Docs comments on the precious metals and oil
We are joined by Doc chatting about the flat gold price and nice move up in silver today. Will this continue? Doc does not think we are in for a major move right around the corner.
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But jj, don’t you think the technical’s were already lined up regardless of US GDP? That’s how I see it. For example it was just a few days back I noted that we should all be keeping our eyes on palladium because it was set to bounce. Same with some soft commodities. Well palladium (PALL) is up more than 6% today along with a host of others that were ready to go no matter what GDP was reported.
So does the news really drive the market?
I don’t know what I’ve done to antagonize Mr. Moriarty, but he seems to have a penchant to disagree with me, not just when I think I’m correct, but when I know I’m correct.
Since the market is now closed; let me explain how manipulation works,
(Contrary to Mr. Moriarty’s erroneous belief expressed in the Pundits Perspectives (rig the market) comments.)
Let’s assume I’m an immoral wealthy person, who wishes to increase my wealth by driving down the price of silver.
You are right, Mr. Moriarty, when you say for every seller there is a buyer and vice versa. It is incorrect, however, to assume that equal amounts of buying and selling result in no net change to prices.
The key to understanding manipulation is in understanding distribution in the market-maker’s book. At times of high volume bids and offers will be more densely packed than at times of low volume.
So here comes a manipulation downwards,
Assume we are just starting on a new month in silver futures:
It is a low volume period in the market, and the market-makers book looks like:
Bid size……..Bid price——-Ask size…….Ask price
100……………..15.00————100……………16.00
100……………….14.00————100…………..17.00
100………………..13.00————-100………….18.00
Suppose I sell short 200 and trigger a stop-loss order of 100, what does the new market-makers book look like when we have a high volume period next?
Bid size………….Bid price———-Ask size…..Ask price
300………………….12.00—————300………..13.00
300……………………11.00—————300……….14.00
300………………………10.00————-300……….15.00
Now I buy back to cover my shorts.
Price stands at Bid 12.00……..Ask 13.00
cost to buy back + 26.00
Amount received from short sales, somewhere between 29.00 and 27.00 depending on when stop loss was triggered.
Now I have over-simplified a bit, but I believe I have illustrated that equal buying and selling quantities need not imply no net change in price.
All I have to do to manipulate the market is to have enough money to dominate trading and pick my times of trading.
I can equally manipulate the price upwards by buying during periods of low volume and selling during periods of high volume.
The only thing I must be able to do is dominate the market.
A little collusion with the market maker to know where all the stops are also helps, but not necessary.
Since I dominate the market I am also aided by being able to set a long term trend expectation, and then change it when I want to.
CFS ignores the fact that if someone was dumping futures it would show up in the numbers. Markets have always been manipulated and it has never made any difference. If you think manipulation is the most important factor in any market, by definition you have to reject supply and demand as being important. All markets are manipulated all of the time. Even GATA brags about their manipulation of the markets.
Manipulation is a great excuse for making bad market decisions.
Manipulation may make an excuse for making bad market decisions, but if one understands the manipulation, it offers opportunities to buy at the best times too.
Have I made excuses for bad market decisions? I make bad decisions at times, but usually blame that on lack of knowledge, not manipulation.
It is pleasant to see you finally agree that all markets are manipulated all the time.
I do pay attention to Reg SHO (Rule 4310) and Rule 4762 numbers.
I have seen many small companies destroyed by naked shorting over the years, and am very careful about companies issuing full warrants on public offerings.
(An invitation to brokers to drive down the share price, in my opinion.)
CFS:
You are deliberately mixing apples and oranges. You have never seen naked shorting in commodities. It exists in shares, it doesn’t exist in commodities.
I’ve said for years that all markets are manipulated and I’ve said for years it’s meaningless.
Anyone investing in markets that they believe are seriously manipulated is nuts. That’s a reason to not invest, not a reason to invest.
Did or did not my simple example show that someone, with ulterior motives can move the price down from a Bid/Ask of 15/16 to 12/13 and make a small profit doing it?
That was my point.
Does a country wishing to acquire gold, for example China, not have a motive to use the futures market to buy gold cheaply?
Don’t tell me manipulation, or I am, dumb, because that is pointless.
Don’t tell me I’m mixing apples and oranges when I’m talking about companies; when I’m talking about companies, it should be obvious I’m talking about shares not commodities.
But I’m also talking about a similarity of manipulation. In a new issue many brokers, often even the sponsoring broker will participate in the offering, buy a share and a warrant, and immediately sell shares and an equal quantity of shares naked short at a later time, and use the warrant to buy back and cover the naked shorts, if he has not driven the company into bankruptcy.
Not all the people who visit this blog are as brilliant as you, Mr Moriarty. I am merely trying to educate my fellow bloggers and explain, as best I am able, with specificity, what I am talking about.
Of course volumes show up.
CFS:
This is really dumb.
“Now I have over-simplified a bit, but I believe I have illustrated that equal buying and selling quantities need not imply no net change in price.”
