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A focus on the US equities, the VIX and gold

June 2, 2016

Doc is with us for the market wrap with a close look at where the US markets are heading with a consideration on the VIX. We also take a look at gold and gold stocks over the next couple months. We are sticking by the call of boring times ahead but closely watching which direction the break will come.

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Discussion
66 Comments
    Jun 02, 2016 02:30 PM

    I don’t know about harvard. I’d say a more respectable university Al.

    Say, MIT, Standford, Purdue, etc.

      Jun 02, 2016 02:42 PM

      How about Hillsdale College or the von Mises Institute?

    Jun 02, 2016 02:30 PM

    I think the downside risk in the conventionals is far greater now than any further possible highs.

    Yep, we may continue to grind up here but there seems to be no energy to drive this market up to 2,500 in the S&P as many bulls have been forecasting. I think we need one big drop down first and then we will just head up into November and the US election.

    Perhaps BREXIT will give us the drop?

    But we need to go back down first before we get that coiled spring energy to shoot to all time new highs IMPO.

    Jun 02, 2016 02:41 PM

    2111 is only 6 points away so it will only take one small rally to get past that.

      Jun 02, 2016 02:22 PM

      True, but how much upside to do you see in the S&P above that 2111.05 resistance?

      Next resistance (from prior peaks achieved) above the 2111.05 level are:

      2116.48
      2119.59
      2134.72
      2132.82

      Do you think it will clear all of these targets on the next up move and head on the road to 2500 that some analysts have opined on?

      http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=2&mn=0&dy=0&id=p50761082557

        Jun 02, 2016 02:28 PM

        It would seem that 2132.82-2134.72 zone from the prior 2 highs would be a reasonably strong resistance zone, but if the market participants get all geeked out and the machines keep buying, maybe there’s no stopping this thing.

        I’ve been positioning like we had a rounded top playing out over the last year in the S&P, but if it breaks out to new highs, then it seems I’ll need to go back to the drawing board.

          Jun 02, 2016 02:33 PM

          If tomorrow the S&P closes above the 2111.05 level then I’ll prepare for more upside, but if it falters and can’t take it or 2116.48 or 2119.59 out on a closing basis, then there still is the potential that this will be a lower high and thus a continuation of the rounded top (distribution dome of doom). Tomorrow being a weekly close and potential to break out or get reflected down should be interesting to observe.

            Jun 02, 2016 02:45 PM

            EX, got a new name that has just popped up here , K92 Mining. Just got an OTC ticker last Thursday, KNTNF, KNT.V
            A couple PR video pieces floating around, worth a listen. Got a partial fill @ $.80.

            Jun 02, 2016 02:29 PM

            Thanks Marty. I just added KNTNF to the watch-list, and will study up on their business plan. I don’t have enough exposure to Papua New Guinea in my portfolio anyway 🙂

            The heads up is much appreciated. It seems they have done some more exploration and found more veins in their Kainantu Gold Mine complex and will be taking off where Barrick left off in 2009 and are in development and refurbishment mode at present. Nice.

            Jun 02, 2016 02:46 PM

            I do like that Highland Pacific and Barrick have already done a lot of the heavy lifting, in years past, to get it permitted, built, and the infrastructure is already in place.

            Jun 02, 2016 02:23 PM

            Yep looks like a no-brainer….

      Jun 02, 2016 02:02 PM

      It will keep hitting the barriers and bouncing off for a while going sideways to slowly up but by the end of the year we could get to around 2250 with a rally from October.

        Jun 02, 2016 02:37 PM

        Interesting. So then, you have ruled out that a major correction could hit the markets in the next few months and must not feel we have not been in a topping pattern.

        Paul L. I am reading or hearing more and more pundits that are sharing a similar view, so I guess I’ve been too negative on the general markets this year. As long in the tooth as this thing in and making the series of lower highs had me leaning towards a 20% correction in the S&P, but I could see the thought process where it is within range to make a new all time highs. Time will tell but I think we’ll know in very short order whether this rally in the general markets has the energy to take out the prior peaks, or if it runs out of steam. It will be interesting to see what happens pre/post the Fed meetings on the 14-15th.

