This Week in Barrons – 11-25-2012
“Control your own destiny or someone else will.” … Jack Welch
I remember hearing Clint Eastwood say: “I have a very strict gun control policy: if there’s a gun around, I want to be in control of it.” Well, this week, it seems that drug lords along with Raymond Yans (the president of the UN's International Narcotics Control Board (INCB)) are lining up to challenge marijuana legalization in Colorado and Washington. Apparently, the voters in Colorado and Washington were unaware that they would have to fight off not only the UN, but also global drug czars in their effort to exercise their local sovereignty. Mr. Yans (in a letter this week) reminded the United States that we agreed to the 1961 Single Convention on Narcotic Drugs, signed by 185 States, that placed marijuana under control, and limited its use for medicinal purposes. The INCB President requested the Government of the United States take the necessary measures to ensure full compliance with the international drug control treaties within the entire territory of the United States, in order to protect the health and well-being of its citizens. It is clear that the INCB (and the drug lords) have not been listening to nearly every independent study presented to the U.N. (including the most recent report in 2011 by the Global Commission on Drugs) concluding that the global war on drugs has failed, and that governments should end the criminalization of drug use. It’s one thing to be threatened by drug lords, it’s quite another to be threatened by the UN. I find it amazing that the UN can step in and try and tell our "sovereign" states what they can and cannot do.
On another matter, I remember listening to Tony Robbins say: “We need to control our consistent actions – because it’s not what we do once in a while that shapes our lives, but rather what we do consistently.” A while back we talked about our 401K’s and IRA’s – and how the US would look at the trillions sitting in these accounts and begin to drool over them. Just this week a vision of a new "National Retirement System" was leaked. Under this system Americans will turn over their private retirement savings to the federal government in return for a government-controlled annuity. Basically it’s ObamaCare for your retirement accounts. Under the guise of 401K’s and IRA’s being unfair to the poor and disadvantaged, a government-sponsored program administered by the PBGC (the government’s Pension Benefit Guarantee Corporation) is in the early stages of taking over the administration of private retirement savings accounts. Fair warning – going forward – know where your money is.
Change happens when you decide to take control over what you do, instead of craving control over what you don't.
500 points in a week was a pretty strong bounce. Last week we suggested that it might be time to play with the DIA’s and SPY’s (the Exchange Traded Funds (ETF’s) for the DOW and the S&P) and that a bounce was near – but we never thought 500 points was in the cards. We suggested that some of the old leader stocks would bounce well, and Apple (AAPL) did just that.
Calling that bounce was fairly easy. We were down about 1,000 points in a month, were oversold from every technical indicator, and were just inches away from a traditional "10% correction". As I said, that was the easy part – the hard part is trying to figure if this bounce has run it's course and we're going to fade back, or if we have just seen the start of a powerful year end rally that sweeps us into the "January effect" and we challenge the Sept/Oct highs at 13,600. I can make a case for either scenario.
This coming week should hold the key. This week (along with being perfectly set up for a bounce) was also the Thanksgiving Holiday week, and everyone is usually optimistic around this time. With lower holiday trading volumes, they often just jam things higher because there's no opposing down volume. But come mid next week (when volumes return to normal) we will see just how much profit taking and short selling is in store, and by week’s end we should be able to figure if we're going to continue ‘up, up and away’ or not.
After a blistering run like we just had, the only question at the beginning of this week is: how much of a pullback will we see?
- On the downside, if the DOW fails the 12,800 level, and/or the S&P fails 1,380 – we could go right back to the November lows.
- On the upside, watch for them to try and take out 13,200 on the DOW and/or 1,426 on the S&P and then continue to us push us higher.
I'm leaning toward the idea that we're going to see some mild profit taking and then they'll come right back in and buy, in anticipation of a "fiscal cliff deal". That should take us up to challenge the October highs. I could even see them punch through that resistance level and hit almost the all time highs by late January. Again, it's too early to tell but that's where I'm leaning right now.
As David S has written us – for reduced volatility with excellent return – take a look at an ETF that mimics Pimco’s Total Return Bond Fund – BOND.
On Monday – via Twitter – I’ll be posting about 15 stocks with buy in prices – that look good both technically and fundamentally.
In terms of my broken record picks – they’re still Gold and Silver. John Paulson continued pounding the gold drum this week, and George Soros increased his gold holdings by 49% in the third quarter of 2012. 16 analysts believe that Gold will rise every quarter next year and average $1,925 an ounce in the final three months – an increase of 12%.
My current short-term holds are:
- AAPL – in at 525.35 (currently 571.98) – stop at 562.00
- DBA – in at 28.30 (currently 28.73) – stop at entry
- SIL – in at 24.51 (currently 23.37) – no stop yet
- GLD (ETF for Gold) – in at 158.28, (currently 169.74) – no stop ($1,727.90 per physical ounce), AND
- SLV (ETF for Silver) – in at 28.3 (currently 32.98) – no stop ($33.34 per physical ounce).
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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