Mastercard Incorporated (MA) announced its quarterly dividend of 30 cents per share, an increase of about 100% over its prior dividend in January of 15 cents. The dividend will be paid on May 9 to shareholders on record as of April 9.

Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned cash to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys.

Federal Reserve Chairman Ben Bernanke sticks to the script when testifying before the Senate Finance Committee, despite signs of a strengthening economy, leading to further talk of a Federal Reserve that is behind the curve.

Coca-Cola (KO) today reported quarterly results that beat expectations and announced plans to implement a new cost savings program. Fourth quarter net income fell by 71 percent versus the same period last year, to $1.65 billion, or 72 cents per share versus $5.77 billion, or $2.46 per share.

Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned dollars to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys.

In trading on Tuesday, shipping shares were relative laggards, down on the day by about 2.1%. Helping drag down the group were shares of Excel Maritime Carriers (EXM), off about 7.2% and shares of Frontline Limited (FRO) down about 3.9% on the day.

BP (BP) announced on Tuesday that it earned a profit of $7.69 billion, 38 percent higher than the $5.57 billion profit in the same period last year. Revenue increased by 15 percent to $96.3 billion.

The Dollar index will have to slide down if it breaks the major support level. Seeing all the improvements in the global economy, this was going to happen and many foresaw it. The dollar index has come down to 78.5 after breaking the crucial support level of 80. This was on the back of improvement in the United States data and good cues from Europe as well. The United States markets have also rallied nearly 3 – 4 % this past week. And most of the world economies are in a short term up trend, which is bad news for the Dollar index. If this continues and the Greek debt crisis tends to slow down, then the Dollar index would see lower levels.

Factors Affecting:

The factors affecting this breakdown on some good volumes, is the improvement in the global economy and some depreciation of the dollar against currency of some major economies. As said, the earnings season will play a major impact in this market and also will decide the move of the dollar index. There were some strong earnings by some blue chip companies in the United States and analysts feel that this will lead to a new shorter term uptrend.

Technical Analysis:

In the chart below, the index has fallen below the crucial and important level, i.e, 80. This level has been acting as a good support in the medium term. As this was a major resistance for the Dollar index to break on the upside, many analysts would have assumed that this index will find very difficult to break the 80 mark on the downside. So, to confirm this break down, we need to see whether the index will continue to remain in this range or below 80 for quite some time.

Forecast:

Medium term traders who were long in the index would hold on to their positions and see whether the Dollar is clinging back above the 80 mark. Short term traders would rather wait for all this drama and the earnings season to complete and then have a fresh call on the Dollar index. The longer term trend is still up, so the long term traders wouldn’t have to worry about this fall. The Greek debt problems has got legs to come back in to the markets and we shall see some handsome returns if those problems come back.

If you have more forex questions please feel free to visit ask-fx.com.

Disclaimer:

THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER.

Could this be the most bearish statistic in the world right now?

Over the past month, one of the world’s key leading economic indicators has tumbled in value by 60%.

That’s not a misprint.

So what is the Baltic Dry Index (BDI) all about? And is this plunge something we should be worrying about?

The Baltic Dry Index Has Tumbled

The BDI is a key barometer of global freight activity. It’s published by London’s Baltic Exchange, the world’s leading market for buying and selling shipping contracts.

The BDI covers 26 major shipping routes. It measures the cost of transport space (shipping rates) on so-called ‘dry bulk carriers’. These carry cargoes of raw materials such as coal, grain, timber, steel and iron ore.

If the BDI rises, it indicates that shipping rates are rising, due to increased demand for transport space for raw materials. If more raw materials are being shipped, it suggests that factories are seeing higher demand for their finished products and so are planning to make more.

This makes the BDI a key leading economic indicator. Rising shipping rates suggest that manufacturing activity is improving, even before it shows up in the official statistics.

