A Good Run Continues

By Biiwii

As often noted to NFTRH subscribers, I believe now is a good time for swing trading.  Not day trading (whipsaw) and not investment (other than maybe a few items I’d consider investment worthy for my own reasons, largely stemming from my originally coming from the productive economy, not the financialized one).

Swing trading is defined here as the act of taking positions on downside buying opportunities and holding through some ups and down and then forcing myself to take profits when they are presented.  In 2015, for some reason they have been presented with great regularity.  I am not sure why, other than I did improve my own focus as a trader and decided to stop burning so many commissions.

I bought Intel on its big drop and decided to hold into earnings.  That’s often a tough call.  Today it’s up in AH after meeting expectations.

Then there are the Biotech/Specialty Pharmas. We have been following the index and the sector ETF, advising that until the trend is broken the trend is not broken.

Still, I decided to take profit on this one again after buying the recent plunge.

depo

I decided to continue holding this one despite today’s 10%+.  The chart and some light fundamental study (but it’s a spec. Bio!) kept me holding.

Continue reading A Good Run Continues

Yield Spreads Today

By Biiwii

Well, the knock down in the 30yr-5yr yield spread did not last long.  While it has not done anything it didn’t already do before ultimately failing in October and January, it bears watching.

30.5

The nominal 10yr is down…

10y

And the nominal 2yr is down by more…

2y

So this spread is rising from yesterday’s close per the following…

10.2

This is stuff you won’t find on Bubble Vision or maybe in your CFA’s monthly report.  But it is only critical to most markets.  The state of nominal yields dropping while curves rise would be a tail wind for gold, and for the stock market?  Not so much.  Yet neither of these mostly opposed asset classes have reacted yet.  That is because… this:

10.2.mo

Major trends have not changed yet.  Patience my friends.

Around the Web

By Biiwii

Financial news & analysis from around the web

 

Tech Bubble: Different This Time?

By Elliott Wave International

[biiwii comment]: 3 posts, all by guests.  Some Mondays I am all talked out after an NFTRH report, and just enjoy decompressing.  The weather is great, the market has been good thus far in 2015 and well, it’s a day by day thing.  As to EWI’s theme here, it makes no difference to me… bubble, no bubble, bubble growing, bubble popping… the theme continues to be trade what you see, not what your ego or hopes and dreams see… and take profits and manage risk along the way.  And for crying out loud stop reading people who micro manage gold in a vacuum as if it’s the only market on earth.  They call that agenda.

Tech bubble: Different this time?

Editor’s note: This article is from Elliott Wave International’s brand-new investment report, “U.S. Investors Face a Giant, Historic Bubble.” It originally appeared in the April issue of The Elliott Wave Financial Forecast, published March 27, 2015. For a limited-time, EWI has agreed to give our readers exclusive free access to the full report. Please click here to read it now.

In March, we covered the return to a popular fascination with technology.

The striking resemblance to 2000’s technology mania is not going unnoticed. How can it? With the NASDAQ’s much heralded return to 5000 and magazine covers proclaiming “Google Wants You To Live Forever,” concern about an “asset bubble” is being raised. But this is actually another throwback to early March 2000, when the NASDAQ reached its all-time high and the Financial Forecast remarked on a “public ambivalence toward warnings of any kind.”

Continue reading Tech Bubble: Different This Time?

EU Confidence Strengthens

By Alhambra Investment Partners

EU Confidence continues to Strengthen

The effects of a strong US currency are vast. Much of what is being reported in main stream media are the negative domestic effects. A wider view shows some positive evolving trends as well.