          Jun 02, 2016 02:40 PM

          LABU had a breakout today. Not sure if that helps much Shad.

            Jun 02, 2016 02:30 PM

            Yes, it has had a nice move all throughout May into June. G.S. peeps gotta be happy campers.

            Jun 02, 2016 02:31 PM

            His position was that biotech would lead the markets higher, so that will be interesting to follow.

            Jun 03, 2016 03:26 AM

            LABU is looking rough this morning as is the S&P so it could be a failed breakout and that may lend credence to the outlook that the markets are still topping out and making a lower low. We’ll see how things close, but this will be an interesting weekly candle in many charts.

          Jun 02, 2016 02:48 PM

          It has been going nowhere for a full year so it probably due for the next move up. Central banks are supporting the market and did not allow a big correction. Oil was supported for the market to continue up.

            Jun 02, 2016 02:43 PM

            I was expecting oil to move lower after getting up near 50 twice and receding. Do you think Oil still has room to run significantly higher in the short term?

            I’ve been having a field day that last few months trading back and forth with DWTI and UWTI (which I know you aren’t a fan of due to the leverage, but I focus on maximizing short-term movements using those leveraged ETFs). The majority of the trades I’ve placed have been pretty accurate and profitable, but at present the picture is fuzzy.

            One trajectory for Oil that made sense to me was for it to get reflected down off that neckline just above 50 back down to 40 before making a move at 60, but it sounds like you are a bit more optimistic than I am on Oil as well. Do you expect Oil to just keep on trucking to 60 or pull back here? What about if the US dollar was to strengthen a bit more – do you think that would mute Oil’s rise?

            Jun 02, 2016 02:55 PM

            I do think you raise and interesting point though Paul L. When Oil was tanking, it was dragging the markets down with it, and once it “magically” stabilized, a rally in Oil really allowed the markets to unhinge from the oil gloom and they started their journey back up to nosebleed levels once again.

            It is very curious that Oil has rallied so strongly when the production has continued to ramp up in many countries, the freezes proposed would have been at record high levels, and none of the OPEC or non-OPEC countries are in agreement about curtailing production. Speaking of non-freezes, even this winter was very mild in N. America as a whole, and that didn’t help Nat Gas or Kerosene but even that didn’t seem to slow down the recent rally in Oil.

            One would think that all those fundamental forces would weigh on Oil, but nothing seems to slow it down – it just charges higher despite the ever-growing supply gut.

            There always seems to buying pressure that arrives in large volume whenever Oil gets back into danger, but this is likely institutional positioning for better days ahead. It’s funny that most of the pundits seem to agree that the Oil patch is a mess, but many have noted that these higher prices will just cause producers to hedge around $50-$55 and this will keep production cranked up. Shouldn’t that price hedging keep a lid on pricing around these levels?

            If Oil was to fall, wouldn’t that impact, at least to some degree, the rally in the general markets (as financials and junk bonds will be under pressure)? Is it even possible for Oil to fall significantly if it is getting propped up to be a supporting factor to the markets?

            Jun 03, 2016 03:28 AM

            The 2 different Video segments towards the bottom of article are worth a quick watch.
            ______________________________________________________________________________

            OPEC fails to agree on policy but Saudis pledge no shocks
            Reem Shamseddine, Rania El Gamal and Alex Lawler, Retuers
            10:30 AM, E.T. | June 2, 2016

            http://www.bnn.ca/News/2016/6/2/Saudi-Arabia-pledges-not-to-shock-oil-markets-as-OPEC-clash-looms.aspx

            Jun 04, 2016 04:56 AM

            I think oil will bounce around in the 48 to 54 area for quite some time but should head to at least $60 later this year. People are saying more oil production will come on at $50+ in the US but that is just not possible as it is not as simple as turning on a tap. The companies in deep trouble would have to be sure before they can begin operations and hire back people. To be safe they would wait for $70 before they would want to stick their neck out again and risk losing more money.