On the flipside, a drop in the BDI could suggest that worldwide demand for shipping space – and therefore, for raw materials – is falling. That in turn indicates that the global economy must be about to slow down.

But 2012 has already seen something much worse than a mere slip. The BDI has collapsed in just a month, as the chart below shows.

And if you drill into the details, the picture looks even bleaker.

Some of the world’s biggest ships are known as Capesize vessels. They are so called because they’re too big for the Suez Canal and have to travel around the Cape of Good Hope or Cape Horn.

Shipping rates for these vessels have plunged by an incredible 75% so far this year.

So is the global economy about to implode?

The answer isn’t quite that simple. For one thing, the BDI can be very volatile – much more so than the economy overall. Previous massive drops in the index haven’t always resulted in a re-run of the Great Depression.

That’s because the BDI isn’t just about transport demand. It’s also about transport supply. Remember, the BDI measures the cost of hiring space on a ship. So if you double the number of ships, then demand for raw materials could remain static and perfectly healthy. But shipping rates, and therefore the BDI, would (in theory) fall in half.

And the fact is that right now, there are far too many ships in the world.

Prior to 2008, when the global economy seemed to be booming, dry bulk ship owners got rather over-excited. They convinced themselves that the good times would last for several more years. So – pretty much all at the same time – they placed lots of orders for ships.

Many of those vessels have now been completed and are becoming available for hire. Extra shipping space equivalent to 23% of the existing fleet is due to be delivered this year, according to Macquarie Research. That’s “too much capacity in the face of more modest growth of trade volumes”.

In other words, it’s no great surprise the BDI has fallen back. What’s more, says Credit Suisse, there’ll be no respite from the oversupply of dry bulk ships until next year at the very earliest. Even then, the existing fleet will still grow by 9% as new ships are delivered. That could still be tough for the market to absorb.

Clearly, this is all bad news for ship owners. But surely it means that the rest of us can just ignore this scary message from the BDI?

Actually, no, we can’t. The trouble is that the extra ships aren’t enough by themselves to explain this plunge. As Louis Basenese points out on Wall Street Daily, the Harpex – an index of shipping rates for container ships, which carry finished goods – has also plunged, even although the supply of container ships is little changed in the past six months.

Meanwhile, Nick Bullman at risk consultant Check Risks tells Financial News that “this collapse looks similar to the falls we saw in the Baltic Dry ahead of the recessions of the late 1970s and early 1990s – but this drop is actually steeper.”

Continues Bullman: “this is signalling… that the world economy is slowing down much more quickly than people have been thinking.”

Why? It all points to China. The country is the biggest importer of raw materials and we know it’s slowing down. This plunge in the BDI is another reason to believe that China can’t avoid a hard landing. That’s bound to have a knock-on effect all around the world.

David Stevenson
Associate Editor, MoneyWeek (UK)

Publisher’s Note: This is an edited version of an article that originally appeared in MoneyWeek (UK).

From the Archives…

Facebook Shares – Notice for Mad Punters: Buy This Stock
2012-02-03 – Kris Sayce

Why Your Money is Better Off in Stocks Than in the Housing Market in 2012
2012-02-02 – Kris Sayce

Why You Should Pay Attention to the ASEAN Bloc
2012-02-01 – Cris Sholto Heaton

Will Australian Property Prices Keep Falling?
2012-01-31 – Dr. Alex Cowie

Is Ben Bernanke Secretly Buying Gold and Silver Stocks?
2012-01-30 – Dr. Alex Cowie

Introducing…The Baltic Dry Index (BDI): The Most Bearish Chart in the World

“What were you on about yesterday anyway?” a friend asked at dinner last night.

“With what?”

“The whole Glencore and Xstrata thing. Sometimes I can’t figure out why you put that stuff in your letter. It makes no sense.”

