Indexes Retest Critical Price Channel Resistance

News, again, drives the US stock market and major indexes higher as optimism of a US/China trade agreement floods the news wires. As we’ve been suggesting, the global markets continue to be news-driven and are seeking any positive news related to easing trade tensions and capital markets. We believe any US/China trade deal would be received as very positive news by the global capital markets – yet we understand the process of achieving the components of the “deal” would likely still be 6 to 24 months away.

Still, with the strength of the US economy and the potential that some deal could be reached before the end of 2019 setting positive expectations, the US stock market and major indexes rallied last Thursday and Friday (October 10 and 11). As the long holiday weekend sets up with no trading on Monday, it will be interesting to see what is potentially resolved between President Trump and the Chinese before the markets start to react on Sunday and Monday nights. Make sure up opt-in to our free-market trend signals newsletter.

Our research team wanted to highlight some very key elements related to technical price theory and technical analysis. These weekly charts highlight what we believe is “key resistance” in the US major indexes and share our research team’s concern that the markets may be reacting to news more than relying on fundamental economic and earnings valuations. In past articles, we’ve highlighted how a “capital shift” is continuing to take place where foreign capital is actively seeking safety and security for future returns. This leads to a shift in how capital is being deployed throughout the globe. Continue reading "Indexes Retest Critical Price Channel Resistance"

Gold Update: $1616?

Last month, after gold had missed our primary target of $1577 and then started to collapse, I wondered if "A Bear Face Was Showing Up?". The price was still above the trendline support, although it dipped below $1500. I also spotted the potential reversal Head & Shoulders pattern, which was adding to the possible Bear Face.

Let's see below what you had been expecting from the market these days.

Gold

The most of your votes in the earlier ballot were for the "No" option, which means you didn't think that gold had topped already keeping bullish outlook, no matter what. The thing is that we don't know the right answer yet, as none of the triggers were pushed. To remind you, the Bearish confirmation is only below $1400, and the Bullish one is above $1557.

I want to share with you the anatomy of the failed Head & Shoulders pattern below to show what has gone wrong for educational purposes in the 4-hour chart below. Continue reading "Gold Update: $1616?"

Weekly Futures Recap With Mike Seery

Gold Futures

Gold futures in the December contract settled last Friday in New York at 1,512 an ounce while currently trading at 1,483 down nearly $30 for the trading week as prices look to head lower in my opinion as I see no reason to own gold at this time.

The U.S. stock market is up nearly 500 points today as a possible Chinese trade agreement could be at hand later this afternoon. If the market likes that situation, gold prices could drop significantly, in my opinion. Gold prices are trading under their 20-day but still above their 100-day moving average, however, if you look at the daily chart, the downtrend line remains intact as I think the only precious metal that will continue to rally is palladium.

The next major level of support is around the 1,450 level, and I think that will be touched possibly in next week's trade. The money will start to come out of the precious metals due to the trade agreement and then will begin to enter into the U.S. equity market. However, at the current time, I am not involved. Still, I do have a bearish bias to the downside.

Volatility in gold will remain high as if you have to remember part of the rally that we witnessed over the last several months was due to the Chinese problem and if that situation is eradicated, there's no reason to be involved in gold.

TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Continue reading "Weekly Futures Recap With Mike Seery"

Inflation In The Offing?

Let’s take a look at some indicators that can come together to let us know when the next inflationary bout is in the offing.

The spread between 10yr and 2yr yields (the most commonly watched yield spread/curve) is still steepening on the short-term. Live chart available here.

yield curve inflation expectationsWhat’s more, it is doing this against a short-term bounce in yields (my TBT positions appreciate that) and that would be an inflationary indication. Not a trend, an early indication.

Indeed, the Continuum is once again climbing above the key 2.2% level.*

inflation expectations

TIP/TLT and TIP/IEF, commonly thought of as inflation expectations gauges, are bouncing but not yet on a trend change to inflationary. Daily chart… Continue reading "Inflation In The Offing?"

Dividend Stocks Yielding More Than Bonds

A weird thing happens when investors start seeing signs of a recession or just start convincing themselves that a recession is inevitable and coming soon; interest rates begin to fall, which means bond yields begin to drop. Most investors are told when they start investing that stocks are risky, but they offer better long-term growth, while bonds are safer, but they don’t offer investors as much potential growth.

While these statements may be true during certain situations, they certainly don’t always hold true. Sometimes, stocks may be both less risky and offer higher growth than bonds. I personally believe now be may one of those times.

As things sit now, bonds are offering rather low yields. The three-month treasury is paying 1.78%, the 12-month treasury is paying 1.75%, while the even longer five-year treasury is only offering a yield of 1.56%. The ten-year treasury is at 1.68%, and the 30-year treasury is sitting at 2.13%. These returns are hardly likely to keep up with inflation over those longer periods. Buying an investment that may just keep up with inflation seems somewhat risky to me.

Even the bond ETFs that have performed well year-to-date and pay yields to their investors aren’t currently offering anything much better than what investors can get from Treasuries. The Vanguard Long-Term Corporate Bond ETF (VCLT) which is up 21% year-to-date is offering one of the best yields at 3.5%. But this ETF is rather risky considering if, and when interest rates turn around, this fund will get hit.

On the other hand, certain stocks are currently offering higher yields, while also offering the chance for stock price appreciation, regardless of which way interest rates run. Let’s take a look at a few of my person favorites equity Exchange Traded Funds, which offer both growth and healthy, reliable yields. Continue reading "Dividend Stocks Yielding More Than Bonds"