May 2, 2014

Karl's BorB Report Logo Headingcaution

THE BULL OR BEAR DAILY REPORT

By: Karl Hormann

 (BTI:  Bull or Bear Trend Indicator Signal)  Gains since Jan/2012: +20.84%

**

NOTE: NEW MINI-TURBO PORTFOLIO (SEE BOTTOM OF NEWSLETTER).  RETURNED +70%+ in 2013.

***

BTI Signal:  CAUTION

Our BTI Allocated funds remain in 100% Cash.

(Using QQQ & IWM)

May 2ndFriday provided us with some more economic news that had the news media celebrating. But I wasn’t celebrating at all and this is why. The jobs report showed us the US created 288,000 jobs last month while the unemployment rate dropped from 6.7% to 6.3%. Wow that is great news! Not really and I’ll explain why.

 

On the headline this looks great and the news media was cheering how this was the best jobs number in a long time and proves the recovery is taking hold.  But as you read into more details we realize the unemployment rate dropped so dramatically entirely because 806,000 people dropped out of the labor pool.  They vanished! The economic report showed that the labor force participation rate fell to 62.8%, a new 36 year low! And this is an improving economy? Those people either are living off of their savings, went on long term welfare or long term disability if they could swing that.  It’s definitely the case because US Disability enrollment keeps hitting new record highs each year.  I mean there is no incentive to get those low paying $10.00/hour sales or McDonald jobs when you can get more money from the government just collecting Welfare or Disability.  That’s what’s going on in America. The welfare program has become so enticing for the poor that they don’t want to work. If you’re on Welfare you get free Section 8 housing, you get a free cell phone as of recently, you get child day care, you get food stamp funds, you get free healthcare access, and you don’t have to work.  What more can lazy people ask for?

 

On CNBC TV the reporters were saying those long term unemployed will just never return to the work force and this is the new reality.  What! I shook my head at his comments. This is from guys making Millions of dollars who have disconnected themselves from the reality of the middle class. They just brush off the worst jobs market in US history as this is the new market and anyone unemployed will never work again.  If that’s the case we are in real trouble.

 

While this battle of recovery or depression continues, stocks are split into two markets.  The momentum names/high flyers are swinging wildly from huge losses to panic buying.  This is a very difficult market to be in at the moment and is why huge hedge funds are showing losses for the year right now. This is also why our BTI signal has remained in cash for an unusually long time. I look at this as a cautious consolidation period. With massive money printing going on supported by this record 36 year low labor force participation, we can rest assure that central banks will continue with unprecedented economic support through government debt purchasing and welfare spending program support.  There will always be money available for this kind of endless spending as long as China does not put their foot down and change their currency into a Gold backed Yuan.  They are the only country that can put an end to our US fraud that is spreading worldwide destabilization through our massive currency manipulation.

 

Our simple strategy continue to be to pay down debt and use your spare cash to diversify your investments.  Remember, 20% Gold/Silver, ¼-1/3 following our BTI Signal, 1/3 in our Turbo-Mini if you can and the rest in diversified holdings that will generate returns as inflation continues.  Some of my recommendations are all listed below like, IYM, Berkshire Hathaway, CVY/DVY and other holdings.  Just remember not to put any more than 10-20% into any one name. Over time these names must go higher or we will be facing economic Armageddon. It’s as simple as that.  Stay disciplined and stay consistent.

 

BTI SIGNAL – The BTI Signal remains in full CAUTION Mode. Our BTI System allocated funds are in 100% Cash. This trade is only for our BTI signal allocated funds. (I allocate 1/3 of my account to trading along with the BTI Signal.) The rest of the portfolio is made up of Long Term Core holdings which we do not sell, like IYM, Berkshire Hathaway (BRK.B), CVY, DVY etc…   We continue to hold all Long Term CORE positions.

 

Despite the small increases in the averages our short term indicators still point to possible weakness not giving us a clear signal. If we do break out markets will go much higher so don’t worry. Better off being safe with what’s going on lately.

 

We continue to add to our long term holdings on all market pullbacks like we just recently went through. Our long term holdings and Turbo-mini portfolio continue to act very well.  Just stay diversified and have some cash ready.

 

Check out my many recommendation at the bottom of my report to get ideas on what you could pick from to diversify your portfolio.

 

http://www.usdebtclock.org/

*We continue to hold our Long Term Core holdings which should account for about 66-70% of your portfolio.*

 

Note:  My portfolio is made up of 70% Core long term positions with dividend paying ETF’s and stocks, Gold/Silver per my sample portfolio & the other 30% to my BTI Trend signal.

