Gary and Doc discuss the US markets, bonds, treasuries and the precious metals
We start off this morning with Gary Savage and Doc discussing their outlooks for the many different markets. Both are expecting some counter-trend bounces but do not expect these to last. We cover the US equity markets, US dollar, bonds and treasuries and the precious metals.
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This is worth the time and effort:
Wow. It is going to take a while to digest all his charts….but thanks for posting that article.
I find it interesting that there were so many commentators and contributors on here that felt the USD would “Never come back to 100 or even 98 again for several years”, that are now processing the fact that the dollar did jump back up towards the end of 2015 as only a few of us mentioned it likely would do. (Surprise Surprise).
I also find it interesting that there were so many on this site in the summer that were just sure Oil was going above the 60s and would be in the 70s or 80s by year end. I took some slack in the summer for saying that oil would top out around $64 and then head down to $38. Well oil went down to $38 right on month for the bottom, and I actually traded it that day (along with Wiseguy) but then we were concerned it may pull back further for the remainder of the year and jumped ship too soon 🙂
When Oil sold off the same commentators jumped in and said Oil would be heading up forever from there, but look, it has stayed weak and has been trudging along in the low 40’s just as predicted. There is too much overhang, and we haven’t seen the final capitulation in this sector of Oil explorers hanging on by a thread, oil service companies dramatically impacted, and the financial institutions that funded their ever-growing expansion….at there own peril. (It is very unlikely for Oil to get to $70-$80 by year end….sorry to burst your Oil bubble folks).
As for Gold, it remains to be seen if it will retest the July 24th low (which varies based on intraday low or closing low), but let’s call that zone $1071-$1076. Personally I’ve had the Feb 5th weekly close of $1065, and more importantly the Oct 30th 2009 mini-trough of $1044.70 (before Gold took off) as two points that Gold may retest down to. After that the Feb 20th 2009 peak of $993.20 should be the final support. I have a hard time seeing lower prices than that, but first, we need to see if Gold does retest July 24th’s lows, or if that was the final bottom. Technically Gold is due for a small bounce and then a dip lower into year end. We shall see……
Good luck to all in their investing.
Not sure about you Excelsior, but I find my trials of trading short term terrible. Since if the trend is confirmed, it is also end of the trend and a new one starts. If I try to catch the reversal the current trend continues. It is hard. So I can only focus on longer term.
I do pretty good catching turns in the marketplace, but mostly do swing trades where it seems that a shorter duration trend is changing for a few days to a few weeks. I use price targets (historical troughs & peaks, Fib levels, moving average lines, and trend lines) and look for confirmation through the Slow Stochastics, RSI, ADX, and MACD. I get it right more than I get it wrong, so overall that’s a good thing. I’ll admit it is much more stressful than just playing a long term trend, but often presents larger returns, and occasional larger losses. I’m a little bit of a charting nerd, but do see the value in fundamentals for longer periods of time. I do agree with the point LPG made last week though, that technical analysis can be used for longer term periods as well……that’s what weekly and monthly charts are for, and why Doc is so darn accurate over longer periods of time.
Best to you Dragonite.
I will try to do more trade while I retire. Too busy to watch. Bye.
It is not without risk, but no risk no reward. I also don’t trade with all my capital and have many boring long term mutual funds, and a 401K full of the usual suspects. In addition, real estate is typically good over longer periods of time (but can be a roller coaster as well). Short term trading is dangerous without proper risk reduction methods and without a clear plan, exit strategy, and alternate plan if things turn against your trade. Enter those waters with caution….
If TA works for the short term (and it does), then it also works long term. The structure of the universe is fractal -the macro is made of the micro and has the same structure (as above, so below).
+1
Agreed with the as above so below hermetic wisdom, and the fractal nature of the universe. Yes, I agree that TA works for both the long and short term amigo.
Yuppers
Just some information to think about oil. US has lost 500,000 barrels per day production since April and the loss is accelerating. Canadian companies have been cutting to the bone. Rig count is down from 1600s to 500s in US alone. Tight oil wells decline fast. Saudi is in war and at least one city was took over by Yemen. Russia is on the move and took control of Syria cities from ISIS. ISIS oil is taken out of black market. I think something is going to change in the near future. I don’t think oil over $60 likely before year end but it is only one and half month anyway. Next year will be interesting.
