This Week in Barrons - 9-9-2012

This Week in Barrons – 9-9-2012

Dr. Doom ‘n Gloom – That’s Me!

We stand just a few short months away from what many people are calling the most important election of our country’s life.  On the surface it seems to show a clear separation of the parties.  The Democrats w/ President Obama stand for ‘shared prosperity’ (socialism, big government, etc.), with the Republicans and Governor Romney standing for ‘individualism.’  Over the past 40 years we've had ample supply of both sides, yet we are still at a time when:

-      -  47 million people are on food stamps,

-      -  the labor force participation rate for men is the lowest since 1948,

-      -  70% of the current job openings pay less than $10 per hour,

-      -  our houses are viewed as liabilities instead of assets, and

-      -  hamburger prices have reached an all time high.

But the economy is just the symptom of a very insidious disease.  What got us into this position?  We Americans are amazing when something bad happens.  No nation on earth will band together neighbor-to-neighbor and pitch in to help, like in the US.  No nation has been so profoundly technologically advanced, so far ahead of the curve.  Yet – we are still a nation of sheep – willing (and often wanting) to be lead.  I don’t think it really much matters WHO wins the election – because an economic disaster is set in motion and will not be stopped.

-      -  Debt problems don't go away by borrowing more money.

-      -  Jobs won't magically appear by increasing or decreasing taxes.

-      -  You can’t fix or improve a health care system by absorbing millions more (non-paying customers) into an already stressed system.

I sat through two conventions waiting for someone to talk about how relocating manufacturing, and creating so much red tape (via EPA, DEP, CAFRA, etc.) have lead to our current predicament – but alas not a peep.  Unfortunately the economic fallout is coming, and cannot be stopped.  But, we can ‘kick the can’ further down the road.  The $64 million question is: How ugly will the situation get?  Almost daily we hear of military operations in towns across America.  We see more and more cameras and drones watching our every move.  We see laws being passed that allow you to be stopped, arrested and held without representation, without court ordered papers, just "suspicion'.  You have to at least consider the idea that Uncle Sam is preparing daily for social unrest.  Imagine what would happen to the inner cities if the EBT (welfare) cards wouldn’t work?  Imagine what would happened if banks wouldn’t open one day, or credit cards declined.  We are in uncharted territory.

-       Never in the history of the world have so many Countries gone broke at the very same time.

-       Never before has the global financial scene had debt loads in the multi-trillions, not to mention the derivative time bomb, where some $700 trillion has been pledged and pledged again against the same assets.

I have gone on record saying that there would be a coordinated Central Bank push, with both sides of the Atlantic embarking on a money-printing orgy.  We had a good start this week when Mario Draghi released his plan for "open ended buying of bonds".  Now, if the Germans vote yes (on the 12^th) for going along with the plan, and then Bernanke gives us more on the 13^th – we should be good to go.  However, little did I know the Chinese would join the party this week by announcing a massive infrastructure project including bridges, highways, water systems, a Port system, and 25 urban railroad projects.  So we now have the real distinct possibility of three continents joining in the stimulus effort.

My point remains the same.  If Bernanke, the ECB and China unleash massive stimulus via their various programs, it will indeed spur economic activity.  But unfortunately it has no staying power.  More debt, placed upon an already un-payable debt burden, just brings the pin ever closer to the balloon.  It's the aftermath that bothers me – so just call me Dr. Doom ‘n Gloom.

The Market:

Okay, they fired off the stage-one rocket boosters on Thursday, when Mario Draghi announced Europe’s plan to buy up Government bonds.  Then China (who has been slowing over the past several months) announced a massive $158 billion spending spree on railways, roads, ports, etc. – therefore the market held onto the previous days gains.  If the Germans (on the 12^th) go along with the program, we'll see another market gain.  And finally (on the 13^th) The Ben Bernanke gets to join in with more QE/Stimulus from the U.S.  With all of that new money in the system – the market should move higher and higher.   

There is a chance that the Germans don't go along with the party, and/or The Ben Bernanke doesn't give us something substantial – in which case the markets could rollover – which is why we have not gone ‘all in’.  I don't want to be loaded to the hilt here ahead of what could be a wild Wednesday and Thursday.

