panic low. Importantly, prices then recovered off the token new low leaving a distinct positive divergence on the 5 minute chart. The subsequent recovery was strong enough to lift prices back up across the range testing some important price resistance at 1410.00. At this point in time, we still cannot altogether rule out a final retest of the 1390 level, however, the prospect of such a retest appears to be fading fast with the market trying to engineer a rally back into positive territory. Even if, on the long shot chance, that prices did retest 1390 again, the odds at this point favor a bottoming sequence and a lead into a powerful recovery rally. In our view, any move above yesterday’s highs by the S&P 500 at 1409.50 should trigger a very large stock market rally, which would complete this corrective bottom. Bottom Line for the stock market: prices have been basing, this is most likely positive action, and a break above 1410 should unleash the bull once again.

Turning to Gold prices, we just witness a similar style waterfall panic in gold this morning, very much along the lines of the sharp stabbing move down that was seen in the S&P yesterday AM. April Gold is presently fully oversold on both the Short Hourly RSI – 9 Hours – at +18.78, and the Long Hourly – 20 Hours, at +30.72 (where +32 is the oversold benchmark. In hour view, while Gold is not yet fully stable, the odds are very high that prices bottom in this $645 to $650 range and begin a rally back up toward $670.

Friday, February 9, 2007

Frank Barbera at Large (Part II of II)

Frank Barbera at Large (Part II of II)SocialTwist Tell-a-Friend
Continued from February 7, 2007

Fari: OK Frank, you also follow Gold, and other metals, what do you like in that area?

Farnk: Well, basically everything, … I am kidding, but I like what I see happening in all the metals, especially Gold, where a move over $665 on nearby April Gold would be bullish as all get out. Near term support for Gold is shaping up nicely at $648 to $650. I like GLD, and I like the Gold Stocks. Among the large cap mining stocks, Agnico Eagle (AEM), Yamana Gold (AUY), Silver Wheaton (SLW) and Goldcorp (GG) are my favorites. AEM is amazing in that they have a negative cost for mining gold, due to the fact that they have poly-metallic output from their mines, and with copper and zinc prices where they are, -- even down a fair amount in recent months, for AEM, the cost of mining gold is zip, nada, zero as Copper and Zinc credits pay the whole freight. Yamana, managed by Peter Marone, is a great growth gold, well on its way to production of 1 Million Ounces a year, -- what a great CEO, the guys a rock star in my book. In the juniors, and now I am really talking my own book, in the interest of full disclosure, I love, love, love Eastern Platinum (ELR-TSE). Eastern Platinum trades on the Toronto Stock Exchange (, and is usually on the Top Ten or Top 15 Most Actives. Today, it is No 3 Most Active (

For US investors, the stock trades under the five letter equivalent of ELRFF, and can be purchased through any US broker. Below C$1.60 ELR is an excellent buy. The company is in production, and has output flowing from several mines at its Crocodile River Complex near Capetown, South Africa and will soon be adding another mine, the Mareesburg Mine in early 2007. This is a growth Platinum story where output will go from 100,000 ounces a year in 2006, to over 500,000 in the next two years. The stock in my view is still a ten bagger from here, and would not be surprised to see it trade north of $10.00 US in a the next two years. It is an investment position, and not a trading stock, but the company has top notch management in CEO Ian Rozier, who I hold in the highest regard, he has done an awesome job for the company and this is one of the best values I see in the mining sector. In the small cap arena, I also like Minera Andes (MAI on the Venture Exchange) quite a bit, they have a great property in Argentina and are getting no credit in the market for a highly prospective copper deposit.

Fari: Looking at 2007, if things deteriorate in the Middle East, where would Gold go ?

Frank: In my view, Gold will break out above $1,000 per ounce, and after a long consolidation, could now be setting at the beginning of that move. All of the Gold Stocks, would go through the roof, and should turn in excellent returns. At my newsletter, The Gold Stock Technician, we keep people current with all of the latest on these markets and up to date with current buy/sell recommendations.

Fari: What about the broader stock market ?

