A focus on the direction of gold and gold stocks
Today with Doc we take a close look at the gold sector in terms of the metal price and stocks. Gold is getting hit again today and Doc thinks this will continue for a while longer as it finds another level to bounce.
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I have aiming for a big rally with about 5% today and we could be back to 50 soon with short covering and then we will see what happens after the shorts have covered.
Isn’t there some crude info out today or tomorrow re the amount of oil drawn down?
Looks like EIA report on Wednesday on petroleum.
http://www.nasdaq.com/markets/us-economic-calendar.aspx
Oil market rebalancing could ‘tip over,’ IEA warns
Holly Ellyatt – July 13, 2016
“There are warning signs that global oil demand is ebbing while oil stocks remain at “elevated levels,” threatening a rebalancing act in oil markets, the International Energy Agency (IEA) warned on Wednesday.
With oil prices rising since the lows seen at the start of the year, hopes have risen that a “balancing act” between supply and demand in oil markets was finally taking place after two years of declining prices due to a supply glut.
But the IEA warned in its latest report that there were warning signs that demand momentum could be ebbing while oil stocks remain high….”
http://finance.yahoo.com/news/oil-market-rebalancing-could-tip-080058663.html
Gold made to almost $200 above the 200 day average. 1225 to 1250 is easily possible for a correction.
Gold has taken out support at $1336, but will it close below?
Silver support is at $19.80
I ‘m not a chartist. Simply a Joe Friday type, “give me the facts”
The fact is that all four major precious metals had moved up too quickly and were overbought.
THERE IS A NATURAL PACE TO EVERYTHING.
Gold is now no longer overbought, Silver is still overbought, Platinum is slightly overbought, Palladium is just overbought.
Volume, as I read it, is indicating that we are not going to have have a major correction, but a slow continuing Bull market.
A wild card is can the bond market be sustained or will it crack, and if it cracks, where will the money go?
I realize the Fed and the Treasury will try very hard to hold everything together, but do they have enough fingers to plug in the bursting dams?
As the dollar drops, will Europeans put money elsewhere?
Will Americans run for the exit? Or will they blindly believe America is best?
Good meet guys.
Doc has done a great job as what little Ive been able to keep up.
A friend just text me Thurs and when he’s getting happy you better bail. He has blown himself sky high many times..I Text back that I would not buy ANYTHING…or sell for that fact.
Stock sell off has been mute and is telling….
Add to the dips I thin….?
I don’t know, Doc. The gold stocks I own have made some pretty massive moves…more than 2008. I see this year as a V shape.
If this isn’t a v-shaped recovery, then the phrase has no meaning!
I can’t decide if it will be U-shaped or V-shaped recovery, so I’m going with a UV recovery.
The Ultra-Violet recovery
We know about tha alpha & beta Rays, but watch out forthe new found gamma & delta Rays this summer. They’re not in the charts gang!
Yep those gamma rays will get ya…… part of the thrills of radioactive decay
Even though I am sitting at a desk, I think I’ll go put on some sunscreen for this recovery.
Rick mentioned a couple days ago his target for the S&P was 2149. With that taken out I guess now his next target of 2194 is on deck.
Yup minor correction so far for stocks says strong hands holding this market now….
Stocks racing to new highs, Hitlery the next prez…happy days are here again…what could possibly go wrong???
Good handle for her!
Ill take the Donald over her.
Doc and Cory,
I agree that PMs look like they are heading down for several weeks. It sure has looked like this before…and metals did a little pullback and went higher. It sure has been a hard call in the last two months.
Doc, with the conventional markets making new highs ( double top from May 2015 ). If it closes higher than May, do you see it moving higher, or do you think this is the double top before the drop?
I’m thinking it’s the pop before the coming drop.
Great question Chartster, and the very quandary I’ve been mulling over as well.
Some feel there is much more room to run with the Advance/Decline line moving up, and other feel the market is getting ready to double top before the drop. This move taking out all time highs in the S&P has been rather bullish, so it’s hard to see what would stop the market from continuing higher, but the thought has crossed my mind that this may be the calm before the the storm…..
I’d enjoy hearing Doc’s mid-term point on view on the general stock markets, and if this rally in the stocks will continue unabated….