Good thoughts on the Oil patch Dragonite. Yes, I don’t want to give the wrong impression in my post above. I think the pain is starting to be felt, and supply side changes are being made that bode well for next year. I am looking for the bottom in Oil to coincide with many of the commodities over the next few months. Earlier in the year I was using technical analysis to call the top at $64 and bottom at $38 and was on the mark with the targets and time frame by blocking out most of the noise and commentaries. Then there was, and still is the glaring over-production fundamentals so I just expect a little more blood in the streets, bankruptcies, and takeovers/mergers to signal the bottom is in sentiment wise. We are getting close in all commodities, but things are looking super rosy in short term. For 2016, I’ll be back in the oil space and have a number of companies and ETFs I’m watching closely.
Correction: that should have said things are NOT looking super rosy in the short term.
I’m also not opposed to the bottom hitting in December as Doc mentions, because then I can start building positions in 2015. Going to watch the longer term charts for the overall trend, and then zoom in to daily or hourly charts when it looks like we are close.
From my research, the over supply comes from three sources;
– Saudi doubled the drilling since January last year and resulted in between 1.5 to 2 million barrels per day. It is intentionally done and very damaging to its fields.
– US increased shale and resulted in 800 barrels per day increase. It is very damaging to US financial sector.
– Canadian oil sand over production not sure how much, should be small. We have very limited shipping capability.
Now all these three places are in trouble. My city Calgary is in depression. Huge layoffs happen in all companies and nobody is drilling. A lot of my friends who used to be the backbone of the companies are laid off. Projects are all stopped. Shell Canada just cancelled its huge oil sand project. Interesting change is coming next year. If Saudi fall into war, the over supply will end.
The supply and demand was both increasing steadily before last year and balanced. China has not slowed down the import as people believed and actually increased by 9%. They are building storage tanks as fast as they can. When Wall Street has to reverse the bet, price will be volatile. Oil is famous for its swings.
Good research Dragonite. Thanks for posting it.
I meant 800,000 barrels/day. Missed a K.
Ha! I figured that is what you meant since Saudi oil was 1.5-2 million barrels per day, that the US increase was around 800,000 per day and not 800. Yes, 800K 🙂
The value of the dollar is measured against or by what?
Dollar index – measured against 6 other currencies in a basket. Very heavily weighted towards the relationship against the Euro and Yen. Not the best basket, and many would like to see more currencies part of this basket, but it is what it is….
Doc, I think you have this right. Where do you think interest rates go as bonds head lower in 2016?
Good show. Doc & Gary have more similarities in their views that differences. Doc seems to see more time needed to achieve his outlook than Gary.
Read a piece by a money manager on Marketwatch this morning that calls for a 1000 drop in conventional markets before Dec. Some may enjoy the read: http://www.marketwatch.com/story/the-next-1000-point-down-day-is-coming-2015-11-10
Wanted to mention some thoughts on the $. Those who benefit from the $’s rise, could certainly be part of the pushing that is taking place. I see these benefactors as all other central banks (Japan, China, European, Swedish and others. JMO
TLT is clearly a weekly chart sell:
TLT is clearly a monthly chart sell:
I like that chart! I’ve been short TLT for about a month via speculative options play. I’m looking for a move down to 116 by the 1st week of December.
Last year at tax loss time I got lucky with buying and I am looking for another kick at the can but I feel it won’t be as profitable this year, maybe the energy stocks will be my best bet. DT
TLT ?
iShares 20+ Year Treasury Bond (TLT)
Fund Summary
The investment seeks to track the investment results of the Barclays U.S. 20+ Year Treasury Bond Index (the “underlying index”). The fund generally invests at least 90% of its assets in the bonds of the underlying index and at least 95% of its assets in U.S. government bonds. It seeks to track the investment results of the Barclays U.S. 20+ Year Treasury Bond Index (the “underlying index”), which measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of 20 or more years.
_______________________________________________________________________
It is generally thought of as a 30 year Bond or long term treasuries. TBT is conversely the inverse ETF.
Good TLT chart Matthew. Thanks.
