Gold vs.

Gold vs. Silver is coming around to the preferred fundamental plan, with a nice little pattern (this one however, is open to debate, fundamentally)…

gld.slv

Gold vs. Commodities is breaking a bullish flag…

gld.dbc

Gold vs. Crude Oil is in a bullish pattern, but not above the neckline.  This one is important to the miners…

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Fed Gearing Up to Stand Down

Guest Post by Michael Ashton

I guess it’s something about strong growth numbers and a tightening central bank that bonds just don’t like so much. Ten-year Treasury yields rose about 9bps today, under pressure from the realization that higher growth and higher inflation, which is historically a pretty bad cocktail for bonds, is being offset less and less by extraordinary Federal Reserve bond buying. Yields recently had fallen as the Q1 numbers doused the idea that the economic recovery will continue without incident, and as the global political and security situation deteriorated (maybe we will just say it became “less tranquil”). Nominal 10 year yields had dipped below 2.50%, and TIPS yields had reached 0.20% again. It didn’t hurt that so many were leaning on the bear case for bonds and were tortured the further bonds rallied.

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Gold-CCI Ratio, etc.

Ssssshhhhh, while the hype and noise goes on in the broad markets about the big drop in stocks, we want to very quietly continue to follow macro indicators so that we do not get lost in any hysteria.  Gold vs. CCI (commodity index) has broken out of a bullish Falling Wedge (by weekly chart) and is bull flagging with weekly RSI above 50.  So far so good.

au.cci

Now of course people are going to say that it is the Agriculturals that are weighing down the CCI and I agree.  But the Ag’s went up hard at the beginning of the year to break CCI out of its long-term downtrend and now they, like every bubble or speculative momentum play, have popped.  It’s a net neutral on the CCI, which in nominal terms has dropped exactly to where NFTRH has been targeting per this weekly chart since it topped out at resistance…

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Euro Junk, Perfect Backtest

[edit, 8.1.14] SPY short covered, EWP short ongoing.  [edit 2] FAZ sold.  EWP still ongoing, probably for a longer hold.

How perfectly did this crap rise to test the breakdown and then drop?  My stop as noted last week was a rise above 43, so I still hold Spain (Europe’s version of junk bonds) short, along with the chunk of SPY also noted.  No leverage, just short.  I am leveraged short against the Financials however, with FAZ, bought yesterday (conveniently noted today, so distrustful sorts feel free to discount it) on its chart pattern.  This is starting to feel sooooo January 2014.  :-)

ewp

Back on EWP, it (along with Italy’s iShares EWI) was an indicator to the speculative potential (i.e. manic excess) over there in Europe since the middle of last year.  The target was in the low-mid 40′s and damned if it did not get there off its lows below 20.

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S&P 500; Bye Bye Wedge

SPX breaks down from the rising wedge, loses RSI 50 and threatens support.  Of course, this is just one lagging headline index.  The damage elsewhere in indicators and leading markets is excellent.  All according to the preferred NFTRH operating plan I might add.  And that goes for the precious metals too.

spx

SPX daily from NFTRH 300

Is Gary Shilling?

Sorry, I could not resist the title.  Gary Shilling, an economist whose name I have heard over the years, has quite a body of work often revolving around Fed policy, GDP and deflation.  The reason I looked into Mr. Shilling is an email from an NFTRH subscriber linking his thoughts on a coming boom…

The Boom is Coming, and Sooner Than You Think (July 18, 2014)

Okay, an economist and Bloomberg columnist thinks this is a boom (actually it is; we are after all in the age of Inflation onDemand © and a Boom/Bust cycle; currently in a cyclical boom concentrated in stocks).  Let’s see what he thinks…

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FOMC

[edit]  So anyway, all wise guy stuff aside, the Fed obviously means business in its effort to put policy-made stock bulls into another gear higher.  This tells us two things (at least)…

  1. They do not want you to short stocks and
  2. This is not your normal recovery

Please don’t tell me that there is anything normal here.  If it were anything even in the same zip code as normal there would have been some words of impending something or other by now.  Instead, it is all clear as far as the eye can see… and beyond.

Inflation apparently needs to get stoked up before these people will even bat an eye and in the absence of inflation signals, this is what we are going to get; full heroics over at Policy Central.  Is what it is and speaking personally, I am going to take the market we’ve got, ginned up or not.  It could well go bullish here, but there is also a potential ‘sell the news’ thing in play as well, especially considering a macro indicator like Junk Bonds in an earlier post.  We’ll see.  Meanwhile, good job Janet!  I knew you had it in you!

Blah blah blah…

“When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”

Blah blah blah…