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Weekly Market Close – Do you sense a change in the complexion of these markets?

Big Al
July 29, 2016

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Today’s Market Close:  DJIA 18432.24 down 24.11; S&P: 2173.60 up 3.54; and,

NASDAQ: 5162.13 up 7.50

Gold: 1358.20 up 17

Silver 20.405 up 0.213

 

Discussion
31 Comments
    Jul 29, 2016 29:48 PM

    I think we all need to get aboard the gold train, if we have not done so, as it looks like it will indeed be going higher. Should be a gold aeroplane really.

    Now, because I just wrote that we are all going to wake up on Monday morning to discover that the Japanese have changed their mind, that they did not like even just one day of a stronger YEN and have reversed their policy… Oh, and news that several Japanese central bankers have committed ritual suicide.

      Jul 29, 2016 29:08 PM

      By the time it is crystal clear to get on the train, that is when it stops.

      So you are faced with the fundamental question. Where is the risk/reward most appealing.

      Knowing the price of everything and the value of nothing, you have no chance of winning the game, imo.

      Jul 29, 2016 29:50 PM

      I’m going in all the way. After all, it’s only paper (money).

      Jul 29, 2016 29:59 PM

      I’ve been on the Soul Train, and then the peace Train, and now I’m on the Gold Train to freedom.

    Jul 29, 2016 29:04 PM

    All we hear is:
    Caution is warranted. Been waiting for that pullback since March.

    The gold stocks are way ahead of themselves and will have their inevitable pullback.

    Anyone who hasn’t sold this rally is nuts. They will give up all their gains.

    Too many treat gold as a religion and gold may be what heaven’s streets are made of, but here on earth we use asphalt.

    Gold train….naa.

      Jul 29, 2016 29:26 PM

      I bought OR on Wed. and OCANF and TAHO on Thurs., so we will surely get a 25% correction when word gets out that Bonzo is in. I can handle a 25% correction as long as we go up 10 fold after that as I expect.

    Jul 29, 2016 29:06 PM

    Asphalt, made out of OIL!

    DFS
    Jul 29, 2016 29:50 PM
    DFS
    Jul 29, 2016 29:11 PM

    Silver
    Price Support Pivot Point Resistance
    20.3180 19.8490 20.2500 20.6510

    Jul 29, 2016 29:24 PM

    Looks like the European banks report cards are not so good.
    Some banks reserves are horrible and need to raise cash.
    The banks that are relatively decent will not be so hot when the crapy banks fail.
    Sunday night should be interesting.
    I thinks the miners outperformed the metals today because news of the bad report cards was out!

    Jul 29, 2016 29:46 PM

    I think the market has disfiguring acne.

    Jul 29, 2016 29:40 PM

    Rising gold price not lifting all boats
    Gold bulls cooling on some marquee names
    Frik Els | 27 minutes ago

    http://www.mining.com/rising-gold-price-not-lifting-all-boats/

      DFS
      Jul 29, 2016 29:43 PM

      It all depends on leverage, AISC per oz, reserves, etc.
      If anyone thinks all miners should rise the same percentage, they are morons.

        Jul 30, 2016 30:59 AM

        +1 DFS. I completely agree, and hence why one must be selective and analyze both the fundamental company metrics and then technical analysis.

    Jul 30, 2016 30:21 AM

    Global Deflation?

    Don’t say that out loud Chris. Are you nuts, man? Not on this site. I have put up chart after chart virtually proving a deflation bust to be the case but most people who come to this site just hurl insults at me on that subject or start calling names.

    Don’t get yourself in the line of fire! What you need to say is that inflation is coming to assuage the gold bugs and make them feel better about the case for precious metals. Because they can never go down anymore.

    Dontcha know that all that Fed money has to land on something? Sheesh. As if the pipsqueak coin being created by the worlds Central Banks even comes close to putting a bandage on the bust that’s inevitable. In relative terms the Feds contribution is peanuts versus the size of the problem. Not many people seem to have perspective on that though.

