2 July 2009-
“Short everything and remain short ! except for the DOGS !!”
levels at present, Dow 8280, Gold 929.30, Oil 66.20, USD Index 79.66, EURUSD 1.3998, Copper $2.2689, Nickel $7.4382, DOG 67.81 *this one is long play and should go up… double short DOW

TECHNICAL STUDIES & OUTLOOK
DOW JONES     downtrend
confirms breakdown in uptrend… support around 8220 levels, look for that level to be tested and likely broken if downtrend moves in earnest.
Fundamentally there are a lot of negative issues recently that could materialise:
- California default, Recent stock issuance globally to cap rises and provide downside liquidity, unemployment high, Eastern EU countries that could default on their bonds leading to Western EU states facing more write downs, lack of consumer spend and travel to hit hotels and commercial prop portfolios, Record Bond issuance leading to higher and higher bond rates (bad for stocks)
- Good news ? we have summer… oh that means less market participation and winter months for miners = less mining in winter
- $INDU for chart on www.stockcharts.com

OIL & Coal     downtrend
broke down into down trend a few days ago and todays decisive $2.00+ drop to $66 range confirms the down trend move is underway…this could logically lead to the capitulation of the metals rally also. Interesting to note that the Dow Jones Oil and Gas Index has also broken down. Stay short commodities with Oil leading the way lower !
Expect coal stocks to also suffer from the breakdown in oil… note that the coal prices for delivery in all 3 major areas have had 2 down weeks following recent up moves… is that a sign that the coal prices have resumed a downward move.
- $WTIC

GOLD     downtrend
Stuck under $940… failed to break through it after a few attempts this week. *more details under GOLD in index page. $GOLD

METALS     uptrend, but becareful
still in uptrends but with oil breaking down… becareful

USD Index     downtrend
still in downtrend
interestingly EUR might be having more issues soon versus the USD… EURUSD used to top out at $1.40 or so… but seems like the EUR might strenghten pass that point at present. Let’s see if it manages to break up decisively.
There was a comment from a fund manager that the recent CNY strenght against the USD was the cause of all the extra funds coming into the oil complex.
- $USD

BONDS, INFLATION and ECONOMIES               30yr yields downtrend
30year US Bond yields topped out at 5% recently and seems to have broken down… with it entering a downtrend at present. Looks like funds are shifting back into Bonds at present and yields might continue to fall for now. This would be contrary to the inflation fears that has been in the forefront recently, with metals prices and oil spiking up strongly.

Contrary Fundamental Backdrop (on hold for now)- Govt issuance of bonds to continue as funding needed for massive deficit spending at present… expect bond prices to keep dropping and rates to keep moving higher on the long end, even though for now the govts are artificially pressing the short end rate yields down…it could be possible that funds are coming back into bonds with more instability to come and economic meltdown to persists.
-  ECB rate confirmed to remain at 1%, unemployment 9.5%
-  USA unemployment 9.5%
-  Australia to continue to maintain its rate without hiking as trade deficit doubled ! in recent report… exports dropped significantly with the global slowdown
-  10 year Note yield $TNX, 10yr 3x Bull and Bear TYD, TXO, or 2.5x Bull Bear Fund DXKLX, DXKSX…
     or TBT ProShares Ultra Short 20+ Year Treasuries (price of bonds down these things   move up)
-  30 year US Bond Yield and Price- $TYX and $USB within www.stockcharts.com or yields can be found at  http://www.bloomberg.com/markets/rates/index.html

CHAIN OF EVENTS
nothing new comes to mind at present
*note- the recent stock issuance statistically points to 10-15% decline in the markets in the following months

Previous Chain of Event effect- 
…….

INVESTMENT THEMES
based on investment ideals (buying when prices are very cheap – trading at very low prices, most likely driven by the current fear or very bad present outlook,… but only buying where the “value” that one buys would hold or grow. Then waiting for prices to move higher when the situation or perspective normalizes)
1. Natural Gas… trading at 18x ratio to oil… as opposed to the historical 6x or so… Gas is not getting the speculative funds pushing it up and at present suffers from the perception that with weakening economies there is less need for power and therefore gas. It is used in a large percentage of industrial power production. At under $4.00 it is priced under the marginal costs of production and no one will be selling more for less than they can produce it… though there is no news that will support the price at the moment, it is trading at historical lows and at a large discount to oil prices… buy at the worse points when things are looking their worse and prices are at record all time lows and wait for things to turn around.*search for Natural Gas within this blog for more info on NatGas.
2. NZDAUD trading at under 80c… it ranges from 1 NZD buying 95c AUD to recent lows 1 NZD buying only 78c AUD… longer term historical range (15 years) shows 75-95c ran

RISK: Major issues to watch out for
1. Eastern EU states like Latvia, Hungary or something similar to default leading to a Western EU state to crash… ie Sweden who has loaned billions to these Eastern States.
2. GBP or other major currency crisis – Jim Rogers has forewarned this as a possibility within the next 6 months

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Collection of  notes on important areas to focus attention on…
- Technical Studies and Outlook
- Chain of Events: most recent outlook on the coming wave of effects from recent macro events
- Investment themes currently worthy of consideration
- Risks and areas to avoid

Chain of Events
Investment Themes
Technical Studies