By Elliott Wave International
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By Jeffrey Snider @ Alhambra
Goodnight Janet; Credit Follows The ‘Dollar’ Now
On this side of the “dollar” world, credit markets have all but written Janet Yellen into irrelevance. Despite her pleas (because of?) last week, there isn’t any part of money dealing or fixed income that is taking her “certainty” about recovery and “inflation” as even a partial setting. So lost is the FOMC, that everywhere you turn these markets are moving opposite.
Where that has to sting the most is “inflation expectations.” Proving to be far more than just crude prices (which have largely been stable since August, at least in the view of not crashing again), breakevens are now at lows last seen in the dark days of 2009, surpassing that first “wave” earlier this year. Trading in the past few days has seen TIPS hedging interest drop sharply, which can only count as credit markets giving up on the recovery narrative in full – once (to January 14) might be “transitory”, but twice eight months later and at new lows is goodnight Yellen.
Continue reading Credit Follows the Dollar
In the interest of maintaining the tradition of highlighting my failures I will note that there was an NFTRH+ update on Intel based on the H&S pattern. My personal risk tolerance was above 29 (neckline), which was also noted as a tight stop loss level in the update (it is critical to limit losses because they sure are going to happen) and so I took a small loss.
But the bull case is not yet proven either as the baby Inverted H&S, while cute, has not broken above its neckline. It’s target is around 33 if it does break through. MACD and RSI look good.
You may recall that we were bullish on Intel and the Semi sector since before anyone started getting excited about the Semi’s, as Intel broke above a 14 year resistance line. Now I am neutral on Intel and indeed, the Semi sector pending the broad market view, which continues to go amazingly well to our post-August layout.
I was going through my chart lists and stumbled upon this monthly chart of the BTK-NDX ratio that was created many months ago to show the secular bull market in Biotech sector leadership (over large, varied tech), which at the time had gotten too far above its monthly EMA 30.
The orange box was created at that time and despite all the hoopla going on now, wouldn’t you know that BTK-NDX has simply reset to its 20 month moving average (mid-Bollinger Band)? Let’s hear it for Hillary’s tweet! Maybe she saw this chart and decided to help it along.
By Elliott Wave International
Millionaires show poor market timing
We’ve seen it time and again: The investment crowd often hops aboard a financial trend just as it’s about to end.
Government itself is actually a case in point. Here’s what the August 2007 Elliott Wave Financial Forecast said:
[In July], The Elliott Wave Financial Forecast discussed governments’ knack for committing to a trend when it is finally ending. A front page article in the July 24 issue of The Wall Street Journal titled, “Governments Get Bolder in Buying Equity Stakes,” confirms the strength of this very dependable sell signal.
Just two months later (October 2007), the stock market registered its historic high.
Overseas buyers are another major chunk of the investment crowd. That group was also ramping up their purchases of U.S. stocks back in late 2007.
Corporations are likewise part of the herd.
Let’s fast forward to 2015, and read what our August 14 Short Term Update had to say just before the worst part of the recent selloff:
Continue reading Why Following the Crowd is Usually a Big Mistake
We drew the parallel in NFTRH 362 using a weekly chart like this one. As it happens, the ‘quants’ are on this theme as well. As B.I.G. points out, it’s been one of the longest runs on record (1,326 days) without a 10% correction. Well it is here and it is remarkably similar to 2011’s correction.
Blow the chart up by clicking it. You’ll see a similar price pattern below the EMA 70, which is starting to turn down, similar MACD, over sold RSI and AROON down. A difference is that 2011 had big down volume bars and this one does not have capitulation type volumes yet.
Now, will history repeat? I am certainly open to it. But the very fact that it’s been 1,326 days without a 10% correction is a negative, not a positive. Something about pressure buildups and the like.
By Michael Ashton
So now we have all noticed that the Fed eschewed tightening a week and a half ago, and we have digested all of the analysis of the “negative dots” which indicate some member of the Fed projected not just unchanged rates but actually negative rates.