    Jun 02, 2016 02:48 PM

    The top was called in May, 2015, and I think that’s correct:

    http://www.advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-the-SPX.php

    We’ve had repatriation of dollars after the Chinese stock market crash last year, as well as $US coming out of Eurozone and Japanese bond markets.

      Jun 02, 2016 02:55 PM

      Thanks Fran, that is very interesting.

      It appears to be arguing that we have topped out and that a crash could well be imminent?

    Jun 02, 2016 02:39 PM

    The bigger issue we face is AI, Walmart is now developing a machine worker, I don’t like the term robotic because most people don’t understand that the intelligence that will be replacing us almost never looks like us. DT
    http://www.businessinsider.com/walmart-is-developing-a-drone-2016-6

      Jun 02, 2016 02:27 PM

      I think I will build a robotic drone too. Its going to be made out of used appliances and cardboard and I will sit it down in front of my computer to watch gold for me while I go and do something productive like grocery shopping.

      So then I am going to put its little finger right on the sell button if anything exciting happens but since this market is so freaking dull I might just duct tape the cartons into an erect posture and put the little Bot on snooze for the next few days.

      Zzzzzzzzzz!

      Jun 02, 2016 02:27 PM

      Here in the UK British Home Stores has now as of yesterday finally bitten the dust. Very sad for an institution as old as the also defunct Woolworths, this time around with 11,000 likely lay-offs.

        Jun 02, 2016 02:39 PM

        We are in a collapse. Its unfolding right under our noses.

        Everything is tanking. GM auto sales down a whopping 18 %.

    Jun 02, 2016 02:38 PM

    NYSE Margin debt versus the S&P – updated to June 2nd 2016 – Courtesy of Doug Short.
    Draw your own conclusions about what it means.
    http://www.advisorperspectives.com/dshort/charts/markets/nyse-margin-debt.html?NYSE-margin-debt-SPX-since-1995.gif

    Jun 02, 2016 02:08 PM

    According to RBC Wealth Management gold is now in an early bear trend and its a sell. Technical analyst Bob Dickey said …..”If it (gold) were to break below 1,200, we would expect a lower range, and even a longer bottoming period that could stretch into years.”

    Hey Bob!…now your talking my language. What took you so long!

    So there you have it folks. A lower-low and a multi-year bottoming process. All we need to do now is cross below 1200 and stay there for a few closes. And at this late hour gold does indeed seem to be setting up for another test of the 1200 line by Friday morning.

    We will get there…..even if it takes until early next week because there are buzzards circling this carcass of an attempted gold bull market and our golden relic is panting like sick dog under a blazing hot sun.

    Check out Bob’s handy sectors trends chart btw. Its nice work.

    Gold May Be a “Sell” Now – RBC Wealth Management
    http://www.kitco.com/news/2016-06-02/Gold-May-Be-a-Sell-Now-RBC-Wealth-Management.html

      Jun 02, 2016 02:59 PM

      It would be interesting to hear if George Gero agrees with his colleague Bob Dickey.

        Jun 02, 2016 02:46 PM

        George says that the big Funds are making a quick exit from gold even as the speculators keep buying the dips. That should tell us something useful. If the professionals are selling gold its because they don’t believe the narrative this is a new bull market.

        [It is NOT a new bull market….mark my words]

        And honestly, who does believe it. In the past week the usual super-bullish blather has tapered off to a whisper and the crowd of religious adherents has withered away into the background. Even that relentless and irrepressible Andy Hoffman has backed off and wants to talk about Bitcoin or the economy instead of precious metals lately.

        We are now looking at a very long protracted grind in gold back down to where it started. Try not to spend too much time looking at the gold chart because this trauma is going to take many months to play out and really depress the surviving bulls as it slowly fades away.

