Graceland Updates 4am-7am

July 27, 2009

1. China. You’ve heard all the talk from the Communist Govt Fan Club. Each price chaser clutching the gold they bought into 1030 praying that the Chinese Gman raises the price for them. I prefer action to talk. Here’s the chart of the FXI, the “Chinese Dow”. Here’s my action: kachingo!

2. As the FXI careened down into the 20 level, I outlined a pyramid buy program for subs. I bought too. I didn’t feel like partying as I laid in the buys. Where was the Chinese Gman fan club then? Nowhere to be seen. Gold was 680 and the Gman fans were having a contest.

3. To see who could throw away the most gold in the shortest period of time, at the price closest to 680. They all won!

4. Now I’m being told by the commie fan club to “buy China now!”. Thanks, but I’m a little busy… booking near 100% profit on my FXI positions. But good luck to Team Price Chaser….

5. Unlike the Dow, I’m very comfortable RELOADING my FXI pyramid on any and all corrections, as I’m focused on the industrial revolution in China, not the “boom”.

6. Some have noticed the head and shoulders bottoms on “stimulus stocks” like: Catepillar. CAT-n broke out over the downsloping neckline on tremendous volume. Giving a classic technical “buy” signal.

7. I’m 47 yrs old. I read Edwards and Magee cover to cover twice in a row when I was 22. And huge sections hundreds of times. On a scale of 1 to 100, comparing the bottom line (does it make money) of technical analysis versus the pyramids, I’ll give the pyramids a 99 and technical analysis a 1. And I use technical analysis all the time! If you pyramided into CAT or the Dow itself on weakness, YOU’D NOW BE ENJOYING THE BENEFITS OF THESE HEAD AND SHOULDERS PATTERNS, BOOKING MONSTER PROFITS. YOU DECIDE WHICH SOUNDS BETTER: Buy today? Or bank a wad of booked profit cash today, while still holding a package of core positions bought into Dow 6500. Hmmm, I wonder which sounds better? Let me put the question another way: Are 100 birds in the hand better than 1 bird in the bush?

8. Meantime, some of you who are gamblers have joined me in my “short the Dow now” campaign. This is a trade. Not a foundational pyramid. Let’s not put together any shortside “wealthbuilder” portfolios. Wealthbuilders work on the long side of the mkt. Not the short side. Regardless, I was filled near Dow 9100 on my latest position add.

9. The aprox $10 TRILLION in institutional cash is making its way into the stk mkt now. With all the fund managers holding hands. “We’re in this together, nobody is allowed to be a bear, nobody can say anything negative on Bloomberg”. The bankers generously help out with loans to leverage the party. Soon the party will turn into a GRIND. Aug-Oct is stk mkt hurricane season. What does Mr. Institutional Smarty Pants do when a hurricane warning is issued? Answer: He puts on his beach shorts, opens the windows on his beach house, and sits down in his chair in the sand, while his car gas tank reads near empty. What about the bankers? Are they sitting in their beach shorts? No. They left town a month ago.

10. Question: WHO is selling these institutions ALL THIS STOCK into this massive price STRENGTH? Oh, I forgot, I’m not allowed to ask that. My Q card says “it’s the man on the moon, but in the future, never mention the other side of the trade unless we tell you to”. OK, I’ll be quiet now.

11. Here’s a chart of Alcoa. Which I own, with my largest positions bought down into almost the TICK LOW near $5. I don’t need Jimmy the chart master to tell me there’s a h&s bottom type formation there. Here’s a news flash for Jimmy: when I bought, and some of you bought, there was NOTHING. Now I’m told by Jimmy the master technician that “If Alcoa breaks above 12.50, the target of the pattern is almost 20! Really? I never noticed that. Here’s another reality check for Jimmy: If Alcoa goes to 20, I’m up 300% on my positions bought into 5 bucks, while he’s up maybe 30-40%, and that is if he is isn’t stopped out after his magical “12.50 neckline” is surpassed. Of course, Jimmy isn’t thinking about what happens if the H&S bottom FAILS. He’s got his buy orders ready to go if the 12.50 is exceeded. What if it does break above 12.50, but GAPS above there? Maybe then Jimmy fills himself at $15 so he doesn’t get “left behind”. Bottom line: Jimmy Technician is going to GRIND his way to micro profits in the Dow, but his stoplosses on some of his trades will probably see him with a net break-even or micro gain. Many will walk out actual net LOSERS.

12. The USD/CAD came to exactly 1.750 overnight. Which is intermediate support. Some say the loonie will rise to par. If you are an American running a bull pyramid on the loonie, you are booking profit non-stop right now. Let me know if you need an extra cash register to handle the workload….I run both long and short pyramids on the USD/CAD. As gold/silver rise, the loonie tends to rise, so my gold/silver positions don’t rise much (or could even fall) in loonies. That’s where a CAD/USD pyramid pays off. On the plus side, when the metals fall, the loonie falls, so I don’t lose as much. And that’s where the USD/CAD pyramid pays additional “dividends”.

