Posted on 09/27/2010 7:01:28 AM PDT by SeekAndFind
The evidence of government intervention is evident in the number of daily new highs versus new lows. The ratio was incredibly slanted during most of 2009 and (lesser so) in 2010. It seems to be aligned with “stimulus money” action out of congress ... in conjunction with what’s known as a “Crash Correction” program idea (info is no longer available via google)resulting from the 1987 market crash.
New high/low info is printed daily in the Wall Street Journal and ... online at http://online.wsj.com/mdc/public/page/2_3021-newhinyse-newhighs.html?mod=topnav_2_3002
He's my usual suspect. He's got so much money he can manipulate the market - IMHO. I am certainly not a financial expert.
This is not because individual investors are “more upbeat.” I doubt seriously that individual investors, or even human investors, are even making a dent in the direction of the market, that’s how little their participation is.
The Fed and Kenyanesian economic policies are distorting the market. Which always ends badly.
I won’t lie, I like seeing stock market gains as much as the next guy. But overall this situation makes me more uneasy than not.
I do not have confidence in this administration at all.
It’s a mile wide and an inch deep.
Dow set for best September since 1939 !
Invasion of Poland rally?
“That is the shortest runway I’ve ever landed on” said the pilot.
“I know” said the co pilot, “but it sure is wide”
Dunno but Rush said it on Friday and he is 99.8% right.
So when it doesn’t happen, it will have done so....UNEXPECTEDLY!
The Reds are buying up America with worthless fiat dollars. Very soon the federal government will own or control the majority of everything of real value (land, homes, companies, banks, industry, healthcare, unions, ...). It will all be done without firing a shot...
“I know the Fed are buying US treasuries by the bucket, but where’s the proff that they’re buying stocks, and if so, of which companies?”
Uh...GM ring any bells?
USUSALLY Sept. is a DISASTER!!
Probably so - but my accounts are up a mind-boggling 45% this month. I make my living trading Canadian junior mining stocks, and I’ve never had a situation with 3 out of 10 positions doubling in the same short time frame - that’s 1/2 of the mining stocks in my portfolio!
Gold, silver, lithium, rare earths - it’s all rockin’!
The metals stocks are still undervalued, IMHO.
The media let it slip that a huge portion of the “stimulus” funds had not been spent yet.
A lot of big Wall Street types with powerful computers are trading among themselves in which the holding period is in seconds (sometimes even in hundreds of milliseconds)."
You are absolutely correct. BTW, HFTs represent 70% of the daily volume. Thus, there is no legitimate capital trading market any more, but rather a market that has been hijacked and turned into a board game being played among the HFTs. This is what causes flash crashes, either as a market whole or with individual stocks. If all the algorithms react the same, then 70% of buys or sells (usually buys) disappear in a couple of seconds leaving what's euphemistically called an "order imbalance".
Here is where real market reform is needed, particularly with the numerous abuses being perpetuated, such as order stuffing. However, we won't see such reform until these scumbags accidentally or on purpose destroy the markets at some point.
In the mean time, small investors are wisely fleeing this scene, and if they know what you and I know, they'll never come back:
I think the markets are responding to the anticipated eviction of the true enemies of the economy..... the democrats.
I think what they mean is that the Fed is propping up the stock market by injecting huge amounts of liquidity. Through its open market operations, when the Fed buys treasuries, it purchases them from the primary dealers -- your JPMorgans, Goldman Sachs, etc. The primary dealers hand over those treasuries, and the Fed gives the dealers "cash", essentially a book entry, the creation of money out of thin air. And with interest rates at zero, the dealers, looking for a return on all that cash, start buying up equities.
That's the overly simplistic nutshell version of what's going on, but I believe it's essentially correct.
I heard the words "rare earths" the other day on CNBC, but I didn't hear what rare earths are....can you tell me in 10 words or less??
RE: rare earths
Rare earth elements are a group of seventeen chemical elements, such as ytterbium, gadolinium, and cerium, which were originally isolated from oxide-type minerals in the Ytterby mine in Sweden in the late eighteenth century.
These elements are commonly used in the production of camera lenses, permanent magnets, jet engines, flat panel displays, nuclear batteries, lasers, vanadium steel, and high temperature superconductors, among many other items.
However, the extraction and refining of rare earth metals is very costly, time consuming, and hazardous to both the workers and the environment.
Despite the difficulty of obtaining these elements, however, their extreme versatility and superiority to existing alternative materials has stimulated global demand to the point that it will soon surpass current production capabilities.