As per timingthemarket:
The correction in summer associated with higher volatility has occurred during each of the past 8 years for a variety of reasons, problems in China, conflicts in the Ukraine, a financial crisis in Greece, etc. Possible reasons for a correction this summer include concerns about the U.S. Presidential race, control over Congress, Brexit and rising racial tensions in the U.S.
Another reason for a correction this summer is the reporting of second quarter results. Consensus is calling for a 6.2% year-over-drop in earnings by S&P 500 companies. The earnings picture is slightly better for Dow Jones Industrial Average companies with an average (median) gain in earnings of 2.1% and for TSX 60 companies with an average (median) gain of 0.68%. Of greater importance, second quarter reports frequently include guidance for third quarter and annual earnings and revenues. Analysts are notorious for overestimating annual earnings prior to release of second quarter results and frequently lower their estimates after release of results. Analyst current estimates for a 7.1% year-over-year increase in fourth quarter earnings by S&P 500 companies are too high and likely will be lowered after companies release second quarter results.
Very good thoughts Paul L. I agree that the summer has seasonally been week in the markets and earning reporting can contribute. Personally, I believe waaaay too much focus is put on some cracker-jack analysts point of view, with the insane game of “Hit the Analyst’s Number”. Yes, they do often over-estimate the 2nd & 3rd quarter, and then reign in their estimates for year end to be too conservative, so that those companies can “Beat their Number.” It reminds me of where things went wrong with home appraisals and their incestuous relationship with Mortgage companies.
What a racket….
It would be great to get back to a world where companies are valued by reviewing their key operational metrics, and where analysts opinions were simply an afterthought.
There are so many times where a company has shown measurable growth or improvement, but because is EPS was less that analysts consensus target, then good performance gets punished. The opposite is true where a company has displayed signs of slowing down or a cause for concern, but because the EPS is more than analysts consensus, the shares spike regardless. It makes no sense, but alas, it is the wacky work we find ourselves in today.
For the last 4-5 years, the general markets have shrugged off bad quarters and ignored the fundamental growth pictures on stocks (letting them play the share buy-back games) and surged higher whatever the news. What has been refreshing, in the second half of 2015 and so far in 2016, is that investors are actually starting to pay attention to the fundamentals of individual companies again.
It will be interesting to see if companies “Hit the Analysts Number” of if they’ve inflated them high on purpose, waiting to pick up more shares on the pullback, so they can cook the books and their targets down too low at year end to make it seem like all is OK in Wonderland…..
Here’s a related article about how earnings have been ignored by the markets, but that is because all they care about is the insane game of “Hit the Analysts Number”.
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Stocks Are In A Bubble, Or Earnings Just Don’t Matter Anymore
Jul. 12, 2016 8:28 AM
Excelsior,
The S&P has no business being up where it’s at.. The financials in this country are as corrupt as the boys making up the financial numbers. How long can it last? I guess that’s the question for Janet Yellen and Jack Lew. The exchange stabilization fund keeps em all propped up! It won’t end well ( gone on too long.. )
With his win in the Japan election on Sunday, ABEnomics is alive and well.
Here comes round three of QE in the US Soon.
Why? Because Bernanke’s went to Japan to collude and coordinate, so the yen will go down first, then the US does a helicopter drop, following Japan’s technique (which we don’t quite know yet, but it is being arranged right now) So the US dollar will drop too.
Then Europe will devalue, then it’s China’s turn again.
This will be kept up through the American elections and, if they can, through the German elections next year.
Should be good for stocks in general and good for precious metals.
Will be lousy for economic growth, but they will try something slightly different for QE this time.
No free market.
No price discovery for real.
They are still using Keynesian economic theory, so the old computer phrase “garbage in, garbage out” springs to mind.
That’s why they call em’ “Currency Wars”.
Maybe it should be renamed a Currency Tug-o-War since there is so much collaboration. 😮
Agreed Chartster – How long can it last? (apparently….. pretty long) 😉
I amazed at the markets ability to plow through bad fundamentals, for the talking heads on the lame-stream media to use jacked up numbers, and for a slow and weak economy to keep coming out smelling like roses…
Eventually the other shoe will drop, but even with Brexit, there were tons of central banks, politicians, and large financial houses coordinating a controlled currency marketplace, so the algo programs didn’t get tripped. Even if there was a big sell off, there are 3 layers of circuit breakers to keep the markets orderly, yet ironically, everyone steps to the side when markets just ratchet higher each day, and shorts get slaughtered.