The 30% of my portfolio that is dedicated to the BTI signal I trade 50/50 between QQQ & IWM (Russell 2000 etf) so half of my position has less exposure to Apple and more exposure to smaller cap stocks.  IWM will usually appreciate higher during Bull markets that we expect to be continuing like the one at the moment. Depending on the size of your portfolio you can cut down your holdings to less until the funds grow or you continue to contribute to your savings/investment account.

** Any last minute evening Signal changes will be emailed to you by 7:30am the next morning via auto alert update.

 

GOLD/SILVER— Precious metals suddenly spike higher after an ugly day Thursday. Of course the reason was that the Ukraine situation was escalating and this sent the metals spiking higher.  Really?  Than why didn’t oil spike higher also?  Oil was up just pennies on the day.  I call bull shit on that excuse. The metals just remain in an oversold condition with too many traders trying to short this market.  Than we have short covering rallies like now.

 

The bearish sentiment on the metals is hitting very high levels with so many analysts calling for Gold to go to $1050 or even $800/oz.  Not in my opinion because we are at production break even cost levels.  Just look at the mining sector that is suffering.  Those stocks are in distressed territory.  Eventually the mining sector will rise higher along with the metals. But this recent weakness has definitely done some damage to the long term chart.  More time is probably required to heal this market.  Is my early summer rally prediction going to hold up?  Time will tell.

 

I continue to hold onto my newest Silver Wheaton stock purchase with a profit now. Another speculative holding that is undervalued currently is Allied Nevada Gold (ANV).  This stock’s fair value is at around $5.75 while it currently trades near $3.45.  Insiders were aggressively buying stock around $3.25 last year, so I feel it continues to be a good bet for the next 12-18 months.  This is for risk capital only remember.  Miners are very volatile.

 

We continue to hold all our metals (20% maximum of our portfolio) and very very small mining positions if you have any.

Oil ETF complex I like: USO, XLE & IEZ.

 

At this time I am again not invested in miners except for SLW which pays a 2% dividend and ANV.

Shopping list:

(New Bull trend as of last week and CEF crossing back over $15.20)

SLW Deep in the money Call Leaps. (I continue to hold)

SLW  (I continue to hold the shares)

SSRI, ANV, GDX, SIL, EXK, IAG,

Keep the total of any of these trades to under 5% of your portfolio value if you do decide to get involved.  See my sample sector allocation section of the web site to see how much you should have total exposure to Gold/Silver and miners.

 

FINAL THOUGHTS— I continue to see a world in distress as bankrupt countries pretend that things are recovering while they all print endless amounts of free paper currency to purchase each other’s worthless bonds to pay for all their extravagant spending.  The level of spending by governments has reached gargantuan proportions.  How it continues is beyond my comprehension.  All I know is that for this kind of fantasy to continue Central banks around the world must continue to print Trillions of dollars in global currencies each and every year.  That spells massive inflation from now on.

 

All I can say is keep preparing as if the great depression is coming, pay down debt and invest.  Just yesterday I picked up a used off road motorcycle for my country property.  It’s the Yamaha TW200. I found it on Craig’s list, low balled a cash offer and the seller really needed the money so he sold it immediately.  The bike gets 80 miles per gallon and has massive knobby tires for great off road capabilities.  I purchased this as another long term investment for both family enjoyment and emergency transportation in either a collapse situation or massive inflation if gasoline in the US hits $10.00/gallon. Right now with no crisis, gasoline at our pumps yesterday were $4.10/gallon for the cheapest grade.  Ouch.  And we had no real hurricanes this past year that effected fuel. Imagine if we have a real crisis in the future.

ScreenHunter_386 May. 03 10.10

And our politicians have the nerve to say there is no inflation at all. Janet Yellen is now pushing hard to get MORE inflation.  She said inflation levels are currently too low and at unsatisfactory levels. What!  Lol You heard it straight from the horse’s mouth.  Janet Yellen want’s “more” inflation!  So keep investing and keep preparing.  The future will get very interesting indeed.

 

Everyone have a great weekend and I’ll see you back here on Monday by 8:45pm. (Weekday schedule)

 

Best regards,

Karl

The Bull or Bear Report

(Newsletters put out every evening before 8:30pm daily.  You will receive email notification once posted)

 

MARKET UPDATE:    

Dow:  –45.98  (-.28%) 16,512.89 (CAUTION)

Transports:  Down -20.18 (-.26%) to 7,698.84

NASDAQ:  Down -3.55 (-.09%) to 4,123.90

S&P 500: Down -2.54 (-.13%) to 1,881.14

Gold:  June Gold Up +16.40 (+1.28%) to 1,299.80 (as of 6:00 pm EST.)