13. There are a lot of different scenarios with currencies and metals. I’ll let you think about the above a little bit. Some of you will have various ideas and theories. In the end, there’s only thing that is really important: Maintain the pyramids on the items you are buying and selling. Just because one major asset class may rise or fall more than another, is not a reason to try some price plop.

14. If you divide $4 trillion by 400 million, what do you get? If my math is correct, the answer is: $10,000. The average Chinese wage earner makes: Under a dollar an hour. With say 400 million families in China, $10,000 per family would go a LONG WAYS. So here’s my suggestion of how the Commie Gman should spend the $4 trillion in forex reserves: GIVE IT BACK TO THE PEOPLE YOU STOLE IT FROM. You may say, “But Stewart, the Chinese Gman has only $2 trillion in forex, not $4 trillion.”

15. Question: Do you really believe the Gman only took what he SAYS he took? I forgot, only the American Gman steals and lies. A communist Gman always tells the truth and loves helping the gold community. Sure he does! “One for the people, one for me. One the people, one for me.” – World Govt Gman Accounting Manual. -2015.

16. I want to thank Gold-Eagle, Kitco, and 321gold, the 3 largest gold sites in the world, for publishing the absolute blasts I’ve unleashed on the gold community in the past month. The bankers function as a well-oiled unified machine. The gold community has functioned exactly opposite to that. I doubt most in the gold community understand how little selling it takes to beat up the gold and gold stock prices.

17. There’s a larger purpose to what I’ve done. The next step is to co-ordinate the newsletters into some of the buy programs. Newsletter subs listen to the writers they subscribe to. I have website coming called www.marketfight.com One purpose of the site is to introduce other writers into the pyramid mindset.

18. For the next month or so, I want now to concentrate solely on mkt technicals, the graceland website, and the pyramids, and buy/sell tactics. Enough has been said on other issues for now. The other issues are related to making money in the mkt, but like a chart, they are a tool to be used at the right time, in the right application. I believe I did that, but now it’s time to be quiet again. The tiger goes back into crouch mode, so to speak… Interestingly, I was born in the Chinese year of the Tiger.

19. The removal of the charts from the email didn’t do anything to stop some of your emails from rejecting it. You need to add my email to your “safe recipients” or similar list if it doesn’t always arrive. Also, “archive” your emails. Some have exceeded your inbox capacity. I like to put some charts in the email.

20. As I get ready to send this off, I see oil, gold, dow, all under pressure. Dow broke the uptrend of past 2 weeks. The bulls are probably sweating a bit this morning. Now the odds may favour the bankers moving in to whip both the bulls and bears out, by driving the mkt back and forth thru their stoplosses.

21. You may notice that I sometimes seem to call tops and bottoms correctly, despite my claims not be a timer. The problem is that I’m interested in maximizing my abilities to make YOU money. Subscribers ACT on what newsletter writers SAY. We all have that secret wish to grab the top or bottom. But as a PROFESSIONAL, you have let that go. Say goodbye to top and bottom calling and say hello to pyramiding into strength and weakness in a size tailored to your personality.

22. Some of you are a starting to get a “feel” for the rises and falls in the mkt. If you trade too big, you can’t feel anything other than raw terror or greed. If your name is Mr. Rothschild, you want to feel complete terror and greed, because you can rationally execute massively leveraged trades while enveloped in those emotions. The average person can’t think rationally when price moves aggressively either for or against the price they paid.

23. Think carefully about Jim Rogers’ argument for owning agricultural commodities. Food demand will grow as population grows, and as the standard of living in China grows, the demand for meat will grow. Meat uses a lot of grains to feed the animals. I look at the downside: People aren’t likely to stop eating any time soon. I’m not so much interested in buying agricultural commodities for a big price POP as I am in buying and selling the price volatility, knowing that the odds of them going to zero are microscopic.

24. Another thing to think about: While stk mkts tend to keep going UP over the ultra long term, it’s not the same with commodities. Corn isn’t a company. There’s not the same “building” process. Corn is a THING.

25. Agricultural commodities don’t get all the excitement in the news that the stk, bond, or the gold mkt gets. Therefore you can focus on the simple job of buying and selling while nobody bothers you. Do you hear me ranting away at the “corn community”? No. How about the “sugar community”? There is no “I gotta buy the banks now!” or “I love this gold mkt!” in the boring agricultural commodities. No “The US dollar is going to zero!” is applied to the oats market. There is BIG MONEY in these other markets. Many of you know one of my mottos is: The big money is made during the quiet times in any mkt. You just saw that in the stk mkt.

26. Do what it takes to make money. If you are being over run with news that is affecting your decisions, look at QUIET markets. One more thing:

27. The tighter the range of price in a low risk market like an agricultural/food market, the easier it is make money with both short and long positions, with an upside bias of course.

Cheers,

Thank-you

Stewart Thomson

Graceland Updates