January 23, 2014
Tobby Connor sends along this posting:
"In my last post I noted that gold could give a major buy signal in the next 2-3 weeks. Let me stress again that patience is required right here. Gold has to confirm the intermediate rally first. That means it needs to break above $1268 and make a higher high. If it doesn't do that then no buy signal will be generated. Without a reversal of the pattern of lower lows and lower highs then this is just another weak bear market rally destined to roll over and break the bulls hearts again.
So far every time gold gets close to breaking through the 1250-1260 resistance zone a huge seller materializes, usually in the pre-market, to dump several million oz. of paper gold on the market and drive gold back down. This happened again yesterday.
I can't stress enough that gold has to get above $1268 before the FOMC meeting next week. Gold can't enter the declining phase of it's daily cycle from a position of weakness below $1268. If it does then they are going to beat the crap out of it, and there is a serious threat that they could break the intermediate rally.
If they do break the intermediate rally then we are going to see $1030 gold over the next 4-5 months.
There is a serious war ongoing for control of the paper gold market and the big seller won a major battle yesterday when they prevented gold from holding above $1250. Gold needs to recover immediately and get above $1268 so the declining phase of the daily cycle can begin from a position of strength, not weakness.
So let me stress again: This is still a very dangerous market. The manipulation has not ended. Wait till the next daily cycle bottom before jumping into the sector. That bottom has to hold above the Dec. 31 low, and the only way it's going to do that is if gold can get above $1268 before this cycle tops. That means it's going to have to fight off the continued manipulation that's holding it down."
Some more links for you:
Jeff Saut: Fewer Stocks Are Participating in Upside Price Action, on Minyanville.Com.
...Interestingly, the Tax Foundation compiled a map showing the largest 'non-payer' states (see chart below). The top 10 states on that map are those tending to vote Republican with a large population of elderly and/or immigrants Said map suggests the alleged 47% are not just voting themselves a 'governmental paycheck.' Verily, I continue to think the pendulum is swinging back toward a government that is going to deal with issues that can no longer be ignored because a tipping point is nigh. To be sure, in my four decades in this business, when something absolutely had to happen, it has typically happened!"
Jason Haver: The Importance of Knowing When to Trade and When to Stand Aside, on Minyanville.Com.
...If we fail to acknowledge the reality that there's a time for action and a time for stillness, then our accounts will be a huge roller coaster of inconsistent ups and downs. Our trades will be winners during the bright times...but then we'll give most (or all) of that profit back by trying to expand when we should be conserving during the dark times. Over-trading is as futile as trying to force the solar panel to work at night."
January 22, 2014
Tobby Connor sends along this posting:
"It's been my opinion for the last several weeks that gold formed an intermediate degree bottom on December 31. That being said I'm still a bit nervous that the sector could suffer another manipulation event (like the flash crash two weeks ago) so I haven't been willing to enter a firm long position just yet.
However there are definite signs that this bear market is probably over. The large momentum divergences on the weekly charts are one.
The heavy volume flowing into the ultra-mining ETF is another sign that smart money is positioning for a major bear market bottom.
Presently I'm waiting to see if gold can break through the intermediate downtrend line and make a higher high above the previous daily cycle top. This would confirm the intermediate bottom. Coincidentally this is roughly the same number in both cases. Gold will need to move above $1268.
I would caution that a move above $1268 probably isn't a timely entry into the sector however. As gold is going to be moving into the latter part of its daily cycle timing band by the end of next week, a better strategy would most likely be to allow gold to bounce off of the 150 day moving average and then retest the $1250 level from above at the next daily cycle low.
So I think a little patience is warranted over the next two weeks. Allow gold to confirm the intermediate degree bottom. If it does, then prepare to buy aggressively at the next short-term pullback."
January 12, 2014
Here are some interesting links.
Should You Buy Last Year's Big Losers?, on DailyWealth.Com.
Japan is the top dog in this category... Japan has underperformed not just for five years... but since 1990. However, in 2013, Japan's market soared...
I called Japan my No. 1 investment idea of 2013. I recommended shares of WisdomTree Japan Hedged Equity fund (DXJ) – a Japan exchange-traded fund (ETF) – to my subscribers. DXJ was up 41.5% in 2013.
Could Japan soar more from here? Absolutely!
Europe in general qualifies as well... The benchmark Europe stock market index – the Euro STOXX index – was up just 4.5% annualized over the last five years. That's pretty poor performance, considering the start date was January 2009 – near the beginning of the Bernanke Asset Bubble. But in 2013, Europe was up 23% in U.S. dollar terms.
Could Europe soar more from here? Absolutely!"
