Midweek Market Update – Dec 17th

The size and strength of this Daily Cycle indicates to me that the bull market trend is alive and powerful, with much more room to move higher. However, all good moves are a process, and this one is in need desperate need of some back-filling first. It’s also far too overbought and more importantly, easily due for a DCL. We’re at the point now where we could see bonds fall through to the end of the month. Then next Cycle should make new highs though, sometime near the end of Jan. Continue reading

Calling all Ships
safe harbor

We had yet another major rally in bonds this week, as capital came flooding into the market at an alarming rate. And this wasn’t the accumulation type of buying either, it was outright distress buying as risk asset were sold off aggressively. This move, similar to the one back in October, is exactly what the bond Cycles have been foreshadowing all year long and I am fairly certain that we will see more such events in the very near future.

I remain astonished at how little airplay the rally in bonds is receiving. What coverage we do see is often portraying this move as just insignificant to the overall markets. But what is lost in the commentary is just how widespread this move really is. Yields on the 10-year German government bond have fallen to just to 0.62%, and 1.81% on the U.K. 10-year. Both of these are down sharply this year, while rates on the European peripheral Continue reading

Midweek Market Update – Dec 10th

The train wreck that is crude oil continues, now having become a fully-fledged crash with seemingly no end in sight. Not exactly an original idea at this point in the decline, but I was right this past weekend to sense continued weakness within Crude. That massive, one day reversal did show promise of Cycle Low, but it’s clear now that it was indeed only a one-shot wonder designed to drawn in eager, bottom hunting speculators.

My crude oil analysis for the immediate future is rather simple, mainly to not hold any expectations. This is an asset clearly in crash mode and therefore where it finds its eventual bottom is impossible to tell. As I’ve stated before, there are Continue reading

A Time to be Sitting

This is not a time to be overly confident of a specific outcome related to Gold. It is, however, a time to control bias. If you’re bearish on Gold, it’s probably because you believe the narrative that improving macro-economic indicators will lead the FED to reduce its balance sheet and, eventually, raise rates. You also probably believe that, although we may not return to the type of growth seen during the Roaring 20’s or the 80’s, the economy’s “new normal” will return growth to more normal levels. From this perspective, you’ll see the recent 3 Year Gold decline as part of a much larger secular bear market.

If you’re bullish on Gold, however, it’s possibly because recency bias gives you very fond memories of the last great Gold bull market. You probably also believe the secular bull market thesis, that the world’s central banks will continue to support the global economic system through plentiful fiat currency. In addition, you probably hold that the debt Super Cycle which topped in 2008 is headed toward its natural Cycle Low via a vicious deflationary spiral. And that the central banks, which remember well the 1930s, will fight the spiral at any – repeat any – expense.

Do the central bankers really believe that they can control economic cycles and nullify economic laws? Are their collective egos that large? Or is their arrogance so great? I don’t think so, since these are really smart guys and gals, appearances sometimes notwithstanding. I believe that the bankers have made a conscious decision to accept whatever consequence may come in an effort to stave off the next depression.

Both the bullish and bearish positions are obviously longer term, secular themes. They should have little bearing on whether, and how, one trades Gold in the near term. So regardless of whether the bull or bear position winds up being correct, it will not impact how Gold trades into early 2015. Unfortunately, however, far too many people seem Continue reading

Midweek Market Update – Dec 3rd

But a very curious development occurred this time, one that I feel has been given far too little attention to date. Not only did gold repel the battering, but it staged a rather impressive reversal. The real tell though was in the silver pits, where 6 year lows were reversed to produce one of the biggest daily price movement in decades. This is significant, because the raid occurred during a very vulnerable time in the Cycle. The type of weakness and vulnerability we’ve seen these past 3 years would have been no match for this type of raid. A continuation of the bear market would have immediately ensued, leading me to believe that the character of this market has changed. Continue reading

Midweek Market Update – Thanksgiving Day
roast turkey

I would like to wish all of my US members a very special Thanksgiving Day. I probably don’t say it enough on this site, but I sincerely appreciate your (all members) loyal following over these past 3 years. I truly …

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Roll the Dice

We’re at the point in the equity bull market Cycle that every piece of news is construed as positive for the equity markets. In many cases, the news even appears to accentuate positive possibilities. The speculative nature of the current advance has by now captured the vast majority of market participants; the media and the pundits are no exception.

For example, the markets were pushed higher this week by several news events, even though the headlines hit the same themes that have been recycled for the past 3 years, and that are almost certainly, by now, fully discounted in prices. The news events included Japan calling off next year’s planned sales tax increase, China surprising with an interest rate decrease, and the ECB announcing that they will be buying assets. These are all related to the tired narrative that central banks and related authorities can alter the natural long term pricing/valuation trajectory of the markets. The world’s equity markets soared on the announcements, and in the process completely ignored the weak fundamentals that gave rise to them. The S&P and Dow even reached new all-time highs, in general very bullish developments. But in this case, the gains were built upon the shifting sand of sound bites rather than economic fundamentals.

The economic reality behind the Continue reading

Midweek Market Update – Nov 19th

Well, it’s just amazing to see this sell-off continue. Really, after such a prolonged period of selling, it just goes to show you how markets can remain extended and extreme for such long periods of time. Even though I’ve left it alone, it’s humbling nonetheless and a lesson for any student of the markets that such moves do occur and they need to be respected. Only the market is ever truly right, which is of course represented by price. All else is our own interpretation of what is right or wrong, all too often laced with our trading biases.

From an analyst’s viewpoint, I’m surprised cr Continue reading

Back and Forth

The miners are confirming this gold move and are encouragingly leading the Cycle again. The back and forth volatility this past week was worrying; in the sense they were showing us a potential gold decline was at hand. The mini triangle pattern, resulting from all this volatility did eventually resolve itself, with the miners convincingly breaking higher as confirmation gold was in a new Daily Cycle.

I’m encouraged by the action within the miners because back on Nov 5th they did find a low 2 days before gold did. The sell-off they experienced, leading into that low, was of the extreme capitulation variety seen only during major (Yearly and Cyclical) Cycle turns. And because we’re in the timing band for a gold Investor and Yearly Cycle Low, this early recovery off a 40% “crash” is suggesting that we have found, in the least, an Investor Cycle bottom. Continue reading

Midweek Market Update – Nov 12th

Now, if bonds were to break down from this point, it would potentially become a reason to be concerned about the longer term trend. Otherwise, this is a bull market after all and this longer than expected period of side-ways consolidation is to be viewed as healthy action. Within the context of a greater bull market, it is more likely to act as the fuel that will sustain a more powerful up-wards move once the primary trend resumes. Continue reading