(Incidentally, here is a good article in The Telegraph about Sweden’s negative rate regime. One of the observations worth pondering is that in a cashless society, there is no zero-percent floor on interest rates: normally, rates below zero percent shouldn’t be possible since someone can always earn zero percent by holding cash. Unless there is no cash. That is simultaneously a deep thought and a terrifying thought – if there is no cash, and all of your money is in electronic deposits at financial institutions, then there is no limit to how much you can be robbed of – or in popular financial parlance, no limit to the “financial repression” that can be visited upon you.)
Continue reading Will They Could They Should They?
The volume after Hillary Tweet day has been incredible as investors, traders, momo’s and substance abusers scramble to dump what they were absolutely in love with not even 3 months ago. On Friday IBB actually closed lower than at any time during the August mini-hysteria. Today they are really laying the wood to the sector as volume has the look of rats scurrying off the decks.
The weekly chart lost its upward Arc, which we had been following in NFTRH for months until it finally broke down over the summer. This is a whopper of a correction, but its bull is not dead until it loses the October 2014 low, which is still way lower at 247.82.
The market’s graveyard is littered with the corpses of people who tried to bottom feed impulsive declines. The 250 area does have a pattern that could be supportive along with said October low.
By Monetary Metals
[Biiwii comment: While I personally don’t like making predictions, I have put this post up regardless, because once I commit to a guest author I do not edit or filter their viewpoints. FWIW however, I generally agree with Mr. Weiner’s assessment of the gold-silver ratio’s target as current NFTRH (and Biiwii) noted targets are ‘low 80’s to 90’; and we also are on a “stocks down” path currently. Also see Catching Up on Some Gold Ratios just posted at NFTRH.com this morning]
The price of gold moved up moderately, and the price of silver moved down a few cents this week. However, there were some interesting fireworks in the middle of the week. Tuesday, the prices dropped and Thursday the prices of the metals popped $23 and $0.34 respectively.
Everyone can judge the sentiment prevailing in gold and silver articles for themselves, but we think there is a growing feeling of optimism (that is a renewed fall in the dollar, which most think is a rise in gold). This goes along with a sense that the long bull run in the stock market is rolling over.
Continue reading Prediction: Gold and Ratio Up, Stocks Down
By Doug Noland
Credit Bubble Bulletin: New World Disorder
The Federal Reserve is flailing and global currency markets are in disarray. Notably, the Brazilian real dropped more than 10% in five sessions, before Thursday’s sharp recovery reversed much of the week’s loss. This week the Colombian peso dropped 3.0%, and the Chilean peso fell 3.1%. The Mexican peso dropped 1.9%. The Malaysian ringgit sank 4.5% for the week, with the South Korean won down 2.7% and the Indonesia rupiah losing 2.2%. The Singapore dollar fell 1.8%. The South African rand sank 4.4% and the Turkish lira fell 1.4%. Notably, market dislocation was not limited to EM. The Norwegian krone was hit for 4.4%, and the Swedish krona lost 2.0%. The British pound declined 2.3%. The Australian dollar also lost 2.3%.
Apparently alarmed by the market’s poor reaction to last week’s no hike decision, the Ultra-Dovish Fed this week attempted to slip on a little hawk attire. It’s looking really awkward. On Thursday evening, chair Yellen did her best to backtrack from last week’s FOMC statement with its focus on global issues. The markets are doing their best not to panic.
Continue reading Credit Bubble Bulletin
As noted in the subscriber email that accompanied NFTRH 362:
“NFTRH 362 trims back down to 22 pages, but makes a lot of points in those pages. In particular, despite everything going according to the best laid plans we should realize that the bear case is not yet sealed. The opening segment talks a lot about policy involvement in markets and the stock market segment clearly shows how 2011 had a similar situation to today’s bearish situation… enter Operation Twist and a changed landscape for years thereafter. All I am saying is, let’s have open minds.”
We also update global stock markets and come to a conclusion on a relatively good shorting opportunity, and review the progress of a new and constructive signal in the gold sector (which remains in TA hell, by the way) and really try to make clear why the Gold-Silver ratio is so important to not only this sector, but global markets and even policy maker actions.
A good report that is right on for the times. NFTRH 362 out now.