Frank: Honestly, I cannot warm up to this market, not at these levels. The DJIA and S&P 500 have never gone this long without a 10% correction, or even a 2% down day, so the markets are riding this wave of euphoria that seems to ex-out any perception of possible risk. Last year, at the beginning of the year, I liked Tech and Healthcare with names like Zimmer Holdings (ZMH), Cisco Systems (CSCO), LSI Logic (LSI) and Microsoft (MSFT). This year, I simply have a hard time finding under-exploited situations, and the multiple on the market looks high to me considering we are talking peak earnings. I think the S&P 500 short term could start doubling back toward 1400 as first support. Ultimately, there is probably more time needed for the market to build an important top as carry over momentum levels are high, and will likely under pin the market most of the first quarter. That said, at some point, I would not be surprised to see this market roll over in dramatic fashion, and make haste for the 1200 zone on the S&P. That would wipe out the rally of the last few months, and in my view could be the beginning wave of a much larger bear market. I believe the stock market represents high risk investing and the only sectors I feel could buck a downward trend would be Gold and Oil, and that is where I operate day to day.

Wednesday, February 7, 2007

Frank Barbera at Large (Part I of II)

Frank Barbera at Large (Part I of II)SocialTwist Tell-a-Friend
February 7, 2007

Fari: What are some of the key drivers shaping your view of the capital markets as we move ahead in the early months of 2007 ?

Frank: I believe the geo-political risk in the Middle East is definitely paramount in my view, as the situation in Iraq has deteriorated into a sectarian civil war, between Sunni’s and Shiites, and could potentially be threatening a larger regional conflict. In this vein, I would not be surprised to see the US and Israel lash out at Iran, or vice-versa, at some point in 2007. In my view, an expanded conflict with Iran would threaten the security of the worlds Oil supply through the very narrow Strait of Hormuz. This type of conflict may be highly problematic, in that the gulf region contains much of the world’s energy infrastructure, and Iran is well armed with ballistic missiles that are within striking reach of that infrastructure.

Fari: What evidence do you see that points you in this direction of heightened risk for expanding war?

Frank: Well, the US recently appointed an Admiral, Admiral William Fallon, as head of CENTCOM, the command center for the Middle East. It is a highly unusual move to appoint an Admiral to oversee direction of a war, that at present is defined by two land wars, Iraq and Afghanistan. Normally, a General from the Army would be in charge where ground wars are concerned, yet an Admiral was just appointed. Some believe that this hints Iran could be the next combatant and where Iran is concerned, a naval conflict would definitely be square one. For the US, in order to keep the troops in the Iraq re-supplied, control over the Persian Gulf is essential, and that is the domain of the Navy. The US has also sent minesweepers, Patriot Missile batteries (anti-missile – missiles) and more surface ships to the region which now host two carrier battlegroups and an anti-submarine attack helicopter carrier, the USS Boxer. These types of hardware hint at larger problems ahead, -- and I might add, I hope I am wrong, perhaps this is just a bluff to intimidate Iran, but the parts and pieces, are imposing.

Fari: So how would this affect the markets ?

Frank: Well, I think any further tension in the Persian Gulf could definitely force Oil prices higher, and at the very least set a floor in place between $55 and $60. In my view, that is bullish for Oil Stocks and Oil Service companies, most of which are really priced right now for $40 Oil. Yes, it is true that Energy Stocks are reporting sequentially lower earnings this year as a result of the rather savage sell off seen late last year. That said, I think Energy stocks are quite attractive, especially the drillers which have long term contracts locking in, in many cases, much higher day rates. Mind you, I would be careful over the next week or two with a lot of these stocks as we are smack in the middle of earnings announcement season, and in some cases, we could see some significant dips. But overall, I would be looking to be a buyer on weakness. I also think that near term, Crude Oil could pull back toward $55 from current levels near $60 and that could pressure individual names. In my view, where Schlumberger (SLB), or a TransOcean (RIG), or a Global Santa Fe (GSF) is involved, weakness in the near term would be a gift.

Editor's Note: Part II will be published on Friday.

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