Guest Post by Ino.com
U.S. STOCK INDEXES
The June NASDAQ 100 closed higher for the third day in a row on Thursday as it consolidated some of the decline off March’s high. Today’s high-range close sets the stage for a steady to higher opening when Monday’s night session begins trading. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. Multiple closes above the 20-day moving average crossing at 3558.39 are needed to confirm that a low has been posted. If June renews the decline off March’s high, the 38% retracement level of the 2013-2014-rally crossing at 3345.52 is the next downside target. First resistance is the 20-day moving average crossing at 3558.39. Second resistance is the reaction high crossing at 3599.50. First support is Tuesday’s low crossing at 3404.75. Second support is the 38% retracement level of the 2013-2014-rally crossing at 3345.52.
Better yet, look square at it because this is the market, not ideology, making the rules. I don’t want to pile on (ref: Tom McClellan’s guest post) but this is extremely gold unfavorable with yields up and short term yields up way more. Insert here the boiler plate about not taking any one day’s reading in a vacuum… but then consider the spreads have been degrading nearly every day for a week now.
Gold will get where it is going one day, but not until fundamentals come back in line.
Guest Post by Tom McClellan
April 17, 2014
On the “blood red moon” day of April 15, gold had an impressive downturn which changed the whole picture for gold prices over the next few months.
Viewing one day’s action on its own is a recipe for being misled. But viewing it in the right context is a great way to draw insights about what the future holds. And one of the most important contexts I have found for interpreting gold’s price action is to put it into its proper place within the 13-1/2 month cycle.
Ukraine war hype, China demand drop, GOFO mysteries… these are the short term noise inputs on the gold sector.
US Treasury bond yield spreads, gold vs. commodities (i.e. the ‘real’ price of gold), gold vs. the stock market… these are some of the fundamental considerations that actually matter and they have taken a hit since January.
It is easy to say ‘I am bullish in the big picture’ (measured in years) but it is not so easy to actively manage in the smaller pictures (measured in days, weeks and months) with all of the above noise inputs and more bombarding the poor individual player.
We use shorter term charts to manage the shorter time frames. Daily charts have most recently indicated a bearish set up as bear flags formed across the precious metals complex (with the exception of silver, which never got going to begin with) last week. Weekly charts continue to indicate that an extended and oh so grinding bottom may be forming, but that includes the potential for ups and downs, also known as volatility.
There is also a lot of noise lately in the stock market. The US stock bull celebrated its 5th birthday last month. The last 2 cycles (the manic phase of the secular bull ended 2000 and the cyclical bull ended 2007) were each approximately 5 years long. Today let’s retreat to the calm of the long term monthly charts and get a snapshot of the big picture.
The S&P 500 has a measured target of around 2190 that we have had open as a possibility since the big breakout occurred in early 2013. A measured target is just that, a measurement; simple math. It is not a directive and therefore 2190 is not hype, it is just a possibility.
What better day than today’s predictable hard bounce to present the other side? If you believe the bounce and want to be a happy bull, just step along from this post. If you don’t mind considering other opinions or are like me in thinking 2014 stands a better than even chance of being the year that the current cycle ends, check out EWI’s 24 page report by clicking one of the graphics below.
We have come to a point in this cycle where we are supposed to feel ashamed for having bearish views or opinions. Prechter’s wrong again after all. The thing is, even a bull could use some alternate opinions. I am not talking about a market crash. Please. I am talking about a macro view. That should be someone’s basis for operation. I have my views and they have not changed since early last decade because the things I had negative views about have not only not changed, they have intensified and shifted (commercial credit replaced by official credit). But there is still a debit waiting out there.
We who hold a negative big picture macro view were stupid until the 2008 liquidation made us geniuses. Now we are stupid again and trend followers are smart. Wash, rinse, repeat. EWI is an affiliate and I make a commission on sign ups to their services. So consider this a promo. Also consider that EWI was founded by someone who was an influence of mine. So it’s not just a pitch. We’ve only recently gotten with the idea of partially funding all the free information here with ads, like most blogs have routinely done all along. Consider this an ad that I wholeheartedly recommend. And the darned thing is free for crying out loud.
Why am I a short term trader now? Because the market has instructed me to be that, with a bias toward a bigger macro change in the markets on an intermediate time frame. An intermediate trader is what I prefer to be, but the market didn’t care about my preferences last time I inquired.
I know I rag on these guys quite a bit, but this is an article well worth your while.
Be wary when you hear ‘this is the big stock crash’
I not only agree with the title, but also his representation of perma bears (and going the other way I might add, perma bulls) seeking to cash in to guruhood by making THE call. The kind that Richard Russell still lives off of today.
Anyway he goes on to some pretty good technical analysis focused on the relatively
week [dohhh, weak] Nasdaq and comes up with similar conclusions to the near term and reservations on the intermediate term that I carry. I don’t think I like the article because he agrees with me; at least I hope not. It’s more because I think it’s level headed and thought out, unlike so much of the crap out here on the internet these days.
Time for bulls to get out their Gox Box Sox because the Semiconductor index is negatively diverging and having an issue at the 50 day moving averages.