Market wrap from Doc
In this market wrap Doc and Cory start with the precious metals then move to the conventional markets including the volatility (VIX).
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OJJ; one of the reasons I’m waiting is because Cory is looking into setting up a webinar and the 2 charts I’m using would be the first 2 we put up to discuss. If it looks like the webinar isn’t a possibility, then I’ll put up the 2 charts post-haste and folks then can toss out their thoughts. I’m not trying to be recalcitrant about it but would like to get all the guys/gals interested in TA on one site and engaging in a real time dialogue. We should know soon if the webinar is possible. If people feel it’s really beneficial we could do it on a regular basis and I personally think it would be a tremendous learning experience for all of us through the give and take. It ultimately will cost a few dollars and we’re looking into cost but currently it doesn’t seem prohibitive especially if divided over a number of individuals.
recalcitrant, really! remember Doc I’m the idiot hear, reluctant works for me
Well why didn’t you say so in the first place, its top secret, you want to see how a chart indicator can forecast a return of the gold bull in the fall of 2016 you’ll have to pay for it, got it!
No, you won’t have to pay for it since we’re looking at a service which allows us to use it free for awhile—-you might say test it to see how we like it. After that, if everyone likes the idea, we can see how many people we can sign up to defray the expenses which shouldn’t be a lot.
I was just toying with you Doc as you were with me, recalcitrant
Good choice of lexicon Doc.
re·cal·ci·trant
adjective
1. having an obstinately uncooperative attitude toward authority or discipline.
“a class of recalcitrant fifteen-year-olds”
synonyms: uncooperative, intractable, obstreperous, truculent, insubordinate, defiant, rebellious, willful, wayward, headstrong, self-willed, contrary, perverse, difficult; formalrefractory; archaicfroward, contumacious
Well all the so called experts here didn’t come up with the answer as to gold turning up off $1162 and popping hard today into $1193 before backing off, you guys not paying attention, 1 man created todays reaction in gold off the back of 1 currency, nope not the US$ , you’ll see it on the chart and the post below was at zerohedge confirming the reason for the action.
As for gold turning off $1162 I’ll show that chart as well, first the currency that moved gold up $30 the last 4 days as it bottomed and turned up 2+ cents and its been doing it since 2007….2007 !!!!!
http://stockcharts.com/h-sc/ui?s=$XJY&p=D&yr=0&mn=0&dy=10&id=p50306358510&a=411729359&listNum=1
Gold turned a buy June 9th as yen bottomed where it goes from here nobody knows but indicator called it correctly!
http://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=0&mn=0&dy=10&id=p09216398530&listNum=1&a=411784548
Zerohedge Gov Kuroda comments move yen and gold reacts, real simple stuff
http://www.zerohedge.com/news/2015-06-10/how-do-you-spell-irony-japanese
All interesting charts JJ. Do you care to make a call for tomorrow or the rest of the week?
No problem at all Cory what chart would you like to see?
TPTB don’t want significant movement in metals at this time. Supply and demand is at best a limited influence in these markets. For the time being special interests rule.
Interesting….. Newmont Mining Corporation (NYSE: NEM) (“Newmont” or “the Company”) today announced that it has agreed to sell 29,000,000 shares of its common stock to Citigroup and J.P. Morgan, each of which will act as underwriters for the offering, for total gross proceeds of approximately $682 million.
http://www.juniorminingnetwork.com/junior-miner-news/press-releases/1101-nyse/nem/8099-newmont-announces-underwritten-sale-of-common-stock.html#.VXjPoqaEo7A
Like I mentioned the other day, I’ve been accumulating select miners into recent weakness and am not worried about the big plunge in gold that so many are expecting.
Agree Matthew, yes I said I agree, calls to zero or to da moon are just silly, the chart will lead the way over any expert suggesting otherwise
And anyone suggesting NEM’s action is disliked by the street as the share price drops its all about the added shares as they raise money = share dilution, nothing more
I agree with that point about the share drop due to the dilution to existing investors.
Matthew, it looks like some selected PM stocks are breaking down and that probably means continuing summer doldrums for the PMs which is fine with me. There’s a downward bias to the PMs and I believe these stocks are signalling that. Like you, I am not concerned about a big plunge in gold since the technicals aren’t signalling that—-If they change then I will become a little concerned.
Lets use NEM as an example, gary you paying attention here?
NEM was a buy May 28th a sell June 1st so no loss or min losses BUT since then it has never suggested buying again as it fell 14% protecting anyone who was thinking of buying NEM, 20/20 hindsight no!
http://stockcharts.com/h-sc/ui?s=NEM&p=D&yr=0&mn=0&dy=15&id=p57698716544&listNum=1&a=411802650
That’s a good chart Original JJ, and yes the MACD indicator told the tale once again.