Unless the batteries on your calculator need replacing, it should go without even having to mention that equal buying and selling would naturally imply no net change in price.
You do not have to go out of your way to be illogical. In this case you are not only not in left field, you are not even in the town the ballpark is in.
Buying and selling have equal effect unless you want to simply make up stupid numbers to prove a totally irrational point.
None of the guys talking about manipulation incessantly ever mention that if you short a commodity, you have to go long at some point. And yes, it has to have an effect when you do.
CFS…good explanation that can and should be understood by everyone…
Thanks, Gator.
OJJ; sounds good. What a lot of folks haven’t considered concerning the GDP is the fact that inventory was replenished considerably and so the 3rd quarter might not be as good.
Doc, the stock market is very strong today, not exactly ‘grudgingly higher’. Is there a possibility that we have completed a sharp but very short correction here? Is it time to buy stocks again?
Thanks for your excellent chart comments.
Jay, I’m having trouble reading the technicals currently on the conventional markets. There are a number of conflicting signals. Next week will be important in shining some light on the technicals. For the time being I’m sitting on the sidelines especially since I believe we have some move left to the upside. I believe we still have some movement to the upside but it may start to slow down a little. We may correct sideways for a few weeks yet with an upward bias. I personally am not taking a short position just yet since the VIX and FXP are telling me that there are no eminent moves up and that translates into the fact we’re not about to get another huge correction down. Watch the VIX here—it’s telling me volatility is quieting down and that tells me that there is no eminent drop in the making. When volatility gets a lower pricing, I’ll then get ready to short the conventionals again. I hope this helps—right now I’ve got to let this thing calm down before I get a clear signal on direction.
Thank you for the patient advise. Much appreciated.
Doc, said above:
“When volatility gets a lower pricing, I’ll then get ready to short the conventionals again. I hope this helps—right now I’ve got to let this thing calm down before I get a clear signal on direction.”
Do I infer from that you are long-term bearish on the general market.?
It is beginning to look like a V-shaped rally right back to the highs. That is not what most people expected so in a way it makes perfect sense. I am still on the bull side of equities btw so no problem at all with these moves.
As long as the monthly charts on the conventionals stay bearish, CFS; I’m bearish. I also am bearish long term on the Chinese markets and I can’t believe our conventional markets can stay up if the the Chinese markets over time sell off. The key is watching the monthly charts on these conventionals.
There are many energy stocks with double digit gains today.
BTU (Peabody Coal) was up heavily as a hedge fund bought another half million shares. Up 50%, sure beats working for a living!
Actually, BTU’s rise might be due to short covering.
It did not surprise me that Soros had, in fact, been NAKED shorting BTU. He really is immoral *#*, The number of shorts actually exceeds the float for Peabody.
Dead cat bounce? Looks more than that to me.
Not a chance CFS. This was a serious power rally that blasted right out of the blocks like a rocket. It has the wind at its back so I don’t see this as a flash in the pan bounce. Look, the dollar is unquestionably in decline. That is just about all you need to know to set up trades long crude oil right now. And that’s why oil is flat. The money is moving on energy. And its not just oil. Chris was talking yesterday about a bull getting underway in uranium so this is sector wide.
Sorry….should have said “that’s why gold is flat”…..not oil is flat.
I think I’m completely confused at this point. The markets befuddle me, gold could easily rally or fall from here. I’m pretty sure oil will rally like Doc says but it will likely only be a week or two if that. Gary says gold’s going to scream higher, Doc says it will fall lower. I just moved into all cash. Next week will likely reveal much more.
And Big Al, if our input is the million dollar question, I’ll take mine by check. 🙂
Yeh, Wiseguy, me too!
I think Al means we have to pay a million to ask a question.
Wouldn’t that be wonderful! Not likely to happen though!
My personal opinion, worth about 2 cents!
Neither gold nor silver are going to scream anywhere.
Gold is probably trending down slightly.
Silver is probably trending up slightly
These trends based on fundamrentals.
Dominant being supply/ demand.
Right now silver is priced below cost of production, whereas gold is not. On average, of course.
There is manipulation at times by both countries/banks and Hedge funds, so one has to be careful around options and futures expiration dates, both in US and UK.
CFS….You made some good points there.
My advice to day would be , if anybody here has any spare cash lying around, doing nothing buy silver rounds….stick it under the mattress, & forget about it until the mainstream media proclaims silver is soaring…..Or if you have a lot of physical gold sell some & turn it into silver…….
This advice comes from the mad Irish fella who knows absolutely nothing about anything .
For non-geared plays:
in oil: USO
in energy, XLE
Both of them are up considerably already today – got that runing to catch a missed bus feeling.
Another two cents…..
It looks like longer than a few days to me (this dead cat bounce)
I don’t like what is going on in Ukraine or Middle East though. Nothing imminent as far as I can tell, but NATO does provoke Putin at times; just to see how far they can push him. One of these days someone might make a mistake.
By the way, Greece was begging Putin for a bail-out.