Silver:  May Silver Up +.476 (+.476%) to 19.519 (as of 6:00 pm EST)

US Dollar Index:  Down -.019 (-.02%) to 79.560

Crude Oil Futures:  May Crude Up +.23 (+.23%) to 99.99/barrel

Advancers beat Decliners (from 7K+ stocks) by: 3,997 adv. to 3,257 decl.

 

Our Recommended Popular Holdings

QQQ  Down -.14 (-.16%) to 87.51 as of 4:00 pm

IWM   Down -.13 (-.12%) to  111.81 (Russell 2000 etf)

IYM  Up +.43 (+.51%)  to 83.96 (Good long term Core position. Basic Materials etf)

MOO Up +.31 (+.57%) to 54.86   (Good Agriculture industry holding)

GDX   Up +.52 (+2.19%) to 24.31 (Large Gold mining etf)

SIL   Up +.36 (+2.95%) to 12.55  (diversified way to own the Silver miners.)

GLD  Up +1.29 (+1.04%) to 125.09  (or you can substitute with:  SGOL)

BRK.B:  Berkshire Hathaway’s Class B Shares. [12-18 month target:  $162.00]

July 31st at: $116.21,     Sept. 24th at:  $115.05,     Oct. 9th at:  $111.77   (Book Value: 1.36),      November $114.87,      December 7th at: $116.62,   Feb 5th 2014 at: $108.83,  Mar 5th 2014: $119.02  April 18th $127.18,

**BRK.B IS A GREAT CORE HOLDING FOR LONG TERM AND FOR PEOPLE WITH LIMITED FUNDS THAT CAN ONLY HOLD A FEW POSITIONS.  BUY ON THE DIPS AND HOLD.  Berkshire is a great buy at a Book Value at under 1.1 to 1.2***

Other good diversified Conglomorates like Berkshire but a bit riskier are: LUK, Y & SEB

iShares Russell 1000 Value ETF:  IWD  (pays 2% dividend)

       Oct 17:  $89.25,      Nov 21: $92.37,    Dec 28: $93.74  April 4: $96.43

 

Healthcare ETF’s below. (Great for Core position holdings)

XHS at $75.36 on 4/25/13 (Health Care Services etf. I like more.  Good Core holding)

IYH   at $100.00 on 4/25/13 (Health sector such as J&J, Pfizer, Amgen…, Dividend: 1.42%)

 

(CVY highly recommended for diversified safer yield)

CVY  UP +.05 (+.21%) to 25.50  (start of year 24.71)

Div Yield 5.00%,  2014 YTD ETF performance: +3.20% (+ dividend yield)

2012 Return: +7.48% + 5% Dividend= +12.48%  (VERY GOOD)

2013 Return: +11.17 + 5% dividend=  +16.60%  (VERY GOOD)

VYM  (Blue Chip high yielding stocks etf)

DVY   (another great dividend earning etf)

 

Extra Suggestions :

TAL:  Target:  $57.00 fair value (CAUTION NOW) pays 6%+ dividend

We have been long this stock since $30.00  (Stop/Close position below $44.50) protect profits.

BGCP:  Target  $9.30+  (Real Estate broker play) Dividend 8%+  (Stop close below $5.50)

EXG:   Target  $12.00 (Global High Income Fund) Dividend  10.22%  (Buy under $9.75 or lower on dips)  Core Longer Term Hold unless conditions change.

HMC  (Honda Motorsport):  Long $41.50,  Target: $57.99   (stop: if closes below $38.35)           Pays 4.78% dividend

 

CHK (Chesapeake Energy): Target: $41.00  (stop: Stay out below $24.70)  Pays 1.28% Dividend)

 

 

Little Riskier Bank/brokerage plays below

KKR:  Target: $35.00,   Dividend: 6.91% (Stop: close below $23.36)

BX:  The BlackStone Group, Long @$19.47,  Target: $47.00 , (Stop: close below 31.30)

Honda Motorsport:   Target: $59.50   (stop/stay out if closes below $37.00) pays 4.78% div.