Matthew
You are not worried because you are not leveraged, or you are not worried because you think there won’t be a plunge? Are you not expecting a retest of the Nov lows? Please share your outlook over the next few months for both gold and the miners. Thanks.
I’m not worried at this time because the charts remain supportive of more range-trading with a short term bias that is now turning up.
Today was interesting because GDXJ outperformed the rest of the sector (which is bullish for the whole sector) yet gold outperformed GDX and silver.
What I think is happening is that the junior miners are telling us that silver is about to turn up and begin to outperform gold again. When the sector is healthy/bullish, gold should underperform silver and the miners -seniors included.
The silver-gold ratio is close to oversold and positioning in the juniors before the turn (for their leverage to the metals) is common. If the smart money felt that silver had much further to fall versus gold, then GDXJ would be selling off and falling more than the rest of the sector (because leverage is a risk that cuts both ways).
Like many, I think the second half of the year is going to be very good but I still think the move up is going to start much sooner than most think. Probably this month, but we’ll see.
Silver priced in gold:
http://stockcharts.com/h-sc/ui?s=%24SILVER%3A%24GOLD&p=D&yr=0&mn=11&dy=0&id=p40483390573
Since most investors aren’t traders and tend to hold for quite awhile, most would be better off if they looked at the weekly charts more than the daily.
There’s nothing ominous here:
http://stockcharts.com/h-sc/ui?s=GDXJ&p=W&yr=0&mn=11&dy=0&id=p95095864810
Interesting thoughts Matthew. As Chris T. mentioned yesterday I am not as concerned about the Gold:Silver ratio, but agree that I don’t think Gold will fall out of bed here. I expect it to be a slow grind down into Summer, but still feel there is high probability that 1150 and then 1130 will be tested.
Good chart on the Silver priced in Gold. I agree with you that in a healthy market Silver will outperform Gold, but I it also under-performs to the downside. Right now things look fairly rangebound, but we’ll have to see what shakes out in the Bond and currency markets over the next month or two for further guidance.
Cheers!
Yes, silver definitely outperforms to the downside, that’s why the G/S ratio is above 70 and not below 40 as it was in 2011. A decisive, sustained move below 70 is what the whole sector really needs to get moving as it will indicate that the sector has finally turned.
Good juniors will triple quickly (or more) at that point.
Interesting Fib arc action:
http://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=1&mn=9&dy=0&id=p53349377630&a=369193490
The bears’ day are numbered.
Gold priced in silver is getting ready to fall and is down today. Good times are coming soon.
http://stockcharts.com/h-sc/ui?s=GLD%3ASLV&p=D&yr=1&mn=3&dy=0&id=p64848441959&a=408685539
That would be nice, as I have a nice watchlist of companies I’m ready to go shopping for once the signal is in that the PMs have bottomed.
Very insightful OJj and Matthew re NEM. Thank you .Doc still hasn’t explained his Fall of 2015 and now changed to 2016 prediction…. It changed overnight.
Barrick and Anglo a buy…..? Maybe NEM..?
It’s notable imo that LPG learned the meaning of shill this week….. Take notice all…
Agatha, LPG speaks at least four languages and since French probably came first, maybe he uses the French word for shill. Just a thought…
Me love u looooooong time Matthew ! 🙂
Hope all’s good.
Best as always,
LPG
Agatha gisty; it hasn’t changed. I’ll say it once again—-and have been saying it for weeks. I expect the PMs to be soft over the summer with a downward bias. I also expect many of the PM stocks to sell off soon and continue into July. I’ve said that then at the end of July or in August to expect some bounce up in the PMs. However, that will be in the trading range we’ve been and won’t be the start of the next bull leg of the PMs—–that should get started no earlier then 2016, most likely in the fall of 2016. There’s been absolutely no change in my position since I’ve reiterated the above ad infinitum.
Matt, I’ll leave you be the chart guy here, good luck to you and if gold is $800 one day or $5000 just know buddie I’m on the profit side of that trend
see yah!
World Bank has joined IMF calling FED to postpone rate hike to 2016. Has propaganda started? How will happen if there is no rate hike?
What will happen if there is no rate increase this year or even in the future?
This is probably the checkmate moment we are waiting for
Gold and S&P 500, Gold and US dollars have no negative correlations.
Sometimes they have but not always the case.
The real positive correlation is gold via inflation. Or gold via Fed Fund interest rate.
The gold long term rally will start when Fed starts to raise its interest rate.
