2012: The year of a housing turnaround?

Improved employment figures and record home affordability levels could spawn a minor housing recovery this year, analyst Mark Fleming said Wednesday in the CoreLogic ($23.80 0.68%) MarketPulse report.
The Freddie report says economic growth will strengthen by 2.1% in the first quarter of 2012, while mortgage rates will remain low at least through the beginning of the year. In addition, the Freddie Mac survey predicts home sales will grow another 2% to 5% from 2011.
Fleming with CoreLogic says several other developments could spur along housing demand. One of those being the number of households paying off debts — a factor that creates more liquidity and access to credit. Furthermore, households started adding home equity lines of credit in the third quarter of 2011, bringing in more access to cash flow and suggesting borrowers and lenders are more confident.
He believes 2012 is the right time for a housing price rebound with affordability levels putting a floor on the market, barring further price declines.
Fleming says economic concerns peaked in the summer of 2011 when politicians were stuck wrangling over the nation's debt ceiling and the economy seemed poised for stagnation.
Fast-forward a few months, and Fleming says conditions are better, making way for a possible recovery in 2012. Fleming's more optimistic outlook is mirrored in the Freddie Mac U.S. Economic and Housing Market Outlook survey for the month of January.
With this in mind, Fleming said analysts will be watching the market closely in search of positive signs during the spring and summer selling seasons.
His report noted that "most housing statistics basically moved sideways in the latter part of 2011. Builder sentiment is improving ever so slowly, but remains at very low levels. Housing starts are also increasing, driven mostly by multifamily starts."

Silver Is A Better Investment Than Gold

Gold investing has long dominated the precious metals space, as investors have used this ultra-popular metal as both a trading/speculative instrument as well as an integral part of a longer term strategy. While silver still has a large presence in the financial world, it is not often that a big name steps into the limelight and touts this white metal over its gold counterpart.
Jim Rogers is easily one of the most famous investors of all time. His astounding track record has led him to become one of the most successful traders ever, earning deep respect throughout the financial world. Better yet, Rogers is not the least bit shy about speaking his mind, whether he is right or wrong. Some of his previous statements included the fact that anyone who doesn't invest in commodities is a fool, that gold will surely drop 20% from its current levels, and now, Rogers has stated that silver is a better investment than gold.
Rogers' Reasoning
Rogers noted that for the time being, silver presents itself as a better play, as it has been a slightly better performer over the past five years. "Consider this: Silver is the only major commodity not to have reached a new all-time high in this bull market; silver is still cheaper than it was 32 years ago, prices are astonishingly depressed" writes Peter Cooper. Also, historically, gold has a history of being worth anywhere from 12 to 15 times silver; that figure is currently showing gold as being roughly 50 times more valuable than its counterpart metal.
Rogers also urges that silver's volatility may make it the perfect option come fall when it is widely expected that the Fed will be announcing yet another quantitative easing program that could create a mad rush into silver. Of course, that is not to say that it will not be a bumpy road along the way. Silver has not maintained quite the composure of gold through the years, as it is known to exhibit massive movements, so the next few months will likely be more of the same.
Ways to Play
For those looking to ride the coat tails of one of the world's most successful investors, we outline several ways to play the metal.

• Silver Miners ETF (SIL): A fund that dedicates its assets to firms who mine the actual metal.
• iShare Silver Trust (SLV): This physically-backed ETF has over $8.5 billion in assets and is an investor favorite, trading more than 7.7 million times each day. This fund will allow for investors to use options to make appropriate bets.
• Silver Wheaton (SLW): A mining/streaming company that has been an investor favorite for quite some time. This is a good option for those looking to single out a particular firm.
• Futures: Of course, you can always utilize the wide variety of futures contracts listed on the COMEX, LME, MCX, and more.

CTA Trading Desk Morning Report

Here is that chart updated to today's readings:

Gold's decline has approached an area where you can expect support. More importantly, when/if Gold gets hammered through the first 2 supports, you can see that the SUPER SUPPORT should be bought with both hands. My initial analysis showed a primary target much higher (in chart below), but we haven't had a washout (that we hope for) and should we experience one, the blood in the street should be bought.