 

HIGHER RISK MINERS PICS (Turning Bullish on 7/19/13)
Allied Nevada Gold (ANV):   ½ Long Position at $7.00.  Final ½ Long at $4.00 on 10/2 limit order.    Target (6-8 months):  $8.00   If Gold can retake $1900 target could be: $40.00/share.

Mesabi Trust (MSB):   Target: $31.40,  pays +2.33% Dividend  (NO POSITION YET)

SLW (Silver Wheaton): Long partial,    Fair Value Target price: $16.00

 

DEEP IN THE MONEY CALL OPTION STRATEGY I AM TRADING from 4/22/13.

SLW might go lower so be very cautious or wait until bullish confirmation.

Buy  Jan 2015 SLW (Silver Wheaton) 15 Strike Calls for around $9.00

You have almost 2 years for Silver to get back over $50.00/oz. At that price your Calls would be worth $35.00.  I think there is a high probability to get at least a 200% to 350% return on this trade.  It is a form of a synthetic Long because we are Deep in the money.  Of course if Silver Wheaten closes below $15.00 two years from now, the call option will go to zero.  So only use pure risk capital on this trade.  And as soon as you get a double sell half of your investment to take your original money out of the trade.  Good luck.

 

 

Abbott Laboratories (ABT):  Target:  $35.04,  Dividend 1% only.  Recommended at $33.79.

Current price: 38.15 on 11/25/13  (Stop: Close below $34.00)

 

MSB, BGCP, TAL (high debt but stable shipping transport business) riskier,

* FDL (First Trust Morningstar Dividend Leaders Index ETF) yields 3.5% from Blue Chip large caps.  Good to buy AFTER major market corrections.  Very conservative income generator.

 

Permanent Portfolio (PRPFX)

2012 Gain: +6.02% (PRPFX is a well diversified holding fund.  Has stocks, bonds, Gold, Silver, etc…)  Great place to conservatively put retirement funds or to park cash Long Term.  The only issue I have with this is the US government Bond Allocation of the fund.

 

IMPORTANT NEWSLETTERS BELOW FOR QUICK REFERENCE 

July 20th 2012: Real Estate Special Discussion Edition

Nov 19th 12012: How to insure your portfolio

Nov 6th 2012: How to make $200K per year

 

*****TURBO MINI PORTFOLIO STRATEGY*****

Check out my new mini portfolio below called TURBO MINI STRATEGY.  It’s a purely mechanical computer generated investment model that picks superb S&P companies that have positive cash flow, positive earnings, accumulating interest and are leaders in the S&P for growth. This is a bit more of an aggressive portfolio, but if you have a large investment account then it could be a great way to supercharge a portion of those funds.  Last year in 2013 it only made about 6 trades and currently holds the 5 stocks listed below.  I will list the changes as they occur in 2014. Of course past performance is no guarantee of future results, but if the Fed will continue to print to infinity or face collapse, you can guarantee these monster growers will continue to accumulate the worlds growing cash supply and cause their stock to rise further.  And if one company fails to perform or falls off of its many growth criteria, that particular holding gets cut and replaced with another up and coming company.  I’m very excited about this new addition to our Bull or Bear Report.  Good luck, stay diversified and invest safely.

I will update these as changes need to be made. I will make a note at top of newsletters to changes to TURBO MINI PORTFOLIO.

TURBO Mini Portfolio G/L for today 5/02/14: +.06%

Portfolio Gains from 1/1/13- 4/22/14:    +73.86%  (live trades)

UNP: Union Pacific, (1.94% Dividend Yield) Long 3/25/14 @ $188.56   -.30% 

AZO: Autozone,  Long 11/12/13  @ $448.27    +18.13%

AAPL:  Apple, Long 8/12/13  @ $457.03   +29.66%

CASH  (40% of account)

 

HISTORICAL TRADES BELOW for 2014

4/23/14: Covered Short GDP on close (4pm)  26.44

4/16/14: SHORT GDP on open 4/16 (9:30 am) 24.85 Open.

4/16/14: SELL WYNN at open 4/16 (9;30 open) to close position.

*****

4/9/14: COVER OFIX at open 4/10 (9:30 open) to close.

4/7/14:  SHORT OFIX at open  4/7  (9:30 am open) to open

4/7/14: SELL GOOGLE at open 4/7 (9:30am open) to close.

3/25/14: Replaced Priceline with (UNP) Union Pacific at 9:30am open price

3/24/14:  REPLACED NETFLIX with  (WYNN) Wynn Resorts Ltd. at 9:30am open price

 

Portfolio Graph I will post each weekend.

ScreenHunter_385 May. 03 10.04