He turned them down flat.
I hope this is not too much politics, but Greek politicians are really selling out Greece.
In my opinion they should just default (best case)
or push the EU bureaucrats much harder. The EU oligopoly really, really wants to keep the EU intact, which all except French citizens are becoming more and more against. The EU cannot be held together in the long run except by force, in my view.
The Greeks should just GO BELLY UP AND FORGET IT………
No worries CFS, we will not stop discussing “sensible politics”!
Doc, I almost bought MUX yesterday@.71, but I thought I’d better check with you first and see how low you think it might go. And how low do you think PDG and CVX could go?
Thanks.
The bankers really want some more QE gravy!
absolutely ………….keeping the scam up as long as they can………..
Big Al, what I think is Doc Postma got out of bed early today. I always looks forward to his market analysis.
He is certainly interesting, Jason!
BB; MUX will struggle to go higher IMO. I feel with MUX and a lot of the other stocks we’re going to trade in narrow ranges awhile with the trend slowly down. I’ve not mentioned it KEREPORT that we’ll be entering tax loss selling season in October and that should tend to continue to at least the end of November. If you look at the charts of most of the PM stocks over the last 2 years the selling was fairly aggressive in OCT./NOV. It won’t be this year but it’ll lend further weakness to the stocks—the technicals also tell me that we won’t see big movements in most of the stocks before Dec. CVX looks like it wants to bounce short term but the weekly/monthly charts tell me there is more work to the downside it’s not going to the upside in the near future for the beginning of a significant move. I might add there’s not a lot of danger for the next 2 weeks for MUX going significantly below $.69. I was unable to bring up a stock for PDG—-did you give me the right symbol? Also, IMO MUX will be lower then it is now by December.
Where credit is due, I was talking to LPG last evening and he brought up the fact that we’ll be entering tax loss season in October. Similar to the last 2 years, it’ll be another negative for the PM stocks but not to the degree of the last 2 years.
Hum… Fundamentals or technicals Doc ???
Doc – I agree that tax loss selling will not be nearly as bad this year as 2013 and 2014 were, and October is a bit early in my opinion. Nov/Dec are tax loss selling season.
If PM miners get enough of a bump to be about flat for the year, then there won’t be that much tax loss selling.
Also MUX up 15.26 % today.
McEwen Mining Inc. (MUX)
0.8300 +0.1099(+15.26%) NYSE – As of 10:31am EDT
Doc, sorry about PDG(which used to be Placer Dome Gold). I meant PVG which is Pretium Gold. I used to own PDG long ago which is why I keep confusing its symbol with PVG.
Thanks.
I’m a fan of Pretium (PVG) Bonzo Barzini.
Me too, Shad, but I wonder how low Doc thinks it will go.
Must-read article, IMHO:
http://www.zerohedge.com/news/2015-08-27/jpm-head-quant-warns-second-market-crash-may-be-imminent-violent-selling-could-retur
GL to all investing/trading.
LPG
JPM ……lol
That was quite interesting. Last Thur, Fri, and Monday, 3 days long crash event is highly technical in nature. Not much to do with fundamentals. The quant guy may be making an important point why this technical selling may continue.
Fundamentals, not technicals?…..It was the third longest bull market in history without a 10% correction. Volume had dropped off substantially before the crash.
People were waiting on the sidelines for a correction.
Everybody always seem to concentrate on price, but volume speaks loudly too.
Volume is key indicator to watch.
They figured it would happen today which it did not.
Al,
To me, the most important part of the article is NOT about what JPM predicts will happen or won’t happen.
The most valuable part to me is that it goes in details about the size of these potential flows and what they are based on.
My 2cts.
LPG
Thanks for posting the article LPG. Hope all is well my good man!
Hello Shad,
All’s good.
Best as always,
LPG
I found the positive feedback loop portion very interesting
Cute and very, very true at this point in time.
Well Docs I missed SPXS. I said I needed the S&P to hit 1950 so that I could get in at $19.75 on SPXS. S&P hit 1950 and SPXS bounced at $19.96. Missed her by 21 cents. sigh
“After the close of trading Thursday, Carl Icahn filed a 13D on Freeport-McMoran (NYSE: FCX) showing a new 88,000,000 share, or 8.5%, stake in the company.”
http://www.streetinsider.com/13Ds/Carl+Icahn+files+13D+on+Freeport-McMoran+%28FCX%29/10849452.html
FCX dropped to 18.5% above the 2008 low.
http://stockcharts.com/h-sc/ui?s=FCX&p=M&b=6&g=0&id=p86879713878&a=422173959
Thx for that info Irwin.
LPG
✔
Now how the heck did you make that check mark? You are a very clever computer user, Irwin.
not so clever;
copied it from somewhere
✔✔✔
I wonder if those are black swans?
check
You can copy images into the comments box? I am a retard with a computer. I did not know that…..so then I suppose I should give it a try.
