July 2009

(Following is the third installment in a series of articles by Chuck Cohen, a seasoned and highly successful investment consultant who lives in New York City. We will be featuring Chuck's thoughts regularly at Rick's Picks in order to expand our coverage, in particular, of junior mining shares, a core area of his expertise. In the coming weeks, Chuck will take up the topics of gold as a core investment, and gold as a speculative vehicle. Today he tackles gold's usefulness as insurance against financial calamity". RA)  No One-Size-Fits-All Strategy In spite of the sharp drop in shares over the past nine years or so, most investors remain firmly committed to common stocks. Mutual fund statistics show that very few holders have pulled their money out of their funds. And the recent "Big Money Poll" in Barron's shows that the big guys are even surer than  they were even at the very top.  It is clear that investors have been stirred, but far from shaken, by the decade's decline and by our faltering economy. And gold? To many investors and even professionals, buying gold is like traveling to Myanmar or northern Pakistan: Few dare to venture there. The truth is, that to our Ivy League and Keynesian educated financial community, gold is viewed as a superstitious relic.     I don't seek to persuade you to sell everything you own, put it all into gold and gold shares, and then buy guns and ammo before retreating to a barricaded cabin in the Ozarks. Instead, I hope to try to make you understand that gold investments come in different sizes and shapes, with varying degrees of risk and reward. It's not an all or nothing choice. The better you understand gold, its attributes and how it fits into your financial planning, the

I am going to deviate a little today being I did post 3 touts over the week end. I am going to postulate on what could happen if my indicators are correct and there is a rally this coming week. I have already covered gold so I will cover two others in a group session. All work is based upon the daily chart. SIU9 last: 12.665. The D for the move down is ___, I am rounding for ease of typing. For price to rally it would have to go through ___ and then P would be ___. If short I would use a stop at _____. On the way to ____ there should be resistance at ____ and ____. There should be some congestion around the _____ area and maybe a slight retracement. At this time pressure is trying to turn up from an over extended area on the chart. On a longer term chart Price was rejected at PO2 = ___ and this current retracement began from that level. HGU9 last: 221.95 Price has been trying to reach PO2 at ____ and been unsuccessful on the move down. For price to move higher it would have to go through ____ and then P would be ___. Look for resistance at the ____ level. There could be a slight move down to a support area of ___ to ___. On a longer term chart Price met resistance at P=___ and this is a retracement down from that number. Silver is halfway between gold and copper as a fundamental entity. It is both an industrial metal as well as a semi geopolitical barameter. Its value is determined at times by manufacturing demand and at other times it is a reflection of the buying power of the dollar and inflation hedge.

All you hear on the radio and on TV is that a head and shoulders neckline has been broken.  I found that a head and shoulders formation works only about 37% of the time.  That number could have changed over the years, but I look at the formation and realize that a lot of people will follow it.  Under those cicircumstances it can not be totally ignored.  When I first posted on this site I wrote that my indicators said price action should be lower and it has been for the past few days.  Now things seem to have turned and I am seeing upside pressure starting to be applied to some key sotcks and indicators.  If you are short I would consider keeping my stops really tight.  You can always re-enter at a later date.  Whether Friday was a ond day wonder or not I can't tell.  As you can tell from my posts on GC, S and NRT over the weekend things are a mixed bag.  Right now it looks like both stocks and commodities could move higher.  A bad earnings report could change the outlook, but right now it doesn't look like that is going to happen.   If the maximum pain theory is going to work at this option expiration Friday, then the SPY will have to press the 91 strike price.  If that is going to happenthan a lot of stocks are going to have to rally.  Ira

There seems to be question with gold at this level. The pressure indicator is over extended and it is trying to turn higher. There is divergence at the lows right now which indicates that the internals for gold are stronger than price indicates at this time. The second price objective for the move down is at _____ and it doesn't appear that price will reach there on this leg down. For price to make a new run at _____ it would have to go through _____ and then the first price objective, P, would be ____. A short cycle retracement higher could start with price movement above ____ and then the resistance levels would be ____and finally ___. If this this takes place then there could be a retracement down before the ____ is reached. Price would have to go through ____ to void the current down move. All upside price projections are based upon the current low.

