Friday Recap "A look inside the market"

Friday morning found futures moving higher on the back of earnings from Google and General Electric as well as news that Spain is taking steps to restructure the banking system and would be willing to invest directly in the banks. There was no U.S. economic news scheduled for release Friday.

With the tailwind from the futures, the SPX opened with a five point gap higher and was up eleven points to put the high of the day on the chart at 10:01. But the bulls struggled to hold onto gains and by noon eight points had been given back. The afternoon traded within a four point range and essentially was a wash as neither bulls nor bears could force a large move into the weekly close.

But this session was different. Last week we saw down days that felt like up days; hours were spent moving higher after morning lows. But on Friday it felt like a down day despite the index gaining several points. The highs were early in the day and hours were spent giving back the gains. The tone of the market seems to have changed.

The SPX lost 9.89 points during the week. The range for the week was 24.80 points, 1.92%. The four week RSI of the four indices (SPX, Dow, NASDAQ, and Russell 2000) is 67. Pullbacks often occur as this RSI reaches 80 and bounces near 20.

Total tick for the week was -116,000. On the NYSE, the advance/decline line decreased during the week by 2,000 and the 10 day average of Net Advancing decreased from 239 to -24. There were 613 New Highs and 105 New Lows.

This holiday-shortened week was ruled by sellers as the extreme ticks were doubled on the negative side (135 positive and 272 negative) and the ultimate extreme ticks (greater than 1000) were twelve negative, zero for the bulls.

We have now gone 98 sessions since the last 2% range day. Since 1990, the average is one 2% range session every 5.25 days. The last similar such extended period without a 2% range session occurred in 2007 leading up to the all-time market top. The lack of intraday range certainly puts the damper on day trading the indices.

Market breadth was not strong on Friday, although it remained positive on the NYSE. New Highs were low despite the up session. Closing a Friday session with a negative tick has been unusual for months.
 
Total tick for the day was 23,000 and the average tick for the day was 15. There were 25 ticks greater than 600 and 28 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000.
 
The intraday volume pattern was driven by options expiration; high volume at the open followed by low volume the rest of the session. This was typical but the volume was notably low. Looking at the Nightly Breadth Indicators continues to suggest that we have had a significant interim top but today's indicators are quite mixed. We're following the McClellan Summation Index closely. It hasn't been in negative territory since very early in September.

Sectors Performance 
 
Sectors stronger than the SPX for Friday:
- Energy -- Outperformed the SPX by +25%.
- Financials -- Outperformed the SPX by +55%.
- Industrials -- Outperformed the SPX by +57%.
- Health Care -- Outperformed the SPX by +4%.
 
Sectors weaker than the SPX for Friday:
- Basic Materials -- Underperformed the SPX by -48%.
- Technology -- Underperformed the SPX by -81%.
- Consumer Staples -- Underperformed the SPX by -7%.
- Utilities -- Underperformed the SPX by -32%.
- Consumer Discretionary -- Underperformed the SPX by -13%.

Uranium vs. Gold

Uranium vs. Gold

By the Casey Energy Team

Think gold is the hottest yellow metal? Think again.

Uranium is taking off, its price jumping up US$3.50 per lb. this week to US$66. It is the biggest price jump in a long time, and it shows that even though uranium has been heating up for six months already, the pot has yet to boil over.

The other yellow metal, as it is known, spent 2008 falling from a ridiculous and unsustainable high of $136 to the low $40s, then spent 2009 doing nothing much at all. In mid-2010, though, the beast started to awaken. China began searching out long-term contracts with suppliers in order to feed its 13 operating nuclear power plants and guarantee fuel for the 25 reactors under construction and the many more planned. Official targets for nuclear capacity in the country are 80 gigawatts electric (GWe) by 2020, 200 GWe by 2030, and 400 GWe by 2050. China’s current nuclear power capacity is just 9.1 GWe.

To reach its 2030 target of 200 GWe, China will need some 95 million pounds of uranium annually. In 2009, the world as a whole produced just shy of 112 million pounds – production clearly needs to increase if it is going to meet demand. And the looming end of the Megatons-to-Megawatts program will only sharpen that divide. The Russian program converted 400 tonnes of high-grade uranium from old Soviet warheads into low-enriched uranium suitable for American nuclear power plants over the last 15 years. This created enough fuel to produce roughly 20% of the United States’ energy needs, but it is scheduled to end in 2013.

The growing pressure on uranium production from swelling demand is no surprise, and it started to lift the price of uranium in 2010. In fact, contrary to popular belief, uranium actually outperformed gold last year. Hard to believe? Here’s a chart showing the indexed prices of gold and U3O8 over last year:

Gold started 2010 at US$1,121.50 per oz. It had a great run, to be sure, and ended the year at US$1,405.50. That’s a gain of 25%.

Uranium started last year at US$45 per pound. For the first half of the year, the price remained stagnant, but in the second half it started on a steady climb and by the end of December had reached US$61. That is a gain of 35.5%.

As for where uranium is headed this year, we certainly don’t expect another crazy run-up, like in 2007, but rather predict gradual gains to the $70 level. So there is still opportunity to climb on this horse; check out Casey’s Energy Opportunities to find out about our current uranium company picks.