εïз♪ღ♣ ♠•± ╿ ▰ ▱ ◆ ◇ ◈ ◉ ◊ ○ ◌ ◍ ◎ ● ◐ ◑ ◒ ◓ ◔ ◕ ◖ ◗ ◘ ◙ ◚ ◛ ◜ ◝ ◞ ◟ ◠ ◡ ◢ ◣ ◤ ◥ ◦ ◧ ◨ ◩ ◪ ◫ ◬ ◭ ◮ ₤ ₥ ₦ ₧ ₨ ₪ ₫ € ₭ ₮ ₯ ℀ ℁ ℂ ℄ ℅ ℆
Cool….thanks Irwin. I can now move beyond happy faces.
Wow! ₪◬◫
Irwin:
Dead canaries
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🙂
This should get interesting……………………..
Doc, you recall asking me to remind you about Teck once it was near the bottom? Well both TCK and Freeport (FCX) were up 25 to 30% each today and the bottom may just be in depending on how you squint your eyes and look at the charts.
Just a heads up because they look to be on fire.
Have I mentioned yet that I am having a fantastic day. Its because I stopped reading the gloom and doom blogs the past few weeks. Even Zerohedge is on the back burner. There is so much to buy right now you can hardly swing a bat at it blindfolded and still miss the ball.
Zerohedge is a terrible gloom and doom site. It makes you depressed with no reason.
Once upon a time, ZH was a very good source of alternative financial news. Not today.
FCX up 53% into the close. Good day mates.
MARKET ALERT!!!
18M + GDX shares after market at top price (never saw volume like this)!
Peter,
Are you cognizant that most of the volume you regularly mentions in your “MARKET ALERTs” as occurring after-hours likely did N-O-T actually occur after-hours but instead was simply REPORTED after hours ???
I kindly suggest you keep this in mind.
GL investing/trading.
LPG
LPG, I say this: every time I see these volumes on days like today when GDX close 2.4 % up, normaly a reversal happens…
Richard, After listening to your interview I took a look at the monthly chart for XAU (which I believe is a fairly comprehensive index of pm stocks)- very depressing. One thing I did notice on my charts which go back to 1992 is that most of the impulsive moves in the index during the bear markets that have occurred since then tend to last 3-4 months (on a rare occasion 5). We are in month 4 of the current impulsive move down in the XAU. Perhaps that means we’re nearing some sort of conclusion to the current impulsive down move, at least in time. I don’t know.
In the long term, there is no reason to hold XAU (Gold stocks) since in 12 years, even gold went up 3 folds and the gold/XAU went from 3 to 25. It means XAU actually declined by 50% while gold is 400% of its original price. What a terrible long term investment. I think it will be worse since some of its components will just go bust.
Yes Lawrence that is a huge black mark on either the economics, or the managements, or both of the companies in this industry. The companies are in the business of producing a product that sells for 4x what it did 15 years ago. If I’m able to sell lemonade at my little lemonade stand for that kind of increase, I know I’d be better off.
Demand went up a lot and the price also went up a lot. If everything stay the same it will be great to the miners. However, inflation has raised the cost of equipment and human. The grade is getting lower. I remember we used to have 10 grams a ton and now mining 0.5 gram a ton. The cost has to multiply. In the last few years Miner either go high grading or borrow like crazy to stay alive. But they don’t have more than a few years high grade mines and they will be depleted. Debt is another curse. When bankers see there is no way to continue, they will call in the loan and put the companies under. If gold suddenly goes wild, they will convert their loan to equity and dilute shareholders to nothing. So our investors are doomed either way..
Maybe I am too pessimistic.
You know, I was wrong, and I’m doing a 180 here.
I now think that Doc is exactly correct.
Where the heck is Matthew and Shad today? Seems awfully quiet around here.
Matthew was accumulating SMP (Americas Silver); it’s really hard to find a place to hide that sort of thing and takes some time. j/k matt
😉
I was indeed accumulating (again)! Picked up some others too.
I saw you also got some Argonaut at much lower than I did you dirty dog 🙂
I decided to accumulate 100% allocation of my (hold-for-years) favorite 3 stocks – the pure-Canadian stock with the potential for largest increase (IMO): Alexco, Pretium, Claude. I’ll wait to fully accumulate my other there: Kirland Lake, Klondex, and Rubicon
I’ll trade the trends with JNUG and JDST to weather the expected/predicted downturns or surprise upturns in the PM/Miners arena.
Gotta take a break from the markets for a few weeks.
That’s and excellent list Brian. I’m a big fan of all six on your list: Alexco, Pretium, Claude, Kirkland Lake, Klondex, and Rubicon. Nice! I like a lot of other stocks like Lake Shore Gold, Guyana Goldfields, Detour Gold, Yamana, Argonaut Gold, Americas Silver Corp, Fortuna Silver, Endeavour Silver, Avino Silver and Gold, Sierra Metals, Mandalay Resources, Great Panther, and even Coeur mining and Silver Standard Resources at these prices.