The chart shows that there are three different cycles at work on this daily chart. There is currently upside pressure being applied to price. You will note that price found support at each of the price objectives for the move down in red. It also found resistance at the first price objective, P, noted in black. The short cycle in blue indicates that price could find resistance at P, ____ and then at the next two price objectives for the up move. At this point the down move has not been voided. The target price for the major move higher, not shown, is _____. This analysis is based upon one chart only. Ira

Now that you have set up your overall plan it is time to implement it.  This is where the beginner starts.  He/she opens an account and he/she feels that it is easy money from here on out.   Trading is one of the hardest businesses that you can be in.  There is no corporate designation of blame as the secret to success.  Every losing trade is no one's fault but your own.  Having to admit that you are wrong and accept blame is the most difficult thing to get used to as a trader.  It is always, "they did it to me', as an excuse.  They came down and took my stop and ran it back up again to exactly where I had it figured.  Once again trying to put the blame elsewhere.   Losing money is not the crime.  The crime is trying to blame someone else for it.  I have been in the market myself since the 1950s.  I was introduced to the stock market in the 1930s and 1940s by my father.  He had a stock that did absolutely nothing, but I followed it in the paper on a daily basis.  When I first started out I made all the usual mistakes and lost an unusual amount of money.  I found the experts didn't really know anything and my broker knew even less.  I was a lamb being led to slaughter and I smiled all the way to the slaughtering pens.  I remember the stock exchanges closing down for the day because they couldn't handle 6,000,000 shares a day.  Now they do that volume in one stock in the first hour of trading.  I graduated from college with an engineering degree and went to work in a design office,  then into the construction business and owning my own construction company.  Then came

The daily chart is still being hammered with downside pressure, but the indicator is in an over extended area of the chart and it is trying to turn up. Price is currently oscillating around PO2, the ____level. I seems to have found temporary support here. The target price for the move down should be ___. For price to move higher it would have to go through ____and then the first price objective, P, at ____. Any upside move could run into resistance at ___and ____. This analysis is based upon the daily chart only. Ira

Trading is business like any other business.  The only difference is that you don't have a store front you have to pay rent for, employees and all the troubles of dealing with the public.  Your business is the same as Macys, Kohls, Safeway, the local liquor store or the corner hardware store.  All you are doing is buying and selling inventory.  Your suppliers are the various exchanges.  Your customers are provided for you by the exchanges as well as the products you decide to inventory.  Now the decision becomes yours as to what type of business you want to be in and how you want to handle your inventory.  You can be a Tiffany and turn your inventory maybe 4 times a year or you can be like a Safeway and turn your inventory on a daily basis.  You can be a high end dealer and look for a 100% to 500% markup on the inventory or you can be mass marketer and look to make between 3% and 5% on each trade.    You can be like a grocer or hardware store and handle multiple products or you can be like a foot locker and only handle one product.  If you are not a producer of an end product you are a speculator.  Speculation in the stock, futures and index markets is based upon the greater fool theory.  You are buying something in the hope that someone will pay a higher price for it.  Basically stocks are worthless pieces of paper unless they pay you a dividend.  You may have all of the fundamental or technical reasons in the world for purchasing a product, but the underlying fact is that you feel, for one reason or another, that someone will pay more for it than you payed for it.  The opposite

Just Jitters, or is the Bear Back? Taking their cue from our cautiously optimistic, if factually challenged, Fed chairman, mainstream purveyors of news have been spewing propaganda for months about a “recovery” in the second half. But do investors actually believe this poppycock? We never would have imagined so, at least not before Thursday. But when the broad averages plunged on weak payroll numbers released ahead of the holiday, they buttressed the... Read the Rest of the Article | Comments *** Lower Bullion Prices Worth Your Patience We told you last week to wait for better prices if you’re planning on buying gold bullion. That is still the case, although it looks like it may not be long before the promised bargains arrive.  A week ago, with Comex August Gold trading for around 824, we projected a minimum downside target of 899; yesterday the futures settled at 924.60 after making a two-week  low at 920.30 . Lest you get the impression that gold sat still in the interim, we... Read the Rest of the Article | Comments *** On Foundation of Lies, Recovery Is Impossible Gold continues to hang tough in the midst of oil’s nasty selloff. Although August crude has fallen more than 14%, from last Tuesday’s peak of $73.38, a Comex Gold futures contract expiring the same month lost just 2.5% of its value during the same period, falling from $947 to $924. The fact that gold has not plummeted in sympathy with oil strongly hints that it will be quite feisty when selling in the oil pits finally lets up. It was triggered by fears that the alleged global economic recovery is much weaker than had been thought. One might have expected investors to be prepared for this turn of events, but apparently... Read the Rest of