Hurdles for Gold Stocks

By NFTRH

One problem for the gold stock sector was highlighted here and here evidently a little too obnoxiously for the liking of some bugs. The problem was the aggressive bullhorn sounds emanating from every orifice of the gold community the minute the charts broke upward into an obviously bullish technical state.

But while the HUI/Gold ratio has been a distinctly positive technical indicator and many bullish gold stock charts populated the sector, we had noted back in December that gold’s hysterically overbought performance vs. broad stocks was due to pull back, hopefully in an orderly consolidation. Well, the relief has dragged on and the ratio of gold to SPX and its global fellows has been consolidating alright.

Continue reading Hurdles for Gold Stocks

Gold Sentiment Lesson #3000

By NFTRH

The number in the title is in honor of the boldest forecast burped up by the gold community in February as the metal (and the miners) jerked upward and jerked the holdout would-be enthusiasts into the market. It was included in the anonymous (but real) quotes from a cautionary post last week on the Gold Bull Horns.

We also used these quotes in an NFTRH update in order to try to make a point, despite what were very short-term contrarian bullish readings that day (per Sentimentrader’s data) for junior and senior gold miners.

From the update (2.28.19)…

Continue reading Gold Sentiment Lesson #3000

Manage Your Psych Profile

By NFTRH

Note: This is not market analysis. This is a person writing words and inserting some funny pictures. It is a product of said person’s view of psychology and the modern market.

First off, my honest self-evaluation: I would be pleased to see the US stock market to go down again, not because I am positioned for it (I am not, yet, other than through fairly non-dramatic risk management like portfolio balancing, profit taking and keeping high cash levels as appropriate) but because I feel like the bull was cooked up by an evil man named Ben Bernanke.

When I write “the bull” I am not talking about the post-Christmas Eve rally. That had to happen and at the time I was buying the spiking fear and panic. I am talking about the post-2008 bull market.

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A Precious Metals Update

By NFTRH

I reserve most of the work on precious metals for NFTRH weekly reports and in-week updates because it is done on a consistent basis, with the work done previously key to the narrative making sense in real time and going forward. In other words, in order to not be out there stabbing in the dark you need to have an ongoing, adjustable plan that makes sense at all times with the macro markets around it.

So that said, let’s take a snapshot of where things stand currently with the understanding that this work will need future updates, which will probably not be made publicly. It is up to the reader to do the work required to put context to the picture. Meanwhile, this will free up more space in next week’s NFTRH 538 to focus on some quality miner charts, which sometimes take a back seat to the macro/sector stuff.

Continue reading A Precious Metals Update

Counter-Cyclical Winds Blow, Gold Miners Front and Center

By NFTRH

As the stock market cracked on October 10th we noted…

Looks Who’s Holding Firm Amid the Carnage; the Gold Miners

And sure enough the GDX bottoming pattern noted in that post (and before that in an NFTRH subscriber update) played out perfectly amid the stock market carnage going on all around it.

Was I trying to predict something? Of course not. I was just following general rules we’ve had in place through all of NFTRH’s 10-plus year history and privately for myself since early in the bull market that began in 2001. Very simply, the counter-cyclical winds must blow and the Macrocosm must come front and center for a constructive fundamental view of the gold stock sector. That first crack in the stock market was a good start.

With respect to the Gold vs. Stocks planet, the S&P 500 topped vs. gold right at our targeted resistance…

Continue reading Counter-Cyclical Winds Blow, Gold Miners Front and Center

Fed Doves Take Flight…

By NFTRH

A ‘wild card’ segment has been added to NFTRH reports because I wanted the freedom to go out of bounds in any direction, beyond our usual areas of disciplined coverage. Last week it was a look at the Semiconductor sector.

This week it is Fed policy with a side trip down memory lane, trying once again to illustrate why today is not at all like the ZIRP era and why the post-2015 re-connect between the Fed Funds rate and the stock market does not bode well for stocks, assuming the Fed really is going soft.

Excerpted from tomorrow’s edition of Notes From the Rabbit Hole, which will also include loads of actionable analysis along with the more theoretical stuff below…

Fed Doves Take Flight (But We Are Not in Kansas Anymore)

Wise guys trading Fed Funds futures see no more rate hikes in 2019, and a few even imagine a rate cut before year-end. Here are the projections for the next 3 meetings, showing an overwhelming view that the Fed will hold the current 225-250 target rate. Graphics: CME Group

Continue reading Fed Doves Take Flight…

Semiconductor Sector (NFTRH 535 Excerpt)

By NFTRH

As in January of 2013 (ahead of an economic up cycle) and Q4 2017-Q1 2018 (ahead of an economic ripple that began in 2018) the Semiconductor sector and in particular its Semi Equipment sub-sector are front and center in forming our analysis about coming events. Excerpted from the January 20th edition of Notes From the Rabbit Hole, NFTRH 535

Semiconductor Sector – Watch the Early Bird in 2019

This one is special for me. I started my work life many moons ago as a participant with the Semi sector [circa 1983-1993], painfully learning first hand how violent the cyclical turns can be. Dialing ahead a couple decades, in January of 2013 NFTRH began a narrative that saw the then up-turning Semi Equipment bookings (this data is unfortunately no longer published) lead the sector, general manufacturing and eventually the whole raft of components that make up the economy into a cyclical up-turn.

