The Google Machine Inspires a Discussion about Inflation and Deflation

By NFTRH

The following is excerpted from the Opening Notes segment in this week’s edition of Notes From the Rabbit Hole, NFTRH 525 (out on Sunday, November 11). It pretty much came out of nowhere after I did a comparison of Google searches for “inflation” and “deflation” while checking Google Trends for another aspect of the report.

The Google Machine Inspires a Discussion about Inflation & Deflation

Switching gears, while I was in the Google machine I decided to compare two terms that are at the heart of our investment management going forward; Inflation and Deflation.

inflation and deflation

It is no surprise that inflation is always much more often searched for because well, they are inflating in one form or another constantly. Whether it is through outrageously experimental monetary policy under the Bernanke Fed or supposedly sound fiscal policy under the Trump administration, it is all designed to raise prices and enrich asset owners, while leveraging debt (which is where the potential for deflation comes in).

Continue reading The Google Machine Inspires a Discussion about Inflation and Deflation

A New NFTRH Segment: Opening Notes – US Stock Market

By NFTRH

I decided a couple weeks ago add a regular segment where I just talk about some things I think I know about a given market or situation based on the previous week’s activity. This is before I get myself educated on the latest market data and information. I need the weekly work I do in NFTRH as much as anyone. Without it, I can be rudderless and prone to my own biases.

This is just one small, less mission-critical aspect of NFTRH (representing 2 of 52 on-point pages across the markets) and the funny thing is, I think it stands up to much of the premium stuff out there in its entirety for any given week. But then, I am biased and as such I think NFTRH is better than any other market report or newsletter that I know of out there.

So here’s what I thought I knew about the stock market before beginning NFTRH 523

Continue reading A New NFTRH Segment: Opening Notes – US Stock Market

Gold Stocks Will Benefit From Cyclical Change

By NFTRH

As we have noted over the many years of the gold sector’s bear market, the gold miners will not rally for real until the real sector and macro fundamentals come into place. Those fundamentals do not include commonly promoted inflation, China/India “love” trades, a US dollar collapse or especially, war, pestilence or any other human misery than economic. The more astute gold bugs do not fall for that.

The gold miners are counter-cyclical as they leverage gold’s performance (whether positive or negative) relative to cyclical assets and markets. Hence the handy picture showing the key fundamental items with the 4 largest planets orbiting the golden sun being the most important.

So the 3 Amigos (of the macro) were saddled up last year in order to guide us to the point of macro change. Linked here is the most recent update from October 19. In this post let’s look at just one macro fundamental indicator among several important macro and sector fundamentals; the ratio of gold to developed stock markets.

Continue reading Gold Stocks Will Benefit From Cyclical Change

SPX/Gold, 30yr Yields & Yield Curve – Amigos 1, 2 & 3 Updated

By Notes From the Rabbit Hole

We began the Amigos theme last year in order to be guided by the goofy riders during the ending stages of a cyclical, risk-on phase that was not going to end until the proper macro signals come about, no matter how many times the bears declared victory along the way. The fact that grown adults see conspiracies around every corner (okay, I see them around every third corner myself, but work with me here) makes such macro signaling very necessary in order to keep bias at bay.

To review…

Continue reading SPX/Gold, 30yr Yields & Yield Curve – Amigos 1, 2 & 3 Updated

SPX/Gold Ratio, Long-term Yields & Yield Curve (3 Amigos Updated)

By NFTRH

It has been a long while since the last Amigos update because frankly if the characters, images and shticks I invent to portray market status begin to wear on me sometimes I have to believe they may do the same to you. Consider that the 3 Amigos, SPX/Gold Ratio, Long-term Yields and the Yield Curve are slow movers that we usually view from monthly chart perspectives and well, sometimes you need to take a break and just let them do their thing over time.

But with yesterday’s smash above the Continuum’s ™ limiter, the long bond’s yield has set things in motion and it is time to update all three macro indicators in detail. Many months ago we asked this following question of Amigo #2 (long-term Treasury yields).

In honor of Amigo #2 being the first one to trigger a signal, he gets to lead off our update today.

Continue reading SPX/Gold Ratio, Long-term Yields & Yield Curve (3 Amigos Updated)

NFTRH 518 Excerpt: Precious Metals

By NFTRH

In honor of the men staring at silver’s daily chart, let’s highlight NFTRH 518’s Precious Metals segment this morning. We have 60% of the new trading week in the books and not much has changed for the PMs since this was written. You’ll notice that this man who stares at charts gets a little wordy at the end. There is much context that would-be gold bugs need to have in hand.

First, the intro per our anniversary series of posts…

To celebrate NFTRH’s 10 year anniversary (Friday, Sept. 28) I’d like to present one segment from this week’s report, NFTRH 518 each day until Friday. These excerpts will give you an idea of what it takes to provide a top tier, best of breed product. But there is much more to a single weekly report than will be shown here publicly. Oh and don’t forget the dynamic in-week market updates as events dictate.

All for 30% less per day than you spend on your single cup of small regular coffee at Dunkin Donuts! Think about that. I mean, I don’t want to downplay the importance of coffee – it makes NFTRH run – but what is the value of consistent, focused and proven market intelligence at your fingertips day to day, week to week and year after year?