I still think that the Germans vote to go along with the program.  Not because they like it, but because not going with it would most definitely signal the end of the Euro as we know it.  They could very easily look at it as the lesser of two very big evils.  I'm also still thinking that The Ben Bernanke announces something on the 13^th.  Therefore, the stars are aligned for a big-time pop higher.  I do not think that this will be a "sell the news" type of event.

However, gaming it by getting too long ahead of this is dangerous.  I’m waiting to put the bulk of my funds to work AFTER I know all the details.  I'm suggesting a straddle play in the TIPS section – that you can certainly use on virtually any holding.

The Gold market also smells something big.  It's one thing when gold increases a few dollars a day, but $25 and $30 daily gains suggest that some inflation is coming our way in rather large doses.  Silver has also been on a fast ride higher – despite JPM loading up on the short side of the ledger.  Can JPM really beat the silver price down again with all those paper shorts?  I guess it's possible, but if the stimulus announced this week is big enough, I think they've lost control and it will challenge the old silver highs relatively soon.  

There’s a wild week coming.  I'm excited (not to see more fiat money), but to see how the markets react to all of this.  One thing I can guarantee – this will NOT be a boring week in the markets.

Tips:

We continue to appreciate in our trading accounts – DS writes me with some bio-tech picks of: XBI breaking out, BIOT in another up-trend, ISIS, ARIA, and PCYC with a significantly raised price target. 

If you own Apple (for example), you may think of straddling the stock. One-way to do this is by selling the October $700 calls (trading around $15.50) and buying the October $650 puts (trading around $14.25).  In other words, you protect your downside, make a little money, and have a good shot at holding on to the stock if the price move to the upside isn't explosive.

Currently I’m holding:

-      -  GDX – in at 42.50 (currently 50.55) – stop at 49.00

-      -  SPY – in at 142.54 (currently 144.41) – stop at 143.00

-      -  SBUX in at 48.88 (currently 51.03) – stop at 50.10

-      -  LOW – in at 28.02 (currently 28.32) – stop at entry

-      -  MRO – in at 28.13 (currently 28.60) – stop at entry

-      -  NTAP – in at 35.13 (currently 35.80) – stop at entry

-      -  IBM – in at 198.34 (currently 199.25) – stop at entry

-      -  GLD (ETF for Gold) – in at 158.28, (currently 168.60) – no stop ($1,737.50 per physical ounce), AND

-      -  SLV (ETF for Silver) – in at 28.3 (currently 32.73) – no stop ($33.63 per physical ounce).

To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there! 

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 9-1-2012

This Week in Barrons – 9-1-2012

7 Trillion Dollars – Yum – Yum…

Last week I made waves when I suggested that the recent Sentinel court ruling is the door opener for financial institutions to co-mingle customer funds with their proprietary trading desks – play cowboy with your money – and if they lose it – “Too Bad” – they are not on the hook.  All they have to say is that they used your money to make you even more money, it went bad, and it was lost.  No fraud, no foul, no illegality.  Last week people asked me:

1.    – If I was serious?

2.    – If I believed it?

3.    – And why would the court open the floodgates for institutions to co-mingle funds?

My answers are:

1.  - Yes, I’m serious.

2.  - Yes, I do believe it.

3.  - It’s all about the money.  With over $7 Trillion (about 50% of our total deficit) sitting in pension funds and 401K's – if they can get their hands on it, they will. 

Right now Obama is locked in a fight for his job, and he's beginning to sweat.  Anyone that's not on the Governments payroll is tired of the rhetoric, and is not better off than 4 years ago.  The Anti-Obama movie "2016" has been selling out across the country.  Currently most people figure that "it must be really rich people that lost their money, so it's not my problem".  Well my prediction is that at some point we’re going to hear about "everyday folks" losing their retirement to co-mingled funds.  Then Uncle Sam is going to say: “It’s time to stop playing in the Wall Street Casino and come over to the USA Retirement Program.  All employer/employee retirement money will now become part of our program."