Continue reading Semiconductor Sector (NFTRH 535 Excerpt)

Amigos 1 & 2 Arrive, #3 Still Out There (as yield curve flattens)

By NFTRH

The 3 Amigos were a blogger’s way of not boring himself to death while fleshing out important macro indicators month after month.

Amigo #1 (SPX/Gold ratio) got home and dropped from target. What’s more, it has taken back the ratio’s equivalent of the entire Trump rally and that is an eventuality we are very open to on nominal SPX as well.

The gaps are interesting and among several possibilities for 2019 we could see fear, loathing and a fill of the lower gap (a greed gap of sorts) prior to a filling of the upper gap, which could blow out the stock bull in manic fashion one day. Relax, it’s just one of several possible road maps. For now, we simply state that SPX/Gold reached a very viable target and dutifully dropped with the market stress.

spx/gold ratio

Amigo #2 (30yr Treasury yield AKA the Continuum) got the bond bears on the wrong side of the boat and kept them there for a couple of months before the big reversal (back below the monthly EMA 100) that came along with the risk ‘off’ rush amid Q4 2018’s market stress.

Continue reading Amigos 1 & 2 Arrive, #3 Still Out There (as yield curve flattens)

The Men Who Stare at Charts: Decades of Disinflation & 7 Years Post-Op Twist

By NFTRH

I was going to look around to see if I could find a media article out there (complete with a TA trying to sound really important) that would be appropriate to be made fun of in our little Men Who Stare at Charts series. But then I decided to create my own chart, stare at it a little, post it and talk about it (hopefully not too self-importantly).

Introducing an all too busy long-term (monthly) view of the Gold/Silver ratio, along with some key nominal markets.

The Continuum in the lower panel symbolizes the deflationary backbone that has been in place for decades. I maintain that this is a firm marker against which the Fed inflates money supplies, manipulates bonds and by extension manipulates inflation signals. We have been on a theme that like Jerome Powell or hate him, he knows exactly what he is doing because to do otherwise (promote ongoing bubbles on top of bubbles) would in essence end the Fed’s racket, as symbolized by a real breakout in long-term yields.

Continue reading The Men Who Stare at Charts: Decades of Disinflation & 7 Years Post-Op Twist

Cyclical Assets vs. Gold

By NFTRH

In January of 2018 we noted a cyclical leader (Semiconductor Fab Equipment) in trouble: Semi Canary Still Chirping, But He’s Gonna Croak in 2018.

We also ran a series of articles featuring the happy-go-lucky 3 Amigos (of the macro) in order to gauge a point when larger herds of investors would become aware of cyclical issues facing the global (including the US) economy. Each Amigo (SPX/Gold Ratio, Long-term Treasury yields and a flattening Yield Curve) would ride with the good times but signal an end to those good times when reaching destination (Amigos 1 & 2 got home but #3, the Yield Curve is still out there). Here is the latest Amigos status update from October: SPX/Gold, 30yr Yields & Yield Curve.

Today I would like to stick with a cyclical macro view, but do so through a lens filtered by the ultimate counter-cyclical asset, gold. As market participants, we are lost if we do not have road maps. That is why we (NFTRH) gauged Semi Equipment vs. Semi (and Tech), the unified messages of the macro Amigo indicators and many other breadth and cyclical indicators along the way to safely guide us to Q4 2018, which has been a challenge for many, but business as usual for those of us who were prepared.

Continue reading Cyclical Assets vs. Gold

Jerome ‘Dead Eye’ Powell

By NFTRH

One of the most disturbing scenes in the series Breaking Bad was when Todd shoots and kills a boy on a dirt bike after he witnessed Heisenberg, Jesse and Todd heist 900 gallons of methylamine. Jesse: “Todd, that Opie Dead Eyed piece of shit…”

That is similar to the feeling I got after the Fed hiked the funds rate as expected, but then declined to offer the stock market much relief for its ongoing temper tantrum.

What’s this? The Fed is not doing as the vast majority of market participants expect it to do? The Fed is not taking active measures to boost asset prices?

My theory has been that since the 2016 election the Fed has firmed its resolve to extricate itself from a dangerous situation; caught with its pants down as Trump/Republican fiscal (i.e. politically instigated) stimulus was going to be laid on top of already extreme monetary stimulus.

Continue reading Jerome ‘Dead Eye’ Powell

FOMC at Center Stage (NFTRH 530 excerpt)

By NFTRH

Below are the Opening Notes and Bond Market segments from last Sunday’s edition of Notes From the Rabbit Hole, NFTRH 530. Jerome Powell was actually more firm than I expected. Atta boy Jay! Aside from my prognostication the more important stuff (IMO) begins at the 4th paragraph. That is where I put on my tin foil hat and tell what I think. It does seem to dovetail with what we saw today out of the Fed chief.

Opening Notes: FOMC at Center Stage

It is likely that the Fed is going to raise the Funds rate on Wednesday because this is a confidence game and a Fed suddenly showing weakness and doubt could exacerbate the market’s already frayed nerves. As a side note the 76% reading of CME futures traders expecting the hike to happen has not changed in the last few weeks.

But US and global authorities can read charts and as a person with some short positions I am well aware that they have people who can read charts as well. It’s not complicated; the market (SPX) needs to hold here or it could be an express (or possibly a slow moving) elevator to SPX 2100.

Continue reading FOMC at Center Stage (NFTRH 530 excerpt)