“Oh. Well, my point was that when you can’t figure out any other way to make more money, you announce a merger. It makes you look busy. Everyone gets excited. You say you’re creating more shareholder value. But really you’re just trying to find efficiencies or “synergies” to squeeze a bit of extra profit out of the business…because the easy profit growth is gone.”

“You should’ve just said that.”

Yep, we should have. So we just have. And today, more proof that the days of easy money selling dirt and coal to China are over. First cab off the rank is the Reserve Bank of Australia’s index of commodity prices. Have a look below.

What you see above is the biggest downturn in the RBA’s commodity price index since the big crash in 2008. Mind you it doesn’t look quite as severe, at least not yet. Last time around in 2008, the rush to cash in global markets caused people to sell a lot of their speculative commodity positions. Base metals in particular got smashed.

Base metals – lead, zinc, copper, nickel, and aluminium – make up 15.7% of the index, according to the RBA. Metallurgical coal (for steel making) makes up 14.7%, iron ore 9.3% and thermal coal (for power plants) makes up 9.7%.

If metals consumption in China is really peaking – the claim we made yesterday – it’s not hard to imagine the index crashing again. And if the index crashes again, it won’t be good news for base metals producers or explorers.

But let’s not be a Danny Downer. Oil is omitted from the RBA index. LNG is included (4.8%). But unconventional energy is not. In other words, a whole sector of the commodities complex that’s in a long-term bull market isn’t measured by the RBA’s commodity index. Do you realise what this means?

It means the RBA’s commodity price index can go suck an egg for all we care. If energy – oil, gas, uranium, and coal – is going to be the most important sector of 2012, the RBA index won’t tell you anything about it. All the RBA index will tell you is if base metals price crash and China’s metals demand has peaked.

We’ll be keeping an eye on it. But in the meantime, one more note about the RBA. It announces its decision on interest rates today. Will the bank cut the cash rate from 4.25% to 4.00%?

That’s an interesting question. But is it relevant? ANZ is just one of the Aussie banks to go on record and say that the RBA’s price of money isn’t what ANZ pays. See the 12 December 2011 Daily Reckoning for more on this. This is the banks’ way of saying they’re not obliged to match the RBA’s rate cuts point for point.

It’s kind of quaint to think there are some people in Australia who think the RBA actually controls the price of money. But some people do! Take Ged Kearney for example. He’s the president of the Australian Council for Trade Unions (ACTU). Kearney told the Herald Sun…

Last year the big four banks made profits of $25.2 billion – easily more than the rest of the banking sector combined. They now have a greater share of the home lending market than before the global financial crisis….If the banks cannot behave in a socially responsible manner, it may be time to consider stronger government regulation to drive greater competition, improved consumer protection and more sustainable corporate behaviour in the banking sector.

Heaven forbid that we’d defend the banks in this space. But someone might want to tell Mr Kearney that Moody’s has just released a report claiming that Australian banks are the “most exposed” banks in the Asia-Pacific to a worsening of Europe’s sovereign-debt problem. What exactly does that mean?

Before you go bagging out Moody’s for being an unreliable ratings agency that shouldn’t be trusted, consider the main point in the note. Moody’s isn’t worried about the amount of European government debt Australian banks own. That’s not the problem. The problem is that Australian banks get at least 19% of their funding externally.

In a genuine liquidity/credit crisis, external funding a) gets more expensive, b) dries up for all but the highest credit-quality borrowers. The cost of money goes up and there’s less of it to go around, in other words. This is why banking is a lousy business in a credit depression and why bank stocks make lousy investments.

By the way, we’d started to go into detail examining the current situation in Greece and Europe…but to be honest, we just couldn’t bear spending another precious second analysing a situation that’s so hopelessly doomed…and so cynically and horribly mismanaged. As our colleague Dylan Grice at Société Générale writes:

Flawed thinking got us into this mess. But rather than change that flawed thinking, our policy makers are applying it with even more rigour: we have more debt for insolvent borrowers, more financial engineering, more complicated banking regulations, more blaming speculators for everything, more monetary experimentation by central banks. Our policy makers have absolutely no idea what they’re doing, but they’re giving it a go!