    The issue I have here is that these megaphone patterns are appearing on charts all across the spectrum and they are telling us something very important we should all take note of. And honestly, I don’t really care if people who blog here do not want to hear about it.

    Others who read and listen do want to know.

    We have an asset price collapse coming. I can’t time it and I don’t think anybody else can either but it will not be pretty once it arrives. And it probably won’t come gently like a fluffy little lamb either.

    Advisor Perspectives offers another of the megaphones on the NYSE Margin Debt chart. Hey, maybe its just me but that one (below) sure does not make me sleep well at night.

    Unless you are a gold bug, don’t sweat it, man. As we already know, those guys are praying for the end of the world!!!!

    NYSE Margin Debt — Investor Credit Megaphone Pattern — Advisor Perspectives
    http://www.advisorperspectives.com/dshort/charts/markets/nyse-margin-debt.html?NYSE-investor-credit-SPX-since-1980.gif

      Jul 30, 2016 30:56 AM

      You see gold/silver going down along with the conventionals Birdman?

      I mean, with the US markets are these crazy highs do you see any significant drop in them also seeing a dash for cash as people are forced to liquidate holdings in gold and silver miners in order to get out of dodge?

      I do think that we have another January or August ahead of us but, with central bank buying of assets, I think, even after any drop, they will just keep pumping up the markets.

      A

        Jul 30, 2016 30:12 AM

        Bob, so far I have been wrong about gold so I am probably not the person to ask. The bugs have been correct in other words. It may be that gold will go up exactly for the reason that most other assets are falling. I will have to entertain that idea as plausible. Greenspan himself suggested it and he is no slacker on the subject as he himself suggests we need to return to a gold standard.

        He has had quite a bit alarming to say recently so we best take it seriously. Comments from him may be echoing what is being said behind closed doors and offer a heads up that should give us pause. Despite how much he is disliked by most people who blame him for the bubbles of the recent decades, he does talk like one of the crowd here at times.

        Check out his extensive recent comments as an example of what I refer too. Alan does not really mince words:

        “The best way to view negative interest rates is to think in terms of the fact of, where, for example, securities denominated in the Swiss franc, the yields on those, versus, for example, the Italian lire as it used to be, the Italian euro now. But that spread hasn’t changed very much for a very long period of time. So when global deflation takes hold, as it has, all interest rates fall, but the spread doesn’t. So, in order to maintain that spread, Swiss interest rates have got to turn negative. Now, the question is, how far can they? Well, there is an arbitrage, that obviously one can get”.

        “For example, in the United States, if interest rates got very negative, what we would do is all get in to currency in which it’s a zero interest rate — I should say it’s a zero cost. We would get into currency, stack it all up in, I would say, in a vault somewhere. The problem with that arbitrage, obviously, is there’s a limited amount of currency you can hold, so at some point, something is going to give. The initial sign is going to be a big pickup in the holding, for example, of U.S. currency, both here and abroad – sorry, parenthetically, very large part of currency, U.S. currency, is held outside the United States”

        “The only thing you can hedge against is the currency, and that’s got a physical limit to it. So there’s a downside limit to how far people are willing to pay to say, for example, get into Swiss securities. And that’s when the markets begin to react quite differently. Hasn’t happened yet, but it will”.

        “I think the cause of it is that there’s a very significant amount of uncertainty in the global economy. It’s coming from the fact that, as I indicated before, in the United States, we’ve got very, very major entitlements problem, which politically, I don’t see how we’re going to touch. We went through two conventions. The word entitlements never got raised, except, let’s do it more. Now, we’re going to have to cut back. There’s no physical way to continue doing this without destabilizing the financial system. So, it will stop, but the problem is that it’s going to take a while before the political system adjusts. So, it’s hard for me to see how we get out of this unless we address that problem first”

        “The issue is essentially that entitlements are legal issues. They have nothing to do with economics. You reach a certain age or you are ill or something of that nature and you are entitled to certain expenditures out of the budget without any reference to how it’s going to be funded. Where the productivity levels are now, we are lucky to get something even close to two percent annual growth rate. That annual growth rate of two percent is not adequate to finance the existing needs”.