While the market for rare earth metals is not very large, amounting to only $1.4 billion worldwide annually, demand is skyrocketing. For example, Toyota, which requires the use of Lanthanum for the production of hybrid car batteries, plans to increase production of the Prius from one million units to two million units. Additionally, wind turbine production is also booming, due largely to subsidies from the United States and many European governments. This has already begun to affect the prices of several of the rare earth elements. Cerium (used in catalytic converters for diesels) has doubled to $4.00 per pound since 2007, and neodymium (used in permanent magnets and hard drives) has quintupled to $23 in the same time period.
Thus, while the cash worth of the market is not as significant as steel or oil, it is appreciating rapidly. Whoever is able to control the production of rare earth metals is in an excellent strategic position against their competitors while alternatives and new mines are developed.
China has been able to surpass the United States in production of rare earth metals due to a much lower labor cost and a lack of environmental controls. As China began producing more and more rare earth elements at lower cost, mines in the United States and elsewhere were forced to close or sell so that China now produces 97% of the world’s supply of rare earth metals. China has continued to expand its control of the world market through investing in the overseas producers of rare earth elements, such as mines in South Africa.
However, after China announced its export restriction, many companies in countries heavily reliant upon China for their supply of rare earth elements have begun exploring the possibility of either reopening their old mines or digging new ones. Molycorp, an American mining firm in business since the 1950s, has already raised $394 million to reopen the Mountain Pass, California, rare earth elements mine, once the world’s largest producer of both cerium and neodymium. Additionally, scientists from the United States Geological Survey (USGS) spent this past August examining a heavy rare earth elements project site belonging to Ucore Rare Metals, Inc., in Bokan Mountain, Alaska. The mine has numerous deposits of terbium (used in low-energy lightbulbs) and dysprosium (used in electric motors), as well as uranium. The United States government has expressed a strong interest in securing a reliable domestic supply of rare earth elements.
The United States is not the only country accelerating the development of alternatives to Chinese imports of rare earth elements. Lynas Corporation, a mining company in Western Australia, has seen its shares rise by 800% since the Australian government blocked an unsolicited investment by a state-owned Chinese mining company.
The result of China’s reduction in exports will likely be at least a temporary increase in the cost of rare earth elements, until feasible and affordable alternatives are discovered or new sources of rare earth elements begin production. This also means an increase in the worth of companies such as Rare Element Resources, Avalon Rare Metals, Ucorp, and Molycorp, to name a few. This trend will likely continue beyond the immediate development of alternative producers to China, as Congress has hinted at the creation of a rare earth elements stockpile, akin to the current existence of oil reserves, in order to create ready access by the military and government in case of an acute global shortage.
FYI:
http://agmetalminer.com/2010/05/06/the-case-for-rare-earth-metal-etfs/
The Case For Rare Earth Metal ETFs
The rare earth metal industry is abuzz with fresh news. We’ve covered a few of these developments over the past couple of days. The big news of the week of course involves the creation of a new rare earth metal ETF from REE Fund that will make investments in over 30 rare earth metal companies from “mine to market.” In addition, Dacha Capital announced in a press release that it had been accepted as a member of the Minor Metal Trade Association for its role in acquiring physical inventory of rare earth metals. Ordinarily (and when I first heard the news), I cringed at the thought of more financial services products coming into a space traditionally supported by the economics of industrial demand. Do we really need more speculation or financial types buying up physical inventory?
It reminds me of a conference session I ran a couple of weeks ago in which some industrial buyers of stainless steel wanted to know what if anything, industry could do to prevent “the speculators” from “messing up metals markets.” My response unfortunately was more of a “not much.” But one of the most critical issues in rare earth metals markets involves pricing. The last major US rare earth metal producer, Molycorp, closed its doors in 2002 due to low prices from China. In other words, the US market couldn’t stay competitive based on import prices.
But therein lies the value of these ETF’s and or financial firms entering the market. By buying up inventory and taking investments in mining companies, and assuming they (the funds) can attract the capital (which we feel will happen), prices will likely increase. And when prices increase, the mining economics become a whole lot easier. We realize it stinks to be a palladium buyer right now if one isn’t hedged just as it is to be an aluminum buyer watching prices increase as stocks swell. But that lift in prices may provide the US rare earth metal industry with the help it needs to get a couple of these efforts underway, and ensure industrial buyers have more than one sourcing option. If there is anything I have learned since joining the metals industry it is this – though everyone thinks “price is king” the reality is “security of supply” reigns supreme.
–Lisa Reisman
OMG!! No WONDER they didn’t explain it on CNBC!!!! Thanks....I think....:)
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