Employment Report +74k, SUCKS, on Market-Ticker.Org.
That red line is the only number that matters. The blue line is the liars line. The red line is the actual percentage of working-age people who have jobs.
It isn't common for us to get such a weak number and a big drop in the alleged unemployment rate, but there is good news with that -- it makes the lies a hell of a lot harder to believe.
There's more bad news embedded in the report as well. Average hours fell by a tenth and the index of hours was down two tenths as did aggregate weekly payrolls. That, of course is actual cash that moves into people's hands (less taxes, of course.)
This is a **** report -- period."
India's Surging Demand Will Boost This Commodity, on GrowthStockWire.Com.
China Is Showing No Signs of a Building Slowdown, on GrowthStockWire.Com.
The nominal amounts of iron-ore imports are just as impressive. Over the last 15 years, Chinese iron-ore imports averaged more than 50 million metric tons per year. In the past five years, China has imported more than 74 million metric tons each year. Demand is strong and growing. In the chart of China's iron-ore imports below, you'll see that imports just reached an all-time high. There's no slowdown here..."
A 40 Plus Move in Hong Kong is Starting Now, on GrowthStockWire.Com.
Hong Kong's economy is being flooded with cheap cash.
You see, in 1983, Hong Kong pegged its currency to the U.S. dollar. This was a great move. It allowed global investors to move money into Hong Kong without having to worry about currency risk. But there is a catch...
Hong Kong operates its peg by using interest rates. In other words, Hong Kong is stuck with whatever interest rates we have here in the United States.
Right now, the U.S. is trying to 'goose' its economy with low interest rates. But like I said, Hong Kong's economy is already booming. These low interest rates are going to act like rocket fuel."
A 30% Trade In Silver, on TopStockAnalysts.Com.
The Best Thing Jim Rogers Ever Said, on GrowthStockWire.Com.
Of all the brilliant things Jim Rogers has ever said, I believe this one is head-and-shoulders above the rest.
Rogers is one of the most successful money managers in history. He made so much money investing and trading during the 1970s, he left the conventional side of work to travel and run his own money. You can read more about him in the greatest trading book ever, Market Wizards.
In that short quote above, Rogers nails one of the most important factors to trading and investment success: Don't spend your time and energy chasing mediocre trades and investment opportunities. Only move when the odds are overwhelmingly in your favor."
Leading Indicators from the Superstars of Resource Investing, on TheAUReport.Com.
...Williams also counsels watching presidential approval ratings, which are at a low right now. 'Usually a president's approval rating is a pretty good indicator of where the dollar is going because it indicates how the rest of the world views the U.S. government. All these factors are leading to significant downside pressure on the dollar. I think we are going to see a tremendous dollar selloff in the not-too-distant future and the biggest gainers should be gold and silver and the precious metals.'
...'Market seasons are like emotions,' he explains. "We overdo the excitement and then get depressed. We tend to go to extremes. The first phase of inflation is already in place. We just don't call it that because it is stored in the stock market. When that busts because it is overvalued, money will leak into commodities. Gold and silver will be the biggest beneficiaries because they were hit the hardest.'
December 25, 2013
Tobby Connor sends along this posting:
"It's been my theory for some time now that this QE driven bull market would top either in late 2013 or early 2014, followed by a multi-month stagnation process as liquidity leaked into the commodity markets.
At almost 5 years this bull market is right up there with the three longest bull markets in history. Sentiment and complacency have reached levels typical of a bull market top. We are clearly well into the final parabolic euphoria phase of the bull.
The Advance-Decline line has started to diverge.
Market breadth is deteriorating; this often happens at intermediate tops.
Money flows are also diverging. Another warning sign that is often seen at intermediate tops.
Even more concerning is the fact that this intermediate rally will be on week 27 next week. Most intermediate cycles bottom by week 20-24. QE 4 is stretching not only this intermediate cycle, but the previous intermediate cycle before it. This has in effect stretched the market extremely far above the mean, guaranteeing an exceptionally violent decline when this house of cards breaks. The Fed hasn't done us any favors by artificially pushing the market much higher than it should've gone naturally. All they have done is guarantee an exceptionally severe selloff when the market finally corrects.
We've clearly been in the euphoria phase of this bull market throughout 2013, and I expect this will continue through the end of the year and maybe into the beginning of earnings season. However, I expect we are going to see a very sharp move down in stock prices as we move through January and into early February.
For those inclined to enter short positions or long term put positions in preparation for the next bear market, I think they could do so when and if the NASDAQ reaches its initial 2000 recovery high of 4250.
