Gary’s long term recap of the markets and commodities
Gary kicks off today by recapping his long term outlook on pretty much everything. We start with the conventional markets, move on to the dollar and gold.
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Speaking of Commodities – just a follow through the consolidation in the Uranium space. Energy Fuels officially acquired Uranerz Energy, giving it the lower cost insitu mining inputs, a combined number of 6 long term contracts averaging around $58 Uranium, and plenty of mines that are permitted and a huge resource and exploration profile making it the largest US producer in the space.
Energy Fuels Inc. (UUUU)
4.64 +0.48(+11.47%) AMEX – As of 1:21PM EDT
ENERGY FUELS CLOSES ACQUISITION OF URANERZ ENERGY
June 18, 2015
http://www.energyfuels.com/investors/press_releases/index.php?&content_id=323
Gary,
As much as I hate to hear your $1000ish call your rational is certainly sound.
Thanks. I also imagine that you call will be contingent upon a Grexit being pushed back another 6 months or more for gold to do what you predict it will do. If I were the so called “PIGS” nations, I would ban together, simultaneously default and create a new currency zone at 1/2 of the Euro. It would be better than a multi-year series of European defaults rocking the markets.
In real terms the bubble in stocks happened in 2000. Today, stocks are bubbly enough and way overdone yet most people, including (and perhaps especially) professionals, believe that there will be a bubble phase or “phase transition.” I’m not saying it’s impossible, but why would so much (formerly) smart money find the risk/reward appealing?
http://stockcharts.com/h-sc/ui?s=%24SPX&p=M&yr=20&mn=11&dy=30&id=p56332558513&a=413003780
The risk reward situation will be more appealing once we get the bigger stock market correction this fall (likely in Sept). Once the markets pull back 15-20% then they’ll get long for the blow off top, as institutional funds need to keep their customers money in the markets. Currently the larger institutional funds are unloading positions to the retail investors who will be holding the bag when the markets correct in a few months.
I really don’t think there will be a blow off top. Among other considerations, too many people are counting on it.
Even if there isn’t, when the market does get a real correction later this year, that overwhelms the central bankers back-stops, then there will be many investment firms that go back long. Regardless of whether the blow off top in the general markets happens, there will be a spike back up to at least test the prior highs we were making this week in Nasdaq and Russell 2000.
If it fails then I’ll short the snot out of the general markets because the bull market in general equities will have peaked. However, if post-correction of 15-20%, the market rebound gets past the lofty levels we have been making recently, then watch out for a parabolic rise and the end of the 7 year bull. There is no way to know what drivers will be happening on the world stage, the currency markets, bond markets, and the Fed until we get there of course, but either way, once we get a taste of a real correction, bargain hunters will jump back in like they do every time, and ride it back up. Whether that ride back up is to a parabolic end, or whether it falls short and validates that the markets are topping right now still remains to be seen.
I’ve been watching more carnage in the oil markets recently, as we’re just starting to see the financial woes magnify and a few bigger companies are having trouble meeting their debt obligations. By next quarter there will be some blood in the streets for metals miners (PMs, PGMs, and Base metals), oil producers, multi-nationals continuing to get clobbered, and the banks the financed this mess.
We’ve discussed on this blog that in the next few months the CRB commodity index will put in it’s 7 year bottom, and turn (Aug?) and the dollar will pick up some pace in tandem, but put in it’s final top or at least test the March highs, then turn.
It’s about to real wild this fall, but for now the slow grind of the Summer Doldrums continues (as expected).
Possibly, but the almost 8% plunge in October might have been the dip to sucker-in those who think they know what a bargain is. 😉
Way too many dollar bulls, too.
http://stockcharts.com/h-sc/ui?s=%24USD&p=M&yr=20&mn=11&dy=30&id=p04744040114
As mentioned in April & May & June – I still expect the dollar to bounce off the 92-93 range and then head higher into Aug/Sept. This should pressure commodities to the downside and give us the 7 year CRB low we’ve been waiting for.
http://stockcharts.com/h-sc/ui?s=%24USD&p=D&yr=1&mn=0&dy=0&id=p58453003969
BUT this is nothing but ugly. Check out that huge distribution volume.
http://stockcharts.com/h-sc/ui?s=UUP&p=W&yr=1&mn=3&dy=0&id=p59334808548
Agreed. I think it needs to pull back from 94 to 92 area, and this is more evidence that this will play out. Once the RSI gets below 30 on the chart I posted we should be in that neighborhood, and from there I expect a sharp reversal up into July/Aug/Sept in the dollar.
