NFTRH+; Intel Earnings

All I knew was the chart’s potential to break 14 year resistance and the chip giant’s goal to actually do something substantive in the mobile chip market.  But this PC demand stabilization is a bonus.  Mobile is still out there with only Intel’s execution into the space at issue.

intc

INTC monthly from original NFTRH+ highlight (pre-breakout)

This morning’s headlines…

Intel earnings up 40%, offers strong outlook

Intel Q2 earnings: Data Center strength, PC stabilization

Intel upgraded to buy from neutral at UBS

Intel price target raised to 37 from 31 at Piper Jaffrey [try 40+]

Intel is booming… etc.

Not all trades work well.  Indeed I had to ‘stop’ a trade in platinum for a much reduced profit, and a trade in LSCC for a loss.  But in this racket you need to get more winners than losers (check) and when the situation is right, let ‘em run a bit.  Intel is running (on 7 of its 8 potential cylinders).  Mobile would be the 8th.

Also, what is good for Intel is not necessarily good for gold.  If anyone starts talking about the positives in large global corporations as stimulating China and Indian demand, take a note.  Then hold that analyses’ feet to the fire when it doesn’t work out.  Gold needs economic contraction and maybe Intel is providing the ‘as good as it gets’ moment for the economy and markets.  Then again, maybe it isn’t.

NFTRH 299 on the Precious Metals

aliceI had family commitments over the weekend but an abbreviated NFTRH 299 (which I might add, still packed more useful analysis than much of what is out there puts out on a good day) closed its Precious Metals segment with this, written after Friday’s big head fake to the upside…

“The bottom line on the precious metals segment (which went on longer than intended) is that the elements are in place for near-term corrective activity but on an intermediate view, considering the breakout in silver, the picture is bullish.

We should not fall into the ‘bullish, no bearish, no bullish…’ trap of chasing daily activity around. We have been raising the prospect of coming corrective activity and Friday’s recovery does not change that.

If the sector rises and starts [to] break important resistance levels in a ‘CoT be damned’, upside extravaganza we will note it and watch for those resistance levels to be turned to support. Since that would likely be a bull market signal, there would be plenty of time to position like ‘Old Turkey’ (the ‘be right and sit tight’ buy and holder from Reminiscences of a Stock Operator) for big gains over the ensuing months. For now however, caution remains advised on the near-term.”

I feel that NFTRH has done right by its subscribers; not in being right all the time* but in saying what I feel has to be said all the time. At $10 a month less than other TA services I have observed – offering little or no macro fundamental or broad market research – I am secure in the idea that slow, steady and b/s-free is going to win this race. Lotta clowns out there.

* Though the rally started at our ‘HUI 205′ parameter, which we had been watching for weeks leading to the late May low.  You know, markets go both ways after all.  So both ways need to be managed in order to be properly positioned for bull or bear.

Schumer to Yellen: Keep Blowing That Bubble!

Good old Chuck, too much is apparently not nearly enough.  Chuck wants ZIRP-infinity stating that Ms. Yellen should “be careful” about raising interest rates.

Here’s what Sen. Charles Schumer wants to tell Janet Yellen on Tuesday

He ostensibly thinks that a lack of job growth is the “overwhelming problem” facing the economy.  I think Chuck’s straw man is starting to come apart at the seams as the hay that stuffs it pops out in an embarrassing display.

Chuck, you are either a dunderhead of the highest order or you are actually more intelligent and privy to real information than some wise ass blog post is giving you credit for.  You may after all be fully cognizant of the implications of this chart and thus just playing your part in an orchestrated media Kabuki Dance to keep the public (the ones buying the stock market with such intensity) baffled with bullshit.

sp500

The best part of this is that there is plausible deniability as to a bubble’s existence because only lately has the stock market’s price begun to detach from its conventional fundamental metrics.  The bubble is and has been for ZIRP’s now 5.5 years running, in official policy.

Declining Yield Curve and Gold

The entire rally in the precious metals since early June has come against a backdrop of short-term yields rising faster than long-term yields.  In other words, it has come against a risk ‘ON’ atmosphere in which there is little anxiety about inflation or systemic stress.  That is not favorable for gold.

2.10

What has the precious metals rally had going for it?  Not the chart above, that’s for sure.  It has had gold’s price vs. some commodities (esp. crude oil) and stocks bouncing and that’s a positive.  It had the blip in GDP going for it.  It also had a massive speculative short covering and long-biased momentum play in silver.  It had the usual gold bug touting about geopolitical strife and finally, some bank in Portugal crapping out.

But the chart above is not bullish for gold and it joins the CoT data for gold and especially silver as a negative, which finally manifested to some degree yesterday.  Now the idea is to find the buying opportunity.  Now it gets fun if yesterday (actually last Thursday, with the big bearish candles on the miners that NFTRH noted) was the start of the periodic games known (around here, anyway) as the Running of the Gold Bugs.

What comes next is a sharper focus on the nature of the fundamental backdrop if/as the sector declines toward some logical support areas.  NFTRH?  Yes, it’ll be on that job.

2014 vs. 2007

Guest Post by Doug Noland

Action at the “periphery of the periphery.”

The job of an economist, among many other duties, is to put things into perspective. So, because I am an economist, among other duties, here is a little perspective on the recent turmoil in the stock and bond markets. First, when the story of this turbulence is reported, the usual explanation mainly has to do with some new loss in the subprime mortgage world… Here is the first instance in which proportion tells us that something is out of whack: The total mortgage market in the United States is roughly $10.4 trillion. Of that, a little over 13%, or about $1.35 trillion, is subprime — certainly a large sum. Of this, nearly 14% is delinquent, meaning late in payment or in foreclosure. Of this amount, about 5% is actually in foreclosure, or about $67 billion. Of this amount, according to my friends in real estate, at least about half will be recovered in foreclosure. So now we are down to losses of about $33 billion to $34 billion… The total wealth of the United States is about $70 trillion. The value of the stocks listed in the United States is very roughly $15 trillion to $20 trillion. The bond market is even larger… This economy is extremely strong. Profits are superb. The world economy is exploding with growth. To be sure, terrible problems lurk in the future: a slow-motion dollar crisis, huge Medicare deficits and energy shortages. But for now, the sell-off seems extreme, not to say nutty. Some smart, brave people will make a fortune buying in these days, and then we’ll all wonder what the scare was about.” Ben Stein, “Chicken Little’s Brethren, on the Trading Floor,” New York Times, August 12, 2007

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DJIA: A Fata Mortgana

Guest Post by Wim Grommen

The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators. The similarities of these indicators during the last two revolutions are fascinating, but also a reason for concern. In fact the graph of the DJIA is a classic example of fictional truth, a fata morgana.

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The Wipers

I loved this band when I was a kid.  The best description I’ve heard is that Greg Sage didn’t play chords, he made them or manufactured them.  Before there ever was a Nirvana, Pearl Jam or Mudhoney there was the Wipers making them all possible.