Grice refers to the “Lost Pilot Effect”. That’s a term invented by behavioural psychologists to explain a certain kind of irrational behaviour. You see it when a pilot gets lost but tells his passengers, “I have no idea where we’re going…but we’re making good time!”

There’s no point in hurrying along somewhere if you don’t know where you’re going. And it’s even more insane to hurry along to a place where you don’t want to be! The best move, if you’re lost, is to get out a map and a compass and find out exactly where you are.

Hopefully Dylan will bring his map and compass with him to Sydney next month. He’s one of our four keynote speakers at the After America conference. We invited a thoughtful group of keynote speakers for our first conference for a reason. We want you to hear from people who can help will help you figure out where we are on the map.

The particular map we’ll be looking at is the Asia-Pacific region. The main players are China, the United States, and Australia. It’s a big map. It covers a lot of territory. There’s a lot to talk about. But hopefully the conference is small enough – only space for 344 attendees – that we’ll be able to really dig into some of these ideas.

By the way, we’re opening up the conference to the general public later this week. You can still get the early bird price of $799 for a few more days. After that, the price moves up to $999.

It’s been an eye-opener organising a conference around one big idea. One mistake we realise we made is not giving people enough time to make travel plans and arrangements. We won’t make that one again! In fact we’re already planning next year’s show.

Another concern is location. Up until now, all of our events have been in Melbourne because that’s where we are. We thought an event in Sydney would make it easier for readers in New South Wales and Queensland to attend. Hopefully we can have events in Brisbane, Perth, and Adelaide too. But maybe not this year.

Price is an interesting one. One friend told us that for the line-up we had put together and the small crowd and the number of new ideas from Port Phillip Publishing editors, the price seemed too cheap. Another financial professional told us that when you factored in travel and hotel arrangements, the price was too expensive.

Either way, this is not a money-making venture for us. For five years we’ve been having a conversation with you about Australia’s future. We thought it was high time to set aside a few days, invite some guests, and really talk about it, including some specific ideas. It’s going to be a cracking show.

One of our other keynote speakers is Dr. Paul Monk. Like Dylan, Dr. Monk is interested in how we think, how we make decisions, and the quality of our knowledge. In the article below, he reviews Daniel Kahneman’s latest book on how we think.

The Brain: A machine for jumping to conclusions
By Paul Monk

Daniel Kahneman’s Thinking, fast and slow should be required reading for everyone this summer. Not because it is entertaining or a mere diversion, but because it is a subtle and beautifully scientific guide for the perplexed. If you see yourself as a citizen in a democratic polity, read this book. Self-indulgent cynics and self-important ideologues probably won’t read it, but they are the ones most in need of what it has to teach. Do yourself a favour, whoever you are: rush out, buy this book and read it quietly and thoughtfully, absorbing its highly readable insights.

Kahneman was awarded the Nobel Memorial Prize in Economic Sciences in 2002 for his work on prospect theory. To understand what is meant by this, how Kahneman got into thinking about it and what his key insights were – in collaboration with his long time research partner Amos Tversky – go straight to chapter 26 ‘Prospect Theory’. It’s a fascinating excursion into clear thinking all on its own. Prospect theory is about gambling, risk-taking and expected returns. It’s a body of theory with considerable practical relevance to the king-sized mess both welfare economics and financial markets got themselves into by the late 2000s.

Kahneman re-examined the fundamentals of utility theory, articulated by Daniel Bernoulli, almost three hundred years ago. He did this long before the past decade or two’s extravagant follies came close to wrecking economies from California to Greece. Utility theory lies at the foundation of modern economics and there is a rather urgent need right now to understand what has gone so awfully wrong in so many economies. Falling back on Marxism or some kind of self-satisfied ideological cliché does not amount to such understanding. Kahneman confers considerable understanding. That’s why he deserved his Nobel Prize.

