Potentially Escalating Trade Wars, Commodities Hit, and US Markets Generally Stronger

July 11, 2018

Yet again we had some news overnight about potential new tariffs on $200 billion worth of Chinese goods. This pushed markets down in Asia and is really hitting base metals. US markets are also down but to a much less extent. Chris and I chat about how these trade fears continue to dominate financial markets as well as some inflation data out of the US.

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    Jul 11, 2018 11:17 AM

    HUGE H&S on the weekly yen chart ($XJY) has been triggered. We are talking about a target of 65-70. (This would be an inverted h&S on the $USDJPY chart). The implications for commodities is frankly dire.

    Say bye bye to the whole commodity complex. Conversely, the US stock market should rocket. Input costs going to 50 year lows folks!

      Jul 11, 2018 11:30 AM

      This reminds me of Doc who was the opinion that gold and silver aren’t going anywhere quick this summer unlike prior years. Natural forces in play at best. There would be quick 2-3 day bounce in miners but profit taking will keep them subdued.

        Jul 11, 2018 11:31 AM

        Well, I don’t think the miners will be spared. I think they will break down HARD along with the yen here.

    Jul 11, 2018 11:24 AM

    Spanky, are you tryin to tell me my Aug gold low and here we go guess is kaput?
    So far my July bounce guess has been nutin but a fizzler.
    So much for historicals.

      Jul 11, 2018 11:30 AM

      Commodities and even the POS yen might be making a long term base, but in the short run (the next 6 months) the yen and gold could drop significantly below their 200 WMAs and could break their 2016 lows. I think the yen is virtually guaranteed to do so. Why people would be bullish yen while the Fed is infinitely tighter is beyond me. The huge counter trend move in early 2016 was just that–the yen had fallen so far and so quickly a large bounce and consolidation before the next leg down was virtually guaranteed. But to think 2016 marked some sort of secular low is just a massive, massive gamble at this point. Like I said, the chart is telling us it will make a new low vs the dollar in time.

      Jul 11, 2018 11:37 AM

      I hate to defend you — especially from yourself, but it’s only the 11th and gold hasn’t even taken out its 1238 low of less than 2 weeks ago.
      The pullback in the miners this week has come on low volume (bullish) and with positive technical divergences.
      So it’s too soon to conclude that you were wrong.


        Jul 11, 2018 11:42 AM

        Gold will be taking out $1238 today in all likelihood. We are going to get a MASSIVE dump imminently (this week) that will shock even you.

          Jul 11, 2018 11:58 AM

          Maybe, but you guys are still too bearish for what we have today.

          Jul 11, 2018 11:43 PM

          spanky – Gold did not take out it’s 2017 low support of $1238 yet, and has bounced back up to $1243. Everyone will just have to wait to see if support holds as a double bottom here or not but the sentiment levels are low and Gold is due for a short-term reversal.

          As for the discussion above that B was having reading the seasonality of Gold it is called the “Summer Doldrums” for a reason guys. After Memorial day, traders “Sell in May and go away” and June & July are usually a boring range-bound whipsaw with a downward bias. The big surge is seasonally from late August into the month of September which is normally a very strong rally. We are still early for that.


          >> Gold 40 year #Seasonality #Chart from (1976-2015)

            Jul 12, 2018 12:41 AM

            What was that Ex?
            You sayin my guess wasnt original?

            And here I was thinkin all my hours toiling over historical charts had found something secret like the lost Inca levitating stone found in the Gobi sands by the famous unknown Scandinavian mathematician sir Rodrick of the Bolivian Hotus group native to New Zealand and the Azores prior to 1437ce.

            Now your sayin its simply doldrums?
            So much for tin foil hats then.

            Jul 12, 2018 12:38 PM


    Jul 11, 2018 11:34 AM

    Think July ’14 to July ’15 type drop in the yen. GDX got cut in half during that window. I wouldn’t expect any different outcome this time.

    Jul 11, 2018 11:24 AM

    If/when gold breaks below the 200 WMA, the selloff could turn into an all out crash a la 2013. How long before Matthew uses the word “relief” in a sentence? Any bets?

