Indicators and comments - emailed to subscribers - Tue, 05 Sep 2006

Interesting recent action on coles, cml shorts.png Shorts furiously buying back their positions, three days later, Aug 18, we see the private equity bid.

Tiger Woods, how would you be. In his most recent round last week, he had 4 bogies in a row on the front nine - his worst performance in over ten years. Like some problem to have eh.

Essendon have had itís worst season since 1933. 72 seasons, 73 years forward. Emotional for them no doubt. I don't share the emotion here myself. Thanks to Paul for highlighting that one. Whilst on that count, did I mention already, if i have my history correct, that one of the all time high prices for gold occurred in 1864, when price went to $42.02 on war news in the US (US civil war). Add 144 to that, Gann's most important number... 2008/09 is a'gonna be emotional.

72 years from 1864 was 1936, very close to the time the price of gold was deliberately lifted by the US government to $35 an ounce to create inflation via lowering the dollar's purchasing power, to get the economy out of depression. (Didn't work.) US citizens were then forbidden to own the stuff and forced to hand over anything they owned. Emotional years then for the metal too.

Similar can be said for oil, tho in 1864 uses for the black gold had only just been discovered. However, if we take 2009 for oil as a possible date / high emotion peak and count back 72 years we get 1937, additionally to what I have forwarded in earlier emails about oil. War clouds were gathering then and all knew oil to be the critical resource: access to it would help determine the outcome of the war if there was to be one. England's supplies came from Trinidad. In 1936 Bolivia had seen uprisings, riots in fact (observe what's going on now) in its oil fields, which spread to Trinidad where worker exploitation had reached new lows. Emotions peaked 19th June 1937 when Warships and 2200 well armed soldiers arrived to enforce English rules of labour and protect the ('its own by rights of conquest') resource base. Unrest spread to Venezuala in 1937(again the link to present days so in 2009 these areas will see repeat emotion) and then Mexico 1938 whereupon that state proceeded to nationalize the industry.

The English enforced news black outs in Trinidad, so the locals communicated the oil news orally by singing it around the countryside, making famous what became known to the rest of the world as 'calypso' music. If you want to read more about that, see the chapter "Oil, Race and Calypso in Trinidad and Tobago, 1909-1990" by Graham Holton, in the book "Latin American Popular Culture: an Introduction", William H Beezley. (Some of you will have met Graham presenting at some of my classes in the past.) Anyway, riots spread also to the copper-belts of Central Africa, hence watch copper prices for peaks 2008/9 also. Emotional years. Time around points of the circle.

Don't you love the comments we get to hear from punters on the Telstra share price, some of it like - "seems cheap to me". Well sure it is, but trend is down. Never buy a share below the moving average. Shows you how little the average punter knows about markets. Better profits are in stocks moving into new highs, at least for those on the long side. Sure you might be able to buy in at the bottom for TLS, but on such patterns price has to go sideways a long time before going higher again. Buy high to sell higher is the more profitable strategy.

More on the fashion thing:
perusing thru a few fashion mags of late, I noted the new French designer sensation Hedi Slimane of Dior Homme fashion label. He describes his style as a mix of social and street fashion: "hedonistic party clothes." Hey, I went thru the same style myself 1986 to 1989. Historically, the hedonism so typical in the last years of the real estate cycle have always ended badly after the 18th year.

To the indicators:
rule of 20 - the market is not looking in collapse territory historically speaking. Present prices are supportable on fundamentals.

yield curve barometer - the Australian curve has gone flat, and no longer clearly inverted, as anticipated earlier by EIS. Signals a slowing economy ahead, or at least no longer growing as strongly as in the past. Nothing to worry about here either presently, and gives room for asset prices to inflate further over coming months. I would say however that the situation Australia faces is slightly different to that of the US. We could see US rates decline a little whilst Australian rates don't move or go up slightly more. The strength of the commodities may help determine this outcome.

Note again, we never get the truth form government representatives.

You watch, when the average American begins to feel the pain of declining land prices, opinions about all this will change, and the public will bay for blood over all the expenditure and corruption.

We were taken to war on absolute lies: that Saddam had an arsenal of weapons of mass destruction, that he was assembling nuclear reactors, that he was a threat to world safety. He didn't and he wasn't.

You must stay aware of this all the time now, as the lies apply equally to the stock market. Sun Zhu i think it was, in his book The Art of War said it best: "All war is deception" he said, and this is true. Same in the markets: by this I mean, for example, if bad news is released but the stock forms a higher bottom, it means the news has already been discounted and the market is looking further ahead. Gann teaches you what this means and how to trade it.

It is why you MUST have at your disposal, charts of your stocks, and learn to interpret what they mean. The chart tells you the truth - I am certain this is why Gann called his first book "Truth of the Stock Tape" Emphasis on the word truth, in my view. In Gann's day, insider trading was legal and artfully practiced by insiders.

This leads me to a few other things, my own tribute in particular, to Don Chipp:
I was lucky enough to have heard a number of his both public and private speeches over the years. I appreciated his passionate belief in individual rights (I would rather say we have individual responsibilities, rather than rights, but that's another story) his belief in free enterprise and small business, his idealism and his absolute honesty. Rare in a politician - in fact utterly non-existent these days. The Age obituary had it quite right in acknowledging his belief that idealism is the only way forward for politics in a civil society. All his speeches that I was privy to were unforgettable. I contested once the seat he held in the House (the seat of Hotham, out Oakleigh way). The party he formed was committed to governing without allegiances to outside influences. I can tell you the Party held true to that idealism, sometimes under great pressure from outside sources.

I went on to discover that those government granted licenses, the largest of which is land value, is the corrupting influence.

These days politics is sorely lacking a little idealism. Our present ruling morons have permitted Mr bin Laden to create a situation where governments are usurping our human rights and values. This is not bin Laden's fault, it is ours. Fear rules only because we permit it. Other idealists knew this:

"Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies and debts and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honours, and emoluments is multiplied; and all the means of seducing the minds, are added to those of subduing the force of the people Ö [There is also an] inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and . . . degeneracy of manners and of morals . . . No nation could preserve its freedom in the midst of continual warfare."

That from the voice of James Madison, April 20th, 1795, one of the founding fathers of the US Constitution.

We are not learning from history are we ? Collective economic structures and our thought patterns remain the same, so be assured history will repeat. Watch now as we head into the Nov 7 Congressional elections for US leaders to ramp up the 'fear' rhetoric a decibel or five, elections the right wing Republicans must win to continue their agenda and also not risk congressional delving into their activities by a newly controlled democratic congress. They understand exactly what they are doing do these guys.

This all coincides this month with the 5 year anniversary of 9/11. Gann would not have taught it that way; he would have had his students think degrees of a circle - 60 degrees in months, two-twelfths. Observe already the lift in emotions, as can be exactly forecast straight after the event: attempted attacks by muslim fanatics, new obl video, defense by non-muslims and western governments, US, UK and Australian leaders upping the consequences of 'not giving in', TV and video specials, film releases and on it goes. Same old same old.

Next counts, 72 months (half 144), 84 months (360 weeks), 90 months being March 2009 (not forgetting counts off 7/7/05 now as well) and so on around the circle. Eighths, twelfths, thirds and quarters.

Anyway, Don Chipp died 30 years from his life's most pivotal public moments of 1976/77 and the formation of the party he founded. The emotional pressures rest in those squares, trines and angles of the circle that is life is what W.D. (re)discovered. Thank heavens he wrote his books.

CML Shorts - PDF

Print This Page
Home ----- Contact Us