Good thoughts Gabriel
Matt– I meant that partly tongue in cheek and in a positive way re LPG & ‘shill’..I like LPG…
Me love u looooooong time – part 2 – Agatha 🙂
Best,
LPG
funny.
Matt– Market Anthropology june 11
Thursday, June 11, 2015
Breaking Away
With the 10-year yield breaking away from the top of its 2015 range, Treasury yields continue to push higher with all the bravado of an Italian cutter racing in Bloomington. Technically, the 10-year remains on course towards challenging long-term overhead resistance, which we expect will come in ~ 2.65% – after retracing and digesting the large moves over the past few weeks.
Bloomington bravado?
Considering that the average age of traders today on Wall Street (30) would place their birthdays six years after the classic coming of age film, the reference may fall on deaf ears as this Millennial class also looks to graduate to a higher education.
Then again, in many ways this speaks to a recurrent theme from us over the past year of the complexity for today’s participants in understanding and visualizing where the markets have been and where they may be headed. As much as today’s stockjocks and bond boys and girls were in diapers or their parents imaginations during previous rising rate environments, the insights and wisdom imparted from even the previous generations experience may prove incomplete.
Although the shift in Fed policy has our complete attention and respect, we have found the more obvious comparative insights to most tightening cycles over the past fifty years less correspondent. The obvious being, that the Fed has stepped away from actively supporting the markets and is progressing towards further normalizing policy. Granted, “normalizing” is a strange characterization in a dynamic system. Certainly, what was considered normal in recent tightening cycles that were not tethered to ZIRP for an extended period or accompanied with QE, isn’t all that normal this time around.
While you’ll find that many contemporary tightening cycles share certain insight similarities with how rising yields affected the performance between different markets and sectors, our own deference towards a wider scope of history with a more top down read of the long-term yield cycle, also strongly resonates with a lesser known period of the 1940’s – sandwiched between the traumas of the Great Depression and the 1951 Treasury-Fed Accord.
This melded perspective of both old and new, impressions our expectations that 1) the tightening – if and when it arrives, will be minimal, and 2) considering yields disposition in the trough of the long-term cycle, we believe real yields will ultimately fall as the capacity of inflation today could easily exceed the reach of nominal yields.
As described in previous notes, the mid 1940’s shared a structural similarity to the trough of the current long-term yield cycle, which is also reflected in comparable cyclical moves in the equity and commodity markets since equities set a secular valuation high over fifteen years ago. Moreover, there are parallels extend in policy and practice, as the 1940’s were the last time the Fed conspicuously supported and bought Treasuries in like magnitude – to prop up the financial system as markets and participants recovered from the long tail of the Great Depression and the colossal price tag of World War II.
That said, it wasn’t entirely a free lunch, as ultimately there were latent effects from the historic liquidity provisions extended by the Fed and the inevitable psychological shift away from such support that impacted participant expectations.
Through the balance of the late 1940’s, the equity markets in the US primarily treaded water with a ~20 to 25 percent nominal cut below the cyclical high set in May 1946 – directly after the Fed’s historic balance sheet expansion had peaked. Over the next four years, the financial markets struggled through adjusting to new policy and paradoxical market conditions, as strong pulses of inflation worked their way through the system, while participants remained concerned that another deflationary leg of the Great Depression would unfold.
Today, as the Fed creeps further towards normalizing policy, we expect that yields will remain supported, as the disinflationary trend that reflexively fed back and buttressed the bid in equities since the back half of 2011 – dissipates. Our best guesstimate is that as inflation finds traction, it will translate with accompanying cyclical pivots in the dollar and commodities – which we believe has already begun to unfold from the relative performance extreme witnessed in the US dollar index this March.
Following up on a reflationary study we’ve contrasted throughout the year, the SPX:Oil ratio continues to remain under pressure, supporting our expectations that oil should outperform US equities, as the strong disinflationary trend that began in 2011 exhausts.
We continue to closely follow the SPX:Oil ratio through a comparative prism of the two major exhaustion pivots (1986 & 1999) that make up the asymmetrical disinflationary/reflationary construct that the ratio represents.
Although both timeframes reflect market environments where oil strongly performed from its Q1 cycle low through the balance of the year, there were notable differences in the magnitude of the moves (1999/WTI+138% vs. 1986/WTI+70%), relating to policy and inflation/growth expectations – which greatly determined the direction of yields through the year.
In 1986, yields troughed as the Fed moved to further ease the fed funds rate as the economy slowed, completing its last rate cut by the end of August and moving to marginally tighten policy by the end of December.
Conversely, in 1999 yields led and rose with oil throughout the year, as the Fed began in late June to tighten policy – eventually contributing to pricking the equity market cycle less than one year later.