In addition I’m keeping my eye on acquiring Defiance Silver, Impact Silver, Kootenay Silver, Mag Silver, True Gold, Balmoral Resources, Gogold, Garibaldi, and may increase my stakes in Torex Gold, Golden Queen, and buy back Silvercrest.
Out on location for work (12 hour days). Very frustrating to only be able to occasionally check the markets on brief breaks on my phone when so many things are in flux. I made a nice trade on Wed (9%) on XIV playing the calming down of volatility when the markets jumped, and squeezed in a 4% gain on a day trade in Stillwater mining yesterday. I missed the big moves in oil and base metal commodities though because there was no time for me to even analyze the markets properly. This is getting exciting.
On location? I bet you’re filming a music video. 😉
I wish. I have some acquaintances that do that though.
Ah, that explains what I was detecting. Telepathy ya know. You think it, and someone somewhere just might pick it up. 🙂
Sending and receiving thought transmissions…….roger roger.
I don’t know if anybody else noticed but the CRB bounced right off support very nicely and that does have something to do with the change in the market dynamics today. This is a trend change if movement shows continued strength (which I think it did today). Personally I am entering long positions in select companies and commodities that I had been holding off on for a very long time as I awaited this bottom…..and feeling very positive while I do it.
BM:
Buying commodities today would only be profitable for 100% of the time during the last 59 years. They not only are lower in constant dollar terms than they have ever been when measured, they are lower by a lot.
Unless you believe we will never need copper or iron or coal or corn or diamonds or silver or gasoline again, it’s a good bet.
Bob, we are so close to the bottom of a generational buying opportunity it ain’t even funny. And with the very real prospect that inflation makes a comeback soon the trades stand to be spectacular. Not just silver and gold either. My focus is wider than that and indeed some are paying off much better already. There will still be a clearing of companies and the surplus on the market though before we really get going. I always keep that in the back of my mind. However I think we are finally getting a glimmer of what is in store.
Power, the difficulty in my eyes on this move down by the PM stocks is that it’s been so long unlike 2009 where you had a dump in about 4 months. You read that right; 4 months. That was a classic correction where it was short and brief. When they threw money at it, the market V’ed and then started promptly up. It took the current move down 4 YEARS. You read that right; 4 YEARS—that’s in comparison to the 4 months the last time. We aren’t going to just V here when we bottomed like last time. Tremendous damage has been done and we’re going to flirt with the bottom for some time—-that’s what happens with these type of bear markets. I know everyone is getting excited about how some of the commodity stocks performed today along with a nice move by GDX and some selected PM stocks. I personally don’t buy it for some technical reasons and won’t be suckered into it. We saw this the end of last year and in March of this year and everyone was yelling about getting on the train before it left the station. I gather some lost money because they accepted that premise . Based on the monthly charts there is no evidence yet that Freeport or any of the commodity charts are ready to take off here. If this is a bottom for them you’ll see a multimonth bottoming process where you can enter these stocks with some assurance that they don’t have a further leg down. The monthly charts still say they’re at risk for that. Just my thoughts.
I am not so sure that Freeport needs to go to the absolute bottom to see its final bottom, Doc.
FCX is one of my favorite stocks. But if China is in fact in a bubble, and if that has further to deflate, as many think, including me, then copper will continue to fall, and so will FCX, in my view.
FYI I think $SSEC will fall all the way back to 2000. Just a silly prediction, but who on earth builds empty condo’s? airports? cities? It’s all a mirage – a paper tiger – and now smart money selling to poor farmers who put their house up for stocks, hoping – i.e. GAMBLING – that it will rise. It’s all too late. Very very sad for the common people. It’s all going down in flames. It was a bubble, a hope, and that’s all gone now.
China is a great country though – they are down but not out. Their history goes back 1000’s of years, and they are persistent, and smart. Down but not out.
At least China got a lot of infrastructure and buildings for its spending. All the US got was a bunch of richer bankers and politicians.
I think the Chinese got a better deal than the Americans.
Agree w/you there!
The train doesn’t have to leave the station for it to make sense to buy. GDXJ gained as much as 43% in January and 30% following the March low.
One could just wait for a break out of the big falling wedge (green lines):
http://stockcharts.com/h-sc/ui?s=GDXJ&p=W&yr=4&mn=11&dy=0&id=p31930512594&a=364035886
The picture looks very promising in my opinion:
http://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=1&mn=1&dy=0&id=p32399242377&a=414662581
+5% today… so far, so good. 🙂
Yes Richard, the monthly chart, and the weekly for that matter, are in such obvious downtrends that I have no excuse for losing money trying to take the long side. (Well, my rationalized excuse is that I am a contrarian investor for that portion of my portfolio.) I don’t see any signs yet that the major downtrend is changing either.
