S&P 500
1987.01
+3.48 +0.18%
Dow Indu
17086.63
-26.91 -0.16%
Nasdaq
4473.29
+17.27 +0.39%
Crude Oil
103.11
-0.01 -0.01%
Gold
1298.250
-9.825 -0.75%
Euro
1.345950
-0.000350 -0.03%
US Dollar
80.833
+0.022 +0.03%
Weak

Currencies, Gold And The Big Picture

Here are the monthly views of the basket cases we call major currencies.

Uncle Buck and his reserve status were leveraged to the hilt by "The Hero" and now his successor is trying to gently talk the Fed out of its policy stance over time.  In other words, tightening is going to come one way or another and Janet Yellen is trying to go the orderly route.  When this process becomes disorderly, the USD is likely to benefit from the liquidations elsewhere in the asset world.

Technically, USD is in a long basing pattern.  There are those who think it is basing before a renewed decline, reading a Symmetrical Triangle (continuation) pattern into poor old Unc.  I think the odds are it is bottoming over the post-2008 years when inflation – try as they might to have promoted it – simply has not taken root.  Leaning bullish, watch support and resistance.

usd

 

Long ago we projected a rally in Uncle Buck’s chief competitor, the Euro.  This was due to a bottoming pattern (formed on shorter term charts) and unsustainable negative hype about the Euro crisis.  The target was around 140 +/-, which is the top of the post-2008 downtrend channel.  Euro remains in a big picture downtrend and if global asset markets start to come unwound in the coming months, it is not Euros people are going to run to, I can tell you that.  Bearish below the upper trend line. [Read more...]

The Real Price of Gold

The real price of gold, as adjusted by commodities is making some nice baby steps toward rebounding.  Here is a picture of the gold ETF vs. certain key commodity ETF’s and markets, that show the progress of what would be the most desirable condition (a rising real price) for a healthy gold bull.

gld.dbc

And then of course there are other notable measures like Gold vs. Stock Markets.  Here is the progress vs. SPY and EZU… [Read more...]

ZIRP Gains More Attention

We have been talking about how there had been no bubble in US stocks and how the economy is doing just fine.  We have also been talking about how the bubble is in policy and that the economy and stock bull market have been created – yes, like Frankenstein’s monster once again – out of this policy bubble.

Enter economist Joseph LaVorgna of Deutche Bank…  Fed needs to start raising rates, top forecaster says.

Will wonders never cease?  As you may know, I read the financial MSM to get a feel for what the casual market participant is reading, what the majority is being told is the truth.  Usually it is some combo of self-promoters and agenda (sometimes political) driven bulls and bears.

“The economy is improving much faster than the Fed is willing to acknowledge, LaVorgna said in an interview. At the current rate of hiring, more jobs will be created this year than in any year since 1999.”

Exactly, and still they inflate.  He correctly puts the focus on the financial (and national) disgrace called ZIRP as opposed to the theater surrounding QE’s long term bond purchases.

“In six months, the unemployment rate will be below 6% and the core inflation rate will be at 2%,” he said. “We are way ahead of schedule. We’re going to get to 5.2% or 5.4% a year ahead of schedule.”

“The Fed is behind the proverbial curve,” he said. “The Fed should be raising rates.”

It’s all that this corner of the interwebs has been hammering on for over a year now.  If the economy is at all real, get rid of QE and end ZIRP. [Read more...]

US Treasury Bonds, Gold & Stock Market

The following is one of a wide range of analytical topics covered in NFTRH 293′s 35 pages this week, much of which is straight ahead technical analysis.  But the T Bond market is usually central to an overall macro view at any given time.  This segment is not meant to provide actionable direction (other than perhaps to prepare for a potential rise in T bonds yields), it is meant to dig into the mechanics beneath the financial markets in an effort to have people consider that there is much more going on with markets than simple nominal TA or conventional fundamental analysis (PE ratios, growth metrics, reported economic data, etc.) can account for.

US Treasury Bonds

10 & 30yr yields have declined to support as NFTRH projected

Yields on long-term Treasuries have continued to decline in line with our view that was contrary the 'Great Rotation' (out of bonds) hype. The [30-year] especially is now close to support and the next play seems like it could be rising yields and declining T bonds. [Read more...]

Gold, Silver & the Macro

Those micro managing the precious metals are fixating on the Symmetrical Triangle (bearish continuation) and a coming 'Death Cross' of the MA 50 below the MA 200.

