Don’t look now but the Dow Transports are working on a short-term trend change to the upside with a ‘W’ bottom and a pop above the declining MA 50’s.
Will TRAN have ended up leading the way to the mildest of market sags before bullish reversal? Well, not until it gets through the red resistance line and then the MA 200. If it does those things, it is going to get bullish and if Dow Theory means much (I still have my doubts) it would eventually spread out to the broad markets. First things first…
The copper market fears that “the plunging stock market could destabilize the economy and impact resource demand,” said Colin Cieszynski, chief market strategist at CMC Markets.
“Copper is now at a big turning point technically,” he said.
If prices can “bounce back above $2.45 soon, it could be a bear trap washout and may signal a bottom,” Cieszynski said. But if they don’t, and $2.45 becomes new resistance, “look out below as a measured move from the $2.45 to $2.95 channel of the last few months suggests $1.95 could potentially be tested down the road.”
Colin, the copper market fears nothing; at least nothing that has gone on lately. The copper market made a top and has been bear flagging through a bear market since 2011. WTF are you talking about, 2.45?? Copper is and has been bearish. Stop whipsawing a world full of MSM reading substance abusers.
This morning we had run of the mill Mainstream Financial Media hype, with MarketWatch predictably going all Greek all the time. CNBC show’s ’em how it’s done however, layering in alongside Greece sides of Puerto Rico default talk, China stocks crashing and a Fed rate hike Jawbone.
If you know me you know that I just love this stuff. The MSM falling all over itself to a) state the obvious and b) over amplify it 100x beyond its relevance.
Horseman 1: Greece is little more than a flash point. ECB is going to inflate to beat the band and as it sees fit in order to paper over any short-term fallout. Dominoes? That can be evaluated later.
Horseman 2: Using the FXT (FXI) we gauged the breakout and targeted the mini bubble well. Now we are watching key support and will evaluate whether it is at a buying opportunity at such time. No theatrics, just market management.
Horseman 3: Puerto Rico? Really? There are a lot more Puerto Rico’s (and Greece’s) lurking out there globally. But as long as global CB’s keep printing, we keep playing this game of macro Whack-a-Mole. Meanwhile this has little to do with US stocks.
Horseman 4: Dudley jawbones a rate hike. Ha ha ha…
CNBC has taken over the lead in the Dumbass Olympics from MarketWatch today.
This is odd, but not illogical, given the dynamics in play for the gold and silver CoT data and a possible counter-trend setup we have been watching for in the ‘inflation trade’.
Here is the CoT chart for silver that was used in NFTRH 348. Not so bad is it? The extreme was set at the first set of arrows, but Silver CoT has improved greatly over the last couple of weeks.
Silver would likely lead gold if a bounce in commodities and certain global markets were to take place. Meanwhile, the actual bullish stuff is elsewhere as the US stock market has re-found its momentum leaders and Europe declines to the upper end of its buy range.
Hey, I know I always seem to need to give these things nicknames (Armageddon ’08, Fiscal Cliff Kabuki Dance, etc.). Maybe that is a reflection of how non-seriously I take modern finance on a fundamental level. What we have here are policy and media driven hysterias, both to the positive side and the negative, swaying an emotional collection of players to and fro. It is more of a game than a science or well heeled, buttoned down profession.
So currently, on an interim basis we are working the ‘Anti-USD inflation trade’ (a bounce in inflation expectations and associated ‘hard’ assets) and the Euro QE ‘Me Too!’ trade, with its template being the US QE that has worked to hyper boost (stock) asset prices.
It appears that the mealy mouthed Fed, still refusing to bail out any savers that are left (both of them), has kicked another leg out from under the US dollar, which had for some reason been discounting a Fed that would begin raising the Funds Rate by now like a normal entity in a normal post-crash bailout environment would have done upon achievement of its objectives.
‘But no, we just need to tweak a few more positive data points out of it or wait until we see the white’s of inflation’s eyes’ implies the Fed. Whatever, the dollar is down this morning and the anti-USD inflation trade should get a bounce in its step, in line with one of our main themes. If the May low is violated, Uncle Buck could take a pretty deep correction.