Category Archives: Financial Markets

Clueless Fed?!

By Axel Merk

“The Fed doesn’t have a clue!” – I allege that not only because the Fed appears to admit as much (more on that in a bit), but also because my own analysis leads to no other conclusion. With Fed communication in what we believe is disarray, we expect the market to continue to cascade lower – think what happened in 2000. What are investors to do, and when will we reach bottom?

is the janet yellen fed clueless?

To understand what’s unfolding we need to understand how the Fed is looking at the markets, and how the markets are looking at the Fed.

Continue reading Clueless Fed?!

NFTRH 381 Out Now

By Biiwii

I began the day fighting a glitch with Gmail’s contacts merge function for 3 hours and then finished up NFTRH 381.  So no promo today.  I am cooked, especially considering 42 pages of market stuff.  NFTRH 381 is out now, it’s good and I’m too pooped to explain why.

nftrh 381

Still Searching for Dollars

By Jeffrey Snider of Alhambra

The point is not whether this is likely but rather that it is entirely possible and that central bank desperation might wander too far

There is a great danger to negative interest rates, one that is denied by economists and central bankers because they deny the essence of wholesale finance. Stuck in the 1950’s, their solutions were arguable even then but hold little if nothing of value now. Markets are being reacquainted once more with the possibility (finally). As discussed last week, the Bank of Japan did not unleash more “stimulus” but rather confirmed the ineffectiveness and general impotence of all that came before (which was considerable).

Confusion over terminology is very much understandable in this area on the grounds of complexity alone. However, even in basic concepts there is in enough instances serious ambiguity as to render little but further confusion. In this case, surrounding NIRP, we have the simultaneous distinctions of the “dollar” short and a dollar shortage. While seemingly indistinguishable by virtue of the words’ common root, those terms are very different at least insofar as they can describe opposite perspectives. And it gets even more confusing when attaining those different perspectives requires an indirect angle.

Continue reading Still Searching for Dollars

NFTRH 380 Out Now

By Biiwii

nftrh 380We have been on the bounce scenario and speaking as a bear on the intermediate trend, I say thank you Mr. Kuroda.  Everything, including clear as day analysis on the precious metals sector, is brought up to date in 34 highly graphical pages; and I feel that I, as a puny little market participant, am as well prepared as possible after once again doing the work.

I no longer tend to offer discounts or other incentives, as I see happening with some services as a bear phase engages.  Frankly, this work is still under valued at today’s price.  You read the more formal stuff at nftrh.com and the less formal stuff at biiwii.com.  You know who I am by now.

The screen shot reprises the old Whack-a-Mole shtick and then NFTRH 380 gets down to serious business.  This market is burping up data points and parameters left and right.

 

Nothing to Say

By Biiwii

I really can’t think of much to say (write) that has not already been written in NFTRH or its updates.  The market is acting as anticipated so far, in anticipation of coming confirmations (bearish favored over bullish), pending some bouncing around, with a relatively brief and lame Santa rally potential.  So, ladies and gentlemen, for now we’ll let others say it with a trip around the interweb pipes and some market news and analysis…

  • Waiting on Santa  –Market Anthropology  [biiwii comment: agreed MA, but Santa could be fleeting and nimble this year]

 

Happy Halloween

By Biiwii

Hey look, anyone can post a jack-o-lantern with a scary face on Halloween, but how many sites are treating you to a traditional Irish Halloween Turnip?  Hmmm… ?

irish halloween turnip

And so October has come and (almost) gone.  We got what we expected, which was a mother of a bounce, now probing the high extremes of the upside range.  Why is it extreme?  Because if it goes past certain levels it morphs from ‘bounce’ to ‘bears hand it over on downs’, and another opportunity lost to croak this market.

October was so very positive and now the bulls have some good tech earnings and a period that everybody knows is favorable.  I mean, they sold in May right?  Right??  Sure they did; a lot of them sold in August (and some bought back in October).  So it’s the bullish November-April cycle beginning on Monday.

All I can say is don’t swallow the bromides, promos and infomercials coming from people who manage other peoples’ money for a living (i.e. the mainstream financial services industry and its associated media).

While I am not net short yet, I sold a little Apple here, added an EM short there and am skulking my way to the door.  I have had some great trades and some real goofs on this bounce but it is time to realize that play time is ending and now only the true believers are going to take this market higher or going the other way, lower.