Doc, also, you refer to ‘your technicals’ – are these proprietary? Can you be more specific as to why you think the dollar will move as you expect? Thanks
Guppy; interesting question—others in the past have asked that same proprietary question. I’ve had some that said they would buy a book if I wrote one on technical analysis. There are many different technical analysis methodologies and when I was younger I read some books on TA. Most of them would put you to sleep and were dubious as far as consistently giving you a system of consistency. What I’ve done over the years is develop my own way at looking at the various TA methodologies and tools out there. You have cycle analysis of Gary and pivot point techniques of Rick . You have Elliot Wave technicians. Some of them like Rick’s is geared to the day traders. I’m not a day trader so I’ve put together pieces of a methodology along with some every day momentum, strength, moving averages, bbs, and other indicator tools. I’ve found that by combining them (so far) the results have been fairly stunning. They’re primarily used for a directional basis and anticipated turning points. I like them since I can often take positions near bottoms and then move with the up swing all the while using them to let me know if I have the potential for a significant move or whether the move is going to be muted and should take profits short term or stay with a position long term. I’ve been slowly teaching Cory my way of putting the tools and indicators together and how to use them. That’s probably why Cory has a bias somewhat when he often says he agrees with my positions and statements on the thread. You might say he has a bias built of the charts we share. He’s seeing how I set up the analysis and possible scenarios. To get into the minutia by talking about it would be very difficult. I would have to do a chart podcast frequently to show my technique.
I enjoyed your 2 technical analysis podcasts that you did in the past Doc, and always appreciate your daily insights.
Guppy Jay – you can do a search for those to webinars with Doc and watch parts of them for the general flavor of the daily, weekly, and monthly charts and momentum and strength indicators. I can’t remember when they were (a few months ago?)
Gary, can you clarify your comment more – if bonds have an ‘accident’ and get sold off, rates will rocket higher, so why do you think that money will rotate out of bonds into stocks? Thanks.
Any truth to silver following sugar?
causation and correlation are two different animals 😉
SLV is going to close below its Bollinger band (20,2) for the 7th day on a row today (possibly 8–the close on Oct 30 was close). I have never seen that before with anything. If someone has an example, I would love to see it.
This is just nutty movement and is so completely unnatural (or at least statistically improbable).
If you look at the open and close price. It is once in trillion year event and it kept happening.
I also calculated the chance of weakness at the year end. It looks like there was 4 weak 4th quarter in last 20 years before 2011. Due to that fact that India, China and most of the world are in or just before holiday season, the gold price has fundamentals to be strong at 4th quarter and early in the new year. If we go into weak 4th quarter again this year, it is FIVE year in a roll the gold is weak in 4th quarter. The chance for this to happen in a free market is once in 3000 years.
Absolutely no use watching bonds. None. You have an infinite bid under treasuries from the Fed, the primary dealers and foreign central banks (who are clearly colluding with the Fed). That “market” is a complete joke.
Commodities getting spanked again today.
It’s hilarious, foreign CBs know that a strong dollar kills commodities and yet they expect inflation when they cut rates while the US is supposedly raising rates.
The Fed and the ECB say they want inflation as measured by CPI, but a strong dollar is completely antithetical to that. They are obviously lying. What they want is inflation in stocks and bonds. They love the fact that stocks and bonds are at all time highs and commodities are at all time lows (at least relative to M1). They are geniuses who have enriched assets holders enormously in real terms. Just incredible.
It’s time we acknowledge that bernanke and yellen are heroes and the best and brightest America has to offer.
NOTHING MATTERS……………………CAUSE IT’S ALL RIGGED !!!!!!!!!!!!!!
I think that gold is at the end of stage 2 of its bear market and just entering stage 3.
This probably mean a precipitous fall into the 800 region imminently. There is actually no visible means of support.
First target is arond $1000. Perhaps that will hold and there will be a little dead cat bounce there before the final plunge but there is little more reasonto ssustain a price of 1000 than 1200, 1500 or 1800, pick a number.
The acceleration to thwe downside of the last 2 years of gold action, especially given the weak rally in this summer/autumn period is pointing towards $800 in my humble opinion.
All the ducks are lined up in a row for a capitulation plunge in gold as we await the Fed’s much hyped first interest rate rise inthe light of a possible explosive second rally in the dollar and all kinds of grief in the commodities demand space.