I hope this is not too far off Topic, but there have been demonstrations in Germany, UK intelligence is on high alert and for the French:
http://www.telegraph.co.uk/news/worldnews/europe/france/11826862/Airlines-told-to-expect-French-911-as-Hollande-warns-of-more-Islamist-violence.html
http://www.washingtontimes.com/news/2015/aug/26/charlie-daniels-open-letter-to-congress-youre-a-bu/
Charlie Daniels said it. (I just think it)
OFF TOPIC;
The liberals will outlaw religious beliefs in this country……
http://cnsnews.com/commentary/terence-p-jeffrey/aclu-force-catholic-hospitals-abandon-catholic-faith
OFF TOPIC;
My last off-topic post, But I wan’t to comment that I do not wish the US culture to be drowned out, just as European culture is being destroyed.
http://www.vdare.com/posts/united-nations-pushes-the-refugee-scam
Gold is looking promising versus the 30 year T bond:
http://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24USB&p=W&yr=6&mn=6&dy=0&id=p93613856953&a=371814669
I believe the Canadian dollar is putting in a very important low but it’s too soon to say with certainty. I’d like to see it close well over 76 this week (tomorrow).
http://stockcharts.com/h-sc/ui?s=%24CDW&p=W&yr=1&mn=7&dy=0&id=p36262798133&a=422233611
Agree. Thanks for pointing that out Matthew. This is part and parcel of the bottoming process in resources right now so I would say you are coming to the right conclusion. Just take note of the shape of that chart though and then scan over things like platinum and copper. Does it make you wonder if all have seen their bottoms and there is perhaps the possibility we don’t go to the lows the charts suggest?
I don’t have the answer to that question btw but have been mulling over thoughts on quite a number of commods that are raising questions. For example, pull up the long term silver chart and draw a rising diagonal across the bottoms of the lows on the monthly.
Silver may literally be at its bottom in this scenario…….thoughts?
Confirmation is needed but commodities priced in gold might have put in a low:
http://stockcharts.com/h-sc/ui?s=%24GNX%3AGLD&p=W&yr=2&mn=11&dy=0&id=p52792479508&a=378282313
Bingo….see my post above. Maybe we are going to agree again (how weird is that!!!)
I’m expecting the General market to open lower tomorrow morning.
Vix to rise slightly.
I do not have a feel for how determined the PPT to end the day up.
As long as the market does not drop too much, the week will still be up and that may be sufficient for the PPT.
I believe the PPT is wishing to have a slow bear market.
Ms Yellen, a liberal Democrat, will be determined not have a collapsing market, because of its effect on the next election and her reputation. However, to allow a slowly dropping market may be the best she is willing to manipulate. Even that may be difficult.
Asian markets are all positive at the moment:
Index Country Change % Change Level Last Update
Australia ASX All Ordinaries Australia +6.90 +0.13% 5,249.50 1:05am ET
Shanghai SE Composite Index China +54.09 +1.75% 3,137.68 1:10am ET
Hang Seng Hong Kong +96.06 +0.44% 21,934.60 1:10am ET
Mumbai Sensex India +367.65 +1.40% 26,598.84 1:10am ET
Nikkei 225 Japan +493.07 +2.65% 19,067.51 1:05am ET
Taiwan TSEC 50 Index Taiwan +204.98 +2.62% 8,029.53 1:05am ET
After the bears successfully defended the 15.70 breakdown area resistance last Friday, it’s easy to see why silver plunged along with stocks on Monday.
http://stockcharts.com/h-sc/ui?s=$SILVER&p=D&yr=1&mn=0&dy=0&id=p82714596707&a=422239117&listNum=1
The S&P bounced from support at the pitchfork-derived uptrend line that provided support last October:
http://stockcharts.com/h-sc/ui?s=%24SPX&p=M&yr=20&mn=11&dy=30&id=p77799386822&a=413003780
Must be a subscriber to view.
So I have a question. And I think its worth thinking about.
Who here is long bonds and thinking maybe, just maybe we are at the top of the market and the bubble in debt is soon going to start to unwind? And if you are one of those long debt near the historical price peak what might you do knowing that rates will rise, inflation is about to come back to life and the biggest unwind in history was about to get underway.
I bet you would sell at the top. Makes sense doesn’t it?
And that is exactly what is now happening with the Chinese unloading Treasuries on the market. Aside from all the other great reasons you may have already heard about how this action is a response to shore up the Yuan we would be seriously deluding ourselves to not consider the most obvious reasons for the “dumping”.
The People’s Bank does not intend to be the bag holder. Nor will they stand by as the debt bubble pops and see decades of their nations productive stored wealth go up in smoke as the Fed is set to hike rates and the credit market is signaling that an end to easy money has arrived.
Rates rise…bonds fall. Its simple as that and we are now at the inflection point where those with an interest in preserving their capital will take action. You don’t need to go any further than reading Bloomberg headlines where reports of massive sales of UST’s by China have now been confirmed.
Capital is once again on the move and mirror images of this same kind of action will start to crop up everywhere as beneficial holders of Sovereign paper have decided its time to cut and run.
And make no mistake…as this unfold it will accelerate rate rises across the globe proving once and for all it is the market that determines the price of money and not the Federal Reserve.
