The Tasgall Group

I read a while back that there is a 4 step hierarchy in terms of what drives markets. The first step is liquidity, then flow of funds, sentiment, and microstructure indicators (i.e., microeconomics or technical analysis). The basic idea is that everything flows from liquidity, and that liquidity is the largest of all influencers. The liquidity environment (expansion or contraction) is the mother-trend and is the “rising tide that raises all ships” when expanding.

I decided to take a look at liquidity trends over the last few years, and maybe in the process compare the current environment to the last (only) soft landing in 1994 as well as the recession in 2000.
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I was just doing a quick review of the markets, and Gold was certainly not the only commodity that was squelched today… Crude oil was down 3.8%, silver down 5.1%, copper down 4.2%.

The interesting thing is that Natural Gas started the day down quite a bit (around 3%), but rallied into and after the close to finish up 2% for the day. Here is the 30 minute chart to see the price behavior intra-day. While the rest of the commodities were struggling just to pare losses, natty gave a pretty noticable divergent performance. Zooming out to the daily chart for NatGas, it looks like we could have the beginning of a trend change, especially considering how little the drag the rest of the energy/commodities didn’t stop natgas from posting a decent day.

I found a decent index (XNG) that tracks 15 natural gas producers. The XNG finished the day down 2.6% despite the 2% gains in the natgas futures. Likewise Canadian trust companies that are heavily weighted towards natural gas reserves (like AAV) finished the day down ~5%. If there are a couple more days of strength in the futures market, we could see some of these stocks turn around.

I assume?Nicholas M. Maounis named his fund Amaranth after the flowers of the same name that represent immortality in several literary and cultural traditions.? Pride goes before the fall.? Isn’t it ironic? Don’t you think?? It’s like Amaranth on your wedding day…ohhh, crap.? I hate getting caught singing cheesy songs while I blog.? So embarassing.

Anyway, I looked up the plant on Wikipedia and found out that he might have wanted to check a few more associations before picking this name.? For example (more…)

It seems like quite a few people are claiming the rally on Monday and Tuesday this week is simply just mutual fund (or even pension fund) window dressing. It got me thinking about what it really consists of and whether or not it happens.? Here’s Investopedia’s take on window-dressing:

A strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. (more…)

In light of Jason’s commentary on gold’s technical picture, I set out to understand exactly why gold has reached this position in an attempt to shed some possible light on how it might act going forward.? My adventure has taken me down so interesting back alleys to say the least.? I began by pulling out the Commitment of Traders reports from the CFTC.? I’ve been studying these reports more and more lately and now I had an excuse to do a more concentrated study on one market. (more…)

I’d like to look at the technical situation in the gold markets and compare the current correction to the market situation back in 2002. Hopefully we can learn something, and maybe even anticipate the direction of the gold market a bit… I’m not going to cover the fundamental story, or why we want to own gold… that’s a topic for another post…

There are many a gold bug that think that gold will travel in a straight line — straight up! They buy at any price, and expect the world to fall apart on any given day. It would all be a lot easier if the price of gold moved in a straight line, but alas, we have to deal with reality here.

Price changes in gold can be violent, and it’s incredibly painful as you expect prices to go straight up, when in reality they go down by 21% in a two week period as the HUI index did from 9/11 to 9/21.
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No, not that big “O”, but rather the company that trades under the ticker “O“, Realty Income Corp. That was the most surprisingly bland name of the one letter ticker symbols that I recently reviewed out of curiosity… (more…)

I came across some interesting observations while doing some research on the historical prices of the AMEX GoldBugs Index (symbol HUI). The HUI is made up of the 15 largest unhedged gold producers in the world, and is one of my primary ways to track gold stocks in the aggregate.

As gold has wobbled and fallen quite rapidly lately, the HUI is moving quite a bit too. Over the last few trading days, it has seen quite a bit of volatility including several single day moves of more than 3% (up or down) and a single day of -7.6% (9/11/06)!

How common is this? looking at the 10 years of data since the index was created, there have actually been 49 days where the index moved up or down more than 7%. (For the gold bugs out there, there were 37 up days and 12 down days.)

Out of the 2500 trading days, a full 10% of the trading days exceeded a 4% move! (A full 60% of those days were UP days.)

Most amazing, there were 2 days where the index spiked defied all adjectives by moving higher by more than 15% including the largest single day gain of 24% back in September of 1999 when God himself smiled on the gold bugs and 15 central banks suspended their gold sales all at the same time…

The largest single down day for the index was -12.6% in July of 2002 when something happened that was important to gold, but not important enough for Google to find it some 4 years after the fact…

And almost by definition, indexes are typically much less volatile than individual stocks, so imagine how much individual gold stocks are moving!

I just found this great bit of data on The Big Picture Real Estate blog, an enjoyable read. I’ll present it here as they did, since it’s just startling (these figures cited below are just out in Sept), and REITs are still chugging upward like little engines that could.

Housing by the numbers

I’m sure this information can be found in many places online, but I just got this via e-mail from TradingMarkets and found it to be a useful quick summary of what’s coming up this week. I’ve pasted it below and followed with my comments (brace yourselves, this is a very long post!!!):

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