I heard one of my old favorite bands from Kiwi land today and realized that I’ve not imposed my taste in music on you for a long while, so here is a weird and beautiful song by the Chills. Have a nice weekend.
They tell me you are supposed to take profits and so that is what I have done with another gold miner, Klondex Mines, because no matter how positive I am on the company a chart like this is vulnerable, too far above the EMA 10, let alone the SMA 50, which is around where I originally bought it.
We had previously advised that traders consider taking profits as GDX hit 23 and HUI hit 210. I did that with some positions, but had wanted to hold this one indefinitely. Well, so much for that. Meanwhile, I’ll get dinged on the ones I decided to hold but with lots of cash am in a position to either take advantage of this pullback or in the less likely (IMO) event it violates certain parameters, avoid most of its damage.
NFTRH analysis fully anticipated the disturbance in the sector and advised profit taking for traders and a probabilities based view of what this pullback is and is not.
Guest Post by Tom McClellan
January 23, 2015
The news out of the European Central Bank on Jan. 22 helped to lift the major averages higher. The DJIA and SP500 have not yet made it back up to the level of their December 2014 highs, but the Dow Jones Utility Average has already pushed to a higher high. That promises more upside movement for the rest of the market.
It is not surprising that utilities stocks tend to move up and down in sympathy with all of the rest of the stocks. They are subject to many of the same forces of liquidity, and returns chasing. In spite of that general tendency, we do see differences in behavior sometimes, and those differences are worth paying attention to.
If the DJIA makes a higher high but the DJU makes a lower high, that sort of divergence usually leads to a selloff for the broader market. It is as if the utilities stocks can act as a canary in the coal mine, sniffing out liquidity problems ahead of time.
That is not the situation we are seeing now, though. With the DJU already up to a higher high, and leading the industrials higher, we are at least several days away from possibly having a bearish divergence, and that would only come into play after the DJIA has made a higher high. And this strength is to be expected now, as we are in a period of strong seasonality at the end of January, and we are also in the 3rd year of a presidential term which is nearly always bullish. In other words, the market is supposed to be going up now, and the DJU is confirming that a rally is what should be coming for the DJIA.
Guest Post by Michael Ashton
Money: How Much Deflation is Enough?
Once again, we see that the cure for all of the world’s ills is quantitative easing. Since there is apparently no downside to QE, it is a shame that we didn’t figure this out earlier. The S&P could have been at 200,000, rather than just 2,000, if only governments and central banks had figured out a century ago that running large deficits, combined with having a central bank purchase large amounts of that debt in the open market, was the key to rallying assets without limit.
That paragraph is obviously tongue-in-cheek, but on a narrow time-scale it really looks like it is true. The Fed pursued quantitative easing with no yet-obvious downside, and stocks blasted off to heights rarely seen before; the Bank of Japan’s QE has added 94% to the Nikkei in the slightly more than two years since Abe was elected; and today’s announcement by the ECB of a full-scale QE program boosted share values by 1-2% from Europe to the United States.
Guest Post by Elliott Wave International
Debt and Deflation: Three Financial Forecasts
There’s more to deflation than falling prices
Editor’s note: You’ll find the text version of the story below the video. Join Elliott Wave International’s free State of the U.S. Markets online conference to get prepared for the major moves in U.S. stocks, commodities, gold, USD and more for 2015 and beyond. Register now and get instant access to a free video presentation from market legend Robert Prechter and regular email updates with insights from our most recent publications and presentations from our key analysts.
Inflation ruled from 1933 to 2008.
Yet in the just-published Elliott Wave Theorist, Bob Prechter’s headline says, “Deflation is Starting to Win.”
Take a look at this chart from The Telegraph:
Guest Post by Bob Hoye
- Gold… and a Ramble –NFTRH [biiwii comment: he’s bitching and moaning again about the misperceptions game surrounding the monetary value relic]
- Bracing for Stagnation –Raghuram Rajan [biiwii comment: errr… one of my heroes. thx for the link, Hammer]
- Will QE Work for ECB? –Dr. Ed
- VDAX Set to Rise? –GaveKal
- January 22 2015 Opening –Across the Curve
- What is a Dollar? –Alhambra
- Jobless Claims Disappoint Again –B.I.G.
Guest Post by Michael Ashton
The focus over the last few days has clearly been central bank follies. In just the last week:
- The Swiss National Bank (SNB) abruptly stopped trying to hold down the Swiss Franc from rising against the Euro; the currency immediately rose 20% against the continental currency (see chart, source Bloomberg). More on this below.
Guest Post by Elliott Wave International
Are Buyouts Checking Out?
Two more key measures of optimism suddenly betray a diminishing appetite for stocks
By Elliott Wave International
Editor’s note: With permission, this article was adapted from the January 2015 issue of The Elliott Wave Financial Forecast. For one week only, EWI is throwing open the doors to its big-picture U.S. outlook. Follow this link to read a lot more of their latest analysis, 100% free, by joining the State of the U.S. Markets Conference.
NYSE margin debt was $457 billion in November, still down from its February 2014 peak of $465.7 billion.
- Stocks Rise as on China Growth, ECB Bets as Dollar Rises –Bloomberg [biiwii comment: surprised? anyone? the theme is up and down chop, i.e. swings, that will eventually lead to resumption of or negation of trend. oh, and the media are busy manufacturing reasons as usual]
- Martin –Josh Brown [biiwii comment: 3 simple quotes; read them]
- Global Monetary Policy Amidst Deflationary Concerns –Ana Maria Santacreu @ St. Louis Fed
- January 20 2015 Opening –Across the Curve
- What Next for the CHF? –Daily Forex
- SNB’s Move and What it Means for Gold Investors –Hebba Investments
- The Retail FX Market is a Complete and Utter Joke --Kid Dynamite
- Sound and Fury –Springheel Jack
- Stefan Kremeth on SNB action –Incrementum AG
- The Dangers of Leverage –Alhambra
Guest Post by Steve Saville
Changes in asset prices or any other prices do not cause changes in money supply, although many of the people who comment on the financial markets and economics believe otherwise. We were recently reminded of this mistaken belief when reading an analysis of oil’s large price decline that included the assertion that hundreds of billions of dollars had been eliminated from the economy as a result of this price change.