For you junior mining enthusiasts, Otto at IKN relates his frustrations with trying to do the right thing and be a good egg among mostly rotten ones, then rubs it in the face of certain hate mailers. [biiwii comment: there is a reason he and I have gotten along well over the years, and that reason is that I perceive him to be a rarity in the gods-forsaken junior mining sphere… honest and in touch with regular people]
Bulls and bears trading left jabs, and the black boxes just doing what they do, churning the market based on inputs of geopolitical and geo-financial (it’s not a word, I know) angst and inflammatory headlines. All while a group of interest rate manipulators huddle to try to find the ‘just right’ (ref: Goldilocks) statement to put together tomorrow.
I have one tech company up 5% and the other down 5%. But cash is by far my best holding right now.
As a decidedly non-committed bear I took my own advice and covered all short positions as SPY hit target. I managed some nice bear trades and still managed to lose money on balance so far this week. That argues to me that I am not smarter than the market this week and thus, should act accordingly.
As for gold and gold miners, I really don’t know right now. My already small exposure was eliminated on the pop after yesterday’s breakdowns. But I tell you folks, if I see the combination of weakening forward-looking data (I could not care less about November’s ‘Jobs’ or Industrial Production) and commodities continuing to implode relative to gold, I for one will be on high alert. Also, it’s a prime tax loss selling week. So how real or materially important is that selling in the miners, other than to provide a potential trading opportunity?
Bigger picture, the final piece of the puzzle for gold bugs is the US economy and its headline stock indexes. This is a very interesting, no compelling market environment for geeks who live for this stuff. Certain markets and ratios are blowing off (up and down) and it is really fascinating. Something seems about to change after these terminal moves blow out (cue Silver 2011 reference).
 btw, volatility aside, the stock market has not at all broken its short-term downtrend.
A good report that departs from some of the nuts and bolts (so much so that I forgot to include the usual currency segment, which we have frankly had nailed since the commodity currencies broke down a year ago and the great USD rally was just a twinkle in Uncle Buck’s eye ), managing what was an expected early December drop in markets with an eye out toward Tax Loss, Santa and January Effect seasonals.
But to me the most important aspects of #321 are its clear views about why nothing about this macro environment is healthy, how the market is vulnerable and how 6 years later we are simply closing out a massively significant market event, with the majority at the opposite end of the emotional spectrum to Q4, 2008.
On that note, at the prodding of a subscriber, I’ve excerpted a segment from NFTRH 7 (Nov. 8, 2008) on Deflation and Inflation. To me it shows how little things have changed in the ensuing 6 years. Amazing, really. I’ll probably post it here later, to go with Friday’s post about a potential ‘inflation trade’ bounce, possibly in early 2015.
The two big financial news items in December have been the multiple Hindenburg Omen signals and the crash in crude oil prices. I recently went on CNBC to talk about the former. Its relationship to the latter is inescapable.
A Hindenburg Omen occurs when the number New Highs and New Lows on the NYSE both exceed a specified percentage of total issues. See this article for more details. There are other requirements, such as that the NYSE Comp be in an uptrend, and the McClellan Oscillator needs to be negative. Those other criteria are important, because there is no sense getting an omen when you are already in a downtrend, or when the market is too strong to be able to go down. This month we have seen the New Lows list expanding, thanks to the poor performance of multiple issues with the words “resources”, “energy”, or “drilling” in the companies’ names.
So does it really count if the New Lows list is populated mostly by members of a single sector?
Serendipity often plays a role when I am considering a blog post. In this case, I wasn’t even planning a post but was updating old spreadsheets for current data to see how things have developed. In the past, I have documented how NYSE Composite volume has been falling fairly steadily since at least 2006. It is difficult to tell whether this is important or not, since some of this is due to the fact that more trading occurs off of the NYSE these days. Still, there was a significant drop-off in 2010 and 2011 and 2012 which seemed more than coincidental (2012 total volume was about half of the volume traded in 2008, in terms of shares, and probably lower than that in terms of volume).