Yes, a higher US dollar has killed oil prices. This has lead to lower broad Index earnings and earnings expectations which is highly concentrated in the energy sector. A higher dollar also hurts foreign earnings of US companies. And, it appears to have abetted a lull in US manufacturing in Q1. Let’s hope the pace of dollar appreciates abates and that these negatives subside.

earnings weakness

Continue reading EU Confidence Strengthens

Official CPI vs. Shadowstats CPI

By Steve Saville

The official CPI versus the Shadowstats.com CPI

Even the most well-meaning and rigorous attempt to come up with a single number (a price index) that reflects the change in the purchasing power (PP) of money is bound to fail. The main reason is that disparate items cannot be added together and/or averaged to arrive at a sensible result. For example, in one transaction a dollar might buy one potato, in another transaction it might buy 1/30,000 of a new car and in a third transaction it might buy 1/200 of a medical checkup. What’s the average of one potato, one-thirty-thousandth of a new car and one-two-hundredth of a medical checkup? The creators of price indices claim to know the answer, but obviously there is no sensible answer. However, in this post I’m going to ignore the conceptual problem with price indices and briefly explore the question: Which is probably closer to reality — the official CPI or the CPI calculated by Shadowstats.com?

Continue reading Official CPI vs. Shadowstats CPI

NFTRH 338 Out Now

By Biiwii

nftrh338Enjoyable to write and of personal benefit in focusing my thoughts, NFTRH 338 was emailed to subscribers this morning.  It includes an extended look at GE’s move to get out of the finance business and focus on manufacturing (in particular, automation and robotics).  We take it further and correlated GE’s move to what the Swiss National Bank did a few months ago.

Oh and there was lots more as we covered stock markets, precious metals, commodities and got into some interesting currency conversation.  A really good report this week.

‘Crappy’ Gold Mining

By Steve Saville

The crappy gold mining business revisited

Last October I wrote a piece that explained why gold mining had been such a crappy business since around 1970 and why it was destined to remain so as long as the current monetary system was in place. The explanation revolved around a boom-bust cycle and the associated mal-investment linked to the monetary machinations of central banks.

The crux of the matter is that when the financial/banking system appears to be in trouble or it is widely feared that central banks are playing fast and loose with the official money, the stock and bond markets are perceived to be less attractive and gold-related investments are perceived to be more attractive. However, gold to the stock and bond markets is like an ant to an elephant, so the aforementioned shift in investment demand results in far more money making its way towards the gold-mining industry than can be used efficiently. Geology exacerbates the difficulty of putting the money to work efficiently, in that gold mines typically aren’t as scalable as, for example, base-metal mines or oil-sands operations.

Continue reading ‘Crappy’ Gold Mining

Pivotal Events

By Bob Hoye

“Positive Rotation Into May”
pivotal.events
Click for full PDF report

 

 

History is Fact, Part 1

By Biiwii

In writing this post I came to realize that its subject matter is too expansive for any single post.  So consider this an introduction to a series of posts that I’ll probably do in the coming months, as facts come to the fore and lend themselves to historical analysis.  Two examples are presented below.

You might not be the type who needs or cares to subscribe to commercial market commentary/advice/trading/management services, but one thing we all can do is work through the freely available stuff calling itself ‘analysis’ flying around out there at warp speed and cull what is based on facts or honestly produced analytical work from the other garbage that is all too often based on ego, bias or agenda.

Most weeks you are able to download a time-delayed version of Bob Hoye’s Pivotal Events newsletter right here at Biiwii.com.  While Bob has certainly got his opinions and biases (as we all do, let’s be honest), he is the most historically learned commentator I have read.  I enjoy the old and not so old news article quotes from bubbles that culminated in 1873, 1929, 2000 and 2007.  Reading Bob’s history lessons is like hitting a ‘Refresh’ button on personal perspective each time.

This is not a promo of Hoye’s service and Institutional Advisors are not even aware of this post.  Hoye is simply one of several influences on my own market management methods, and probably a reason the words “patience” and “perspective” show up so often in my own writing.  It is vital to keep frames of reference and perspective at all times, no matter how long things that we view each day with our own two eyes take to play out as noisy short-term components of a longer-term process.

It used to be easy to skim Bloomberg or MarketWatch (or in the old days when people actually knew it existed, Thestreet.com) and pick out ‘bubble head’ headlines during bull markets, but the current phase is complicated by the fact that these services, especially MarketWatch, seem to ‘day trade’ the news based on what is happening on any given day or over night action.

