A straight forward look at US markets and the USD
Chris Temple kicks off today with a focus on the US equity markets and the dollar. As the markets continue to stay afloat there is still not a lot of strength. For the USD there are a number of factors that could continue to move the dollar higher.
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If the S&P does rise and make a new high it will then qualify as having created a topping megaphone pattern which could signal danger on the next move. But we are not there yet so I don’t want to read too much into the chart. To be honest, I am divided on which way the market will go next because there are so many conflicting technicals and ideas and everyone seems equally convincing right now.
It seems like a coin toss at best. Anyone else feel that way?
Yes. Half the analysts and articles I read opine that the markets have topped and they’re about to break down in a big way. The other half expect the blow off top in the markets over the next year and that we are just consolidating for the next move higher. Until we get more of an indication of which way things may break, then I am treading with caution and just looking for entry points into quality companies that are doing their own thing and will do fine regardless of the macro picture.
Good to know its not just me. I don’t know whether to jump out of the fry pan or wind my watch lately. Basically I am doing not much except dabbling in some oil stocks that have been on the move. There are quite a few on the TSX that have been on a hell of a tear lately….a bit like gold stocks were doing some months back. I just don’t know how long that will keep going.
Keep an eye on LABU Excelsior. Its right on the 50 day now and looks like it may be ready to break out. Next week will tell the tale I suspect but its already been posting higher highs and higher lows all this week with decent returns. I have put it on my watch list to indicate if the market is going to turn bullish.
Yes, I’ve been all over the board lately in a number of different sectors and have been trying to target a few good companies in each respective sector to trade.
As for LABU, it is one I do follow for the Biotech sector. It seems to be one of the main ETFs that is discussed on G.S. site (in comments sections), so I try to keep tabs on it. I’ve traded it in the past, but haven’t in a while.
IBB & XBI are really the only other other biotech ETFs I follow, but biotech is actually one sector where I don’t get into the individual stocks. I just don’t have the knowledge to identify real companies from the hot air. So much of biotech is intellectual rights, patents, trials, government approvals, etc…. It’s just too nebulous for me to get my head around if progress is being made or they’re blowing smoke. I stick with ETFs to get a cross-section of the macro trend. Same thing with Healthcare.
I could not have said it better Shad. Mining investments make sense to me…not so much healthcare and biotech. I ignored all the big run last time because it was completely over my head. So like you its just better to go with an ETF. It caught my eye after hearing Gary mention it so many times otherwise I would not follow it but he is on to something here. I really like the look of some of the long term Biotech charts.
VRX (Valeant) looks like a buy to me too. Say what you want about its terrible debt problems but that stock is set to head back up in a big way. Don’t ask me why either because I have no idea why the market does what it does sometimes.
Paul L trades and posts on Valeant fairly regularly, so he may have some thoughts regarding trading it or it’s outlook.
I took a big loss on VRX and should not have touched biotech. It is much easier for me to trade BP oil and maintain a big core position that pays $2.40 dividends per year. It could do well in the long term but who knows how low it could fall. I got out at $31 after averaging down higher up. I will substitute that with Intel which should move slowly up to the end of the year and maybe some Cisco which I had sold before earnings and have to buy back on any dips.
Sorry to hear that on Valeant Paul L. Yes, You seem to do much better trading BP, and left the volatility trade for BP as well. If you have a stock like that, where you really understand its movements and tracking, and get the benefit of the dividend then go for it. The issues with Valeant were a concern for me and I posted some articles and editorials concerned about it a few weeks back if you remember. This is why with biotech I’d only focus on the ETFs LABU, IBB, and XBI, to diversify amongst a group of companies. For right now, I have the same approach to oil with XLE and XOP, but will eventually be zoomed down into the individual companies once we see who survives this sub $50 oil rout we’ve been in all year and part of last year.
I wouldn’t be surprised to see today’s upswing give back over half at least by the close. It’s simple distribution IMO.
Options expiry pump and dump?
Chris: Please watch this talk when you get a chance. I’m not so sure any of us ought to be thinking oil and uranium will make us rich! Seriously, do watch if you have the time: https://www.youtube.com/watch?v=Kxryv2XrnqM&feature=youtu.be
well, that, to me, was not at all convincing today. I sense weakness rather than nervousness – if that makes any sense.
It really would not surprise me if we don’t lose 200 points on Monday or Tuesday in one go.
On the DOW of course.
“Nothing has taken place to negate the prospect of new lows. Markets typically have to move to extremes on both sides to trap people. That is the character of markets – ALL MARKETS. It is human nature we are talking about…..Gold has not broken-out in real terms and that may not arrive until 2023. For example, gold broke through the 1980 high in 2008 in nominal terms in dollars and broke out again in Swiss francs in 2006. So monitoring any instrument in a basket of currencies and adjusted for real inflation is critical”. ~~ Martin Armstrong
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And those words pretty much sums up my feelings about gold (thanks Martin!).
There has not yet been a genuine breakout in gold according to anything I have looked at. Longer term charts are definitely not encouraging either. Some of them are downright damning and suggest improbable lows are possible. So there is no reason for anyone to break out the Champagne and declare the precious metals bear has died.
Not yet anyway.
This cyclical bear must first complete before we can even consider a bottoming process that would ordinarily follow before a new bull market can begin. To me that’s just plain obvious even if it is not technically great as an observation of simple facts.
The extreme bullishness that is still present in this market makes shorting the damned thing a nightmare of hits and misses though. And that tells me a long protracted decline is inevitable if not unavoidable as both bulls and bears get whipsawed all the way back down.
I continue to remain bearish gold and silver and expect further declines off this current high. In this case I am looking for metals to retrace all the way back to their lows in spite of the inevitable bounces that will be seen along the way.
(cyclical should have said secular….sorry)
Chris is right about the USD. HS pattern is hard to read. SM may go up for all wrong reasons