May 5, 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%

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

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BTI Signal:  CAUTION

Our BTI Allocated funds remain in 100% Cash.

(Using QQQ & IWM)

May 5thThis morning we received economic news that first the service sector grew at the fastest pace in 8 months and the Institute for Supply management forecast for factory activity rose to 54.9 in April up from 53.7 in March.  Anything over 50 indicates growth. In the US the service sector is one of the largest employing sectors in the country, so this is showing us activity is definitely growing. Is the economic ball starting to roll? As long as the charade continues I assume it will.

 

So you say there is no inflation? I was reading an article today that in London an apartment recently sold for $237 Million dollars! A new record. It was for a 16,000 square foot penthouse in one of the most expensive areas of London. These properties are being purchased with the wealth of Russian Oligarchs, Chinese tycoons and Arab sheikhs. With commodity prices near record levels and globalization at its peak, the few are reaping massive rewards while the middle class are squeezed out slowly and steadily. You have to remember these prices are being paid with all cash, not financed. This type of activity confirms that global supply of money is at unprecedented levels.  If that money is not buying real estate it would be looking to buy other assets like stocks or companies outright. You can read the entire story in detail at the link below.  It’s an interesting read.

 

http://www.cnbc.com/id/101637981

 

As I have said this story just highlights the direction our world is going in.  In a desperate attempt by politicians and governments to prevent collapse, bankruptcy or civil unrest, they are printing endless amounts of money to spend on their unaffordable pension programs, welfare programs and whatever else they want. Unfortunately all those dollars are being funneled eventually right the pockets of these oligarchs and select corporate executives at the helm of the other fortune 200 corporations. The amount of money out there is simply dizzying, you just have to follow the trail and grab onto the trade.  This is just the beginning.

 

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.

 

This consolidation range we have been in over the past few weeks is probably getting close to doing something. Since we have not gone into a full blown correction up until now I think the risks to the downside are lessening.  All markets are waiting for is a sign and it will probably be off to the races.  We watch to see when our BTI Signal gives us a clear direction.

 

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 were mixed today with Gold higher and Silver almost even. We did undergo some technical damage on the charts over the past two weeks for Gold and Silver. But I still believe that the metals will make a large move in 2014. You just can’t hold down the price of a labor intensive commodity for years as costs continue to rise.  Something has to give.  We just wait patiently with our 20% allocation.

 

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 just continue to laugh as I watch our idiot politicians in the US do nothing.  As the months pass by they don’t seem to care or even realize that the crisis is worsening. I guess with each year that the debt ceiling gets raised and nothing bad happens our politicians feel emboldened to just keep doing what they always do.  Raise spending, promise deals for their lobbyists and go about business as usual. What’s the problem? They see no real inflation in their eyes as they look at government statistics. Janet Yellen says that there is no inflation so what’s the worry.  Most of these politicians are all Multi-Millionaires already so what do they know about cost of living expenses.  They have paid for health insurance, a nice salary plus all the kick-back or sweet heart investment deals that leave them with millions in profits compliments of their lobbyist friends.  You think anything is really going to change?

 

It’s almost too easy to invest today.  Just part 66% of your funds into Long Term core positions as I have said and use the last 1/3 as our more nimble capital to reduce risk during volatile times. So far every dip has been bought up aggressively. That’s a sign of plenty of liquidity looking for places to invest. I predict higher prices ahead, so do not worry.  Just worry about your personal income and job security.  That could be a real problem for the middle class.

 

Tomorrow I will not be able to do a full report because I have to pick up my wife from the airport at around 7pm. She had a family weeding to attend in Florida while I had my God Daughters 1st communion in NY. Oh the dilemma! Lol….
I will post any signal changes though by 5:30pm.  Thank you for your understanding.

 

 

Everyone have a nice evening and I’ll see you back here tomorrow. (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:  +17.66  (+.11%) 16,530.55 (CAUTION)

Transports:  Down -22.96 (-.30%) to 7,675.88

NASDAQ:  Up +14.16 (+.34%) to 4,138.06

S&P 500: Up +3.52 (+.19%) to 1,884.66

Gold:  June Gold Up +10.60 (+.82%) to 1,310.40 (as of 6:00 pm EST.)

Silver:  May Silver Up +.084 (+.43%) to 19.630 (as of 6:00 pm EST)

US Dollar Index:  Down -.013 (-.02%) to 79.550

Crude Oil Futures:  May Crude Down -.14 (-.14%) to 99.34/barrel

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

 

Our Recommended Popular Holdings

QQQ  Up +.39 (+.45%) to 87.88 as of 4:00 pm

IWM   Down -.36 (-.32%) to  111.67 (Russell 2000 etf)

IYM  Up +.29 (+.35%)  to 84.25 (Good long term Core position. Basic Materials etf)

MOO Up +.00 (+.00%) to 54.71   (Good Agriculture industry holding)

GDX   Up +.04 (+.16%) to 24.36 (Large Gold mining etf)

SIL   Down -.06 (-.48%) to 12.48  (diversified way to own the Silver miners.)

GLD  Up +1.20 (+.96%) to 126.26  (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  Down -.06 (-.24%) to 25.44  (start of year 24.71)

Div Yield 5.00%,  2014 YTD ETF performance: +2.95% (+ 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 5/05/14: +.28%

Portfolio Gains from 1/1/13- 5/05/14:    +74.35%  (live trades)

UNP: Union Pacific, (1.94% Dividend Yield) Long 3/25/14 @ $188.56   -.43% 

AZO: Autozone,  Long 11/12/13  @ $448.27    +18.25%

AAPL:  Apple, Long 8/12/13  @ $457.03   +31.49%

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.