        “I don’t know how it’s going to resolve, but there’s going to be a crisis”.

        “We are running out of people. In other words, everyone is very pleased at the fact that the employment rate is rising. Well, statistics tell us that we need more and more people to produce less and less. That is not a prescription for a viable political system. And so what we have at this stage is stagnation. I don’t think that there is anything out there which suggests that there is a recession, but I don’t know that. What I do know is that the money supply, and too, which has always been a critical indicator of inflation, is for the first time going up remarkably steadily 6 percent, 7 percent, almost a straight line. It’s tilted up in the last several months. It’s added a percentage point or two. The thing that we should be worrying about now, which we have actually given no thought to whatsoever, is that this type of economic environment ends with inflation. Historically, fiat money has always ended up that way”.

        “Three fourths of the major economies, OEC economies for example, have, over the last five years, have had a less than a one percent annual rate of upward growth. The economy can’t go anywhere under those conditions, and we’re getting a state of stagnation which is not only evident in the United States but pretty much throughout Europe and the far east. And as a consequence of that, it’s very difficult to see where the next step is except what I’m concerned about mostly, is stag-flation, meaning I think we’re seeing the very early signs of inflation beginning finally to pick up as the issue of deflation fades”

        “In fact, I don’t think you can describe the world economies in terms of the old conventional issue of inflation, recession, and the like. What we are dealing with is a population that is aging very rapidly, and that is inducing a major increase in so-called social benefits, what we in the United States call entitlements. And that is dominating the whole financial system, and until we come to understand that we have got to slow this rate of growth, which in the United States has been 9% per year since 1965, we are now down to the point where it’s taken so much savings out of the economy that we’re not getting enough investment, but that has very little to do with whether we’re going in a recession or not. I think we’re just in a stagnation state”.

        “We’re beginning to get a pickup in wages beyond the rate of growth of productivity, and that is usually the best indicator. But, just as importantly now, is that since money, at the end of the day, is what causes inflation, we have been seeing, since the beginning of the year a significant pickup in the rate of money supply growth, and over the very long-run, it’s the ratio of money supply divided by the real GDP capacity to produce, which ultimately determines the price level. It’s a very rough indicator. It doesn’t work for two or three years and then it pops in. But over the long-run, it’s never failed. And we’re in a situation now where looking at the interest rate levels that we’re looking at and the inflation rates we’re looking at, it’s very clear that we’re going to be moving reasonably shortly into a wholly different phase.” ~~ Alan Greenspan
        ————————–

        Anyway, interpreting these comments from Greenspan suggest a crisis is indeed coming fairly soon, that we are still deflating at this time and that one of the major triggers of future trouble is going to be entitlements. In the future however, say over the next three years as he mentioned, Alan is suggesting Stagflation (which has already begun) and a pick up in general inflation. So I guess we could say that it is coming but its not here yet. To me, reading his comments warn that for the immediate future it is still deflation that is our concern and we have not yet seen the crisis that he is talking about. So the SHTF pretty much anytime…..after that we inflate.

          Jul 30, 2016 30:58 AM

          Birdman:

          Don’t worry about being dead wrong on gold. Since January you have been dead wrong on commodities as well. When commodities are the lowest they have been in recorded history, looking for more deflation is irrational. I said it in December and you were wrong then and you will be wrong now.

            Jul 30, 2016 30:05 PM

            You have a thing about that word wrong lately, don’t you? Is the great Moriarty always right? An internet search suggests you screw up big time on a fairly regular basis. Its why I won’t buy the book of an arrogant, self righteous blowhard like yourself. Its also why Al doesn’t invite you on the show anymore. Because Bob, there is a difference between being controversial and being an a$$hole.

            Jul 30, 2016 30:42 PM

            Ok, now that I got that off my chest…..how about a little education Bob. You see what you don’t seem to get is that we will enter a recession soon if we are not already in one already and every single recession since 1980 has been of the disinflationary sort (Eg. a deflationary recession).

