General Commentary Including Deutsche Bank, PM's And Recent Trades Review...
October 4, 2016
A major “Sword of Damocles” overhanging global stock markets has been the situation with Deutsche Bank,
which has a monumental derivative book and whose stock has been
plunging to new lows. We have largely ignored this situation up until
now, on the assumption that everyone else will until the SHTF, a
strategy that has until now paid off. However, we should keep in mind
that this is potentially a very dangerous situation that could dwarf the
Lehman debacle and send world markets into a tailspin. That said,
however, we have just seen a turnaround on stupendous record volume in
DB stock on Friday, which suggests that the crisis is set to ease at
least over the short to medium-term, and if so world markets could
rally. Mrs. Merkel and the German government have been caught in a
dilemma over DB – after lecturing Greece and other southern European
governments about the virtues of propriety for ages they can’t very well
wade in and rescue Deutsche Bank, so it looks like the bailout will
have to come from an international consortium of banks, via the simple
expedient of printing up another few trillion, which gets more habitual
the more times you do it, and there’s always the fallback position of a
coordinated international bail-in, although for obvious reasons they are
unlikely to resort to this until they have implemented the cashless
society. Cyprus was a trial balloon for this. In the meantime, various
creditors might take pity and engage in debt forgiveness. The movie Wall
St 2 with Michael Douglas is recommended viewing for senior management
at Deutsche Bank.
Thus it is ironic that at a time when there are a plethora of “end of the world” articles inspired by Deutsche Bank’s troubles, Deutsche Banks’s latest chart shows what looks like a convincing reversal, with a prominent bull hammer appearing last Monday, the 1st sign of a reversal, then a Double Bottom with Monday’s low on Thursday, followed by a big white candle on titanic record volume on Friday. This could be a major bottom here and the bill for bailing out Deutsche Bank can surely be pushed onto either German taxpayers or international taxpayers, or both, in time-honored fashion, perhaps with a special exemption on this occasion for the Greeks, as an exercise in diplomacy.
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It’s
been a good two weeks or so for our more actively traded stocks, with
some notable successes, but there are some non-performers especially in
the lithium sector which we will address during the coming week.
Amongst our successes were the following…
Catasys Inc CATS, $0.94, which we bought at about $0.66 in July and $1.05 in August, and sold at about $1.32, after which it plunged quite quickly to about $0.75. We bought it back at about $0.77 a few days ago and it has since rebounded back up to about $0.94. If it should rally back up towards resistance at the underside of the Head-and-Shoulders top at about $1.00 again in coming days, it is thought best to take a quick profit and see what happens – many traders, thinking in round numbers, will aim to get out at $1.00, so sell at $0.98 or $0.99, should we see this price. The Head-and-Shoulders top is not believed to be a final top but it is considered prudent on a quick rally back to the underside of the pattern to stand back and see what happens next.
Comstock Resources CRK $7.64. We did a very good trade in this, buying it at $4.11 on 12th August, and taking profits at $8.05 on September 9th. We bought it back on 25th September at about $6.94,
since which time it has rebounded somewhat. However, the current
pattern is regarded with suspicion, with a weak rally to a point beneath
the earlier high. Considered best to TAKE OUR MODEST PROFIT HERE and stand aside and see what happens, with a view to possibly buying it back on another dip.
Eguana Technologies EGT.V C$0.33 We did a couple of good trades in this too, buying it at about C$0.15 back in May and C$0.27 in August, and selling it at about C$0.34 on 9th September.
Reviewing the chart it still looks positive overall, and appears to
have been in a large consolidation pattern since its mid-May peak, and
looks likely to take off higher again once its 200-day moving average,
now at about C$0.20, has caught up more.
Pioneering Technology Corp PTE.V C$0.58 We succeeded in taking profits in this right at the recent top at about C$0.65, after buying it at about C$0.31 in June and $0.385 in August.
After we sold it reacted back, then bounced but failed to make it to
the highs, and on Friday it put in a rather negative looking
candlestick. Overall its pattern is positive so we’ll be on the lookout
for a good entry point going forward.
Select Sands SNS.V C$0.47 we did a couple of nice trades in this, buying it at C$0.37 in August, and selling it for a quick 27% profit in September, and then we bought it back at C$0.49 early last week
in anticipation of a big breakout move which we duly got last Thursday
when it soared 38% on big volume. This was a breakout of major
importance, so no action is required here, and the stock is a repeated
buy on dips.