I think 2016 puts on the QQQ or SPY could pay off 1000% or more over the next two years. Remember never risk more than 5-10% on an option position."
December 15, 2013
Just some links today
Full Show: Crony Capitalism , on BillMoyers.Com.
U.S. Stocks Could Still Soar 63%, Starting Now , on DailyWealth.Com.
The More Credit the Gov't Creates, the More This Fund Gains , on GrowthStockWire.Com.
If you want to participate in this uptrend, one way is the SPDR KBW Regional Banking Fund (KRE). This fund tracks the performance of the Regional Bank Index."
Yes, more jobs, but wage growth holds up recovery , on CNBC.Com.
What Would the Fed Do if Banks Started Lending, En Masse? , on Minyanville.Com.
'Sound of Music' Broadcast Shows Just How Sick of Technology Americans Really Are , on Minyanville.Com.
Perhaps the airlines would serve the flying public well by recognizing people's rapidly declining patience for a world saturated with gadgetry. Might we be fondly reminiscing one day for the time when an airplane at 35,000 feet provided the one, solitary refuge from cell phone conversations?"
Big Risk: $1.2 Quadrillion Derivatives Market Dwarfs World GDP , on DailyFinance.Com.
Central banks will move goal posts to keep QE forever , on MarketWatch.Com.
9 dumbest mutual fund moves of 2013 , on MarketWatch.Com.
December 9, 2013
Tobby Connor sends along this posting:
"In this business there is no greater buying opportunity than at a bear market bottom. For those few investors able to control emotions, delay gratification, and go against the crowd, a bear market bottom is where millionaires and billionaires are made.
Unfortunately for the vast majority of traders, emotions are much stronger than logic. Most people when they see a market that has gone up for five years automatically assume that it's going to continue to go up. And because everyone else is getting rich and they don't want to be left out, they jump on board too.
In reality a market that has gone up for five years is all that much closer to a top and the upside potential is limited, not exponential. Unfortunately at market tops traders are unable to think logically and all they know is that the money is coming easy. Unfortunately when something is easy, it's usually about over.
By the same token when a market has gone down for two years dumb money investors automatically assume that it will continue to go down for the foreseeable future. Let's face it why would anyone want to buy something that is going down when you can buy stocks, that are going up forever, and get rich quick? (This is the same mentality that was prevalent in the real estate market in 2005/06.)
Again if one would stop and think logically, a market that has gone down for two years is all that much closer to a bottom. This is how smart money investors think, they think logically instead of emotionally.
In the chart below notice how the volume exploded at the 2009 low. This is a classic example of dumb money emotional selling, and smart money contrarian buying. Now after five years we have the exact opposite. Big money is slowly selling into the rally to the emotional dumb money investors. Volume is contracting.
So if smart money is selling into the euphoria phase of this bull market, one has to wonder where they are putting their money. One need look no further than the closest bear market.
Smart money understands that all bear markets eventually come to an end. They understand that recency bias is a trap that catches investors at tops and prevents them from buying at bottoms. They control emotions, delay gratification, and understand that bear market bottoms are where the greatest buying opportunities in this business are generated. As you can see big money has been coming into this market since June in preparation for a bear market bottom.
I am cautiously optimistic that gold is in the process of completing a successful test of the June lows. If I'm correct then this will turn out to be one of the greatest buying opportunities of our lifetime.
Let me stress that this isn't the time to swing for the fences. Picking a bottom in a bear market isn't easy. If you're wrong and get caught in another leg down it's going to be painful as these can often drop 15 to 20%.
At the moment I'm watching for signs that gold has formed an intermediate degree bottom. If that bottom can hold above the June low it will confirm that June marked a final bear market bottom, and I believe the start of the bubble phase of the secular gold bull market.
In a somewhat related vein I want to finish this article by talking about inflation. The general consensus at the moment is that there is none. That of course is nonsense. We have massive inflation right now. Inflation is an increase in the money supply.
What most people don't understand, including members of the Federal Reserve, is that inflation doesn't typically flow evenly into all assets. During the beginning stages of an inflation liquidity usually flows into financial assets, as that is where the Fed targets its efforts.
Typically during the first stage of an inflation liquidity will flow into stocks, bonds, and in our case over the last decade real estate. It's only during the second stage of an inflation when these bubbles become overvalued and pop that the inflation that's being stored in the financial markets begins to leak into the commodity markets. At that point we "label" it as inflation.
Notice in the chart below that from 2002 to 2007 inflation expressed itself as rising tock prices and a bubble in the real estate market. During this time the general consensus was that we had little to no inflation. The reality was that we had massive inflation, it's just that everyone was looking for it in the wrong place. Once the housing bubble and stock bubble began to deflate the inflation that had been stored in these markets began to leak into the commodity markets and the second stage of the inflation began. This culminated with a spike in the CRB and oil reaching $147 a barrel.