This concept was initiated between 2007 and 2010.  The Government was broke, the banksters had taken down the financial system, and they were looking everywhere for money.  Everyday the Unions would come to Obama and tell them that their pensions were underfunded.  The market crash had taken a lot of people from ‘Hero to Zero’ in a very short time.  So the calls went out to find cash.  What they found was $6 Trillion in 401K's and Roth IRA's – mostly sitting there almost forgotten.  And it was Vice President Joe Biden that floated the idea of a "Guaranteed Retirement Account" (GRA), in the February 2010 "Middle Class Report".  The report outlines how the government was going to force our retirement funds into a Government-Run Mandatory Plan. 

Even before that, Teresa Ghilarducci (an economist) wrote a paper in 2007 called “Agenda for Shared Prosperity”, that she presented to the Economic Policy Institute in Washington.  In that paper she outlined her ideal plan for these "Guaranteed Retirement Accounts".  She proposed that our current system is failing, too few people are in 401K’s and taxes are straining the elderly.  Therefore, a "Guaranteed Retirement Account" (run by Uncle Sam) that forces you to donate to the program is a way of solving things. To quote:  "Contributions equal to 5% of earnings are deducted along with payroll taxes and credited to individual accounts administered by the Social Security Administration. The cost of contributions is split equally between employer and employee. Mandatory contributions are deducted on earnings up to the Social Security earnings cap".
 
The problem with the Biden proposal (as you might expect) was that the Republicans fought back – telling the government to “keep your hands off our people's retirement money".   Well, when the front door is locked – find the back door.  I believe that this is why the Sentinel Court case was not some ‘off the wall’, one time mistake.  Ever since February of 2010 (when the idea of a Government sponsored retirement account first surfaced), our government has been fixated on getting that pool of money.

So if the Republicans won't let them just take it without a fight, and the population doesn't really trust Uncle Sam (but doesn't trust Wall Street either), you can see what they've decided to do.  Let Wall Street rape J.Q. Public enough that J.Q. Public will come to Uncle Sam begging for safety.

-       This is why the court found nothing wrong with Sentinel.

-       This is why John Corzine was allowed to take a billion customer dollars and roll the dice.

-       This is why Bernie Madoff’s billions are still unfound. 

They've allowed the market go crazy, so they can come out and declare that the average person should not have their money in a 401K (where bad things can happen to it), but rather let Uncle Sam take care of it for you.  Once we get this next round of QE/Stimulus, and we see the coordinated global push and take advantage of it – my remaining 401K’s and IRA’s will be liquidated and converted to physical assets.  As far the trading accounts go – there’s always been a risk to them.  They aren't FDIC protected, and all we’re hoping there is to be one step ahead.

I know that what I just wrote is scary, and could be written off as the musings of a madman, but before you go there – remember this same government just FORCED you to buy health insurance or be taxed by the 16,000 new IRS agents that were recently hired.

The Market...
Once again some jawboning from The Ben Bernanke saved the market from really melting down this week.  He stated (from Jackson Hole, Wyoming) that indeed he is poised to "do more" if the economy doesn't show any signs of perking up.  I feel that the ‘more’ is coming on September 13^th.  The FOMC has a two-day meeting on the 12th and the 13th, and that allows them to see a handful of important things.  First, we will have seen the most recent non-farm payroll report.  Secondly, we will then know about the ECB bank meeting.  And third, the German vote on the constitutionality of going along with the ESM program will be announced on the 12th.

There are many ways that this can play out:

-       If the Germans agree to the ESM plan, AND The Ben Bernanke announces something big on the 13^th with QE3, we're going to get a big time rally that could easily test the all time highs by year-end.

-       If the Germans hold tight and vote against the ESM, but The Ben Bernanke still lets loose with QE3, we will still rally – we just won’t get as far.

-       BUT, if we don't get anything out of either – we’re going to see a drop of 20% or more in a big hurry. 

Honestly, it’s not really all that often when we know (in advance) that a big move is on the table.  We all should take advantage of this by playing both sides of the coin.  The market IS going to move up or down significantly.  I'm leaning towards up, but I'm not willing to take a one side trade on that, no thanks.  Let’s discuss next time the ‘straddles’ and ‘strangles’ required to best position our portfolios ahead of the move.

Tips:

We made some nice gains and cashed out this week on:  SPY, SNDK, and TTWO.  I’m currently watching VRSN over 48, NTAP over 35.12, CLF on a double bottom bounce over 37.50, and AUY over 17 – all seem interesting to me.    

