A long-time subscriber has a great nickname for gold stocks and gold stock investors. That nickname is Club Misery. Comfy US stock market bulls, so well tended by Big Daddy’s policy for so long are starting to wake up and feel just a tiny bit of it now too. Yet there is an embedded confidence in place that was not there even 2 years ago when we began to note real indicators for coming strength. The bulls now think…
Daddy Momma will weaken the dollar, create more credit and do what ever it takes to get me comfy again! Frankly, I am not used to discomfort. I am simply going to click the heels of my ruby slippers and await more seed corn to devour because I am set in my thinking now. I watch CNBC and Jeremy Siegel is resolute and smirking (now that’s confidence!) and the other guys sound a little cautious short-term but even Jeff Saut does not question this secular bull market. Maybe I am not so miserable after all.
And do you know what? Our dullard bull here could be right. Personally, I find no need to define this other than a satisfying disturbance to a robo market that drifted ever upward on policy and then on momentum to over valuation. My big picture fundamental view is that it is and has been bogus with respect to real fundamentals (not the PE’s and growth metrics all built upon destructive policy that they talk about incessantly in the mainstream financial media), but that policy’s windmills can keep turning longer than you can tilt at them.
So for me, if this has been a market top I’ll be happy. If it is a big buying opportunity in the making, I’ll be happy because the damned thing is now trade-able both ways and the macro is moving. There will be opportunities aplenty going forward and I don’t just mean long or short the stock market. Too much to go into in one post, but I now declare Robo Market dead. It is still a FrankenMarket however, as it has been since I began my public writing journey a decade ago.
Anyway, here’s the venerable one… the headliner of headliners, Mr. Dow making his lower low today and introducing himself to the other Club Members. I expect a savage market bounce back soon, but as noted in an NFTRH+ update earlier, these breaks of trends can be considered like scouts for what may still lay ahead on the near to medium term. Doing the work of identifying support and resistance levels in service to being prepared is going to be fun. Robo this.
 My apologies, the SPX is not at a lower low. Razor thin though it may be, it maintains a higher low right at the key SMA 200.
For your viewing pleasure here are some of the uglier items littering our fine and sound financial markets, so organically rising on natural fundamentals these last couple of years. Here are some stocks…
And a couple indexes…
Now, the bears have seen this movie before. For instance, the DOW made a lower low last October and what did it do? It ripped shorts’ heads off into year-end. But still, there sits the venerable S&P 500 below the August low.
Here one conjures up the charts that I shall not brow beat you with again (for this week anyway ) that show S&P 500 in utter lock step with policy effects and having well-outpaced corporate profits into over valuation. One also looks around and sees a landscape littered with charts that look like the first 3 above.
The news driven short covering rally yesterday was impressive and now momo’s are being punished. Makes sense.
The US dollar has been the anti market to so many items lately, with just one of them being the SPY in the lower panel of the chart.
Here is USD fund UUP making a hard reversal on volume on its daily chart.
Don’t they say that traders don’t care if the market goes up or down, just as long as it moves? Well, I find burning commissions pretty annoying, but I find this market very interesting. All shorts were covered at the first sign of the reversals because so many things were at support levels.
It’s the old dry kindling just needs a match sort of deal.
The Russell 2000 obviously has an ugly topping pattern. It has long since nudged to a lower low to the August low and now has eased below March and January. If it holds below the line this thing will be in a bear trend. The bears should hope that TA geniuses do not come out and blow horn the DEATH CROSS!!! of the MA’s 50 and 200, which is a Red Herring. The chart is bearish enough without the help of that hype.
Anyway, RUT was a leader to the upside on this most intense bull market phase, which has been the post-2012 period and that leader is starting to lose its bull market.
I took some puts on the SPY on Friday’s b/s joy fest and woke up on Monday ready to see red… in the markets. Instead, what I saw was index futures up 1%+. I saw red alright. But I held on because yesterday just didn’t feel right. It felt like a bull trap. Here’s the wild ride in the SPY puts I held *.
* I say “held” because not being a river boat gambler (or even a particularly good trader lately) I took the flash profit this morning. I hold a few other less dangerous bear positions pending the October view, which I am nowhere near convinced will remain bearish.
Also, I know this was not called publicly so feel free to disregard it. This is not a site for casino calls anyway. There are plenty of those out there.
We have been reviewing various pictures of fading US stock market internals as its sponsorship thins out. Here is another, with the Nasdaq COMP featuring fewer and fewer advancers even as the price of the index rises.
On September 12 we did a heads up NFTRH update about how the EM’s (MSEMF vs. SPX, EEM vs. SPY) was losing leadership and breaking the first level of support. It is still password protected, so no link. Here’s EEM-SPY…
Nominal EEM has since gone on to lose the August low, potentially indicating a bearish trend to come. I shorted this (jumping the gun a little because it had already broken down vs. US stocks) using EEV on Friday.
Excerpted from the September 21 edition of NFTRH, #309, which went on to do extensive technical and macro work across all the key markets…
Last week we noted that Uncle Buck would be front and center in the analysis, not because the strength in the (anti-market) currency was not expected (it was), but because our big picture theme of an ongoing economic contraction had remained intact (ref: gold vs. commodities ratio) over the long-term.
It is important here to remember that NFTRH would only be on its big picture macro themes as long as indictors implied they are still viable. I will be damned if I will let us follow a Pied Piper off an ideological cliff, no matter what readers (including me) might want to hear. We must dedicate to know what is happening, not what our hopes, dreams, egos, etc. think or worse, hope will happen.