Precious Metals

Last week:

Here is how I see the precious metals situation. It’s one or the other of…

  1. US dollar declines short-term and the precious metals bounce with the rest of the anti-USD trade, or…
  2. US dollar rises (likely along with the Gold/Silver ratio) and the precious metals decline again into a real buying opportunity.

Continue reading NFTRH 518 Excerpt: Precious Metals

NFTRH 518 Excerpt: US & Global Market Internals

By NFTRH

To celebrate NFTRH’s 10 year anniversary (Friday, Sept. 28) I’d like to present one segment from this week’s report, NFTRH 518 each day until Friday. These excerpts will give you an idea of what it takes to provide a top tier, best of breed product. But there is much more to a single weekly report than will be shown here publicly. Oh and don’t forget the dynamic in-week market updates as events dictate.

All for 30% less per day than you spend on your single cup of small regular coffee at Dunkin Donuts! Think about that. I mean, I don’t want to downplay the importance of coffee – it makes NFTRH run – but what is the value of consistent, focused and proven market intelligence at your fingertips day to day, week to week and year after year?

FYI, here is a screenshot showing the Contents of the entire report…

Continue reading NFTRH 518 Excerpt: US & Global Market Internals

US/Global Stocks, Commodities, Precious Metals and the ‘Anti-USD’ Trade

By NFTRH

[edit] With the intensity of this week’s move I’ve already taken a couple quick profits in items that could be considered part of the ‘anti-USD’ trade.

The most recent leg of the US stock market rally and the bounces in global equities, commodities and precious metals are coming as part of an “anti-USD trade”. Certain US stock sectors, most global stock markets, commodities and precious metals were pressured by the USD rally that began in April and now, as the buck eases, a relief valve opens.

All charts below are as of Thursday’s close.

US – S&P 500

The S&P 500 – in essence a collection of sectors that are ‘pro’, ‘anti’ and ‘neutral’ the USD’s status – appears to be on the way to our target of 3000+, based on a conservative measurement of its daily chart pattern. This was the NFTRH alternate scenario after our expected summer drive to test the January top did not prove out a then favored view that the test would fail. As you can see, SPX broke out, dropped to test the breakout and off it goes. We have since been operating to the new favored plan.

Continue reading US/Global Stocks, Commodities, Precious Metals and the ‘Anti-USD’ Trade

Pieces of the US & Global Stock Market Puzzle Come Together

By NFTRH

This article is edited slightly from the original to clean up some wording and make points a little clearer.

All through the summer NFTRH had a “top-test” view on the primary US stock index, the S&P 500. We were 100% right on that; SPX spent all summer grinding upward to that test.

That is where the would-be market genius aspect of the analysis ends because it appears that the favored outcome of that test – that it would fail into a correction – will be negated in favor of the alternative outcome, which we have also carried forward. That outcome is a continuation with a measured target of SPX 3000+. So the favored and alternate views have traded places. The alternate now being that the bullish state of things is one big, post-Labor Day bull trap.

Continue reading Pieces of the US & Global Stock Market Puzzle Come Together

Gold is the Sun, and an Anchor

By NFTRH

The ‘Gold as Inflation Hedge’ Canard

On the one hand you have the sons of Harvey & Erb, who called gold to $800/oz. and caused a stir in the gold “community”. Per Campbell Harvey in this video with Kitco’s Daniella (dig the flowing golden locks of hair)…

“Gold is just too volatile” to be an effective inflation hedge.

Well yes sir, you are right. Gold does not track inflation in any kind of a convenient time frame. Gold’s volatility is a reflection of the volatility of the assets orbiting around it in the constellation of risk.

This cool NASA illustration makes the point. Those planets – like equities, commodities and the various FrankenVestments concocted by Wall Street – are in motion. All is often fine, but when a meteor of risk discovery hits one of them well, it is suddenly marked down vs. gold. See?

Continue reading Gold is the Sun, and an Anchor

Semi Sector: A Warning or a Buy?

By NFTRH

We began tracking this negative divergence in NFTRH last year as the leadership of two premier Semi Equipment companies began to decelerate vs. the broad sector.

amat/smh ratio

Over time the ugly patterns became even uglier with breakdowns to new lows. This chart shows that ugliness but more importantly it tries to illustrate AMAT & LRCX as leading indicators for the broad markets. In 2013 it was a big part of the macro signaling that told us to prepare for a coming economic upturn. In late 2015 it told us that the market top of that time probably was no such thing.

Continue reading Semi Sector: A Warning or a Buy?

Multi-Market Status: Precious Metals, Commodities, US & Global Stocks

By NFTRH

A general review of the current status across different asset markets. This is not comprehensive, forward-looking analysis as per NFTRH, but it is an up to the minute summary (as of Friday afternoon).

Precious Metals

Gold, silver and Gold Stock indexes/ETFs made what I had thought were bear flags yesterday, but today painted them as short-term ‘W’ bottom patterns, in silver and the miners anyway.

This chart of gold (courtesy of Barchart.com) shows a flag breakdown, whipsaw and new closing high for the short-term move. As we’ve noted for weeks now, the Commitments of Traders (CoT) is in a contrary bullish alignment with large Specs all but wrung out of the market (they were fleeced again; don’t believe hype about their increased shorting being some sort of conspiracy). All in all, not bad for the relic. The bounce lives on.

Continue reading Multi-Market Status: Precious Metals, Commodities, US & Global Stocks