I would argue that we are now about to begin a second stage inflation again. It appears that rising interest rates have already pricked the echo bubble in the real estate market, and at five years the bubble in the stock market is almost certainly in the final euphoria stage. Once stocks begin to stagnate and rollover we are going to see that same process that we saw in 2007/08 as inflation leaks out of stocks, bonds, and real estate and moves back into the commodity markets.
If I'm correct about gold forming a final bear market bottom then this second stage inflation is going to be an incredible driver for the next leg of gold's bull market, which I believe will probably turn into the bubble phase and top some time in 2017/18."
December 5, 2013
Tobby Connor sends along this posting:
"Analysts everywhere appear to be wondering what could possibly be the catalyst to turn the gold market around. I maintain it's the same catalyst that drove the gold bull market from 2001 to 2011. Out of control currency debasement.
Does anyone seriously think that we can print trillions of dollars out of thin air for five years and not eventually have something bad happen? The next the black swan is already staring us in the face. It's going to be a collapse in the purchasing power of the US dollar.
Since the beginning of the year the dollar has been showing signs of extreme stress as it began to oscillate violently back and forth in what is known as a megaphone topping pattern. When this pattern breaks to the downside it is going to initiate the beginning stages of what will likely be a fairly severe currency crisis by next fall.
In this environment I think it's going to be impossible for the manipulation in the gold market to continue. As a matter of fact I got a signal last Tuesday that indicates to me that the forces trying to manipulate gold down to $1000 have probably thrown in the towel and given up, realizing that an impending dollar crisis is about to begin.
On a cyclical analysis basis, the intermediate cycle is now running out of time for a move all the way back to the $1000 level. As you can see in the chart below the average duration for an intermediate degree cycle is between 20-25 weeks. Currently gold is on the 23rd week of this cycle.
On a smaller time frame you can see the current intermediate cycle already has four daily cycles nested within it. I don't believe there is time for a fifth daily cycle, and a fifth daily cycle would be required if gold were going to make it all the way down to $1000.
On top of that the current daily cycle is now stretched to 34 days which is already longer than 90% of historical cycles. What this means is that gold is very late in its daily cycle and a bottom is due at any time. The logical trigger would be on the employment report Friday, although I think the market will be expecting that so we may get a bottom earlier in the week.
Last week's sentiment polls are also suggesting that bearish sentiment has reached levels where the market is at risk of running out of sellers. I expect when the current weekly sentiment poll comes out later this evening we will see sentiment in both gold and silver at levels comparable to the June bottom.
To top it all off I'm starting to hear some of the usual clichés that always appear at major turning points.
"The charts are pointing down"
Folks, at bottoms the charts will always say the market is going lower. And at tops the charts will always say the market is going higher.
Then there are the numerous calls for completely unrealistic targets. I'm now starting to hear $700 price targets for gold.
I believe we are within days of a final bottom in this intermediate cycle. I think an initial 10-20% position can be taken anytime this week. Then once we get confirmation of an intermediate bottom one can start adding to that position.
I'll say it again, if one can pick, or even get close to, buying at a bear market bottom the initial move out of those bottoms are where the biggest gains in this business are made. The first two months out of the 2008 bear market bottom miners rallied 100%. I don't think it's unreasonable to expect something similar this time as this bear market has been every bit as severe as the one in 2008.
And one final confirmation before I forget. Oil appears to have put in a final intermediate bottom. Look for oil to lead the commodity complex out of this bottom.
November 30, 2013
Just one excellent link today. Bolding is my own.
Obamacare: The Result of All Politics, All the Time , on Bloomberg.Com.
...The war between the parties also explains Obama's false promise about letting people keep their insurance -- not just that he made the promise in the first place, but also (which is even stranger) that Republicans in Congress didn't call him on it when he did.
...In this way, from one election to the next, exaggerated polarization causes politics to collapse into sound and fury signifying nothing. This is why, annoying as they can be, you sometimes need centrists. Without them, opposition can be so furious that it's pointless. And the result is a breakdown of effective accountability.
...Actually, it's plausible that tighter partisan sorting increases ideological polarization. Even if it didn’t, Lind is missing the point: Greater partisan polarization would still be a problem, because it narrows the range of debate within the parties and militates against constructive criticism of opposing views. Partisan rivalry is meant to improve policy. That's one of its purposes. Once a certain level of estrangement is achieved, rivalry stops helping and starts hurting. You couldn’t ask for a clearer case than health-care reform.