But that’s not all. Everyone of you here should know very well by now that rate hikes and inflation go hand in hand. Be forewarned because 2016 is going to be a year quite unlike the year we are currently in. Personally I am going to get short this week as the realization has become crystal clear to me.
If China is selling at the top that’s all the signal I need to play it on the down side.
—————————————
From Bloomberg today:
“By selling Treasuries to defend the renminbi, they’re (the Chinese CB) preventing Treasury yields from going lower despite the fact that we’ve seen a sharp drop in the stock market,” David Woo, head of global rates and currencies research at Bank of America Corp., said on Bloomberg Television on Wednesday. “China has a direct impact on global markets through U.S. rates”
It’s Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington – ZeroHedge
http://www.zerohedge.com/news/2015-08-27/its-official-china-confirms-it-has-begun-liquidating-treasuries-warns-washington
A Listener: When the Chinese dump their US debt, it’s over for the bond market and the USD. Sugar would be nice to own them. You are 100% correct to tout alternative commodities. I think about metals a lot as an insurance policy but for trading and profit, all commodities will be interesting.
You add a lot of individual thinking which is rare sometimes.
Bob, I really appreciate that comment from you. I kind of enjoy throwing out my observations when I come across a great trade idea. Especially if anyone finds it helpful. I don’t have an agenda and I don’t have subscribers so it gives me the freedom to talk and think without the pressure the professionals are burdened with. Most of those guys cannot afford to be wrong. The subs crucify them when they admit it. And they cannot compliment anyone else’s work without looking foolish in the eyes of people who pay for advice. Too bad. Pride is a handicap and inhibits creative thinking and risk taking that can be so rewarding. I do my best to keep the personal bias out of my words although I admit to sometimes getting a little too enthusiastic. But if you go anything at all from what I have been trying to communicate all I can say is I am very grateful that you took the time to tell me my ideas were helpful to you.
Cheers Bob! All the best.
And one more thought. I probably don’t even need to comment on the risks to China vis-a-vis their treasury hoard with regard to a combination of a falling dollar AND rising rates (bonds falling). That is a double whammy. I happen to think this action on their part is confirmation of an important change in currency relationships only a few seem yet to understand.
The dollar is in decline.
It’s bad enough to lose in absolute terms as your paper gains disappear on falling bond values but quite another to see a simultaneous withering of their buying power on what remains.
My trajectory tells me that the dollar is eventually going all the way down to .66
Do your own calculations. It won’t be pretty for those who trade this the wrong way.
A Listener – Interesting thoughts up above regarding China & long term treasuries, and in this section regarding the US dollar.
Maybe time to consider long Ruble’s as a contrary bet if oil keeps rising. The Russian stock market is still beaten down as well and is something I am also looking at. XRU looks like it will work for getting some exposure with low risk. The Ruble is in its 22 day of declines now so looking for a bounce.
In my view, it all depends what the Chinese do with the dollars from selling treasuries. If they convert them to Yuan, that would be contractionary and I doubt the Chinese would do that. They could take those dollars and invest in more assets worldwide and some of that would be in the U.S. That would be a positive for the global economies. It would also be positive for our trade balance ultimately. So it all depends on where those dollars flow and what is done with them.
I agree Doc. But so far they have burned through the first few hundred billion trying to support their domestic stock markets and end the declines to no avail. The articles I have been reading are interesting in the discussion about where that money is being applied.
damn, I love this company – it’s like owning a global equity mutual fund without the fees.
From SeekingAlpha: “The company today made its first significant investment in Indian infrastructure, leading a group buying six road and three power projects from India’s Gammon Infrastructure Projects Limited.”
Brookfield Asset Management (BAM-us)(BAM.A-ca)
http://stockcharts.com/h-sc/ui?s=BAM%2FA.TO&p=M&b=6&g=0&id=p97216832091
If markets are adjusting/correcting, BAM price will be fine.
If a bear mkt has begun, 50% drop off the high could happen (see ’07-’09).
“The company was founded in 1899 as a builder and operator of electricity and transport infrastructure in Brazil; the company’s earlier name of “Brascan” reflected this history (“Brasil” + “Canada”).[9] The company provided electricity and tram services in São Paulo and Rio de Janeiro, and the Brazilian side after the split is still known as “Light”, short for Brazilian Traction, Light and Power Co. Ltd.[10] Over the next century, the company expanded and it is now an owner and operator of approximately $200 billion of real assets, with 24,000 employees in over 100 offices in 20 different countries.”
~wiki
website: https://www.brookfield.com/
yes, I own some.
Narayana Kocherlakota (FED) says NIRP is possible …
So Money or gold ???
Irwin, Interesting company, BAM, P/E just under 10, just had analysts raise its rating from sell to hold. Good growth rate, unfortunately just went ex-div, it’s only vulnerability I can spot from a superficial look is it’s exposure to the Canadian real estate market, which I believe is in a bubble about to burst.
from Yahoo!
