“Harbinger of Doom”: Amigo 3 in Play, But Real Doom Awaits

By NFTRH

“The Harbinger of Doom”? Of course we (well, the media) are talking about the yield curve AKA Amigo #3 of our 3 happy-go-lucky riders of the macro. I have annoyed you repeatedly with this imagery in order to show that three important macro factors needed to finish riding before situation turns decidedly negative.

Amigo 1: SPX (or stocks in general)/Gold Ratio

Amigo 2: 30 Year Treasury Yield

Amigo 3: Yield Curve

In honor of Amigo 3’s arrival to prime time let’s have a good old fashioned Amigos update (going in reverse order) and see if we can annoy a few more people along the way. :-)

Yield Curve

Clicking the headline yields a Bloomberg article all about various yield curves and all the doomed news  you can use, including a hyperactive interview with an expert bringing us all up to speed on the situation.

Continue reading “Harbinger of Doom”: Amigo 3 in Play, But Real Doom Awaits

A Post-Powell View of USD, S&P 500 and Gold

By NFTRH

The Fed blinked. This was not news to Macro Tourist Kevin Muir or readers of Biiwii.com, which is very pleased to publish his work.

Fed Finally Blinks

Amid a weakening global economy, gathering signs of weakening in the US economy and a dump in inflation expectations, Jerome Powell implied that the Fed may be going on hold for a while after a December rate hike.

This graph from SG Cross Asset Research/Equity Quant by way of Kevin Muir’s article attempts to show that the accumulated rate hike tightening and “shadow” tightening as a result of QE suspension has now met or exceeded the levels that preceded the last two economic recessions.

Continue reading A Post-Powell View of USD, S&P 500 and Gold

Positive Implications for Gold Miners if Crude Oil Breaks Down

By NFTRH

It’s an over obsessed upon commodity, previously hyped for its (Hubbert’s) “peak” status by “experts” like T Boone Pickens and a whole clown show of promoters amplified by the media at the time.

Now WTI Crude Oil has reached a thick resistance zone (as managed in NFTRH for the last couple of years) and may be breaking down from a peak of a whole other kind. Here is the monthly chart we use.

wtic

It is preliminary, and one weekend OPEC jawbone could put oil back up in the consolidation. But as of now the price has ticked below the previous 2018 low to close the week. It is not a good look… unless you’re a gold bug, that is. More on that later.

Continue reading Positive Implications for Gold Miners if Crude Oil Breaks Down

The Stocks-Bonds Interplay

By Steve Saville

It’s normal for the stock market to ignore a rising interest-rate trend for a long time. The reason is that while the interest rate is a major determinant of the value of most corporations, the interest rate that matters for equity valuation isn’t the current one. What matters is the level of interest rates for a great many years to come. Therefore, a rise in interest rates only affects the stock market to the extent that it affects the general perception of where interest rates will be over the next decade or longer.

To further explain, the value of a company is the sum of the present values of all its future cash flows, with the present value of each future cash flow determined via the application of a discount rate (interest rate). Nobody knows what these cash flows will be or what the appropriate discount rate should be, but guesses, also known as forecasts, are made. Clearly, when discounting a set of cash flows spanning, say, the next 30 years, it won’t make sense to simply use the current interest rate. Instead, the analyst doing the calculation will have to make a stab at what will happen to interest rates in the future.

Continue reading The Stocks-Bonds Interplay

Pivotal Events: Stocks & Precious Metals

By Bob Hoye

Click for PDF report.

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Or better yet, subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas to get even more bang for your buck. You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

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

Gold Man! Net-shorts In Gold Futures/Options Largest Since 2006

By Anthony B. Sanders

But Will It Continue After Last Week’s Bloodbath In Equities?

Too bad Black Sabbath didn’t sing Gold Man.

Hedge funds and other large speculators increased their net-short position in gold futures and options in the week ended Oct. 9 to the most in data going back to 2006, surpassing a record reached last month, according to a government report released Friday. The wagers came days before turmoil in equity markets sent investors flocking back to the metal, pushing prices to the biggest gain since 2016 on Thursday after six straight monthly losses.

thebiggoldshort

Let’s see if gold shorts continue with the reversal of fortune in the S&P 500 index and gold.

Continue reading Gold Man! Net-shorts In Gold Futures/Options Largest Since 2006

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

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

Extreme Positioning in Stocks vs. Bonds

By Callum Thomas

As I was updating my various charts and models, something weird caught my eye.  This peculiar chart shows speculative futures positioning in equities (aggregated across all US index futures) and bonds (US 10 year treasury futures)… and most notably, the spread between them.  With bond traders the most crowded short in recent history, the spread between bonds vs equities positioning is at an extreme.

So what?  Let’s break it down: if traders are short bonds they expect yields to rise (which usually happens as a result of higher growth and inflation outcomes), and if traders are long equities they expect stocks to go up (which similarly hangs on a supportive growth backdrop).  So basically what we’ve got here is traders doubling down on a view that growth and inflation heats up even further from here.  They may be right.  But if they’re wrong, there will be a lot of scrambling to cover positions (aka the long awaited return of market volatility).  So if you’re looking for latent pressure building up in the markets, you’ve found it in this chart.

 

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Or better yet, subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas to get even more bang for your buck. You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

Midsummer Walkabout

By Tim Knight

I actually like it when we get past June 20. Knowing that each day has less sun is like a gift to me. I can’t say why. It just feels like a sense of relief.

Let’s look at some ETFs together. It would make a better narrative for me to order these differently, but I’m going to be lazy and leave them alphabetical.

First is commodities, which I think will roll over beneath the red horizontal I’ve drawn. Crude oil, in particular, I believe will drag this lower.

The diamonds remain in a long-term and intermediate-term uptrend. Short-term, it’s starting to gently turn lower, but as you can see from the moving averages, it’s going to take a LOT of damage to break this bull run.

Continue reading Midsummer Walkabout

Gold Bugs vs. Stock Market Bulls

By Charlie Bilello

Which is the better investment: Gold or Stocks?

It’s a battle as old as markets.

Gold Bugs and Stock Market Bulls are equally fervent about their investment of choice, often with complete disdain for the other side.

The story (since the gold standard was completely abandoned in 1971) goes something like this…

1972-1980

Gold Return: +1256%

S&P 500 Return: +97%

Narrative: Gold is the best investment in the world, and will continue to be so forever. There is hyperinflation in the U.S. and a secular stagnation in real growth. The only way to protect yourself is with Gold. And by the way: no one should own stocks.

 

Data sources for all charts/tables herein: Stockcharts.com, Bloomberg.

Continue reading Gold Bugs vs. Stock Market Bulls