            Now you might say this one will be different. We would all like to believe that. But guess what? The CRB Index weekly chart is doing something really interesting that is in dispute with your theory.

            Its has been turning down since the end of June and funny thing is despite the fact gold is currently appearing to make a recovery it is in fact at risk of a large drop. So the larger CRB chart still says we have another leg down for the commodity sector and this is not over yet despite your pathetic bleating that we are in a new bull market for precious metals.

            You know what they say…it ain’t over till the fat lady sings and the curtain comes down so maybe don’t bet all your chips on a single square…..uh,…..Bob.

            Weekly CRB Index Chart — Gee, it sure looks to me like we are not at the bottom yet.
            http://stockcharts.com/h-sc/ui?c=%24CRB,uu%5Bh,a%5Dwaclyyay%5Bpb40!f%5D%5Bvc60%5D%5Biue6,12,9!lj%5B$spx%5D%5D

            Jul 30, 2016 30:50 PM

            And PS…the only inflationary recession I can recall happened in 1973. Maybe you know of another that happened in the last hundred years. Its probably no coincidence either that the dollar has been as strong as it is for the past three month or that this current decline in the buck is almost at an end. You just cannot jive a strong dollar with rising inflation no matter how you cut it bub and by the looks of the chart USD has quite a rise ahead of it. But don’t take my word for it. Rick Ackerman happens to agree and predicts its heading for 1.20 and Bob…. he is one hell of a lot smarter technician than you are.

            Jul 30, 2016 30:51 PM

            Over and out BM. Chew on it.

          Jul 31, 2016 31:38 AM

          thanks for sharing that post bird.

          Listen up, do yourself a favor stop fighting the trend. imo gold is heading north of $1500 and silver north of $24 (this year).

          It doesn’t matter if its inflation/deflation gold’s arch enemy is goldilocks. You know the not too hot and not too cold economy.

          Just buy 100 shares of something, prefarably an index to eliminate single stock risk. Once you get your feet wet, the fear will subside. Always averge UP imo. Stick with the discipline of ONLY adding to your position size once you are in the money.

          Averaging down has always been a suicide mission in my investing career. With the possible exception of gold and silver, I buy those dips regularly.
          They are currencies, that is why.

          Don’t forget what gold and silver are. They are NOT commodities UNLESS the goldilocks scenerio is occurring.

          Gold and silver go up in inflation or deflation episodes. Why? Because they are currencies. They are THE guarantee of the guarantors. They are tier 1 assets. They are the bedrock of the financial system. They have no counterparty risk. Their value is intrinsic.

          Since the peak in 2011 the general equities markets have been in that goldilocks scenerio. General equities have outperformed while gold and silver underperformed.

          Now, it is different, the uncertainties are everywhere while the economy is teetering. Just buy something, anything..100 shares of stock A.

          I talk to so many investors and they do the same thing. I tell them buy just a little bit to get your feet wet. Then start dollar cost averaging. This should be treated as your savings account. Treat it as a dollar denominated asset. It is for protection of a currency event.

          Do not get caught in a situation where you saw the bottom in the metals, only to watch them move higher and higher.

          Good luck

            Jul 31, 2016 31:28 AM

            Dave , you assume way too much. For example that I am not active with mining stock and gold Etf’s on the long side. Notwithstanding that the conversation about where we are and where we are headed is an intellectual exercise and is well worth monitoring continuously.

            Call it my hobby to keep reviewing the hundreds of charts I keep in the binder to try to make sense of what we are all experiencing. That is time well spent in my opinion so every once in awhile I post on those ideas that have caught my interest and most people don’t object.

            Some appreciate the effort actually (you are not the only one reading these pages!)

            So thanks for the offer to just become brain-dead and climb on board the zombie gold train but I think I’ll take a pass. You guys really make me laugh sometimes. You all think you have it figured out so the investigation ends there.

            But here’s a heads up for you…..