There is a very real possibility that the wonder bounce has been a last chance to sell.  I am not saying that because I want the market to drop, which I do (because I find it easier to manage when people are spooked), but because the balance of the indicators (technical and macro) still say that the intermediate trend is changing to down.

[edit] Work done in NFTRH 367’s first 6 pages implies there could be an opportunity for one more small pop higher, though none of the above is altered materially if that plays out.

Over in precious metals, the spooks came on cue, 10 HUI points below our ‘bounce’ target zone.  This was completely view-able in advance through the CoT structure.  It’s confirmation was in the reversal in silver vs. gold, post FOMC.  While for the moment I am net short the PM’s, I have a few quality miners tucked away in my pocket.  This is not because of some idealistic viewpoint but rather, because my view of a coming macro change has not been eliminated by the market bounce.

Speaking of FOMC, it was really interesting that they decided to put a little pin prick in the fabric of things with that ‘at its next meeting’ wording.  Meanwhile, another sign of manufacturing degradation has burped up in the economy.  You won’t find it on financial TV where some guy jumps around like a gorilla on crack to entertain the investing masses.  But you will find it faithfully chronicled each month by a guy formerly in the medical device manufacturing industry.

The market road map has been loss of momentum → downside resolution → bounce attempt → downside retest → mother of a bounce…  all very manageable and logical.  Now it gets interesting again because irrationally bearish sentiment is fixed, technical limits are upcoming and market/economic indicators are questionable at best.

Happy Halloween!

Another +’er After Earnings: BSX

By Biiwii

Another recent NFTRH+ chart spec was Boston Scientific, a company I had intimate dealings with in my former life as a manufacturing guy.  We highlighted this one a couple weeks ago, sat through some grind and finally the consolidation appears to be breaking.  Here’s the daily chart from that update, which also included weekly and monthly views to clearly show the bullish consolidation within an uptrend and the big picture breakout similar to the one we caught in INTC last year.

bsx daily chart (boston scientific)

So while I am never bashful about admitting my clunker trades (like recent spotlights on crude oil and commodities), I won’t be bashful to note these winners either.  The thing with this racket, until new macro trends are established and trends can be ridden, is getting more winners than losers and clipping the losers, limiting losses.

Yields Making a Signal?

By Biiwii

[edit] Aye aye aye…  distracted and hurried I looked at the chart wrong.  Everything written below is opposite to reality (except the deflation part, as both yields decline in the short-term).  I misread my own chart and thought the 2 was breaking down and not the 10.  Unbelievable.  I need a vacation, or a break from my in-day schedule, which is hectic lately.  Please accept the apologies of an embarrassed blogger.  I guess over years and years things like this are going to happen once in a while. 

The yield curve is still doing no better than potentially bottoming, but when viewed nominally and side by side, the 10 and 2 interest rates appear to be considering different courses.  The 10 is still up trending and the 2 is breaking down.

That would of course be a positive for the yield spread and a negative for most other assets (esp. with the curve rising in a declining short-term yields scenario) and could be a positive for gold.  Imagine if long-term yields were to rise (not predicting it, merely riffing) and short-term yields were to decline?  Wow.  For now, I’d just settle for a curve rising under the pain of short yields dropping faster than long yields (i.e. DEFLATION!!!!).  😉

2 year yield and 10 year yield, interest rates

[edit] By ‘breaking down’ I mean the 2015 up channel on the 2 year.  An actual down trend would not be indicated until it makes a lower low to April.

30yr-5yr Yield Spreads

By Biiwii

The 30 minus the 5 is how Stockcharts.com would calculate the 30-5 yield spread.  30 divided by 5 is how I have done it to be more conservative.  I am using 30’s and 5’s because I cannot get a spread chart of the 10’s and 2’s during market hours (I am all ears if you can point me in the right direction, using the Contact link above).

Both calculations are looking as if they are in bottoming patterns.  But of course we are kept in suspense at the noted necklines.  Doesn’t it seem like indicators taunt you sometimes?  I recall watching the now very bearish Palladium-Gold ratio taunt me for months before finally registering its signal.

30 year yield, 5 year yield curve

Why is this significant?  Well, aside from gold desiring rising curves the S&P 500 generally does not want a rising 30-5 or other spreads, at least in the first phase of a rise.  Here’s the NFTRH chart…

30 year yield, 5 year yield, s&P 500