      Jun 02, 2016 02:48 PM

      There are still a few bears out there.
      http://www.moneyandmarkets.com/golds-decline-whats-next-78621

      JC
      Jun 02, 2016 02:11 PM

      Yes Birdman, I agree. Technicals are still showing Gold down to 1190. It may go lower than that, but the charts are saying we should get that low at least. I’m long DUST based on that assessment. If the technical show a change I will sell it and buy NUGT.

        Jun 02, 2016 02:56 PM

        For sure JC…..just watch out for the whipsaw action as we get bounces all the way down. The bulls are in serious denial. They buy every dip even though gold has been a dismal performer since the start of May.

        Those guys just keep telling themselves this is just a normal pullback and that the next bounce will launch them into golden heavens with profits dripping off their keyboards. It’s like a mantra. Each support level is going to yield the big one as it will mark out the place where the next lower-high will establish itself and prove them correct.

        We already saw that rodeo though. There is no bull-launch coming. Just lots of bull traps for bag holders and a few Rodeo clowns thrown in to keep the buyers holding on for dear life as their portfolios whither.

        Jun 03, 2016 03:23 AM

        I’d like to see Gold hold above $1194.13 (the 200 day EMA), and as a fallback, for Gold to hold above $1191.70 (the October 2015 peak). If those give way, then that would concern me much more than if Gold bounces from right below the 1200 level.

        http://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=2&mn=0&dy=0&id=p36125046411

    Jun 02, 2016 02:39 PM

    A difference of opinion, that’s what makes horse racing…Mark Twain

      Jun 03, 2016 03:01 AM

      So its not about good horses and insider information?

    Jun 02, 2016 02:58 PM

    Here’s your proof that The Western civilization is quickly becoming
    twisted, deranged and is openly welcoming the occult. It’s a major
    sign our society is on the verge of a major collapse. It will disappear
    and be destroyed. These trends are suicide for humanity.

    https://www.youtube.com/watch?v=Br6_hIguCY0

    Or you can ignore it at your own peril because destruction lies ahead.

    b
    Jun 02, 2016 02:32 PM

    “proof that The Western civilization is quickly becoming
    twisted, deranged”

    gotta disagree Jake “quickly becoming” is entirely inacurate.

    Jun 02, 2016 02:12 PM

    Your right b, its already here. Now in our faces
    sponsored by The Central Planners.

    Reprobate minds = destruction lies ahead.

    Everyone has the right to their own opinion.

    Jun 02, 2016 02:25 PM

    Anyone interested you should watch this.
    Whether you believe it or not, its unfolding
    before your very eyes. The occult is moving
    in a direction that will lead to destruction and
    bloodshed of the entire world. This is their goal.
    That’s what they thrive on. Ignore it, if you want.

    https://m.youtube.com/watch?v=L_tYlX-zbwc

    Jun 02, 2016 02:06 PM

    Auto loans are now spectacularly upside down. Buyers have
    been rolling over all their negative equity into the new loans.

    Amazing how The Central Planners just keep the illusion going
    until it all goes bust. All these people on credit have negative net
    worth and just their job to keep up the payments. Not everyone
    but a good majority.

    America too, stands to lose the most in any war. Russia has no
    debt. A war and all this debt and leverage is leading to our demise.
    Western civilization is in great peril.

    Historic collapse is in the pipeline. I believe it’s already here.

    Jun 02, 2016 02:58 PM

    Greg Hunter Wrap Up. War drums in the south China sea.

    http://usawatchdog.com/weekly-news-wrap-up-6-3-16-greg-hunter/

    Greg knows how to put it all in perspective and easy listening too.

    Jun 02, 2016 02:27 PM

    Harry Dent says- gold bust ahead. Predicts $250 gold.