            The Velocity of money is crashing. Bet you didn’t know that did you? And lately its as close to what we might call a death spiral as they come. Check the chart for yourself. We have seen a relentless decline in velocity (M2) since the chart broke important support levels in 2009.

            And the fall has never ended since then.

            Do you have any idea what that is telling us? You may just want to revisit your whole inflation thesis as long as this keeps up because it does not mean squat that the money supply has expanded wildly due to the Fed when that money is factually circulating less and less each month.

            I happen to think these charts are warning us about the worldwide retirement boom that is already in progress and if that is correct then gold and silver will never really get as far as most people imagine. Forget 10,000 dollars an ounce or other such fantasies. We might be lucky if the previous highs are broken in nominal terms.

            Here is the MZM Broad Money Supply Velocity Chart — It’s Depression level stuff.
            https://fred.stlouisfed.org/series/MZMV

            Jul 31, 2016 31:36 AM

            yea I know, everyone knows about the velocity of money. Its an old story. I certainly hope this is not a revelation to you. It has been heading south for nearly a decade. That is NOT the cause of this upmove. This upmove started in January, velocity of money has been going south for a decade. So much for that theory.

            General equities were cheap in 08, now they are NOT. Thus fund managers know valuations are high and are seeking value. They are not willing to be the last fool in the greater fool theory.

            As far as assuming way to much,
            i don’t. If you are active, good for you. I wish you nothing but the best. It is impossoble to tell you are active with the normally negative bias your posts pervade.

            No its not brain dead either, we spend hours, and hours researching.

            My only concern is for my fellow man. I’d hate to see all their blood sweat and tears, which their savings represent, go down the drain and be worthless. That is my angle. Nothing less, nothing more. Just protect you and your family.

            the end

      DFS
      Jul 30, 2016 30:03 AM

      I happen to agree that, at sometime, there might be an asset price collapse, but that is useless information investment-wise unless it is imminent or can be timed.
      I also believe that gold might be $2000 one day, but that is also useless information, without a time given.

        Jul 30, 2016 30:04 AM

        Only G-D knows the time and day DFS. Greenspan is channeling the gold community now though and I find that pretty interesting. He is also repeating much of what we have been hearing for the past few years on Zerohedge and similar news/ blog sites. I suppose none of its new around here but I do think we are a lot closer to the “moment” now that our Central Bankers past and present are saying what the rest of us have known all along. Basically….there is no way way out anymore. We are strapped in for this ride whether we like it or not and the landing is probably going to be pretty rough. That’s useful information for me. It means we all need to keep preparing because the real crisis still lies ahead. And that takes time, planning and organization.

    Jul 31, 2016 31:39 AM

    Earnings recessions lead to actual recessions.

    At least that has been the case the majority of the time for the past 5 decades and I have a chart that shows it. So I will again post that graph of corporate profits showing the huge megaphone pattern (now in decline) but this time overlaid with a little extra information.

    (Chart comes from Jesse Felder of TheFelderReport.com)

    Grey bars are recessions of course. But more notably perhaps is what happened to the stock market each time earnings tanked. The conclusion is obvious here as there has not been an earnings recession of any magnitude that was not also accompanied by at least a 20% draw down in the S&P.

    What is really, really interesting though is that the list of major crisis that are noted on this chart show clearly that each of them happened during the end of the earnings recession and just prior to or during the onset of actual economic recession.

    Got that?

    It tells us that falling earnings are a prelude to much bigger troubles and as we know now the S&P has already seen two consecutive quarters of deflating earnings for the major companies and a third is almost certainly on its way.

    And that means this really is a time to consider caution in your investing.

    So we are not out of the woods by a long shot and most especially as this recession in earnings coincides with the CRB turning down on the weekly charts. And as already mentioned, that massive megaphone projects into negative earnings growth territory for the entire S&P if it carries through to its natural conclusion.

    Good to see you won’t argue facts with me Bob. But you are great with bluster and BS. Sorry to tell you this again…but we are still deflating.

    Here it is: Corporate Profits Percentage Change from prior year since 1965 — FRED Chart
    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160730_bear1.jpg