Currently I’m holding:

-       GDX – in at 42.50 (currently 47.96) – stop at 47.00

-       LOW in at 28.02 (currently 28.48) – stop at entry

-       SBUX in at 48.88 (currently 49.61) – stop at 49.10

-       GLD (ETF for Gold) – in at 158.28, (currently 164.22) – no stop ($1,684.60 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 30.84) – no stop ($31.37 per physical ounce).

To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there! 

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 8-26-12

This Week in Barrons – 8-26-2012

What’s Ours is Ours – and What’s YOURS is Ours ... U.S. Government’s 7^th Circuit Court of Appeal.

Don’t you ever wonder why any of the Wall Street ‘crooks’ are NOT in jail?  I do – so I began to dig into the most recent ones – John Corzine of MF Global.  MF Global went bankrupt some time ago (loosing all of their customer’s money) – but it was money that John promised he would ‘keep separate’ from his investments and ‘hold for safe keeping’.  So I wondered – how then did he lose the money – if it was just ‘parked’ in a savings account somewhere?  Well the following is John’s defense – and subsequently what we ALL need to be worried about.

Back before the Lehman Brothers implosion and the financial collapse of 2008, a story was circulating about Sentinel Management Group (SMG) who had gone bankrupt – loosing over $500 million worth of customer funds.  It didn't get a lot of publicity because SMG’s business was a ‘Futures Commissions Merchant’ (FCM).  FCM’s are regulated institutions whose sole focus is to give other institutions a place to park some cash now and then and make a decent return.  SMG usually made their money with short-term loans, buying and selling paper assets, etc.  When SMG applied for their license – they represented that all customer funds would be segregated from the company’s investment funds.  Therefore, no customer money would be "lost" due to a bad bet or loan.  Well, what ended up happening was that SMG pledged customer money as collateral to secure a loan for Mellon Bank.  As the economy began to implode (and no one was buying up their assets), SMG got squeezed and was forced to declare bankruptcy.  When the bankruptcy process began to hand out money to the investors, the customers (who were told that they money was safe – because it was SEPARATE from other monies) were forced to the back of the line.  The big banks were standing in line first, and when all was said and done, all of the customer money was gone.

Questions were immediately asked of the regulators who said they had audited SMG and didn't find anything out of the ordinary.  But upon further questioning, the auditors were forced to admit that they had no idea how SMG actually operated, didn't understand the books, and basically signed off on audits to make it look like they had a clue as to what they were doing.  In a nutshell – they lied.  They didn't really audit SMG, because they didn't understand it.  

As you might imagine there were lawsuits.  The customers demanded to be made whole – because SMG had told them that customer funds were segregated and therefore ‘safe’.  But SMG didn't keep them segregated, and pledged those monies as collateral on a loan.  When all the dust had settled, the court decided SMG had done nothing wrong.  So, an appeal was set, and the 7^th Circuit reviewed the case, and announced their decision on Aug 9^th – basically telling the world that your money is NOT SAFE in virtually ANY financial institution.

According to Reuters:  “A federal appeals court on Thursday upheld a ruling that puts Bank of New York Mellon ahead of former customers of SMG in the line of those seeking the return of money lost in the 2007 failure of the futures broker SMG.  SMG allegedly pledged hundreds of millions of dollars in customer assets to secure an overnight loan at Bank of New York Mellon, leaving the bank in a secured position but SMG's customers out millions.  That SMG failed to keep client funds properly segregated is NOT (on its own) sufficient to rule as a matter of law that SMG acted ‘with actual intent to hinder, delay or defraud’ its customers,” said U.S. Circuit Judge John D. Tinder.

Now it gets a lot better.  During the trial, some of the banking testimony was so ‘over the top’ and not even making sense that in the judges opinion: “Instead of finding that the banker testimony justified a finding of egregious banking behavior, the District Court finds that the bank officials were such artless liars that they could not have been concealing deliberate wrong doing.”

So SMG (aka John Corzine and MF Global) told everyone that customer funds were segregated and safe.  They then took customer funds and pledged them as collateral.  The loan went belly-up and the bank wants the millions of dollars cash collateral.  The court gives it to them.  The appeals court ruled that SMG was so ‘stupid’ that it couldn’t have committed fraud – so the collateral went to cover the loan and screw the customers.

