Stock Market Commentary
The other day I made a post showing you the various valuations for the different stock markets in Europe. Among the lowest valued markets was Austria. You can buy into it through the EWO ETF and even get a nice 3% plus dividend.
It has an interesting chart and you can see how it has been basing in a stage one consolidation phase. Right now it is pausing and making a final right shoulder. It looks to me like it could breakout anytime, but most likely in a few weeks.
I just did this video about Tuesday's nice move in commodities and gold stocks. They appear to be in the process of breaking out into new bull markets right now. I think European and other world markets will follow into new bulls too within a few months.
For a full spreadsheet of my portfolio click here.
According to recent press reports George Soros's fund management company has doubled its position in the GLD gold stock ETF to 884,000 shares and Paulson & Co. has increased its holdings by 26% to 21.8 million shares.
All of this happened in the second quarter of this year and is known to us because of filings the two had to make with the Securities and Exchange Commission.
This is fascinating chart that Dave Skarica forwarded to me after Jordan Roy-Byrne of thedailygold.com sent it to him. Take a close look at it. It places valuations on the stock markets for most of the European nations looking at such things as book value and earnings estimates for this year and the next couple of years. You can see that Greece isn't the only market that it is super cheap. Austria, Italy, Spain, and Belgium also have super cheap rock bottom valuations while almost every other market in Europe is pretty cheap too.
Just bought 833 shares of GREK @ 11.92
If you have been following my work than you know Greece is something I have been talking about for well over a year - and eventually investing in Greece. I am taking an investment position in Greece today. The Greece stock market is so undervalued that it has the same type of cyclically adjusted P/E valuation that the United States did at the bottom of the Great Depression.
I just did this video market update for you. What I was thinking about before I did the video is a simple question - right now what can we know about the market and what can't we know? Well we can't know exactly how the Euro crisis is going to play out, we can't know whether Greece will default or not, we can't know whether Romney will win the election or whether Obama will be win - simply put there is so much that we can't know that it can easily make you to nervous or uncertain to do anything.
You simply can't predict the future.
Waking up today and taking a quick look at the headlines this morning I see much of the regular talk about the Euro, and like every day there is always a headline or two proclaiming doomsday - how the Euro won't be saved and how the European Union is going to break up. Of course I don't believe this and I had been negative on both for a long time. I simply don't doubt the propensity for central bankers to print money when push comes to shove. In my view European markets have actually stabilized and will be going into new bull markets by the end of this year or next year.
I just added to my SDS position with an additional 2,000 shares at an average price of 14.99 on this market gap up. If the position has a gain on it I will hold it going into the close and hopefully for the next few weeks. If this additional position has a loss going into the close though I will probably sell it by the close and hold my original 2,000 share position. We are gapping up into resistance so I think it likely the market will sell the opening gains today. It may not end up in the red, but it should take back the bulk of the gains.
Last week I announced that I was going to start an "Open Portfolio" with you that would reflect my real trading account and show you what trades I do and how I manage my money.
Since then I haven't made any trades, but I have added a little bit of money to the account. So I just updates it this morning.
Last week several CNBC talking heads practically swore that the Fed will announce a massive quantitative easing money pump today when it releases its 2:15 PM FOMC statement.
Now people aren't so sure.
CNBC itself has this to say in its morning market update:
"Fed Chairman Ben Bernanke is likely to do little more than keep the door open to more easing when the Fed winds up its meeting Wednesday afternoon."
Hey did you know it is still earnings season? LOL!!! CNBC isn't talking that much about earnings reports and hyping them up anymore, because they are now focused on central bank action. I bet you haven't thought that much about earnings either, because now everyone is obsessed with tomorrow's 2:15 PM Federal Reserve announcement and wondering if Ben Bernanke is going to announce a new $500 billion dollar quantitative easing money printing bond buying operation.
Ron Insana said he would on CNBC. Steve Liesman loves the idea. So I guess that makes it true.
Hopefully we'll get some sort of bounce today. Spain is up this morning. Things have fallen bad the past few days. An up day or two is overdue. Two big stories hit the stock market yesterday that you need to know about. And no I'm not talking about Apple. Yes I'm talking about big macro policy.
First the Wall Street Journal published a story based on leaks from Fed officials that said that Ben Bernanke and his Federal Reserve Board members are now getting worried about the economy and the global markets and are looking to take action this month or next month.
I'm going to start to do something new for you - I'm going to start a model portfolio on Google Finance that will mirror what I'm really doing with my main brokerage account. I think now is the time to start to do this so that we will be ready in a few months for what I think will be a great investment buy point in the financial markets. Instead of just giving you stock picks during that time I'm going to show you not only what I'm buying, but how I am managing my portfolio and account so that you'll be able to see it all in context.
Yesterday we saw the S&P 500 gap down over one percent on the open and then bounce to take back about half of its losses. This morning as I write this before today's opening bell the futures are mixed. Look we've been in a correction since April and saw a mere bounce in this correction in June. However, we could easily see the stock market go up today and tomorrow and then fall apart later this week or next week and continue lower.
First you may wonder why can the market go up today and tomorrow?
I just did this video answering an email question someone sent me. On Friday I did a video saying that I was planning on taking some big investment positions in the stock market and then Sunday I wrote a report saying I thought the stock market was going to drop again into the Fall. This person found this to be confusing. And if he is confused I'm sure there are others confused too.
CNBC has stopped talking about Greece, but I haven't taken my eyes off of the Greek stock market. As I posted the other day it has already fallen to an extremely low valuation and is now the cheapest stock market in the world when looked at from a fundamental perspective.
But I don't think the time to buy is just yet.
Two weeks ago there was a meeting of European finance ministers to try to do something - really start to do something - about the European financial crisis. The ministers met and talked and issued a statement. Here in the United States the stock market started a little rally and some of the talking heads on CNBC heralded the meeting as a "breakthrough." Of course if the market went down they probably would have called it something else, but because it went up and they so much want to believe in it they talked it up.
Gold stocks are still lagging the broad market and the metal for now. We saw a nice bounce in the stock market last month that probably will continue for a few weeks at least. Gold stocks bounced too. At first they bounced hard in May, probably due to the fact that they simply had fallen so bad over the past year that they had gotten themselves to a super lower valuation with many of the major gold miners trading with PEG ratios below .50.
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