Thinking, fast and slow has five parts: Two Systems, Heuristics and Biases, Overconfidence, Choices and Two Selves. It also contains, as appendixes, two of the classic papers for which Kahneman won his Nobel: ‘Judgment under Uncertainty’ and ‘Choices, Values and Frames’. Part I sets cognitive science in an easy to understand frame of reference which acts both as a disciplined corrective to a good deal of pop psychology and a lucid introduction to the theoretical work in the following four parts of the book.

He suggests that we think of our brain – our “machine” for making judgments – as consisting of two basic systems; which he calls System 1 and System 2. He describes the characteristics of each and explains how their faults and standard ways of interacting result in many kinds of error, bias and illusion – universally and predictably, not in merely unusual or idiosyncratic cases. System 1 is the intuitive, unconscious, fast reaction part of the brain. It is emotional, holistic and instinctual. It is, as he expresses it, “a machine for jumping to conclusions”.

In certain circumstances and often in everyday life, its functions are reliable, rapid and even remarkable. But when it comes to matters that require complex, abstract thinking it is in deep trouble. System 2 is better equipped – if trained and switched on – to handle such matters. The problem with System 2 is that it is lazy and highly inclined to rationalize rather than critically examine the intuitive judgments of System 1.

In Parts II, III and IV of the book, drawing upon the work of many psychologists and cognitive scientists, Kahneman offers an endlessly fascinating dissection of the brain of Homo sap. The chapters include ‘The Law of Small Numbers’, ‘Anchors’, ‘The Science of Availability’, ‘Availability, Emotion and Risk’, ‘Causes Trump Statistics’, ‘Intuitions vs Formulas’, ‘Risk Policies’ and ‘Frames and Reality’. And at every point Kahneman exhibits a demeanour at once keenly curious, meticulously scientific and utterly unpretentious. The implications of what he imparts are enormous and need to be digested by our education systems (not least all business administration courses), our public policy systems and our methods for public debate.

An indication of the ways in which such insights can be applied was offered several years ago, in Richard Thaler and Cass Sunstein’s Nudge: Improving Decisions About Health, Wealth and Happiness. Originally completed in 2007, it was reissued in 2008 with a Postscript titled ‘The Financial Crisis of 2008′. They drew attention to the alarming reality that almost no economists or financial analysts had foreseen the crisis, or issued public warnings as it approached. They praised the behavioural economist Robert Shiller for having done so.

Shiller’s warning in 2005 had been that “social contagion” was creating a massive housing market bubble that would inevitably burst. Shiller’s books, Irrational Exuberance (2000) and The New Financial Order: Risk in the 21st Century (2003) are recommended reading. Thaler and Sunstein’s own observation is that sound public policy, informed by the insights of cognitive science and behavioural economics, needs to invent ways (they suggest a number) to prevent or defuse such outbreaks of social contagion, or what Charles Mackay long ago called ‘extraordinary popular delusions and the madness of crowds.’

As Michael Lewis’s peerless writing shows, a little thoughtful analysis can reap enormous dividends. If markets and capitalism are to flourish and the costs of human stupidity are to be contained in future, then many things will need to be rethought and reformed. Lewis’s latest book, Boomerang: The Meltdown Tour, a characteristic tour de force shows this from Iceland and Ireland to Greece, Germany and California. If you don’t read Kahneman this summer, you simply must read Lewis.

Kahneman, meanwhile, is hard at work trying to engineer better thinking in the marketplace, or at least to nudge the unwilling and unwitting in that direction. He is a partner in a firm called Greatest Good, committed to applying cutting-edge data analysis and the insights of behavioural economics to real business challenges. His associates are a highly impressive group of people, including Steven Levitt (of Freakonomics fame), innovative economists Gary Becker and John List, the checklist manifesto man Atul Gawande and the brilliant theoretical physicist Lisa Randall. Now that, to paraphrase Groucho Marx, is a club of which I’d like to be a member.

