NFTRH 287 Out Now

Financial Markets,

nftrh287We got the market bounce that was anticipated by NFTRH 286.  Now #287 gets about the business of gauging what the bounce will be.  A post here at the site set a target for the NDX up around 3600.  If that comes about, the S&P 500 for one could pop to new highs.

Then, there is the Semiconductor status to deal with (above 10 year support) and a whole host of indicators that beg caution.  The market is now fun for me even though the Market Gurus Association would not even let me in the front door, let alone issue me a crystal ball.

Precious metals?  Well there’s a short-term view, which I think we all know by now is bearish.  But there remains a longer-term view that continues to support a different potential.

Also, in line with the rhythms of my own personal journey, a new aspect of the service will be coming as I finally get comfortable with the idea of managing chart based trading opportunities, both long and short for those interested.  NFTRH+ (trading) will be coming soon and it will give some people more of what they want, while separating out noisy updates for those who want to keep a non-trader’s perspective, which should in my opinion be the majority of people who are not full time market participants.

NFTRH 287 is out now and it’s (IMO) a good one.

Automatic Stabilizer?

Guest Posts,

Guest Post by Doug Noland

Yellen comforts New York – and the Bulls.

“Fundamental to modern thinking on central banking is the idea that monetary policy is more effective when the public better understands and anticipates how the central bank will respond to evolving economic conditions. Specifically, it is important for the central bank to make clear how it will adjust its policy stance in response to unforeseen economic developments in a manner that reduces or blunts potentially harmful consequences. If the public understands and expects policymakers to behave in this systematically stabilizing manner, it will tend to respond less to such developments. Monetary policy will thus have an ‘automatic stabilizer’ effect that operates through private-sector expectations. It is important to note that tying the response of policy to the economy necessarily makes the future course of the federal funds rate uncertain. But by responding to changing circumstances, policy can be most effective at reducing uncertainty about the course of inflation and employment. Recall how this worked during the couple of decades before the crisis–a period sometimes known as the Great Moderation. The FOMC’s main policy tool, the federal funds rate, was well above zero, leaving ample scope to respond to the modest shocks that buffeted the economy during that period. Many studies confirmed that the appropriate response of policy to those shocks could be described with a fair degree of accuracy by a simple rule linking the federal funds rate to the shortfall or excess of employment and inflation relative to their desired values.” Janet Yellen, April 16, 2014

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US Stock Market

Stock Market

Guest Post by Ino.com

U.S. STOCK INDEXES

us.stocksThe 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.

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Yield Spreads; Gold Bugs Avert Eyes…

Precious Metals, ,

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.

10.2.yields

10 & 2 year yields, from Bloomberg

Gold will get where it is going one day, but not until fundamentals come back in line.

Gold’s Cycle is in Left Translation

Guest Posts

Guest Post by Tom McClellan

Gold 13-1/2 month cycle
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.

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Big Pictures: Stocks, Gold and the Miners

Past Posts of Interest, Precious Metals, Stock Market, ,

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.

spx

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2014: State of the US Markets

Financial Markets, , , ,

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.

us.marketsus.markets2

Stock Market Notes

Stock Market
  • Covered a short position against leveraged NDX bear ETF QID (sort of a hyper long position) and am going to take profits on triple long TQQQ too.  I may keep a couple other specs for a little longer, but the market is already bouncing toward points that satisfy a ‘relief bounce’.
  • I am well aware of the merger uproar surrounding Osisko and M&A seems like a bigger picture positive for the gold miners with Yamana and Agnico Eagle going tooth and nail with Goldcorp over this Quebec mine.
  • Until the precious metals start fixing their daily charts and I see something other than GOFO mysteries on the macro fundas… I’ll watch for now.  But M&A is a funda too.
  • Time to have nice steady heart rate and evaluate bear positioning again on the stock market.