I reserve most of the work on precious metals for NFTRH weekly reports and in-week updates because it is done on a consistent basis, with the work done previously key to the narrative making sense in real time and going forward. In other words, in order to not be out there stabbing in the dark, you need to have an ongoing, adjustable plan that makes sense at all times with the macro markets around it.
So that said, let’s take a snapshot of where things stand currently with the understanding that this work will need future updates, which will probably not be made publicly. It is up to the reader to do the work required to put context to the picture. Meanwhile, this will free up more space in next week’s NFTRH 538 to focus on some quality miner charts, which sometimes take a back seat to the macro/sector stuff.
Precious Metals Update
First off, Commitments of Traders data are only available through 12.31.18 as a result of the government shutdown. So we are flying somewhat blind from that perspective. At the end of December, the CoT for gold and silver were well on their way to a bearish alignment. Have they maxed their trends and reversed in the meantime? It is quite possible, especially since the metals have taken pullbacks (within their intermediate uptrends) recently.
We have been following an analog to 2001, which saw SPX break down below its 50 & 200 day moving averages as HUI began its bull market. What’s more, SPX then tested its breakdown in Q1 2001… Continue reading "A Precious Metals Update"
A ‘wild card’ segment has been added to NFTRH reports because I wanted the freedom to go out of bounds in any direction, beyond our usual areas of disciplined coverage. Last week it was a look at the Semiconductor sector.
This week it is Fed policy with a side trip down memory lane, trying once again to illustrate why today is not at all like the ZIRP era and why the post-2015 re-connect between the Fed Funds rate and the stock market does not bode well for stocks, assuming the Fed really is going soft.
Excerpted from tomorrow’s edition of Notes From the Rabbit Hole, which will also include loads of actionable analysis along with the more theoretical stuff below…
Fed Doves Take Flight (But We Are Not in Kansas Anymore)
Wise guys trading Fed Funds futures see no more rate hikes in 2019, and a few even imagine a rate cut before year-end. Here are the projections for the next 3 meetings, showing an overwhelming view that the Fed will hold the current 225-250 target rate. Continue reading "Fed Doves Take Flight"
As in January of 2013 (ahead of an economic up cycle) and Q4 2017-Q1 2018 (ahead of an economic ripple that began in 2018) the Semiconductor sector and in particular its Semi Equipment sub-sector are front and center in forming our analysis about coming events. Excerpted from the January 20th edition of Notes From the Rabbit Hole, NFTRH 535…
Semiconductor Sector – Watch the Early Bird in 2019
This one is special for me. I started my work life many moons ago as a participant with the Semi sector [circa 1983-1993], painfully learning first hand how violent the cyclical turns can be. Dialing ahead a couple decades, in January of 2013 NFTRH began a narrative that saw the then up-turning Semi Equipment bookings (this data is unfortunately no longer published) lead the sector, general manufacturing and eventually the whole raft of components that make up the economy into a cyclical upturn.
The prime Semi Equipment names we follow are Applied Materials (AMAT) and Lam Research (LRCX). Well over a year ago we used their failing leadership to the broad Semi sector as a leading indicator on the economy, and things finally came to a head in October 2018. We made note of how industry advocates have been lobbying hard for the Trump Administration to re-think its trade tariffs as relates to Semiconductors.
My question has been over the last year and still is… ‘is the Semi Equipment downturn a real cycle or just a cyclical interruption?’ Reference… Continue reading "Semiconductor Sector - Watch The Early Bird In 2019"
The 3 Amigos were a blogger’s way of not boring himself to death while fleshing out important macro indicators month after month.
Amigo #1 (SPX/Gold ratio) got home and dropped from target. What’s more, it has taken back the ratio’s equivalent of the entire Trump rally and that is an eventuality we are very open to on nominal SPX as well.
The gaps are interesting and among several possibilities for 2019 we could see fear, loathing and a fill of the lower gap (a greed gap of sorts) prior to a filling of the upper gap, which could blow out the stock bull in manic fashion one day. Relax, it’s just one of several possible roadmaps. For now, we simply state that SPX/Gold reached a very viable target and dutifully dropped with the market stress.
Amigo #2 (30yr Treasury yield AKA the Continuum) got the bond bears on the wrong side of the boat and kept them there for a couple of months before the big reversal (back below the monthly EMA 100) that came along with the risk ‘off’ rush amid Q4 2018’s market stress. Continue reading "Amigos 1 & 2 Arrive, #3 Is Still Out There"
I was going to look around to see if I could find a media article out there (complete with a TA trying to sound really important) that would be appropriate to be made fun of in our little Men Who Stare at Charts series. But then I decided to create my own chart, stare at it a little, post it and talk about it (hopefully not too self-importantly).
Introducing an all too busy long-term (monthly) view of the Gold/Silver ratio, along with some key nominal markets.
The Continuum in the lower panel symbolizes the deflationary backbone that has been in place for decades. I maintain that this is a firm marker against which the Fed inflates money supplies, manipulates bonds and by extension manipulates inflation signals. We have been on a theme that like Jerome Powell or hate him, he knows exactly what he is doing because to do otherwise (promote ongoing bubbles on top of bubbles) would, in essence, end the Fed’s racket, as symbolized by a real breakout in long-term yields. Continue reading "The Men Who Stare At Charts"