Taking the likes of MarketWatch seriously can induce a whipsaw like you read about (literally) to an investor’s frontal lobe.  I know for a fact that there are some sharp commentators there (as I have interacted with some of them elsewhere and found them to be very forthright and intelligent) but there are dullards as well and more than the actual writers, I think it is the editorial staff that is responsible for selecting and presenting content each day and creating a noise level that can literally scream ‘Market Crash Imminent!’ one day and ‘Here’s Why You Need to be Fully Invested in US Stocks’ the next.  It’s like a sick joke.

Moving on, let’s use a few pictures to illustrate some historical facts.  From a post yesterday (Looking for Your MoM?), the S&P 500 is happily climbing despite a gathering of economic data that has gone negative by MoM change as it did in the last two recessions.  The facts are that this condition actualized the implied risk to equity investors in both previous examples but on this occasion has not yet done so.

I have marked up @dv_dend‘s graphic to better illustrate how in 2000 the market topped out and began to turn down as a group of economic indicators turned down and how in 2007 the market began to turn down before the indicators went negative.  Then… the whole ball of wax nearly collapsed.  The current cycle sees the economic indicators in a danger zone and the stock market – which should have topped – has not.  That (the stock market intact, technically) is a fact and it needs to be respected every bit as much as the implied risk to today’s confident bulls.  Hence, NFTRH, while working this market happily and gainfully, continues to advise the only rational orientation for this circumstance; when in doubt the default is CASH, not heavy long and not heavy short… CASH.

mom

Another picture comes from China.  We have charted FXI and its parent FXT for years in NFTRH, and over the last several months followed its progress in attacking and surmounting long-term resistance.  We have assigned targets and I have had the pleasure of having a subscriber tell me he is getting nervous about his profits in FXI (after buying in the 41’s based on NFTRH’s charting) and would like to know a good selling point.  It was advised that rational measured targets are being registered now and that profit is good… consider taking some of it…

fxi

…because history is littered with examples like this.

silver

The ‘We Are Here’ reference was from NFTRH 318, which introduced the above chart to talk about a historical precedent in Silver for the current stock market mania and the potential that the October 2014 market correction was just a pause to refresh prior to a manic blow off.  Here the post loops right back to the first graphic above.

For perspective and reference, here is the excerpt from NFTRH 318, dated November 23, 2014 that accompanied the above historical Silver chart:

“Just a month ago market players were barely recovering from their knee jerk puke fest kicked off by a negative projection by one semiconductor company and a pig pile of media hype that was something to behold.  We called it hype then and conveniently enough, there is the SOX at a new recovery high.

So two momos (BTK & SOX) are bullish and threatening accelerating upside.

And yet nothing about the market is healthy.  Nothing about silver and commodities in general was healthy in early 2011 either.  I find myself using the silver example repeatedly in discussing the US stock market, so let’s dial in its bull market blow off.

Understand that human behavior does not change, however it does tend to herd and gravitate to whatever is giving the good feelings. 

Let me ask you, in early 2011 what was the average silver bug’s sentiment profile?  Sure, there had been a 5 buck setback in the silver price in late 2010 and early 2011.  What did that serve to do?  It fueled the final phase of the bull by taking out some of the already embedded over bullish sentiment and clearing the pipes for a massive blow off amidst hysteria about $100, $200 an ounce silver and touting about how the Silver-Gold ratio still had a long way to climb.

In short, it killed silver; but not before silver killed a hell of a lot of shorts.”

History is a ‘probabilities and perspective’ guide… always.  It is also fact.  It is a time in history now to play what the market gives, sure.  But it is also a time to manage risk and default to cash.

2 Market Leaders

By Biiwii

Market leader #1, the Biotech index is anything but broken as we noted for the oh, 100th time a couple days ago after many drums were beating for an end to BTK’s rally.  When it ends it ends, and the trends (esp. by the NFTRH weekly chart and its upward Arc) will instruct on that.  Meanwhile, the daily did not even test the channel line, instead it’s bouncing at the 50 day averages.

btk

Market leader #2, the Semiconductor index was suspect under the 50 day averages.  Now?  Not so much (though in this market, one day popping up or down needs confirmation).  SOX is 100% intact above the support level around 650.  It’s got some pretty gaudy upside targets by longer-term charts.  Above 650, bulls have the benefit of the doubt.

Continue reading 2 Market Leaders