For me, the buck rates a “sell first, ask questions later.” It buys a lot more real assets than it did just a year ago yet most people (as usual) would rather sell what’s cheap and buy what’s expensive.
Meanwhile, next week just might surprise a few gold miner bears.
http://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=0&mn=5&dy=0&id=p00690727887&a=413021619
Tim Wood gets it. We have a huge bull trap, not a secular bull market.
http://talkdigitalnetwork.com/2015/06/greek-crisis-tip-of-global-economic-meltdown/
Good interview. Thanks for posting it.
Thanks Matthew…good interview..he does get it…
Gary, Are you shorting gold?
Just a small position in my metal portfolio.
Three forks…
Andrew’s:
http://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=8&mn=5&dy=0&id=p04122596838&a=413005399
three forks…………fork in the road, fork to eat with, pitch fork for the devil in the details………………..
good one……… 🙂
This weekly chart of gold illustrates the value of exponential moving averages compared to the popular default setting.
http://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=8&mn=5&dy=0&id=p36184788797&a=413006667
I’ve always wondered what makes the exponential moving average different than the regular 50 or 200 (day/week/month) moving averages. How are the exponential MAs calculated?
Good question. I would like to hear the answer to that one too.
Yeah, me too. 🙂
I think this will do more good than anything I can say:
http://www.investopedia.com/terms/e/ema.asp
And there you have it. Using both is a good idea.
Thanks. Great video. Explained the differences pretty well.
That was a good video and written description. So it seems the simple MA has an even weighting over the time period selected, the exponential puts more weighting on the most recent data and less weighting on the older data. It could be more precise, but as mentioned in the video could trigger false signals, so they are best when used together. Very interesting.
Shad, the funny thing is, the opposite has been true with GDXJ’s “golden crosses” last year. The 50/200 SMAs delivered two false signals while the 50/200 EMAs gave just one. The best performer was the 55/233 EMAs (those are Fibonacci numbers) which gave no false signals.
http://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=2&mn=0&dy=0&id=p69508139914&a=400467548
Yes, I saw where the exponential moving averages were more on-target than the simple MAs on your chart. The article/video was saying that, in general, since the exponential weights the recent data more heavily than the older that it can cause more false signals. Since it is clear it is best to use both, you’ve made me a believer today. It likely will be a case by case situation with different equities, and we’ll have to figure out if the trend is reacting to the SMAs or the EMAs.
Great discussion, and great lesson of the day 🙂
The dollar will hit 92 and a half before it goes back to 1.10 Gary. I don’t get where you are coming from at all. The dollar is now in its fourth month of declines and ratcheting lower. It has already topped.
Bird,
As I explained, I’m not trying to time the wiggles perfectly. The secular trend is up. It doesn’t matter much to me if the dollar gets to 92 first or has already bottomed. The big trend is up.
Nope….it is down Gary. You made the same mistake last time before the dollar took flight and at that time you INSISTED that the dollar had a destiny much, much lower. When it rose instead (to your shock) you became a dollar bull and now you remain in that camp despite a chart that clearly shows a peak and top following its parabolic rise. Here is the thing Gary, if you get this wrong you are going to misjudge the Euro, crude, inflation, gold, interest rate hikes, most currencies and everything else you like to trade. You absolutely must not misunderstand the direction of the dollar at this time or you will get hung out to dry on most longer dated trades. Sorry.
peru suxana on 321 gold was saying he figures its still a good idea to stay in the market.
When are these darn wannabe miners (junior miners) gonna start going belie up so I can make some $? I am a big $hort position on the juniors.
You’ll see it in spades in the 3rd quarter Jason. Many news releases in the JR miners for PMs and base metals are posting missing debt payments, trying to restructure, or getting time extensions on warrant payments. 3rd quarter will be the bankruptcy phase.
Good interview guys. Gary did a good job unpacking his long term forecast, and the reasons behind it. We’ll see how it goes…..