A solid U.S. employment report on Friday sparked a sell-off in the U.S. government bond market. And with the positive report, the FED is now under pressure to raise rates sooner than the market had been expecting. Considering that the bond market is already deep enough in the current Daily Cycle, it was surprising to […]
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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
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We finally have some movement within the gold complex, and for a welcomed change, it’s to the upside. It has been dicey lately, as the back and forth daily swings have been unnerving. It’s not common within bear markets to see an asset form a Cycle Low and then just take off to the upside. This is why anyone trading the precious metals sector needs to understand that the Long traders carry with them a lot of anxiety. Past experiences have them guarded, which is why we see these frequent quick intra-day reversals…they’re spooked far too easily.
Fortunately, we are into the timing band for these big Cycle Low events now. Within this report, I bolster the idea that we’re seeing evidence to support these lows as having pasted already. Shifting the main question now away from whether we have new Cycle’s in play over to a discussion on what these Cycles could potentially bring.
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