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.
So we have been making a fairly big deal about the over bought state of silver vs. gold or put another way, gold’s extreme under performance to silver. Witness the Gold Silver Ratio (GSR)…
NFTRH 298 updates the precious metals rally, which has gone through what we called Resistance #1 on GDX and as of today rests right at Resistance #2. There is a viable Resistance #3 a little higher as well. Silver remains stretched vs. gold and the CoT data – not yet widely reported due to the holiday – made another disturbing move. We are still working a big bottom, and even established up trends in the quality items we follow. But there are short-term issues gathering.
There is also Option 1 and Option 2 on the stock market. Option 1 would be the healthy thing for the market to do and that is the way I am leaning. Option 2 would be exhilarating in the short-term and then… all done; macro pivot time.
Lot’s more including some NFTRH+ trade updates and the usual spectrum of global stock markets, commodities and currencies.
NFTRH 298 out now.
Reading MarketWatch makes my head spin sometimes (that’s part of the fun of it I guess).
Paul B Farrell (May 9, 2014):
10 peaking megabubbles signal impending stock crash (Fed driven rally is about to end badly)
Paul B Farrell (July 3, 2014):
Great Obama Bull Market will roar till 2016 (Historic market up 250%, aims for 300% gain by election)
Ha ha ha…
Meanwhile, here’s a headline for ya (clicking the graphic will yield the full report) from the BLS…
Hey, if a bearish biased guy (with tools to keep himself straight with the market ) could have seen this 1.5 years ago why do so many continue to be surprised? A simple progression went Front-end Semiconductor Equipment industry ramp → Semiconductor manufacturer ramp → strong manufacturing → buoyant Jobs data (despite the kicking and screaming of those unwilling to accept it) → ???
Now, how does this end? Well, I am a bear on the macro big picture. But insofar as the Fed has sat you down in front of your TV set and assumed control, as of 9:01 AM US Eastern on July 3 it is working.
There is nothing wrong with your television set. Do not attempt to adjust the picture. We are controlling transmission. If we wish to make it louder, we will bring up the volume. If we wish to make it softer, we will tune it to a whisper. We will control the horizontal. We will control the vertical. We can roll the image, make it flutter. We can change the focus to a soft blur or sharpen it to crystal clarity. For the next
hour [indefinite period], sit quietly and we will control all that you see and hear. We repeat: there is nothing wrong with your television set. You are about to participate in a great adventure. You are about to experience the awe and mystery which reaches from the inner mind to – The Outer Limits.
Otherwise known as my tools. Linked above you will find a new reference library being built to explain in plain English NFTRH’s preferred methods of market management.
I have heard too often that people aren’t always clear on what I am talking about with some of the analysis, especially with things like the inter-market ratios and their meanings (although I do see this stuff cropping up out there to a degree). When I first started guys used to throw charts into their analysis to make it look good, but it was not helpful charting in many cases. Now, a level of sophistication is becoming more prevalent.
Anyway, in an effort to hopefully allow more people to meet me half way I have decided to start building a handy reference under the Our Tools link above.
Keep an eye on it as I am sure it will grow. But there are a few things up already I’d like you to check out if you are at all unclear about what the heck it is I do here, and especially in NFTRH reports. Also, the TA link uses as an example a weekly chart of GDX with my freshest thoughts on its weekly technical status.
A good, tight 30 page report that is going its own way, not the way the herd is going.
NFTRH 297 out now.
The TLT long-term Treasury bond fund is not looking too good technically, by daily chart. The uptrend channel is violated, MACD is getting close to red (0-) and RSI and AROON are already red. Long-term bonds do not like inflation.
Meanwhile, T bond bear TBT has a sneaky bullish look to its daily chart and is on the verge of changing its trend to up (ref. SMA 50).
The big spike in the precious metals, led by silver, prompts not the feel good pumping you will see elsewhere. No, it prompts yet more macro work with some very interesting views noted about the post-2011 time frame. Full geek mode folks. There will be time later to play bull hero.
38 pages and I didn’t even get to a commodities segment. It’s fine because I currently have little interest in that mixed bag of hot money speculations and I have a lot of interest in what’s going on in the precious metals and US and global stock markets.
Happy Father’s Day dads!
A good report this week. Nice and clear and able to define most things pretty well. An exception being a brain dump near the end where the writer simply faces the reality that there are some things happening in the macro that neither he nor likely anyone else, has the ability to fully define. Nor however, do I find the need to define it at this time.
A note from an NFTRH subscriber, who is a sophisticated investor if you catch my drift. He watches the markets intimately and reads, reads and reads some more not taking any one entity as the be all and end all. Reprinted with his permission:
“I give you credit. I listen. I weigh. I believe your position is well argued. I feel many have dog piled and jumped on your work and in many ways have become Johnny come I called this again … and yea, I know you’ve hinted at this and it is what it is… but for fuck’s sake… all these guys are calling for 1080 or lower… and i just don’t buy into the intellectual honesty to it all… point? none. i hope you are adequately compensated for fair level headed calls and i believe you when you say what you say whether or not i agree/disagree.”