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Profitable Investing in an Interventional Environment, Forecast for Gold, Equities & Crude Oil



-- Posted Friday, 19 October 2007 | Digg This ArticleDigg It! | Source: GoldSeek.com

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

DEEPCASTER HIGH POTENTIAL SPECULATOR

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

 

 

Faithful adherence to certain key (and often neglected) principles is essential for profitable investing (and accurate forecasting) in an interventional environment:

 

1)     It is remarkable how often some investors fail to heed the maxim that it is essential to determine the ongoing trend of the market.  Even the strongest securities and tangible asset investments cannot often fight the major trend.  Uptrends need not be our only friend.  Downtrends can be our friend too, either by going short for profit, or hedging, or waiting until a downtrend bottoms.  Bottoms provide an opportunity to purchase strong securities at a bargain price.

 

2)     It is essential to take account of “The Interventionals,” not just the fundamentals and technicals.  The substantial evidence that the Central Banker Cartel intervenes regularly, indeed daily, in a wide variety of markets is quite compelling*.

 

The Cartel often achieves its interventional goals because it (via its primary dealers) is the biggest player (via its derivatives arsenal) in many markets.  Helpful information regarding Interventions can be gleaned from reviewing a variety of sources, including the nearly daily Repurchase Agreement (REPO) injections into the markets by The Fed as well as the OTC Derivatives figures.

 

For example, the Bank for International Settlements (the Central Bankers Bank) OTC Derivatives Table 19 (at www.bis.org>statistics>derivatives>Table 19) shows OTC derivatives in the $290 trillions range for interest rates and $6 trillions range for crude oil and other commodities.

 

In interpreting “The Interventionals” it is important to keep The Cartel’s interventional goals in mind.  Among those to which Deepcaster has referred in his earlier Letters and Alerts, The Cartel must maintain the legitimacy of its Fiat Currencies and Treasury Securities.  This entails periodic takedown attempts of Gold and Silver prices, as well as Tangible Asset prices.

 

Fortunately for Deepcaster subscribers, our analysis of the Interventionals (as well as Fundamentals and Technicals) allowed us to make a “short Dow” recommendation two weeks ago which is now showing a profit.

 

3)     It is essential to study the fundamentals and technicals even though interventions can override the fundamentals and technicals.  One must study the fundamentals not only for all the usual reasons but also because fundamentals somewhat constrain the timing and effectiveness of interventions by The Cartel.

 

Similarly, one should study the technicals for all the usual reasons and, in addition, because The Cartel needs to make its actions seem technically plausible in order to continue to “run mainly under the radar.”  It is not in The Cartel’s interest to make its interventions any more visible than they already are.  Indeed, there is powerful evidence that The Cartel often uses and/or helps create technical patterns which lure certain investors (such as hard asset investors) into getting “off sides” before Cartel actions such as taking down the price of gold or silver.

 

 

Deepcaster’s Analysis

 

Regarding The Interventionals, recent days have seen periodic diminishment in daily Repurchase Agreement (REPO) injections which has caused The Pool moving average to slightly decline.  This means that some sectors of the markets are not going to be supported on these days.  The Major Indices declines of Monday, Tuesday, and Wednesday, October 15, 16, and 17, 2007, were apparently, and not surprisingly, the result of such diminished Repo support.

 

This equities move will likely also be followed soon by major moves in Gold and Crude Oil (which, for reasons Deepcaster has pointed out, are the tangible asset “enemies” of the Central Bankers), as well as major moves in the U.S. Dollar and long-term U.S. Treasury Securities, which Deepcaster describes in his latest Forecast at www.deepcaster.com.

 

Moreover, the Fundamentals for the equities markets are really not as healthy as the juiced government and agency figures would lead one to believe.   www.shadowstats.com (an excellent purveyor of Real Data) indicates that real Consumer Price Inflation is increasing at a rate in excess of 10% per year, M3 is increasing by over 14% per year and U.S. GDP is currently a somewhat negative number.  All those three indicate that we are in a stagflationary economic situation and not in the rosy economic environment painted by the Federal Reserve and other purveyors of The Cartel/Big Media line.

 

Given the foregoing, the Fundamentals for Gold and Silver are extremely bullish, but one must nonetheless consider the Interventionals.

 

Regarding The Technicals, On Thursday, October 11, 2007, the Dow Industrials plunged from an all-time high to close down for the day - - a key reversal day - - which is a bearish indicator.

 

Prices are crawling along the upper boundary of the Bollinger Band for the Dow and most of the major indices and the MACD is on the verge of giving a “sell” signal.  But while the Dow Jones Industrial Average (DJIA) call/put ratio is on a “buy” signal, the 1-month and 2-week DJIA stochastics are on “sell” signals.

 

Moreover, we are at a significant markets inflection point as measured by the remarkable number of Fibonacci numbers clustering in early October.  As well, the Dow chart shows an upward bearish wedge which is about to break out to the downside.  The intermediate S&P (SPX) pattern is in a bearish, expanding ascending wedge.  The minimum downside target is 1060.  On the other hand, the SPX has broken out of a bullish head and shoulders pattern which could kick off a bullish rally.

 

But most ominous (for Dow Theory devotees) is the fact that the Dow Jones Transportation Average (TRAN) has broken out and down from a rising bearish wedge.  Moreover, the TRANNIES have formed a pennant flag which is quite bearish.  And, ominously, on Tuesday and Wednesday, October 16th and 17th the equities markets generated back-to-back Hindenburg Omens.

 

Deepcaster’s Forecast

 

We expect the Dow and other equities indices to continue their decline in the next very few days.  Significant Precious Metals and Crude Oil moves should follow soon thereafter, as should major moves in the Dollar and long-term U.S. Treasury Securities, which we describe in considerable detail in Deepcaster’s latest Alert and Forecast posted in the “Alerts Cache” at www.deepcaster.com.

 

A major geopolitical event or development (e.g. peace progress in the Israel/Palestine dispute or an accommodation regarding Iran’s nuclear program) could serve as the catalyst for the anticipated Indices, Crude Oil and Precious Metals moves, as could earnings reports surprises. 

 

 

Deepcaster

October 19, 2007

 

 

*We encourage those who doubt the existence of Intervention by a Fed-led Cartel of Central Bankers to read Deepcaster’s October, 2006 summary overview of Intervention entitled “Juiced Numbers IV:  How the Government Gets the Statistics It ‘Wants,’ Markets Get Manipulated, Citizens Get Deluded, and Worse” at www.deepcaster.com.  Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation.  Virtually all of the evidence for intervention has been gleaned from publicly available records.

 

DEEPCASTER LLC

www.deepcaster.com

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

 

Gravitas, Pietas, Virtus


-- Posted Friday, 19 October 2007 | Digg This Article | Source: GoldSeek.com




 



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