Shares Short (as of Aug 14, 2015) 1.32M
Short Ratio (as of Aug 14, 2015) 0.91
Shares Short (prior month) 2.13M
BAM priced in gold (for SC members)
http://stockcharts.com/h-sc/ui?s=BAM%3A%24GOLD&p=M&b=6&g=0&id=p40324491748
BAM priced in gold for non-members:
http://stockcharts.com/h-sc/ui?s=BAM%3A%24GOLD&p=W&b=6&g=0&id=p80302238219
a listen & bob m– maybe you can suggest a sugar co or etf….for holding…
thank you
Agatha:
I have only traded the sugar futures. I don’t know companies or ETFs for sugar.
SGG is an ETF which replicates a futures contract of sugar.
A Listener mentioned it last week I think – or was it Shad.
Best,
LPG
There is also (CANE) and (SGAR), in addition to (SGG). SGG is the most liquid, but the other two offer advantages in how they play the futures contracts.
For Coffee use (CAFE).
Gabriel, your on it, instant pop in gold after the dovish comments, Jackson Hole in the past has produced a lot of dovish outlooks/liquidity, hints of QE etc
Will be really interesting if the main speech Sat will produce a global rally
Here’s a video by Morris Hubbart in which he makes the point that I always do that the huge increase in volume in the miners is bullish.
http://www.superforcesignals.com/video/2015aug27gdxandj/2015aug27gdxandj.html
Note: When Morris talks about GDX, he grossly overestimates the volume seen at the 2008 low. It was just 35 million not 100 million. Peak volume at the recent low was 510 million.
Great points on the importance of volume to indicate turns, or accumulation/distribution. Moris Hubbartt is always great.
Sorry Morris…… I missed an R and Matthew missed the second T.
Regardless, his technical videos are always worth a watch. Thanks for posting it.
Damn us both! 😮
Ha! We better get our ducks in a row….
Gold, Silver, & Dollar Volume Alert Video Analysis
Morris Hubbartt – Aug 28, 2015
http://www.superforcesignals.com/video/2015aug27goldsilverdol/2015aug27goldsilverdol.html
Key Precious Metal Stocks Soft Volume Pullback Volume Analysis
Morris Hubbart – Aug 28, 2015 (Posted from 321gold)
http://www.superforcesignals.com/video/2015aug27key/2015aug27key.html
**DOC – You’ll want to watch this video from Morris. Very interesting!
_________________________________________________________________
Dow Industrials & Transports Bombs Away Video Analysis
Morris Hubbartt – Aug 28, 2015 (posted on 321Gold)
http://www.superforcesignals.com/video/2015aug27dow/2015aug27dow.html
Here’s a good article that goes nicely with the video above.
_______________________________________________________
Dow Theory & Gold’s Strong Season
Tuesday August 25, 2015 – Stewart Thomson
http://www.kitco.com/commentaries/2015-08-25/Dow-Theory-Gold-s-Strong-Season.html
Agatha this link might be of value for sugar etfs….sugar chart had a buy signal 3 days ago fwiw
appreciate jj… anymore suggestions welcome…..
I’ve never traded sugar, but I see silver and sugar dance together, $Sugar is like the US$ and $WTIC the chart is updated at the end of the day-stockcharts, there are free live charts you can watch of sugar, good luck!
thats one fact re sugar I have heard.. sugar & silver…. usually sugar precedes…thanks Bob.. I do not touch futures…Im a v simple peasant woman…;) commentary recently has improved greatly./
http://stockcharts.com/h-sc/ui?s=$SUGAR&p=D&yr=10&mn=10&dy=0&id=p62934210739&a=422269048&listNum=1
Agatha, like everything else on the planet, buy and hold will kill your equity, if you don’t have the ability to trade the channel then DONT!
GDXJ has been capped by pitchfork resistance for the last three weeks:
‘http://stockcharts.com/h-sc/ui?s=GDXJ&p=W&yr=5&mn=9&dy=0&id=p28290135372&a=422269671
Some times reading through dull economic data can be so funny.
Here’s a paper about cost of families:
http://www.epi.org/publication/what-families-need-to-get-by-epis-2015-family-budget-calculator/
Written by a social welfare type person, based on US Government data.
It is interesting.
Worth reading.
So why is it funny?
It’s only humorous if you read last years report and compare the two.
The papers advocating increasing welfare benefits to keep up with actual costs of raising families are completely at odds with the supposedly same government statistics on inflation.
When the government is concerned with giving cost of living increases for social security, statistics are minimized to reduce cost to Government.
When the Government is interested in buying votes of welfare recipients, USING supposedly the same statistics, costs are maximized.
So funny. So sad. What ever happened to just telling the truth and estimating the most accurate statistics possible?
What’s worse is that socialists don’t understand that socialism is cause of the rising costs that they want relief from.
GDP revised today has the US growth spin in play today Doc, $ up and commodities up is normal reaction to the growth spin.
I see $yen off almost a full cent is holding gold down, will need yen to head towards 118/84 for gold to advance that spike high in yen to 116/86 had gold at $1169