The
Cannabis / Marijuana sector has been doing really well in recent weeks,
and although we bought the sector rather early and could have got
better prices, our portfolio in this sector has ended up doing very
well. One of these stocks that we have done well with is Organigram Holdings OGI.V C$1.74, which we bought at about C$0.99 in April and C$1.04 in June C$1.04 in June and sold for C$1.64 on 20th September.We bought it back on 30th September at C$1.69, because it now looks like it is going to break out to new highs.
The
big reason that the marijuana sector is doing so well appears to be
that no less than 8 US states are voting on the legalization of cannabis
on 8th November, 5 states for recreational use and 3 for medicinal use.
This may turn out to be a classic “sell on the news” event, especially
if we see a big run up into this date. The sector is in a powerful
uptrend that looks likely to continue until 8th November, perhaps longer
if the outcome of the vote is favorable
There is a lot of hypocritical humbug written about this industry.
For example, a subscriber based in the UK had trouble taking profits in
one cannabis stock a few days back, because a market maker had a “moral
objection” with trading these stocks. Presumably, this market maker
would have no such dilemma with trading tobacco or defense (war) stocks.
As far as the writer is concerned cannabis is a herb that, properly
used, has far more beneficial properties than tobacco, especially in
respect to treating various illnesses, and if that market maker has
“moral problems” with trading these stocks, they should be fired on the
spot for failing in their duty to trade a stock listed on the exchange –
it is not their place to pass moral judgment on what stocks investors
trade. Those who are not comfortable trading them should perhaps take a
look at one of our Cannabis stocks, Cannabix Technologies
BLOZF $0.254 which is in a strong uptrend and is a company that makes a
device for law enforcement to test whether drivers are “stoned”. Again,
as with alcohol, the problem is not cannabis itself, the problem is its
misuse.
Gold and silver stocks have continued to consolidate in recent weeks. Gold has been consolidating since early July after a sharp rise during June and looks like it is waiting for its 200-day moving average to catch up more with the price. There is an important support in the $1300 – $1310 area, and since the price has dropped down close to that it is considered a buy here.
The pattern in silver
is similar and looks to be morphing into a Symmetrical Triangle. The
bullish inverted hammer of Friday means that there is a good chance that
it will rally during this coming week.
Gold stocks, as represented by GDX,
appear to be completing an intermediate base pattern above its rising
200-day moving average, and this looks like a good point to pick up the
better ones, especially now that Deutsche Bank looks like it is pulling
back from the brink, thus averting, for now, the risk of an all-out
market implosion, although here it should be pointed out that DB is
certainly not the only bank in trouble. Only in the event of the entire
market caving in would the sector would be likely to break down into a
C-wave decline.
Originally Published October 2nd, 2016.
Reprinted with permission from CliveMaund.com.
Thus it is ironic that at a time when there are a plethora of “end of the world” articles inspired by Deutsche Bank’s troubles, Deutsche Banks’s latest chart shows what looks like a convincing reversal, with a prominent bull hammer appearing last Monday, the 1st sign of a reversal, then a Double Bottom with Monday’s low on Thursday, followed by a big white candle on titanic record volume on Friday. This could be a major bottom here and the bill for bailing out Deutsche Bank can surely be pushed onto either German taxpayers or international taxpayers, or both, in time-honored fashion, perhaps with a special exemption on this occasion for the Greeks, as an exercise in diplomacy.
Instant Access to Current Spot Prices & Interactive Charts
Catasys Inc CATS, $0.94, which we bought at about $0.66 in July and $1.05 in August, and sold at about $1.32, after which it plunged quite quickly to about $0.75. We bought it back at about $0.77 a few days ago and it has since rebounded back up to about $0.94. If it should rally back up towards resistance at the underside of the Head-and-Shoulders top at about $1.00 again in coming days, it is thought best to take a quick profit and see what happens – many traders, thinking in round numbers, will aim to get out at $1.00, so sell at $0.98 or $0.99, should we see this price. The Head-and-Shoulders top is not believed to be a final top but it is considered prudent on a quick rally back to the underside of the pattern to stand back and see what happens next.
Gold and silver stocks have continued to consolidate in recent weeks. Gold has been consolidating since early July after a sharp rise during June and looks like it is waiting for its 200-day moving average to catch up more with the price. There is an important support in the $1300 – $1310 area, and since the price has dropped down close to that it is considered a buy here.
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