Silver and gold ETF charts are presented below, with their respective 50, 100, 150, and 200-day moving averages (DMA). The 50=yellow, 100=blue, 150=purple, and the gray=200…some argue that these figures are completely arbitrary, but they have perhaps become a self-fulfilling prophecy, for the market does indeed respect them. These setups of interest in the GLD and SLV include trend-line support and moving average support.

First off in the SLV, the market seems to be coming into the 100 DMA at around $31.00. At last check, the market is a mere $0.17 away from this level. The $31.00 level also connects to three prior support levels via a trend-line. The GLD is appropriately seeing a similar picture, however without the key 100-DMA. The trend-line in GLD has similar prior touches, but the upward momentum is not confirmed with price staying above the 100 DMA. Perhaps a pair trade could be advised here, getting long the SLV and short the GLD, aka long the better looking chart and short the mediocre chart. A pair trade involves properly sizing the appropriate amount of shares to the same dollar amount.

One should note that the SLV has massive open interest in the soon to expire December options. The $32.00 December line, that expires this week, has over 45,000 contracts open and may act like a magnet; helping the pair trade.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to… Author salernoma@mx.lakeforest.edu

• Apple sold more than 2 million iPhone 5 units in China over the weekend, and stated that China is generating about 15% of the companies fiscal 2012 sales

• Citigroup has downgraded Apple to a neutral after citing research that showed “near-term supply-chain order cuts” and questioned the iPhone 5 strength in the market

LVS made it official, Madrid is the site of its next multibillion dollar casino and hotel complex, according to CEO Sheldon Adelson. LVS is very much “buying low” in Spain For most of Europe is in a deep financial crisis. According to CNN, 50% of Spanish youths are unemployed, but LVS said that the proposed casino complex may generate up to 250,000 jobs.

Away from the fundamentals, the chart displays an interesting pattern. LVS has been in a rage since September, stuck in-between  $47.5 and $40.00. The 200 DMA was literally flat from September to October, but since November expiration the line has started to slope down and hence Friday’s price action. This is about the fourth time LVS has came to this level and every time before it has been promptly rejected.  It is also interesting to note that LVS was in a similar range for almost a year and a half. See the charts below for the visual, perhaps LVS needs horizontal consolidation before the market properly prices in their new Spain operation.

The long-term chart could possibly be a massive head and shoulders, if the right shoulder gets built out a little more. At the start of 2011, the 50-day average volume was about 40 million shares; the 50-day average volume now is only about 7 million shares…a massive decline. Other interesting tidbits include where the majority of option open interest sits. The largest line of put open interest is at the December 2012 $37.25 strike, with over 8,000 contracts, this is the largest open interest amount in December, January, or March puts.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to…

 Author

 salernoma@mx.lakeforest.edu

So, how should this news be interpreted? Which one is more important for the ‘big fruit’?

Well, lets start with Citi downgrading it to neutral. It’s definitely not what you want to see if you’re a bull. Like I said, Apple is sitting on some key support and this upcoming week is going to be very important for its future direction in the next 3-6 months. If you’re a bull on Apple, you can argue that an analyst downgrade holds very little significance since there are new ones coming out all the time. Every analyst wants to say that they nailed the ‘top’ or ‘bottom’ of Apple, so every analyst constantly changes their price targets. Jumping from 700 to 500, 450, back up to 625, there seems to be very little significance in a downgrade. Nothing matters more than the price action… that’s what makes the money.

Switching gears and moving over to Apple’s blow away sales number… more than 2 million iPhone 5’s sold in China within a 3 day span. Quite a staggering number for three days, and one that the bulls wanted to hear. The timing couldn’t be any better! It’s a very hard number for the bears to argue, and they pretty much have to hold their tongues and pray that the price continues to drift down on the downgrade by Citi.

This headline is important in the case that the ‘buzz’ is back for Apple. The whole ‘buzz’ that made it rally from $150-$600. Someone in the U.S. could easily argue that the ‘buzz’ just doesn’t seem to be there, like it was when Steve Jobs was in charge, but guess what… Apple sells overseas as well! This argument seems like such common sense, but usually overlooked. It’s obvious that people in China are currently swarming over Apple products and is very important for Apple’s long-term picture.

When breaking both of these news articles down, it’s obvious to me that the blow away sales in China are more important for Apple then Citi’s downgrade. Sales are what drive companies, not analyst downgrades!

Author: Peter Nitso

pnitso@yahoo.com