Do bonds and stocks falling in unison point to a major decline ahead?
Doc is back with us again today to chat about the markets. First we look at how stocks and bonds are dropping together, which has not happened since the Fed stepped into the markets a number of years ago. We then move to the US dollar and where people should have there investment funds to protect from an upcoming drop.
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they have a meeting EVERY WEEK……………somewhere in the world of confusion……they just need to keep the sheeple in line until their term is over.
The rats are jumping the ship………..Ben jumped, then Fischer jumped, then some bankers jumped, out the window. One every week,,,,Weak minds want to know what to do………….JUMP.
Doc, the bond boyz have been pricing in an interest rate hike for months now, they drive rates and the FOMC follow
50% drop in the Dow Doc, how about we break down first, seems like a very emotion audio Doc
http://stockcharts.com/h-sc/ui?s=%24INDU&p=W&yr=7&mn=2&dy=0&id=p59071855902&listNum=1&a=411434451
Just saying that when the next bear arrives, the odds are good for a significant drop. That doesn’t mean tomorrow. Bears usually occur over months and I would guess the next one will also. As I’ve mentioned in the past, you first get a break down and then a move up again to sucker people back in and then you slowly move down over many months—-nothing emotional about that at all—-just history.
just saying your a little ahead of your self from a chart point of view
OJJ; just saying I’m seeing some breakdowns that we’ve not seen for a long time. They could just be a head fake but time will tell. As John Hussman would probably say; it’s always a good thing to panic before everyone else panics. The Dow theory may be awakening from a long nap, this is one long “recovery” bull move, and the 12 month MA for the conventional markets is for the first time in years is breaking below the 26 month MA on the monthly MACD. Put that together with both bonds and conventionals breaking down along with pricing at where we started the year and I would ask myself why I would put new money to work. Then throw in the fact that from a capitalization to gdp the conventionals are very rich along with Bob Shiller’s CAPE analysis. Then consider the huge discrepancy between the conventional markets and the 25 year MA as related to past significant downturns—just some things to consider. But then again, THIS TIME COULD BE DIFFERENT.
Agreed Doc. Great points and perspective, and it is clear that there is turbulence in every market and a general lack of direction everywhere. The general markets likely have one push higher over the next few months and then they’re looooong overdue for a real correction of 20%. I’ll be deploying some money into SPXS and TZA late in the summer (August) to start shorting a market that is going to have its pants pulled down and spanked.
Completely agree with both posts, Doc. For me, there is no good reason to be long.
Chart hasn’t suggested being long or buying since 18300
http://stockcharts.com/h-sc/ui?s=%24INDU&p=D&yr=0&mn=6&dy=0&id=p65934547043&listNum=1&a=411476523
Don’t remember anyone here suggestion overweight longs positions in US equities these past 6-4 years, hmm, must all those Doom and Gloom reports effecting ones emotions
Armstrong on the Dow
I’m right there with you Doc on everything except a new bear market. I’m just looking for a hard move down into a 7 year cycle low (athough that could drop 20% or more and technically be a bear market) to be followed by a final bubble phase in stocks that could take the Dow to 25,000- 40,000 before it all comes crashing down.
You and Armstrong in same camp, no bad company Gary!
I am in agreement with this Gary and have been calling for a 20% correction in the fall (September has been my target since Feb/March). After that I see a blow-off top in the stock markets that may head into 2016 at nosebleed highs. Then we’ll get a 40-50% crash only after that euphoria phase.
I believe the market is essentially done. There will be no 25,000-40,000 Dow for a long time.
DOC, I put the S&P500 and GOLD charts side by side together and find that after the 2008 crash, GOLD and the conventionals (S&P, Dow 30, and NASDAQ) rise together. When GOLD starts the decline (bearish golden cross on monthly chart), the conventionals DO NOT stop rise. I saw a invert correlation between GOLD and conventionals. If conventionals fall back, I think GOLD will rise. What do you think?
Peter, that’s interesting stuff—-thanks for the info. I think initially if the conventional markets start a bear market, gold and some PM stocks may just slowly move down yet but at some time the Fed will feel they have to intervene and then watch out for the rise in gold.
DOC, look both monthly charts and mark january 2012. Maybe the paper GOLD was converted into dollars (QE program). If you think It´s a good idea, could be nice post both charts. Thank for the comment.