      Jul 11, 2018 11:29 AM

      It’s a relief to know that I’ve not been wrong about you. 😉

        Jul 11, 2018 11:32 AM

        The only thing you have been wrong about is price action over the last 2 years.

          Jul 11, 2018 11:39 AM

          That’s funny, then why am I no worse off for it and up significantly since you were squealing with fear in December?

            Jul 11, 2018 11:46 AM

            I’m glad you can make perfect long trades in a bear market. That is quite the skill, I will admit.

            Jul 11, 2018 11:57 AM

            No, I’ve been far from perfect but perfection isn’t necessary.

            Jul 11, 2018 11:48 PM

            Agreed Matthew. I haven’t traded all my mining stocks perfectly either, but I was adding to positions the few days leading up to the Dec 2017 FOMC and caught much of the move up in the miners since then, and trimmed down some of the positions. Some I got in too late, and some out of a bit early, but there are a number of stocks that have done well since December and that was an easy pattern to trade on the fundamentals and technical set up.

            Perfection is not required, just capturing most of the trend.

      Jul 11, 2018 11:21 AM

      Hey spanky, copper should get some relief soon!

      Today’s drop does not yet show on the following chart…

        Jul 11, 2018 11:29 AM

        I prefer the term “sucker’s rally.”

    Jul 11, 2018 11:30 AM

    AS I mention, the recent low in $hui was formed off a black candle. That low also represents the neckline on a H&S formation that projects to about 150. I would expect some sort of bounce there for a few weeks before $hui plunges to sub 100.

    Jul 11, 2018 11:33 AM

    $HUI is going to probably crash through 170 like a hot knife through butter, along with gold plummeting below its 200 WMA.

    Jul 11, 2018 11:37 AM

    I am paying almost $7 per imperial gallon for 104 octane for all my cars. That looks to me like a sign that oil has topped at 75 and headed much lower.

    Jul 11, 2018 11:46 AM

    My Brixton is up 15% this week:

      Jul 11, 2018 11:53 AM

      It’s a sell/short at the 50 WMA, but it probably won’t even manage to get there in the next 6 months.

      Jul 11, 2018 11:04 PM

      I bought some of the American version. I will probably add some more when there is an opportunity. Anxious to hear more about their planned spin off of the Cobalt assets.

        Jul 11, 2018 11:45 PM

        Charles – I’m interested to see how Brixton’s spinoff of the Silver/Cobalt assets goes as well.

        Ever Upward!

    Jul 11, 2018 11:01 AM

    GDX a couple of cents away from making an outside week down. It will be sold like no tomorrow once 21.98 breaks.

    Jul 11, 2018 11:05 AM

    Look at oil. !!

    Jul 11, 2018 11:10 AM

    Oil may have hit a major top at 75 now down near 5%. It could go a lot lower. Paying about $7 for 104 octane and the down south they complain about $3 gallon gasoline. Of our gallon is bigger.

      Jul 11, 2018 11:28 AM

      Absolutely. Just like the rest of the complex, oil’s long term chart was absolutely destroyed between 2014-2016. The recent rally and consolidation was nothing but a rally in very very long term basing pattern or possibly a continuation pattern and oil is going even lower than $24 or whatever it hit previously. Oil will be basing for another decade in all likelihood.

        Jul 11, 2018 11:36 PM

        I think BP CEO had expected oil to be averaging 55 for this year and basing plans on that price.

      Jul 11, 2018 11:47 AM

      I agree that 75 may be a significant top but I think oil is heading much higher after it consolidates in the 60s for awhile.

      Jul 11, 2018 11:54 PM

      mistake. Should be 94.

    Jul 11, 2018 11:23 AM

    I pay 2.73 for a gallon of 87 octane in TX. England leads Croatia 1-0. Vamos Angleterrrrrra!

    Jul 11, 2018 11:42 AM

    Before Trump complains about Germany buying energy from Russia he should look in his own backyard. The US is importing the majority of products from China and that it makes it an equally large national security threat.
    Of course Ivanka gets special treatment from China to run her business and there will never be tariffs on her goods being manufactured in China and imported back. The Trumps are making America great again by outsourcing from China for materials and labour for his projects.
    He is shipping jobs overseas. A different standard for the Trumps.