Everything is funny when you’re making money…… It makes it hard and unwise to bet against their great deception, or the mindless sheeple that continue to pile into stocks without a care in the world. Major crises that would have rocked the world 10-20 years ago, now play out as 2 day events. What could possibly go wrong?
I do agree that eventually truth will out, and I hope when it looks like the markets really are going down in a meaningful way, that I’ll be smart enough to short them when that time comes.
Good luck in your investing!
The turn of events that could ‘destroy everything’ for investors
Alex Rosenberg
“Even as the S&P 500 reaches up to record highs, one strategist is warning that there’s a single negative turn of events in global markets that could send stocks reeling.
“A crash in sovereign bonds” is “the one thing that will destroy everything, so that is the one thing we need to be watching,” Boris Schlossberg, a macro trader and strategist at BK Asset Management, warned Monday on CNBC’s “Power Lunch.”
Schlossberg’s point is that low bond yields have been a primary driver of high stock prices. As bond yields drop, the fair prices for stocks are often thought to rise, as their future returns can be lower and still look favorable as compared to bonds.
This common relationship becomes even more salient as yields dip to negative territory, as they have in much of the developed world. In the U.S., Treasury yields have only crept up slightly from the all-time lows seen last week.
As long as yields stay low, Schlossberg says there’s no reason to think stocks will retreat from their record-setting levels, even as valuations rise amid disappointing earnings.
Indeed, the S&P 500’s forward price-earnings ratio is about 17.5, which is above historical norms, and a bit higher than the last time the index was at this level.”
Doc, have you sold any of your PPP or PVG that you bought lower this year? Looks like they could pull back, but if I sold I might not get back in, and could miss the ride to the Emerald City.
Bonzo, I sold my entire position in PVG on about Friday. I did it based on some technicals. I’m holding my PPP long term now and will add if and when we get a pullback. I’m watching others of my holdings carefully and will sell if I start to see some technicals for individual ones that look like they’re in for a significant correction. By the way, up to this point PVG is the only one I’ve sold—had a great profit and couldn’t resist it for technical reasons.
Doc, do you still trade Great Panther Silver (GPL) ? If so, I’ve noticed it has had the share price hit harder than other Silver miners, and I wondered where you saw support showing up for a good entry point. I trade it off and on and was thinking of buying on this dip, but don’t want to “catch the falling knife”.
Thanks, Doc. I bought some PVG@4.7 this year and should probably sell some tomorrow, now that I hear you just sold yours. Guess I’ll hold on to PPP and MUX for now.
Who is buying stocks now…
http://www.zerohedge.com/news/2016-07-12/mystery-who-pushing-stocks-all-time-highs-has-been-solved
Here is who is buying stocks now…..
Ex, Sotheby’s is having a sale of Einstein’s artifacts, including an old jacket which still smells of his pope tobacco. You might be interested.
Sweet. Thanks for the heads up CFS.
Then I could wear Einstein’s Jacket, and ride around in Stephen Hawkin’s old wheelchair, playing Carl Sagan videos on his speak n spell device, and take a spin down to Neal Degrasse Tyson’s place for a beer and to marvel at the paradoxes of string theory.
Genius!
I am surprised that Einstein smoked pope tobacco as he was a Jew.
I made a mistake. It was Christie’s not Sotheby’s.
Still time; the sale is tomorrow!
http://www.christies.com/features/5-minutes-with-Einsteins-leather-jacket-7510-1.aspx
I know a lot of Jews and they all smoked a lot
Darn CFS – I think I bought the wrong jacket then……
I went to Sotheby’s instead of Christie’s and bought the Jacket of “Young Einstein”….
Actually, the entire, daily, KE Report could just be one 10-second clip with Dr. Postma saying:
“Nothing is really making sense anymore”
That pretty much covers it.
Then we could all have a nice brunch and talk about other stuff, especially the things we can actually change or influence.
I love a nice brunch….
Interesting point!
Gold Price Of $1,400 Is Just The Start – VanEck
Tuesday July 12, 2016
http://www.kitco.com/news/2016-07-12/Gold-Price-Of-1-400-Is-Just-The-Start-VanEck.html
Doc, I hope you still think oil is going down as I sold my Apache today to raise funds to buy silver after the correction.