Stock and Commodity Investors Profiting in "the whipsaw year" 2010

By: DeepCaster_LLC

“The U.S. Economy faces a “significant chance” of contracting again after emerging from its worst recession since the 1930s, Nobel Prize-winning economist Joseph Stiglitz said.

“It’s not clear that the U.S. is recovering in a sustainable way,” Stiglitz, a Columbia University professor, told reporters in New York…He said the crisis of the past year was made worse by lax regulation that allowed some financial firms to grow so large that the system couldn’t handle a failure of any of them.”

Nobel Laureate Joseph Stiglitz, 12/29/09

Looking ahead into 2010, perhaps no ability will be more important to Profiting, and to avoiding Catastrophic Losses, than properly Timing one’s Investments and Trades. (And merely “Buying and Holding” will be a recipe for Disaster as we, and, increasingly, others have pointed out in several recent Articles.)

That is because, first, high-probability Forecasts of where Major Market Sectors will be at the end of 2010, or a year and a half, or two, from now, risk omitting Major Countervailing Moves in the shorter Term.

Second, these Countervailing Major Moves are likely to be so Strong that only those with Very Deep Pockets and Strong Stomachs are likely to be able to successfully invest now in anticipation of where a Sector will be in a year, or year and a half or two, or more, and survive the Volatility in between.

Third, Cartel* Intervention in Major Markets is becoming even more evident, (and ever more widely acknowledged). Thus, regular Monitoring of The Interventionals, as Deepcaster does, is essential to successful forecasting, especially regarding Timing.

Consider some specific Sectors.

U.S. Dollar

Long-term prospects for the U.S. Dollar are grim. Among the many much-publicized reasons are Total U.S. Federal obligations of over $70 Trillion. These can realistically never be repaid without a substantial further devaluing (quite possibly ending in the destruction) of the U.S. Dollar. The irresponsible and excessive monetary and credit creation enabled by The Fed in recent years is a primary cause of Dollar weakness.

Short-term however, the prospects are quite bullish. As we earlier Forecast, the U.S. Dollar has begun a short term bounce, for several reasons beyond the fact that it is technically oversold.

Among them are the fact that businesses and individuals are paying down debt, but the repaid funds are not all being relent by the Banks. Ergo, there is a temporary relative shortage of dollars.

Moreover, the prospects for the Dollars biggest “competition” as a currency, the Euro, are worsening.

Several Eurozone countries, including Greece, Italy, Spain and the Portugal are in increasing financial trouble.

All have budget Deficits as a percentage of GDP, and Debt as a percentage of GDP well in excess of Eurozone limits.

And it is looking as if the other Eurozone members are not going to bail them out. Thus vis-a-vis the Euro, the U.S. Dollar is looking stronger short-term. Deepcaster has just made a recommendation to take advantage at the prospective strengthening of the U.S. Dollar (go to www.deepcaster.com and click on ‘Alerts Cache’).

Moreover, The Fed has been giving signals that it intends to unwind monetary easing early in 2010. If and to the extent this comes to pass, it will be U.S. Dollar bullish.

Thus, for Forecasting purposes, it is likely the Dollar will continue strengthening for a while in 2010, and then plunge to new lows. But when? (Deepcaster’s Forecasts regarding Timing are contained in his January, 2010 Letter and Latest Alert at www.deepcaster.com) Timing is key, as it is with Gold and Silver prices.

Gold and Silver

As distasteful as it is for us to confirm, the December, 2009 Takedown of Gold (and Silver) in the face of quite Bullish Fundamentals and Techicals, demonstrates that The Cartel* is still sufficiently Potent to suppress Precious Metals prices, as we, reluctantly, earlier forecast.

*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts And December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the “Alerts” and “Latest Letter” Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.”

But it does not necessarily follow that The Cartel will continue to be able to suppress Precious Metals prices. Indeed it is becoming more and more difficult for them to do so. Broad support for Rep. Ron Paul’s “Audit the Fed” bill in Congress, and GATA’s recent commendable suit filed against The Fed for Gold Market Manipulation are but two indicators.

Even so, both Bullish and Bearish pressures on Precious Metals prices will intensify in 2010. Short-term Dollar strength and continuing U.S. and global Economic Weakness (Consider 22% Real Unemployment (shadowstats.com) among Middle Class Wage Earners/Taxpayers/Mortgage holders who are 70% of U.S. GDP, and consider 80% of all new jobs are created by small business which is increasingly sorely pressed) will continue to pressure the Precious Metals prices down.

But continued Systemic Risk, $70 Trillion plus in Total Federal Obligations, Actual and Potential Sovereign and Business Debt Crises, and the impending Wave of Mortgage Rate Resets all militate in favor of higher Precious Metals prices.

And of course, it is not in the interest of The Cartel to allow wider acceptance of the fact that Gold and Silver are the Ultimate Safe Havens, and not the Cartel’s Treasury Securities and Fiat Currencies. We expect The Cartel to continue their attacks on Precious Metals in 2010 which is why it is essential to monitor the Interventionals, as Deepcaster does.

The aforementioned conflicting forces will almost surely create whipsaw pressures for Precious Metals prices (and other Market Sectors as well). For Deepcaster’s Forecast regarding the timing and outcome of this Titanic battle see his January, 2010 Letter and Latest Alert at www.deepcaster.com. For a full discussion about profitably coping with Cartel Interventionals see Deepcaster’s “Defeating The Cartel…with Profit” (Part 1 - 03/28/2008 and Part 2 - 06/19/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.

Equities

Also subject to whipsaw generating pressures in 2010 are the Equities Markets.

Lousy underlying long-term Fundamentals, including a massive increasing government, business and consumer debt, prospective sovereign and corporate Debt Defaults, a second wave of Mortgage Defaults and Foreclosures, and prospective short-term Dollar Strength which often spells Equities Weakness all militate in favor of volatility. In addition, key Fundamentals are spelling doom for Equities in 2010.

On the other hand, Governmental liquidity injections, perceptions (however ill-founded) of “green shoots”, and official Statistics issuance in 2010 which will likely look relatively good when compared to 2008 and 2009, and, if course, Cartel Interventions could catalyze temporary upside moves in Equities.

Crude Oil

More than ample above-ground supplies, coupled with a weak economy is relieving pressure on crude prices in the Short Term. But Geopolitical pressures, and (in the middle and long-term) ‘peak production’ limits, and increasing Chinese and Indian demand will continue to push prices upward. Result: price whipsaws.

Profiting in “the Whipsaw Year” of 2010 will more than ever require attention to Timing and The Interventionals.

Best Regards,

By DEEPCASTER LLC

www.deepcaster.com
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