This opens the door for virtually ANY investing institution to take your 401K (or brokerage) money, and use it as collateral for their gain.  If things go badly – well – your money is gone and there is nothing you can do about it.  According to the court, what SMG did was exactly what MF Global did – taking a billion dollars in customer money to cover their own bet and loosing it all.  At least I now know why John Corzine is not in jail.  The courts will rule that this is ‘bad business judgment’ and not fraud or stealing. 

The door has been opened for an outright "mad dash for your cash", and you can bet that the bankers are looking at this ruling as their ship that finally came in.  I can't say it any clearer, if you have significant 401K holdings, you need to make a decision.  Do you keep it where it is (in some fund’s pool) – where one day it could be ‘mingled’ with the firm’s proprietary trading money and lost?  Or do you cash out – pay the penalty – and buy up gold and silver?  You know my choice. 

The Market:

On Thursday one of the non-voting Federal Reserve members appeared on CNBC to tell the world that in his opinion the economy is doing well enough that more QE is NOT necessary and in fact could hurt things – correspondingly the market plunged 80 points.  On Friday The Ben Bernanke himself said words to the effect that the Fed very well could be ready to do more accommodations, and the market soared for 100 points.  This market is not moving based upon fundamentals. In fact if it were, we'd be down 4,000 DOW points because very few companies are beating earnings with rising revenues.  Companies are beating earnings on cost cutting and ‘aggressive’ accounting.  This market is only moving on the hopium of more fiat money out of the Fed.

Each day we tick a bit closer to finding out if the Fed is going to do anything after their Jackson Hole (‘Bankers Gone Wild’) meeting on 8/31 and 9/1.  It is expected that if we are going to hear anything, that is when it will come.  I would agree with that except for one little twist.  The German vote on the constitutionality of Germany going along with the ESM plot to save the Eurozone comes on Sept 12.  Could it be that The Ben Bernanke is going to wait to see what comes out of that meeting, before making a statement here?  It's possible.  The ‘catch’ is that there is so much expectation that he is going to announce QE3 at Jackson Hole – if he doesn’t – the market could easily put in a 300+ point down day.  I think he knows this and with the world slowing down, he will announce ‘something’ – and potentially ‘something big.’  No more of this $600 Billion over 9 months stuff.  I’m talking $1 Trillion.  And if we get something big out of him, AND the Germans lose their mind and go along with the insanity that is Mario Draghi – we’re going to see the world markets explode to the upside.

So this next week is the set-up week.  Everyone will be jockeying for position to try and take advantage of what might be coming.  The issue of course is if he double crosses everyone and does nothing, or if he decides to wait on the Germans – going terribly long in the market will be a painful mistake.

I think this week the market will walk back up towards the 13,300 level that has been a concrete ceiling for months.  But you can bet by Friday afternoon, I will have taken profits in the trading accounts, and be down to some bare minimums ahead of the Jackson Hole meeting.  Yes, I do think he will announce something, but if it's not big enough, it might be a "sell the news" event.  If it is big enough, the market will run so much that we will have a lot of time to get in and pick up the right stocks.

So the bottom line is: On Sept 2^nd, and then again on Sept 12^th we are going to see the markets move.  Which way – the jury is still out.  But, knowing that The Ben Bernanke's getting the squeeze from Obama's camp to "do something", and Romney has repeatedly said this week that he's going to replace The Ben Bernanke if he wins the Election, Bernanke's only hope of remaining the Fed head is to go full guns and hope it carries Obama to a victory.

Tips:

We made some nice gains and cashed out this week on:  PBR, WRES, LSCC, WYNN, IBM, ATI, OVTI and MMM.  I’m currently watching: SSRI over 14.15, GDXJ over 22, and NTAP over 34. 

Currently I’m holding:

-       SPY – in at 135.75 (currently 141.66) – stop at 141.00

-       GDX – in at 42.50 (currently 47.55) – stop at 46.50

-       SNDK in at 42.51 (currently 43.12) – stop at 42.75

-       TTWO in at 10.13 (currently 10.10) – stop at 9.90

-       GLD (ETF for Gold) – in at 158.28, (currently 162.20) – no stop ($1,669.80 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 29.86) – no stop ($30.61 per physical ounce).

To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there! 

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

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Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>