Reference back to the beginning of the year when the stock was highlighted by NFTRH+ as a would-be technical breakout play (had not yet broken through
10 14 year old resistance) technically with a target of 40+, and fundamentally due to projected inroads into the mobile space for the chip dinosaur. Well, Intel broke out on increased corporate demand for its PC chips. At that time it was noted that mobile is still “out there” (doing my best Agent Mulder).
Well now the buzz is coming in for Core M Broadwell, and it is good stuff. I sold half my position but still hold the other half, hopefully for target and beyond. Here’s the original NFTRH+ chart…
Another commodity related marker that is testing important support is the TSX-V AKA the dot.VEE AKA the the Venture AKA the CDNX AKA the wild west outpost of Canadian speculation.
We have been following this one every week in NFTRH and also on occasion its ratio to its daddy, the Toronto exchange, which has been flying around in blue sky nominally. TSX includes mostly real companies and many that are not involved in energy, mining or other commodities. You can see the message that has been in play since the last great commodity speculation blew out with silver in early 2011.
This chart is like a junk vs. quality credit spread only for not only Canadian stocks but also for inflationary effects and resulting speculation. Not happening.
If there is to be an inflation trade it a) has given no indication of happening and b) better get started soon.
While we have been charting a constructive gold vs. commodities big picture view, we have also kept track of a disgusting gold vs. SPX big picture view as gold has been “boxed in” as it grinds around looking to close the gap from 2007. That was the kickoff to the financial crisis as the first institutions began melting down.
This cycle really has done amazing work in repairing (some, including myself would say sweeping under the rug) the damage and resetting the gold bug psyche as well. It is important to remember that gold bugs were the kings of everything back then, with their ideology unquestioned. But these are the markets and they don’t care about egos. Actually yes they do, they care about crushing inflated ones. The job appears to be in its final stages.
Here is a Bloomberg interview with Esther George from Jackson Hole that I thought you might find interesting.
Separately, here is today’s yield curve, with the 10’s and 5’s basically flat but rising vs. the 2’s, which means a rising 10yr-2yr curve today. FWIW…
People need to ask questions like ‘what, if anything are the implications of a declining BKX-SPX ratio?’ because this ratio, which has had us prepared for some bearish stuff since early 2014, remains bearish.
NFTRH was on the first two lower highs in real time and now the ratio has gone on to establish a beautiful bear trend. It’s only a daily chart, but the weekly is trend DOWN as well. There is no positive divergence for the stock market here.
Apparently the carry trade idea (based on the tapering of QE’s bond purchases, which would theoretically benefit the banks by pressuring long-term yields upward while ZIRP is maintained by Fed Funds) has run out of steam. Here again is the very notable reversal in lending activity, in line with the drop in long-term yields (makes sense).
The Gold Silver ratio is acting perfectly today… to NFTRH’s plan at least.
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Some risk off indicators looking pretty nasty…
Long-term T bonds breaking out of a short-term pattern vs. the stock market.
Inflation expectations (by TIP-TLT ratio) tanking. Don’t worry gold bugs, the metal’s preferred scenario does not include breakout inflation hysterics at this time.
Well the media always need to have a reason and this morning the reason for the hard down in the stock market is apparently second thoughts by investors on the Fed Minutes and QE tapering (with a side of Portugal/European problems).
What is actually happening is that it was time for a summer disturbance (at best) due to the factors we noted in the NFTRH excerpt on Monday. At worst the bull market is ending, but the favored plan is for a significant – possibly scary – drop that refuels the bull for one more thrust.
But that preference does not have a lot of conviction behind it. The only conviction I have right now is that the market is/was due for a July breather and this could be it.
People should have been prepared for this.