About the author: Dr. Paul Monk has a PhD in international relations from Australian National University. Paul worked for the Australian Department of Defence and the Defence Intelligence Organisation, where he later became head of China analysis and chairman of the inter-agency working group on China. He is a keynote speaker at After America: the Port Phillip Publishing Investment Symposium, March 14th-16th at Sydney’s Intercontinental Hotel.

Regards,

Dan Denning
Editor, The Daily Reckoning

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A CERTAIN KIND OF IRRATIONAL BEHAVIOUR

&

JW Jones: www.OptionsTradingSignals.com

“You can’t feel the heat until you hold your hand over the flame.

You have to cross the line just to remember where it lays.”

~ Rise Against. “Satellite” Lyrics ~

Friday morning traders and market participants awaited the key January employment report from the U.S. Bureau of Labor Statistics. The reaction to the supposedly wonderful report was a surge in the S&P 500 E-Mini futures contracts as well as several other key equity index futures.

The overall tenor among the financial punditry was predictable as wildly bullish predictions permeated the morning session on CNBC and in the financial blogosphere. However, after the report had been out for several hours notable independent voices such as Lee Adler of the Wall Street Examiner came out with information that suggested the numbers were an apparition of manipulated statistics.

I am not going to spend a great deal of time discussing the report, but the reaction to the news was decisively bullish on Friday. The question I want to know is whether Friday was a blow off top? In the recent past the S&P 500 has seen several key inflection points and intermediate-term tops form on non-farm payroll monthly announcements.

I follow a variety of indicators to help me decipher more accurately when the market is getting overbought or oversold. For nearly two weeks the market has been extremely overbought, but now we are reaching truly astonishing levels. The following charts represent just a few signals that the market is due for a pullback and a top is likely approaching.

Percentage of NYSE Stocks Trading Above Their 50 Period Moving Average

The chart above clearly illustrates that as of Friday’s closing bell (02/03) over 89% of stocks were trading above their 50 period moving averages. Consequently that reading is one of the highest levels that we have seen in the past 3 years. In addition, over 73% of stocks that trade on the NYSE are currently priced above their longer-term 200 period moving averages. Another extremely overbought signal.

S&P 500 Bullish Percent Index Weekly Chart

The S&P 500 Bullish Percent Index is another great tool for measuring the overall position of the S&P 500. It is without question that the longer term time frame is reaching the highest level of overbought conditions in the past 3 years.

McClellan Oscillator Divergence with S&P 500 Price Action

The two charts shown above present an interesting situation regarding the divergence in the McClellan Oscillator and the price action in the S&P 500. The most recent example of this type of divergence occurred in October of 2011 and prices immediately reversed to the upside after several months of selling pressure. In fact, this correlation between reversals in the S&P 500 and divergences in the McClellan Oscillator works relatively well historically.

Clearly there are bullish voices arguing for the 2011 S&P 500 Index high of 1,370.58 to be taken out to the upside in the near future. Additionally, several market technicians in the blogospere have been pointing to the key resistance range between 1,350 and 1,370 on the S&P 500 as a likely price target. Obviously if those price levels are met strong resistance is likely to present itself. However, as a contrarian trader I have found that the more obvious price levels are the more likely it is that they either will not be tested or they will not offer significant resistance.

It is obvious that Chairman Bernanke and the Federal Reserve have embarked on a massive fiat currency printing campaign which has helped buoy risk assets to the upside. Through a combination of reducing interest rates on safety haven investments like Treasury’s and CD’s, the Federal Reserve has forced conservative investors and those living on a fixed income into riskier assets in search of yield.

This process helps elevate stock prices and creates the desired outcome for the Federal Reserve which involves the perception by average individuals that they are wealthier. The Fed calls this the “wealth effect” and they seem poised to insure that U.S. financial markets continue to ride upon a see of cheap money and liquidity.