Our recent track record in the uranium sector has been far from shabby. In the second half of 2010, we recommended two uranium stocks, one large-cap and one small-cap, and both generated healthy returns.

The large-cap was Denison Mines, a company we have bought and sold for more than a decade. In late 2009, we recommended buying Denison at 90¢. Then in July we recommended it again, at $1.30 or less. Three months after that, the stock hit $2.24 and we took our initial investment off the table, or as we like to call it, a Casey Free Ride. Denison is now at $3.30, providing a 13-month gain of 267% or a three-month boost of 156%. Not bad!

On the other end of the size scale is JNR Resources, an Athabasca Basin explorer with a host of projects and an experienced management team. The Denison recommendations went out in both Casey’s Energy Report, our monthly newsletter aimed at investors with mid-level investment knowledge and tolerance for risk, and Casey’s Energy Confidential, an alert service directed towards more sophisticated investors with a higher risk threshold.

For JNR, in August we alerted our Confidential subscribers to a 17¢ private placement. By the end of December, the company was trading at 45¢ and we took our initial investment off the table, leaving our 165% gain on the books as a Casey Free Ride, to continue to grow with the company and the price of uranium.

Fraudulent Practices In Precious Metals-Harvey Organ

I wrote to the CFTC voicing my concerns over many matters.  I am open to your comments   You will notice that I sent it to only 4 commissioners. I left out Bart Chilton. From: harveyorgan@rogers.com

To: GGensler@cftc.gov, somalia@cftc.gov, MDunn@cftc.gov, JSommers@cftc.gov

Subject: Position limits and elimination of exemptions. Date: 1/20/2011 9:40:56 P.M.

I am rather disappointed that you have allowed the major banking short interests to continue with their fraudulent and manipulative practices in the precious metals. You have allowed another 60 days of massive shorting by the bankers to allow for yet another public input. The public for the past 2 1/2 years have bombarded you with millions of emails with the hope that you will see the light and put position limits on silver and eliminate the phony exemptions. Mr O'Malia was the lone dissenter on your latest vote voicing his concern that the swap books on JPMorgan once opened would be a shock and that the CFTC would not know how to handle the situation. It has been my contention all along that the major short, is in reality the Chinese government who lent their hoard of silver in support of the suppression of gold. It would be difficult to suppress gold while allowing silver to advance in price. The gold was supplied by central authorities. The USA ran out of silver in 2003 and in order to receive most favoured nation status, the Chinese have done a swap with the USA with a date certain to re-swap. It is quite conceivable that the Chinese have asked for their silver back but were refused as global supplies for silver are vanishing.

Yesterday, the USA Mint announced a record 4.6 million oz of silver eagles sold in the first 3 week period of January which is a record. The USA produces 40 million oz from their mines so for the first time, the USA must import silver from the rest of the world to satisfy the mint's requirements.

The comex is witnessing massive movements of silver into and out of registered vaults signifying turmoil as this silver is putting out fires in other jurisdictions. In gold we are witnessing the opposite. How on earth is gold being settled?

What is even more troubling to me is this:

How could you even discuss position limits and the elimination of exemptions without first telling us what happened in July 2008 which caused you to bring in the enforcement division of the CFTC? Mr Chilton has decided to act unilaterally in proclaiming one trader, JPMorgan, with fraud, and from his statement to the press, major class action law suits have been initiated and filed.

It is frustrating to many of us who witness time and time again massive un-backed paper driving the commodity price of silver and gold down like today. I guess the CFTC's motto that the futures market is a price discovery mechanism is out the window. Mr Dunn has stated that he needs more manpower to try and catch manipulation. Yet when a whistle blower is presented to you and this person describes in detail the accounting of how the crime has been committed in the past and how it will happen in the future and yet you refuse to listen to this gentleman.

Mr Sprott of Sprott Asset Management is having a tough time trying to find any physical silver for his silver fund and yet the bankers massive sell huge amounts of paper silver. The SLV also has liquidated massive amounts of "paper silver". The real stuff is difficult to find in quantity.

Sooner or later, this fraud will end and I guess there is going to be a lot of explaining to do.

I urge you to do the right thing and order JPMorgan and friends to stop this massive fraud and manipulation immediately.

Harvey Organ.

China buys gold and the world follows-Marketwatch

 China buys gold and the world follows 

The Chinese are building on a trend that’s likely toast 

By Myra P. Saefong, MarketWatch 
Jan. 21, 2011, 12:01 a.m. EST

SAN FRANCISCO (MarketWatch) — Gold prices have lost around $75 an ounce this year but analysts are unfazed by the drop, with many betting the slump in prices will soon be cut short as the Chinese New Year feeds an increase in global demand that’s destined to last.

“We are entering a period of strong seasonal growth in gold demand and Chinese New Year is a big part of that,” said Brien Lundin, editor of Gold Newsletter. “Physical demand has been supporting the gold prices on the downside even during the typical slack periods, and I expect that upcoming increase in demand will also support the price, but at higher levels.”

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