Eventually, one of these factors will turn and produce a rally in gold but none has turned – the (down)trend is your friend (or your enemy).
Maybe the money printing in the last 7 years means nothing. It has increase from 850 billion to 4.6 billion in monetary base. Foreign CBs printed as much if not more. Gold was $1000 prior to all this money printing. Can market becomes so extremely unreasonable?
4.6 trillions, can’t wrap my min on it.
silverbug…..the down trend is your friend or your enemy……..good one…..now you can qualify for guru status and new letter writer…….just funning 🙂
I am saving my…”s”………….for when the…..hits the fan..
I agree. If the Fed actually raises rates, this will be the beginning of very severe and drawn out bottoming process. USD looks set to head to the moon. I am seriously looking at taking positions in companies like Kellogs and General Mills if the Fed pulls the trigger. The gold long thesis will be severely damaged if the Fed raises in December.
It’s clear the Fed could care less about mining companies and companies like CAT, many of whom will cease to exist. All they care about is all time highs in the financials and a bond market that treads water.
My target has been $800 for a long time. It could get there next July or August. Gdx maybe down to $10 to 11.
AMERICA IS ONE BIG CLOWN NOW, THAT THE WHOLE WIDE WORLD IS LAUGHING AT !!!!!!!!
AMERICA: Desperate to hold on! We are all going to pay for their greed!
ok mark… we got it…
It’s a free forum…………….this is not North Korea!
not yet………..Dennis Rodman , is thinking of running for communist chief, and having all the basketball players vote in the next election.
Trump, is thinking of Kim’s hair style, and may want to borrow his hair.
Putin, is thinking that Kim should ride the next rocket over , no scud for him, kim.
OH WAIT………..with all the rigging going on………..maybe we are North Korea!
that made me laugh FFM. Trump with Kim’s hair style…..
🙂
AMERICA: The only real thing they have left to play with is the stock market and the precious metals market………..and that’s it! ………and the whole world is watching!
CHINA AND RUSSIA ARE ABOUT TO PUT A HALT TO ALL THIS ILLEGAL RIGGING!
https://www.youtube.com/watch?v=1pR3-aN_gv0
I want to gobble up more shares of NUGT but the 10 day and 1 year charts are a no buy. Gonna get a good average down once they bottom, if ever! lol
I tell you what, if the Fed pulls the trigger in December and the stock market reacts positively, it’s likely headed to the moon with the USD. Just throw every dime you own with full margin into GOOG.
Another thought-provoking post, as usual, Matthew ~ Brian
Rate Hikes & Gold: Bring It On!
http://www.321gold.com/editorials/thomson_s/thomson_s_111015.html
If this guy actually put his money where his mouth is, he would have lost his shirt 3-4 years ago. He is a permabull broken record.
If the US is leading the rest of the world higher with respect to interest rates, the USD will continue to get a bid, and commodities will continue get hammered.
If the US raises rates while the rest of the word raises faster and further, which is obviously not happening right now, the opposite will happen.
History is not on your side, spanky -not in the ’70s and not in the last 15 years.
Btw, don’t confuse Stewart’s commentary with his trading. His approach works.
Here’s a note he put with his last article:
“My proprietary trading system at (xxxxxx) has generated about $54 per GDX share in trading profits since 2011, and done so while GDX itself has, unfortunately, slipped from about $55 to $15. Trading enthusiasts who like the concept of buying and selling gold stocks with limited drawdowns, can send me an Email at admin@guswinger.com. I have a nice excel file document with the entire trade-by-trade track record. This system is ideal for business owners, who don’t have the time or inclination to look at the market during the day. Thanks.
Btw, don’t confuse Stewart’s commentary with his trading. His approach works.
Here’s a note he put with his last article:
“My proprietary trading system at http://www.guswinger (dot) com has generated about $54 per GDX share in trading profits since 2011, and done so while GDX itself has, unfortunately, slipped from about $55 to $15. Trading enthusiasts who like the concept of buying and selling gold stocks with limited drawdowns, can send me an Email at admin@guswinger.com. I have a nice excel file document with the entire trade-by-trade track record. This system is ideal for business owners, who don’t have the time or inclination to look at the market during the day. Thanks.
Stocks are clearly a sell on the daily chart:
http://schrts.co/Fyr8MI