Ultimately the Federal Reserve’s most recent announcements have served to help flatten the short end of the yield curve further while providing a launching pad for equities and precious metals. However, issues persisting in Europe could have an adverse impact on the short to intermediate term price action of the U.S. Dollar.

Right now everywhere I look I hear market prognosticators commenting on how hated the U.S. Dollar is and how Chairman Bernanke will not allow the Dollar to appreciate markedly in order to protect U.S. exports and financial markets. I think that the Dollar has the potential to rally in the short to intermediate term. Right now the U.S. Dollar Index appears to be trying to form a bottom.

U.S. Dollar Index Daily Chart

Obviously there is good reason to believe that the U.S. Dollar Index could reverse to the upside here. Whether it would have the strength to take out recent highs is unclear, but a correction to the upside not only seems unexpected by most market participants, but it seems plausible based on the weekend news coming out of Greece.

Monday morning the Greek government is set to determine if they will agree to the demands of the Troika in exchange for the next tranche of bailout funds. If the Greek government and the Troika do not come to an agreement, the Euro could sell-off violently.

Additionally there are already concerns about the next LTRO offering from the European Central Bank. The measure is to help provide European banks with additional liquidity, but there are growing concerns that the size and scope of the LTRO could have a dramatic impact on the Euro’s valuation against other currencies. Time will tell, but there are certainly catalysts which could help drive the U.S. Dollar higher.

Another potential indicator that the Dollar could see higher prices in coming days was the largely unnoticed bearish price action on Friday of precious metals. Both gold and silver have been on a tear higher over the past several weeks. Both precious metals have surged since the Federal Reserve announced that interest rates would remain near zero on the short end of the curve through 2014.

However, on Friday gold and silver were both under extreme selling pressure. The move did not get much attention by the financial media. The price action in gold and silver on Friday could be another indication that the U.S. Dollar is set to rally. The daily chart of gold is shown below.

Gold Futures Daily Chart

Obviously the reversal on Friday in gold futures was sharp. The move represented nearly a 2% decline for the session on the price of gold. However, as long term readers know I am a gold bull. I just do not see how gold and silver do not rally in the intermediate to longer term based on the insane levels of fiat currency printing going on at all of the major central banks around the world. The macro case for gold is very strong, but the short term time frame could reveal a brief pullback.

At this point, I suspect a pullback will present a good buying opportunity for those that are patient. However, I think it is critical to point out that this move in gold on Friday could be a signal that the U.S. Dollar is going to find some short to intermediate term strength. If the Dollar does start to push higher, it will likely put downward pressure on risk assets like equities and oil

While Friday’s price action may not mark a top, nearly every indicator that I follow is screaming that stocks are overbought across all time frames. Pair that with the Greece uncertainty and LTRO considerations and suddenly the Dollar starts to look a bit more attractive. Ultimately I am not going to try to pick a top, but the evidence suggests that it might not be too many days/weeks away.

By Chris Vermeulen:www.TheGoldAndOilGuy.com & JW Jones: www.OptionsTradingSignals.com

This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.

Jack Henry & Associates Incorporated (JKHY) announced its quarterly dividend of 11.5 cents per share, an increase of about 10% over its prior dividend in November of 10.5 cents. The cash dividend on its common stock is payable on March 8, 2012, to stockholders of record as of February 21, 2012.

Teva Pharmaceutical (TEVA) was downgraded today by Morgan Stanley (MS) from overweight to equal-weight with a price target of $47, as the firm believes that the stock has gotten ahead of itself recent. Thomson Reuters (TRI) today had its numbers reduced by Credit Suisse (CS) due to challenges in the financial sector.

Colfax (CFX) was upgraded today by Bank of America/Merrill Lynch (BAC) from neutral to buy with a price target of $42, the the acquisition of Charter should add to the bottom line. Shares are higher by about seven tenths of a percent.

Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned cash to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys.

Investors are ringing in the new trading week sending stocks lower on concerns Greece will be unable to avoid default as it tries to negotiate terms on a new bailout package. Good morning, this is Kristin Bianco with the Week Ahead Market Report for Monday February 6, 2012.

In trading on Monday, shipping shares were relative leaders, up on the day by about 1.5%. Leading the group were shares of Global Ship Lease (GSL), up about 7.6% and shares of Genco Shipping & Trading Limited (GNK) up about 6.9% on the day.

Last Thursday, Swiss miner Xstrata (LSE: XTA) and commodities trader Glencore (LSE: GLEN) announced a potential blockbuster merger that would shake up a few of mining’s biggest industries.

According to Reuters, the deal is set to total $80 billion. And the newly combined firms “would rank as the world’s largest thermal coal exporter, the largest zinc producer and third-largest copper miner…”

Many analysts are already predicting a jump in the price of coal, copper and zinc in the coming weeks.

But the all-share merger would also disrupt another big mining industry… iron ore. And investors will want to pay close attention.

Iron Ore Equals Big Profits

Over the past 10 years, iron ore has had a run even gold can’t touch.

From August 2001 to August 2011, prices jumped 1,266%. Gold jumped 566% comparably.

Today, about 70% of iron ore traded in the world is accounted for by three companies – BHP Billiton (NYSE: BHP), Vale (NYSE: VALE) and Rio Tinto (NYSE: RIO). And they’re raking in massive profits.

Reuters reports, “Iron ore sells for around $140 per tonne to China… and only costs about $20 to $30 per tonne to mine.” China’s steelmakers aren’t very happy about paying such high prices. But since October 2011, they’ve had a little bit of a reprieve.

The “big three” have flooded the market with iron ore supplies, driving the price lower, to around $120.

As mining.com explains, the iron ore’s big players are “concentrating on building market share rather than maximizing prices. This way the giants drive high-cost producers out of the business.”

If Glencore and Xstrata don’t want to get left out in the rain, they should make this merger happen.

And there are two main reasons it’s more likely to happen than not.

Glencore and Xstrata Make Sense

First, Glencore already owns 34% of Xstrata. So both companies already understand the risks and advantages this merger carries. And it should make it that much easier for them to agree on a final price.

Second, Xstrata has been trying to gain a stake in the iron ore industry for years. In 2009, the company attempted to purchase Anglo American (LSE: AAL). The deal would have made Xstrata the fifth-most-profitable company in the iron ore market. But talks fizzled and the deal fell through.

Now the proposed merger between Glencore and Xstrata has reignited speculation of another takeover attempt coming for Anglo American, the world’s fourth-largest iron ore producer.

A few other companies also stand to be bought up if a deal is reached, as well.

Iron Ore M&A Heating Up

First Quantum Minerals (LSE: FQM), Fortescue Metals Group (PINK: FSUMF) and Freeport McMoRan Copper & Gold (NYSE: FCX) are also being seen as potential targets.

But Freeport may also be too expensive for Xstrata and Glencore and could end up as more of a competitor than potential takeover.

Only time will tell. But this is one development that should begin unfolding in just the next few weeks.

Good investing,

Mike Kapsch

Article by Investment U

Feb. 6 (Bloomberg) — Gregory Smith, founder of Australian investment company Global Commodities Ltd., talks about the outlook for crude oil, corn, sugar, and soybeans. He speaks from Singapore with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

Feb. 6 (Bloomberg) — Mitul Kotecha, Hong Kong-based head of global currency strategy at Credit Agricole, talks about his investment strategy. He also discusses the U.S. and Chinese economies, Europe’s sovereign debt crisis, and Reserve Bank of Australia monetary policy. He speaks with Rishaad Salamat, Susan Li, David Ingles, and Zeb Eckert on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)