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Forget sell in May and go away, should we be selling in April?

April 1, 2015

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Discussion
25 Comments
    Apr 01, 2015 01:43 AM

    I tend to think that for PMs we may have a little bounce next week into mid-April, but I’ve been saying since the beginning of the year that March and May would have big dips, and that the end of April has seen some serious selling pressure the last few years. I am going to play the swing trade up in the metals in early-to mid April, but then I’m going to cash or shorting for late April/May. (subject to change if if the season trend gets bucked this year)

      Apr 01, 2015 01:51 AM

      Chris I also agree with you that the main street economy is going to be a different animal now that some people learned their lessons in 2007-2009 and won’t be using their houses as ATMs or borrow money so willy-nilly, or go into such huge debt. There has been a culture change in most families on reigning in personal debt, people avoiding credit cards or purchasing homes, and holding onto cars longer. Most of the cars sales in 2012-2014 were pent up demand from people holding onto older cars after the 08-09 crash.

        Apr 01, 2015 01:09 AM

        And again, Shad, that’s a problem for the bankers. Without the population willing to follow their priorities, they’re even more screwed

          Apr 01, 2015 01:19 AM

          Yes – agreed. They got use to a consumer frenzy and everyone living beyond their means, and now that the cheese has moved, the Fed has printed like crazy with TARP, the Home Credit, Cash for Clunkers, bond buying QE 2, Operation Twist, QE 3, and it is not ever going to be enough to reinflate things.

          This will continue to pressure the auto & home sectors, as well as the financial sectors. Add to the woes of the financial sector the oil patch being cut in half and the Q1 earnings that will we reported in April/May and we’ll see further pressure on the financial sectors. Couple all of this with the stronger dollar punishing multi-national companies and hurting exports, and we’re about to have a big mess in a month or two.

          We are at an inflection point, where for the first time ever, we are seeing news about selling stocks early, locking in gains, and a general anxiety in the marketplace. The ride is going to get bumpier for sure.

            Apr 01, 2015 01:43 AM

            Here’s an example of how monetary hyperinflation and massive overproduction stoked by banking leads to oversupply, and inevitably to deflation:

            http://www.odometer.com/rides/10497/17-mind-blowing-pics-of-places-in-the-world-where-unsold-cars-waste-away#slide/0

            Apr 01, 2015 01:01 AM

            Wow those photos of new car inventories piling up are astonishing! The ones in Spain & Russion weren’t a real surprise though, considering the economic environment they see themselves in. Over supply in Cars, oversupply in Oil, oversupply of US exports form Steel to Toys….. not good for the mid-term forecast.

            Apr 01, 2015 01:20 AM

            that should have said Russia not “Russion”. Sorry, I do know how to spell, but was Rushin’…. : – )

            Apr 01, 2015 01:44 AM

            One last thought on the Automotive supply glut, is how that may affect the demand for PGMs. It could tip them to the downside if it is a prolonged supply glut, but it is counterbalanced by rising Automotive sales in China, India, Thailand, Vietnam, and South America.

            There have been real fundamental reasons why the PGMs have done so well with the supply problems in South Africa due to the labor disputes and mine shut downs over the last 2-3 years. In addition, many believe Russia has tapped most of it’s long term Palladium stockpiles and will likely not bring nearly as much to the market with through its Nickel mining or tensions with the west. Another feather in Palladium’s cap is that China & south Asia is going for Gasoline Automobiles, in addition to Europe starting to convert from Diesel to Gas.

            However, as mentioned on the March 27th – Palladium section of the blog that day, I am concerned the Palladium broke below the Oct 17th low of $751. Prior to 03/27/15, Pd had been making higher highs and higher lows since October – which was bullish. However, now we have some major chart damage when it closed at $736 on Mar. 27th, and then at $732 on March 30th. It tilts the scales towards the bearish for the mid-term. There was a nice pop yesterday and today, but we are still below that prior $751 bottom, and that is the first level of resistance to take out.

            Apr 01, 2015 01:15 PM

            So Palladium support is the double bottom this week at $725/726 and the resistance is $751 from the Oct 17th low that when it was broke on March 27th caused a selling cascade.

            I am still bullish long term on Palladium but am curious as to anyone else’s thoughts on the short to mid-term. Has this weeks breach of the Oct low caused a bearish pattern to form?

    Apr 01, 2015 01:16 AM

    Up, down, up, down – looks like a market that is teetering on the edge.

      Apr 01, 2015 01:23 AM

      Yep. It appears that everyone is undecided at present on whether the markets rage higher, or if we are going to fall off a cliff. I expect this to continue for April, but believe we’ll have some fireworks in May. The summer doldrums, but be much more lively in June/July then normal. Commodities should bottom in May/June, but then surprise to the upside in the late summer/fall. I think the general markets will correct just a little bit here, but then push for one more leg up reaching new highs, and correct by 20% in September suddenly.

      Apr 01, 2015 01:43 AM

      Actually, you are exactly right Bob. Market corrections (even crashes) are often preceded by wild volatility so what we are seeing now could be a warning sign. Somewhere around this house of mine I had a binder devoted to just that topic. I really need to dig it out for a refresher on the stats. The nut of it though is that daily spikiness in equities is a time to be vigilant for an impending correction.

        Apr 01, 2015 01:03 AM

        My thoughts exactly.

    Apr 01, 2015 01:46 AM

    RIO………….have fun………..best j.

    Apr 01, 2015 01:46 AM

    Well I’m pretty pleased with the action. I bought GDXJ call options as it approached its low of 22.43 yesterday after I highlighted 22.40-50 as my next buy zone the day before.

      Apr 01, 2015 01:02 AM

      Well played sir.

    Apr 01, 2015 01:50 AM

    The jobs numbers have been fake for 6 years.
    SHAWDOW STATS JOHN WILLIAMS…again proven correct.

    Apr 01, 2015 01:53 AM

    I THINK ………THE CRASH UP is a possibility , per Cath Austin Fitts points out.
    The facts are out there for those who want to look.

    Apr 01, 2015 01:54 AM

    CHRIS……….people go out to eat , BECAUSE THE WOMEN DO NOT KNOW HOW TO COOK.

      Apr 01, 2015 01:55 AM

      Home economics are no longer taught. Women are to busy making a living, to know anything about cooking………sign of the times.

      Apr 01, 2015 01:02 AM

      funny J….The Long.

    LPG
    Apr 01, 2015 01:13 AM

    I totally agree with Chris re: Q1 earnings growth, GDP, USD etc…
    My issue with this is that EVERYONE probably has this backed in their forecasts.
    My 2 cts.
    LPG

      Apr 01, 2015 01:45 AM

      Just my thoughts LPG. It’s why the market always catches the majority off-guard.