Pivotal Events

By Bob Hoye

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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

Inflation Trade, in Progress Since Gold Kicked it Off in Q1 2016

By NFTRH

I am sure you remember the lead up to Q1 2016. The US economy and stock market were transitioning from a Goldilocks environment and narrowly avoiding a bear market while the rest of the world was still battling deflation. Precious metals and commodities were in the dumper and try though US and global central banks might, they seemed to fail to woo the inflation genie out of its bottle at every turn.

Then came December of 2015 when gold and silver made bottoms followed by the gold miners in January of 2016. Then by the time February had come and gone the whole raft of other inflatables (commodities and stocks) had bottomed and begun to set sail.

As I listened to Mr. Powell speak about inflation yesterday my mind wandered back to Q1 2016 as I thought about the Fed trying to manage inflation at or around 2%. I also thought about how inflation tends to lift boats, not sink them. At least that is what it does in its earlier stages, in its manageable stages.

The balls out post-crisis inflation begun by Ben Bernanke was a massive market input and I suspect we have not yet seen its full effects – other than in US stock prices thus far. So dialing back to Q1 2016 let’s look at a few pictures, beginning with the Fed’s 10 year breakeven inflation rate, which bottomed… you guessed it, in Q1 2016. That means that ‘deflation expectations’ topped at that time.

Continue reading Inflation Trade, in Progress Since Gold Kicked it Off in Q1 2016

Yields, Inflation Trade and the Ongoing Boom

By NFTRH

Yields are up, bonds down again pre-US open, per Investing.com’s graphic…

This goes in line with inflationary signaling on the macro. Yesterday was an impulsive one for the ‘inflation trade’ (IT). Since the previous intermediate trend had been up before the recent consolidation in yields (bounce in bonds as fear struck the macro) continued strength from here would indicate a resumption of that rising trend in long-term yields.  Here are daily, weekly and monthly views of the all-important 10yr & 30yr US Treasury yield.

10yr daily…

10yr weekly…

Continue reading Yields, Inflation Trade and the Ongoing Boom