Gold follows the map posted in an earlier update.
Gold dropped within two visible legs close to the area of 61.8% Fibonacci retracement level located at $1,738. The second leg down has overshot the size of the first leg reaching almost 1.272 of its distance. The RSI has shown two legs down either. Initially, the 50 level in the indicator’s sub-chart acted as a support, and then it turned resistance for the joint between two legs. Continue reading "Gold Builds Buy Setup, Is Bitcoin Next?"
The bulls have been trampling the bears in a near orderly uptrend for the past ~10 straight months now. The bear thesis couldn’t have been more wrong despite the markets facing a trifecta of rising interest rates, an unknown delta variant backdrop, and the Federal Reserve tapering later this year. The major indices are in unprecedented territory breaking through all-time high after all-time in what seems to be a daily occurrence. With Q4 2021 coming into the picture, the S&P 500 is up over 20% and places the market in rarified air.
The S&P 500 index recorded its 53rd record high on September 2nd, which makes 2021 the 5th-ranked year over the past century in terms of record highs, per Bank of America. This significant milestone has been achieved with four months remaining in 2021. The other major indices, such as the Nasdaq and Dow Jones, are showing similar patterns as measured via QQQ and DIA, respectively.
Stocks are overbought and at extreme valuations, as measured by any historical metric (P/E ratio, Shiller P/E ratio, and Buffet Indicator). Valuations are stretched across the board, with the major averages at all-time highs and far away above pre-pandemic highs.
Figure 1 – Adopted from Buffet Indicator analysis via Current Market Valuation
As the Consumer Price Index (CPI) continues to push higher in conjunction with better-than-expected employment numbers, the Federal Reserve may be compelled to finally not only entertain the idea of raising rates but implement a rate increase. Although interest rate risk disproportionally impacts fixed-income investments such as bonds and annuities, stocks will undoubtedly be impacted as well. This is especially true for highly leveraged companies such as tech and super-charged growth companies. Even the prospect of higher rates hit the Nasdaq in March for a sharp decline, albeit that decline was quickly erased. This is a case in point of how quickly the markets can turn negative with the hint of rising rates which may be exacerbated in an already very frothy market. Continue reading "Q4 Approaching: Markets In Rarified Air"
The Copper/Gold ratio remains at a key decision point. Gold has been clobbered lately but a key metallic macro indicator remains in a long-term congestion zone. If it’s going to be cyclical ‘inflation ON’ we’d expect Cu/Au to break through and do what it has not done since a major inflation trade blew out in 2006-2008, and for the 30yr Treasury yield to eventually catch on and rise at least to the EMA 100 (blue line).
Here is the daily futures view of Cu/Au. Going by simple TA (daily trends) it looks poised to break out to the upside, especially in the face of a government at the ready to pump Trillions more funny munny into the economy. The economically cyclical metal would benefit over the more counter-cyclical monetary metal. It’s logical, but still theoretical. Markets do not always do the logical thing, now do they? Continue reading "Gold Gets Hammered But Copper Fails To Seize The Moment"
You might be wondering what "Quadruple Witching" is and why it would have a negative effect on the market. Quadruple witching refers to a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. For example, while stock options contracts and index options expire on the third Friday of every month, all four asset classes expire simultaneously on the third Friday of March, June, September, and December.
Quadruple witching days witness heavy trading volume, thus putting strain on the markets, which often leads to down trading days like we see today. In fact, the week following quadruple witching, the market indices such as the S&P 500, DOW, and NASDAQ tend to decline, perhaps due to exhausting the near-term demand for stocks. Something to keep in mind as we head into next week. Continue reading "Quadruple Witching Puts Pressure On Markets"
Cathie Woods and her ARK Invest group of funds are changing the way investors look at Exchange Traded Funds in a number of ways. Whether it's from the standpoint of high-performing funds or innovative investment strategies that are looking years or even decades down the road, what Cathie and her team are doing is extraordinary. But what may be the biggest and most important innovation ARK is bringing to the investment community is the transparency her funds have shown investors.
ARK Invest gives investors the stocks they are buying. Well, every fund does that. But what ARK does, is they give you their stock buys and sells on a daily basis. Yes daily.
Furthermore, they tell you the exact amount of shares they bought or sold, the amount of money they spent (which allows you to determine the average cost), and which one of the ARK funds the shares were bought or sold in.
This is a big change from the way most funds operate, in which they post quarterly or monthly their holding list, number of shares, and percent that the company makes up in the fund based on assets under management.
While what Cathie and ARK are doing is ideal, investors can still use the information other funds provide in order to ‘cherry pick’ stocks in certain industry’s that they believe will do better than others. While this idea may not be for all investors, it is something that investors who prefer to buy individual equities, as opposed to going down the ‘fund’ route, can still use ETFs and other funds to their advantage, without ever owning them. Continue reading "Using ETFs To Help You Cherry Pick Stocks"
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