    New forecast. I know prices I’m paying for necessities
    is about where they were 15 years ago or so.

    https://research.economyandmarkets.com/X195S1BD?gclid=CjwKEAjwsr-6BRCLvrj785rbhTsSJADjUxakKPpyVVDn0LmBLCJmyCYyNwatGE_ZLYjC9U3sDTJu-hoC2rrw_wcB

    I’m extremely bearish on gold. Not by choice, prices for everything are falling sharply.

    People just aren’t paying attention. Housing and stocks must deflate. IMHO

    THEY MUST AND THEY WILL !!!!

    Jun 02, 2016 02:29 PM

    I agree about housing and stocks TJ

      Jun 02, 2016 02:37 PM

      Andrew, your not suppose to agree. I need contrary indictors.

      Anyway, the collapse that unfolds the world has never been
      there before. That’s why betting on PM’s is not wise. Its all
      gambling. No one knows what will happen. If they claim to
      know its very poor misplaced judgment. IMHO

      They could explode too. Its a crap shoot.

        Jun 03, 2016 03:06 AM

        I waited 3.5 years to re-enter the PM group. Got 85% back in from Oct-Jan21.
        As on 10am Friday, my new money gains in PM -202%. Got to be in it to win it!

          Jun 03, 2016 03:09 AM

          And yes, I have an Entry & Exit model that I abide by and update weekly. But that takes work & diligence.

    CFS
    Jun 03, 2016 03:40 AM

    A fairly well-known oil trader,Erik Townsend, who used to be on Financialsense has started a new blog/interview site.
    http://www.macrovoices.com

      Jun 03, 2016 03:01 AM

      CFS, never missed an hour of FSO for 10 years. Thanks for the link!

      Jun 04, 2016 04:03 AM

      That is a great site with real experts worth listening to instead of the crap on cnbc.

    CFS
    Jun 03, 2016 03:42 AM

    I bought a LNG transporter, MGLP, back in January because of low P/E, high dividend. It just took a jump up. Anyone know why?

      CFS
      Jun 03, 2016 03:27 AM

      Still kicking myself for not picking up CLR or even PARXF.

    CFS
    Jun 03, 2016 03:48 AM

    I do NOT like the way many silver and gold stocks have moned below their 50 day moving averages as if they did not exist.
    Anyone else perturbed by this?

      CFS
      Jun 03, 2016 03:21 AM

      On the other hand, the 50 day moving average still seems to be support for, GDX, GDXJ, SIL, SILJ ETFs, etc.

    CFS
    Jun 03, 2016 03:56 AM

    This is a Chinese PM site:
    http://www.wfgold.com/index.php?lang=1

    Jun 03, 2016 03:40 AM

    NO American jobs………..people leaving the work fArce by the hundreds of thousands

    CFS
    Jun 03, 2016 03:05 AM

    Up, up, and away, today!

    Jun 03, 2016 03:42 AM

    Panic Buying this morning of PM stocks

    Impact Silver +25% ! ! !

    Jun 03, 2016 03:44 AM

    That escalated quickly …

    https://www.youtube.com/watch?v=FONN-0uoTHI

      Jun 03, 2016 03:02 AM

      It will be important to see how the buying and volume end up at the close, but today could be a VERY STRONG signal that there is a HUGE pent up demand for PM Miners. If gold only goes up 2% and PM Miners go up 8% … WOW!

        Jun 03, 2016 03:07 AM

        Love the Ron Burgundy quote to start the morning.

        Yes, there is a fair bit of money coming off the sidelines to buy the weakness. It is getting interesting.

    Jun 03, 2016 03:58 AM

    It is hard to believe that with the dollar down as hard as it is that silver is only up .30

    Jun 03, 2016 03:14 AM

    Lewis, I agree, silver should be up$.80-$1, but the BOYZ will do what they have to do.

    Jun 03, 2016 03:20 AM

    Just coming off a very oversold condition.

    Nice rally but whipsaw is always part of the
    game. 1200 held. However, its far from over.

    Is this a fake out !!! Won’t know for a few weeks.