...This vacuum of uncommitted opinion explains what would otherwise be a puzzle. Countless words have been written on the case for and against Obamacare, yet the perfectly foreseeable problems of the past two months took almost everybody -- advocates and opponents alike -- by surprise.
The curse of U.S. politics is not just that it's polarized but also that there's so damned much of it. Unaligned expert opinion is hard to find. Unaligned commentators are even rarer. Top jobs in the civil service, several layers down into the bureaucracy, are given to political appointees. Experts brought into government for specific projects are required to be Democrats or Republicans first, and experts second: They become another species of politician. "
November 27, 2013
Just some links today
If You Build It, They Will Crash: Wall Street Architecture as Contrary Indicator , on Minyanville.Com.
The Chrysler Building, that Art Deco masterpiece on 42nd Street, crowned its spire on October 23, 1929. Twenty-four hours later -- truly, if you sent such a script to Steven Spielberg he would dismiss it as far too fantastical -- came "Black Thursday" five miles downtown, an 11% drop in the Dow (INDEXDJX:.DJI) that began the Great Crash."
Comet Ison: daylight sighting of 'once in a lifetime' event possible, on Telegraph.Com.
'If it survives that encounter with the sun it could even be bright enough to be seen during the day in early December.
'Now the last time that happened was 1680 when the Great Comet sent people scurrying to church to repent their sins, so things could be pretty spectacular.'"
Banks Threaten To Charge You For Saving Money, on HuffingtonPost.Com.
Fed Reveals New Concerns About Long-Term U.S. Slowdown, on Bloomberg.Com.
The Dirty Secret of Black Friday 'Discounts', on WSJ.Com.
November 15, 2013
Tobby Connor sends along this posting:
"Something may have changed today in the gold market. For one I think gold probably formed a minor daily cycle bottom today. But what I'm really talking about is the complete recovery from another middle of the night attack. For most of the last year these late night attacks have worked wonders for sending gold crashing through technical levels and triggering stops. Today however it simply didn't work for the first time.
It's been my opinion for months now that the forces behind these take downs were trying to push gold back down to the 2008 C-wave top at $1030. At which point I expected they would flip sides and go long for the bubble phase of the bull market. After watching gold fight off the manipulation today I'm starting to wonder if gold has been pushed as far as it's going to go.
At some point all artificial markets finally say "enough is enough" and the fundamentals regain control and take the market back in the direction it was meant to go. Usually more aggressively than would have happened naturally. We saw this in spades in 2008/09.
If gold is finally ready to break free of the year long manipulation then we may have printed a final bottom today. The next couple of days should tell the tale. If gold can rally $40-$50 tomorrow or Wednesday, and the miners 5% - 10% on heavy volume that would in my opinion be a strong signal that today was more than just a minor daily cycle low. If gold can deliver a powerful follow through surge off of this reversal then we may just have a final intermediate bottom, and maybe, just maybe, the bubble phase of the bull market is ready to begin.
I told my subscribers this afternoon, miners have the potential to form a 2b reversal (a technical signal that sometimes spots an exact bottom or top of a trend). One could take a long position at the open tomorrow and put a stop right below today's intraday low. If the 2b reversal is valid then the low will hold and the stops will not get triggered. If nothing else it's a low risk setup with a minimal loss but huge upside potential if we did print a bottom today.
If the manipulation is going to continue it will probably try to regain control tonight. If we see another premarket hit tomorrow then step aside and wait to see if gold can fend off the attack again.
As of 7 O'clock this morning the attack on gold has begun. The intervention is going to try and hold gold below $1250. If gold can fight off the attack two days in a row, that would be a strong sign the daily cycle has bottomed and maybe the bull has finally broken the manipulation."
November 23, 2013
Just some links today
One More Reason Stocks Could Go Higher From Here, on DailyWealth.Com.
This strategy has also worked well recently. Over the last five years, buying in November led to an average annualized six-month gain of 19%... the highest of any six-month period... and double the average annualized return for all six-month periods."
Why isn't QE causing inflation?, on TAToday.Com.
Perhaps The Only Chart That Matters (For Now), on MCOscillator.Com.
U.S. income inequality: A tale of two cities , on TheGlobeAndMail.Com.
Strong Rules on Fracking in Wyoming Seen as Model, on NYTimes.Com.
It is the latest of several groundbreaking regulations related to energy production issued by Wyoming, which in 2010 became the first state to require disclosure of some of the chemicals used in the drilling process known as hydraulic fracturing, or fracking."
Who's Paying for JPMorgan's Settlements?, on Bloomberg.Com.