Tuesday, June 03, 2008


Over the past 6 months, long term buy signals have stayed strong. Short term buy signals were extremely strong back in January and again in March and are back at strong levels again today.

One anecdotal buy signal that has worked very well in the past is the capitulation of a couple of account holders. This market is just too tough. It is hard to hang on when the markets do not make sense. I have tried very hard to make my readers aware of the international and political currents that are pushing this big battleship around. It takes a lot of power to list a battleship. The good news is that the risks have been reduced and the markets are gradually becoming aware. The market feared the potential of dramatic tax increases in the USA (change) as a result of a three house sweep. The market feared the potential for a long drawn out slug fest in the Middle East or even an all out war with Iran. US elections, events in the Middle East and markets are closely connected.

So far, many on the left are not willing to acknowledge that the war against terror is being won. Last night a democratic strategist went unchallenged when he said that the war in Iraq is going badly. The ability to deny the positive results will go away as the fighting subsides and the price of oil falls.

Polls show as much as a 15 point lead for McCain in several key states. I disagree with McCain on Cap and Trade and other issues but he is correctly calling for even more sanctions against Iran while Obama is calling for negotiations. Obama is either misrepresenting what he knows about negotiations, on-going for about 30 years, or he is a very naive person. Thirty years is a long time to negotiate. Iran is very stubborn. Still, Iran has not gained power and influence as is being portrayed by democrats. Instead, Iran has lost its strangle hold on billions of barrels of oil and gas. Its economy is in shambles. Its ability to subsidize terror is being diminished. It is even running out of terrorist to support.


It is not for us to known when. We know that Syria has agreed to let the IAEA inspect its bombed out nuclear site by the middle of this month. It is know that the IAEA has requested to visit two other Syrian sites. It is known that Syria has indicated some willingness to compromise on a couple of points in regard to the Golan Heights in the preliminary peace agreement with Israel. On the other hand, we know that Amadenijhad is unwilling to fess up to IAEA inspectors. He is still unwilling to suspend production of nuclear fuel. The USA has called the bluff again. The USA is willing to wait a few more weeks while the spigots to Iranian oil are tightened a little more.

A couple of days ago, the decision was made by China to support a new dry weight port in Pakistan rather than in Iran. With so much drilling activity in the Caspian Sea, there is need for all sorts of goods to flow. The new port in Pakistan is destined to become a major trading center and it represents a great blow to Iran. Pakistan is just one of many nations that is being rewarded by cooperating in the war on terror while Iran is being bypassed by oil pipelines, gas pipelines, by ports and by production contracts. China's 16 billion dollar investment in the North Pars gas field has been on hold since February. Shell and Respo pulled out of the South Pars field last week. Qatar is sending gas from its South Pars Field all the way to America. This gas is coming from the field adjacent to Iran's North Pars field in the waters of the Persian Gulf between the two countries.

If you or I were citizens of Iran, with our fuel being rationed and inflation running at 40%, we would be upset. We would especially be upset if the neighboring country was selling our gas to our sworn enemy. Iranians have a lot of friends and foes to be upset with. Oops, I forgot! One does not complain about what one does not know. Iran has shut down several news agencies. The latest is just a three day suspension of the FARS agency. This agency has been the propaganda machine of Amadenijhad for the past three years. Closing it down for three days is an order to remove even more truth from the news or be put out of business.

I suppose the US is more like Iran than I want to believe. Cuba and China are producing oil and gas in waters within 100 miles of Florida. The reporting of this drilling has been scant. The average American assumes that the congress is working for the general welfare of the people. The average American does not realize how much he is paying in higher taxes and higher energy costs in order to supply the congress with campaign funds and in order to make the environmentalist feel like they have achieved something. Yesterday, a comment was written that 15% of the people will be against drilling for oil no matter what and that 15% are for drilling everywhere. The other 70% have not been engaged in this question until recently. The commenter believes that the word is getting through to the people and to the congress that action needs to be taken.

Yesterday, The Hays Advisory Group put its remaining loose cash to work. This group has its growth accounts 100% invested in stocks. This decision was made because the bulk of both short and long term buying indicators are at very positive levels.