:

With the recent weakness in both Gold and the S&P 500, one would expect the miners to be falling out of bed. However, they have held up very well as can be seen in the above ratio chart:

CTA Trading Desk Morning Report

In the WIR last weekend, I stated I was bullish but cautious, and would not hesitate to move out of long positions if the market dropped further. Yesterday we sold out of more than 25% of our long positions and added about 20% cash. As for our Guidance and Risk Management System results, the only holdings that the system has unacceptably ranked are some precious metals stocks plus IBM. In the latter, traders were blind-sided. It's a position we are, for now, forced to hold, rather than trade. We are now just over 50% long and down to 19 positions only. Today looks more positive for equities, commodities and possibly precious metals. I continue to believe that investors, not speculators, have a good opportunity at present to buy the precious metals -- both the bullion and the stocks.

Yesterday, Bill wrote that the President was boasting about devaluing the US Dollar during the debate as a way to make the US competitive in the global market place. This process has been going on in the majority of countries for years and is why gold has been trading like a currency and not a commodity - it just takes some talking heads a very long time to figure this out. Gold is going much, much higher due to this global process and each day there are additional large money managers figuring this out and getting on board the gold bull. The bull will end when the large money is offing precious metals and precious metal stocks to the public at much higher prices. We are nowhere near that time.

Recently, I have been writing about a short-term drop in price in order to reset sentiment and allow the price of gold to rise to new highs.

The following chart on Public Sentiment on Gold was updated on sentimentrader.com. I believe that it was done prior to yesterdays decline so I assume that public opinion moved even lower than is shown here:

That is what we were looking for, but it is not as low as I would like to have a real washout, but it is getting there.

If we get that decline in gold, we will see a final washout setting up the perfect launching pad directly in the timing band for a low. This will occur when the seasonal strong period is starting (end of October) due to the Indian wedding season. That would be an absolute gift!

Here is the Running Chart on Gold:

Here is the same chart drawn as a line chart for more clarity:

As you can see, price has moved very close to the projected area. Although we do not yet have the washout hoped for, one could make an argument to start to add to precious metals positions now - depending on your timeframe.

At the beginning of October, I posted the following chart showing 2 possible scenarios, one in blue, the other in green. It turns out that the higher probability one (green) has been working out. This chart is close enough for a partial buy, imo, but you must be ready to take some heat.

This simple chart of the HUI also looks constructive, I think its self explanatory:

Should near-term weakness in stocks and commodities occur, the Trade of the Generation will be hot once again. As money flees into bonds, they should be sold into that strength and gold should be bought.

Trade of Generation:

The bottom line is that we have entered the time to start to get long precious metal stocks. There are additional areas to add - either into weakness or if breakouts occur. I suspect more very short-term downside is in front of us, but you definitely do not want to be out of the market when the rally begins in earnest.

Bill Cara's Blog

CTA Trading Desk Morning Report

[7:00am ET] Good morning.

Cara 2013 Toronto Conference announcement

The Cara Toronto 2013 Conference will be held over three days, Friday to Sunday lunch, September 13-15. The meetings room hotel has not yet been selected, but special room rates will be obtained at that hotel as well as at the Strathcona Hotel. For those who wish to arrive a day earlier, Bill Cara will be organizing a full day of discussions with exhibitors at the Cambridge Toronto Resources Show at the Sheraton Centre.

The speakers are expected once again to be Bill Cara, Geoff Goetz, Vad Graifer, Deron Wagner, Marc Farmer, and Harp Singh plus Stephen Wellman and at least one other. Geoff and Vad will participate in real-time trading on September 13. Vad will demonstrate the Reality Trader system while Geoff will introduce and have an in-depth discussion of the Cara 100 Guidance and Risk Management System. Many of the speakers will have pre-taped video presentations to be followed by live Q&A. An on-site electronics technician will ensure the program runs smoothly and that we have more time next year for Q&A. Those presentations will be available by remote access for those who are unable to attend in person.

Also, rather than have restaurant dinners this year, by popular request we are going to have pub food at the Strathcona on Friday and Saturday evenings. Lunches on Friday and Saturday will be a LA’s (again) and Volos, the sister restaurant across the street at York and Richmond, which will be close to the meetings room hotel. The farewell luncheon on Sunday will be adjacent to the meetings room, and then attendees will be able to get away early for out-of-town departures. A special rate from the hugely popular Porter Air will be available again next year.

We believe that the 5th Cara Conference will be by far the biggest and the best. A brochure will be posted on the website in the next few weeks after the full agenda has been finalized. The dates, however, are final, and so we hope to see you there September 13-15.