I’m thinking along the same lines Doc. At first Gold and the PM stocks will fall in a “sell everything” phase, (which will strengthen the dollar a bit). However, as things drag on, Gold and PM stocks will start attracting a bid from the fear trade, and they’ll end the 4 year cyclical bear and start their gradual climb up back into the longer term secular bull.
With high unemployment and debt plus low wages how could stocks and bonds possibly be strong? Facing reality is not going to be nice or fun.
Plus, there seems to be some wage inflation on the horizon. Today’s DJIA is just about where it was January 1. I like to look at risk/reward. The conventional market has had a nice run for 6+ years. I figure why take a risk now with new money when many experts have figured out what the returns may be per year over the next decade and it isn’t a lot.
Of course, if you do your due diligence, there are still going to be stocks that will fight a reversal in the conventional markets.
Yes, there are plenty of quality companies in every asset class that will survive a decline of their particular sector, but the gains won’t be as magnified as when the market is in Fed & Institutional juiced market mode. When that game ends, then only the strong will survive and thrive. It is very similar to how there are still certain mining companies that have bucked the trend or certain oil companies that bucked the trend in both of the sell off’s in these markets.
Doc,
You and Gary are making so much sense right now. I have much gratitude for your insights. Thanks.
ditto that.
Marin Katusa: On Leaving Casey Research & Why Speculating Is All About Private Placements — BY COLLIN KETTELL ON JUNE 07, 2015
Jump to 30:15 into the interview above and hear Marin Katusa’s thoughts on the Uranium Sector. Very good overview of the sector, reactors coming online in Japan, China, United Arab Emirates, his addressing several countries in their uranium outlook and World Nuclear Fuels Market conference. Good stats in that section of the bright future of nuclear energy and the uranium demand picture.
37:40 – Marin discusses Oil, fracking, and production increases.
He sees oil be stuck in a range between $45-$70 for years. I tend to agree it will be stuck in that range for a while. The range I’ve discussed frequently since March was a potential grind down to $38-$40 with an upside in the $64-$66 range. The Grind continues…
“being” stuck in a range
Even Prechter said there is a risk … :).
What Is A Better Investment Now Gold Or Silver, Redux 2015?
I don’t agree with everything in this article, but thought I’d post it as an interesting perspective.
sidebar: There are far more uses for Silver than just photography and Jewelry. The author left off silver coins & bars, solar panels, electronics, dental and medical instruments, water filtration systems, and good ole silverware. I guess the point of the article was that investment demand from central banks policy will drive Gold and that it pulled back less severely than Silver. I can see that as silver both over and under performs with more momentum than Gold.
After the downturn, Gold may lead the charge out of the gate, but once it does and PMs get moving, then it is likely that Silver will also outperform to the upside.
South African Gold Mining Strike Could Impact Prices and Supply – Commerzbank
Tuesday June 09, 2015 09:57
What is expected to be difficult negotiations has started among South African gold producers, the National Union of Mineworkers (NUM), which represents 57% of South African miners, and the more radical group, the Association of Mineworkers and Construction Union (AMCU), which represents about 29% of miners. According to reports, NUM is asking for wages to be increased by 84% and the AMCU is asking for wages to be more than doubled. Commodity analysts at Commerzbank will be watching the progress of the negotiations closely as last year, the platinum group metals production was crippled because of labor strikes. “The AMCU has already threatened a strike if it is left out of negotiations and a new agreement is concluded,” the analysts say. “South Africa’s importance in terms of gold has been diminishing for years, however. Last year, the country was the world’s sixth-largest gold producer with 145 tons, which equates to 4.9% of global mining production according to the WBMS. Nonetheless, a prolonged strike could have an impact on supply and prices.” — By Neils Christensen
“June is the most important time of the year to buy gold.
Unfortunately, by the time this vital month gets underway, most gold analysts and investors are too afraid to take any action.”
http://www.321gold.com/editorials/thomson_s/thomson_s_060915.html
Well it is the lowest month seasonally, so it would make sense that June is the best month to buy at the lows (on average). However, we have a conflagration of different factors coming together, that may drag Gold down into July as well, along with Silver. If we move sharply down into late June, I still may take some first tier positions depending on how things look at that time.
Here’s the chart from that article on Gold Seasonality if people want to jump straight to it:
http://www.graceland-updates.com/images/stories/15june/2015jun9gs1.png
Well Doc the S&P breached the 100 DMA today …
The PPT forgot the FED has a meeting next week ?