The Sym-Tri has been apparent for about three weeks and the Death Cross is hype put forth by those who would make grand TA statements.  The Death Cross means next to nothing.  I mean, how much good did the Golden Cross that the "community" was pumping in March end up doing?

gold

Gold is bearish and has been bearish by its technicals (below the 50 and 200 MA’s), and ever since the economic soft patch was was put behind us (cold weather, remember?) by its apparent macro fundamentals as well.  NFTRH has been keeping this situation locked down and in a box for future reference.  The box will be opened when the time is right.

Meanwhile, I'd suggest that people avoid micro managing gold.  It is not an idol or a religion, and while there is a whole industry champing at the bit to begin promoting it again, it is just a tool for retaining the value of money.  Sometimes tools sit in the toolbox.

As for silver… [Read more...]

ZIRP Era in Pictures

Zero Interest Rate Policy (ZIRP) was instigated by a credit induced collapse of the US financial system and perpetuated in December of 2008 by desperate financial policy makers as a fix to problems they created in the first place.

In reality, it is simply an epic distortion of normal economic signals that cleaned up the mess created by previous policy distortions (like the commercial credit bubble of the Greenspan era) by systematically (5+ years and running) main lining new distortions into the system.

zirp

So in addition to this picture, which could one day hang in a monetary museum with the title ‘Grandma and Her Savings Account Bail Out Wealthy Asset Owners’, let’s take a walk down memory lane and marvel at some other pictures created by this policy… [Read more...]

Pigs no Longer Fly; What Are the Implications?

Along with the highly publicized loss of leadership from big tech, the US stock market is now in danger of losing another, and possibly more important leader, the piggies or banking sector.

While the weekly chart of BKX has not yet broken down, it is very close to doing so after sporting a negative RSI divergence for the better part of the last year. We should not jump the gun with bearish scenarios, but as always we want to be among those looking forward and ready, just like in 2007, which was the last time BKX-SPX began to roll over in earnest.

bkx

NFTRH has followed the BKX-SPX (leadership) ratio every step of the way during the current leg of the cyclical stock bull market. Most recently we noted that BKX-SPX failed to make higher highs on two occasions. This put the ratio – and by extension the stock market – on alert as we watched for a lower low.  Ladies and gentlemen, let me introduce you to a lower low. [Read more...]

CoT – Gold, Silver, Commodities & T Notes

Among its 29 pages of high quality market analysis, this week's NFTRH (#287) reviewed the Commitments of Traders (CoT) structures of a few markets and their implications.

cot.au

The above CoT graph clearly shows that gold has declined as the structure improved (red arrows). It then bottoms with the circled extremes and rises in conjunction with a degrading structure (green arrows). Gold is still on its journey toward bottoming. [Read more...]

Big Pictures: Stocks, Gold and the Miners

Ukraine war hype, China demand drop, GOFO mysteries… these are the short term noise inputs on the gold sector.

US Treasury bond yield spreads, gold vs. commodities (i.e. the 'real' price of gold), gold vs. the stock market… these are some of the fundamental considerations that actually matter and they have taken a hit since January.

It is easy to say 'I am bullish in the big picture' (measured in years) but it is not so easy to actively manage in the smaller pictures (measured in days, weeks and months) with all of the above noise inputs and more bombarding the poor individual player.

We use shorter term charts to manage the shorter time frames.  Daily charts have most recently indicated a bearish set up as bear flags formed across the precious metals complex (with the exception of silver, which never got going to begin with) last week.  Weekly charts continue to indicate that an extended and oh so grinding bottom may be forming, but that includes the potential for ups and downs, also known as volatility. [Read more...]

Gold Contrary Indicators

The gold sector is peopled by a high concentration of contrary indicators because it is a relatively (to the vast world of equities and bonds) small market that offers refuge from some of the damaging aspects of the spectrum of investment products that are supported by the manipulation of interest rates and printed (and digitally created) money supplies. Thus, gold has moral high ground if an asset can be thought to have morality.

More accurately, the people bullish on and promoting gold take high moral ground and that is where the emotional power comes from in this market. This power feeds upon the desires of regular people to not suffer the consequences of the 'evil' actions of those running a system that many do not agree with. Readers of this site know of course that I certainly don't agree with the setting and manipulation of interest rates by decree of man (and woman) in service to engineering desired outcomes in financial markets. [Read more...]

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