As described in previous notes, while the current relationship between oil and yields is tighter than both periods, we find greater similarities with 1999 – both with respect to Fed policy posture and the respective cyclical trends in the equity and commodity markets. Moreover, current market conditions reflect the potential for a more long-term downtrend in the SPX:Oil ratio – which we expect would translate with a “shoulder” on the asymmetric pattern now in place.
Interestingly, from an intermarket currency perspective, there are significant differences between 1999 and today – which we believe if left standing would strengthen the case that a broad based rebound in commodities and inflation was unfolding.
The most glaring difference is that in 1999 yields led the turn – tightly correlated with the dollar, as oil followed the pivot 10 weeks later with a lag.
Today, the opposite dynamic is true, with the move higher in yields in late January – inverse to the recent pivot lower in the dollar.
This has also been translated downstream with a lag, with the euro and oil remaining tightly correlated from their cycle lows in early march.
Consequently, the 1999 10-year yield/oil chart resembles the 10-year yield/euro chart today. Should the comparative pattern hold prescience, yields over the coming weeks will retrace and flag as the euro takes its turn breaking away. This perspective would dovetail with our work in the relative extreme noted in the US dollar index, which continues to loosely follow the symmetrical secular pivot from the index in 1985.
at 7:51 AM
Thank you for another good article, Agatha. I probably agree with all of it.
This excerpt nicely sums up my view:
“Today, as the Fed creeps further towards normalizing policy, we expect that yields will remain supported, as the disinflationary trend that reflexively fed back and buttressed the bid in equities since the back half of 2011 – dissipates. Our best guesstimate is that as inflation finds traction, it will translate with accompanying cyclical pivots in the dollar and commodities – which we believe has already begun to unfold from the relative performance extreme witnessed in the US dollar index this March.”
Good article Agatha.
Ojj DON’T LEAVE ME ILL WIPE MY OWN ASZ…lol
So I agree to a very LARGE degree with chart trading…Fundamentals do work but I believe are VERY tough and the 99.9% that do FAIL…Fundamentals become skewed due to the shenanigans of the of central banks…..It consumes and incredible amount of time studying them are you can still be dead wrong. Charts are great insight to accumulation / or liquidation. If your a contrarian that can fail you to as things can stay overbought or oversold for a hell of a long time in a bull or bear market…Hence Dow and Gold….Just because stocks resource stocks are cheap even a year ago as so many pumpers protested they can get ALOT cheaper and they did.
To me I see many Goldies looking very weak at the moment and its a crap shoot IMO…Why not have cash when so much uncertainty.
Ojj…much appreciate your commentary..
Good thoughts Bill. I’ve gone mostly to cash right now, and sense some weakness in stocks, but nothing terrible based on the ones on my watch-list and the mining ETFs. As you say, things can stay overbought or oversold longer than people think and they can always get cheaper. (I’m actually hoping they do as I’m waiting to take on positions once we get some signal that the PMs and miners have bottomed).
Chad
You always have great input too! Thanks
A few TMM, GUY, ASR I mentioned a while ago are holding up and if it was a real bull market they would most likely be flying..
I personally have 95% cash and would like to move back into some more real estate as well, but with markets like here in Canada scares the crap out of me…Just scroll through here: http://jugglingdynamite.com
I’d give my right arm for an 80s type rate spike as I’m the one getting screwed with no yield on a pile of cash…You have to gamble in this stupid world to make some loot…
No mortgages no debt for me but…The debtors are being rewarded…for now..SOBs
Great thoughts Bill. Yes Guyana Goldfields has been on a tear, and Alacer Gold Corp has held up really well. As for Timmins Gold I am undecided, but the Bollinger Bands have really narrowed lately signaling a break out or break down. It will be interesting to watch.
Yes Canadian real estate is where the US was in 2006 and 2007 the bubble is getting a bit frothy 🙂
For the link above starting here down.
“Canada’s lust for home equity lines of credit”
Doc, sorry I challenged a comment you made Tues with your gold bull market resumption call suggesting the fall of 2016, its not about the time frame Doc its that you said that for over a year now the long term technical’s you watch have suggested the bottom won’t happen till fall of 2016
Obviously these technical’s your watching for over a year are in place, so why not show the chart, today, of what your looking at because someone who has used charts for 40 years is very interested in a technical that can see the future, anyone else interested?, I bet you are.
So copy and paste the chart as I do when the 1 indicator I use changes like today on the Dow chart, otherwise its a gut call not a technical call and that’s a BIG difference Doc
Why do we have to wait, its telling you now so lets see it…………………