[edit.1] And in consideration of the relative clarity of indexes vs. individual stocks, I am going to focus trading on index ETFs, especially leveraged ones. Long, short, any sector – including the precious metals. Trader’s market and all.
[edit.2] With the media serving up the Ukraine relief pap and some volume coming in, it is possible that said bounce may have begun. We’ll see. I shorted QID and bought a triple long on the QQQ.
Signals continue to gather that a top of some significance is forming. Bull market top? Undetermined. But with the COMPQ (and also the NDX) making lower lows expect a couple things.
- A new bounce attempt that could be ferocious and
- Failure, with new lows down the road
Signals like this lower low, even if neutralized as I expect it will be, tend to be shots across the bow for a later date. So, my little bounce scenario played out in just 2 days (I am full sidelines now on any longs), showing just how weak this market is. But that may not have been the bounce. A fierce rally could be implied (as lots of things come to their 200 day moving averages) but the odds just increased that said bounce would ultimately fail.
One does not have to try too hard to visualize a left shoulder, a big fat head and a hard bounce that peters out around the 50 day moving averages. A drive to 4200 could involve a lot of relief and renewed optimism. People should remain at a steady heart rate if that goes on.
One of the PIIGS is breaking down today. PIIGY #1 (Italy) is breaking a wedge today by daily chart. It is just a wedge break and need not drop too far (often about 1/3 to 1/2 of the wedge will do). The 50 day averages should decide on that.
NFTRH has been following the monthly charts of both Italy and Spain and their improbable measured upside targets (not quite achieved) since last year for the speculative impulse they implied for the European markets.
PIIGY #2 (Spain) is still intact…
Big picture (2014) I remain bullish for a coming turn. But technicals and fundamentals must be aligned. All we can do is continue the journey without imposing our will on events. They’ll play out as they will and we need to adapt to that, not the other way around.
Gold Stocks Technical Bottom Line
- I am so bullish I can taste it, but the time may not yet be right. The big market pivot will take its time unfolding. This corrective leg, which had looked so normal as a post-Ukraine reaction, is taking on short-term technical problems.
- I am going to tell you what I see every step of the way and trust you not to over react and simply stay within your discipline.
- A bear flag breakdown on HUI, if it happens, would project to around 211 in my opinion.
- Unfortunately, it would also open the possibility of a bottom re-test below 200.
- We are not going to sponsor this sector or wear it like a badge. We are going to capitalize upon it whether that is on Monday or some later date.
- The fundamentals, which must go along with the technicals, must come in line to complete a bullish view. They were savaged after January.
- In my opinion, the sector also has the ability to rip higher out of nowhere in anticipation of fundamental improvement, technicals be damned. So be forewarned on that. But NFTRH is in large part, a technical service.
You can review NFTRH here.
Guest Post by Steve Saville
Below is an excerpt from a commentary originally posted at www.speculative-investor.com on 13th April 2014.
On the US monetary inflation front, the news is that there isn’t much in the way of news. As depicted below, the year-over-year rate of TMS (True Money Supply) growth hit a 5-year low of around 7% at the end of last year and has since edged a little higher.
There are only two ways that money can be added to the US money supply. The first is via Fed asset monetisation, which is how most new US dollars have come into existence since September of 2008 and how almost all new US dollars came into existence last year. The second is via commercial-bank credit expansion. This is how almost all new US dollars came into existence for decades prior to September of 2008.
An article at a popular gold website is talking about gold and Ukraine in the same sentence, let alone the same article. That’s not a positive. Surely people don’t fall for that one anymore, right? As for this technical buying, what is that? Chart is going up so they buy? This is pap, to be tuned out.
“The escalation of the Russia-Ukraine conflict prompted the safe-haven bid, while the improving chart picture for gold caused the technical buying and short covering.”
The other thing gold bugs should not have wanted to see was tepid volume and a failure to get back up into the bear flag on the GDX chart below. HUI, GDXJ and GLDX also sport these flags. On the plus side, MACD’s are triggered. Unfortunately, that takes a back seat to price action and volume.
Still hanging on, white knuckles and all .
Triple D tested my patience today but since its test of support has not failed I held on for a wild ride. 3D Systems and me; an over hyped company in an over hyped industry and a hype-o-phobe holding it as the punch drunk bulls continue to bail. Yes, sounds about right. This is one of several ‘bounce’ longs in a net long – but very cash heavy – portfolio. We have clear parameters for this stock market bounce.