Semiconductor Sector; A Market & Economic Leader

The signals have persisted since the May lows in the Semiconductor sector and in the broad markets. Nominal Semiconductor (esp. Semi Equipment) stocks and the sector’s market leadership have remained intact into our window for a projected cycle bottom, which was the 2nd half of 2019.

This post shines a favorable light on the Semiconductor sector while at the same time acknowledging that may have little to do with the broad market’s fortunes as Q3’s reporting begins next month. In other words, while we have been projecting new highs for the S&P 500 on the very short-term, there are fundamental and technical reasons to believe the stock market could be significantly disturbed in Q4. But the Semi sector is an economic early bird. Let’s remember that.

Reference first…

Nearly $50 Billion in Fabs to Start Construction in 2020

By the end of the year, 15 new fab projects with a total investment of US$38 billion will have started construction and 18 more fab projects will kick off construction in 2020. Of the 18, 10 fab projects with a total investment value of more than US$35 billion carry a high probability. The other eight, with a total investment value of more than US$14 billion, are weighted with a low probability of materializing.

See also… Continue reading "Semiconductor Sector; A Market & Economic Leader"

Gold Update: Is A Bear Face Showing Up?

Gold has missed our main target by $20 as it topped at the $1557 on the 4th of September. The gold optimists still benefited nicely as this peak was $67 above the first target of $1490, that we hit more than one month ago. So, it was definitely worth it to keep bullish for one more month.

Let’s see below if there were a lot of gold optimists a month ago.

Gold Poll

Indeed, the majority with a large margin preferred the continuation of the gold’s rally. It means you could book more than $60 for every ounce staying bullish. Thank you for support as I also believed in that outcome.

In the meantime, we should bear in mind that this was just a considerable correction, which had started in December of 2015. It has been retracing the other drop between 2011 and 2015. So, it is evident that the considerable drop and the correction are almost equal in time it took to emerge – 4 years both. Shall we book the recent rally as “done”? Continue reading "Gold Update: Is A Bear Face Showing Up?"

Precious Metals Were Ripe For A Pullback

If you hear one peep out of the gold community about a precious metals “takedown”“attack” or any other such aggressive or war-like language you will then be hearing some old fashioned and promotional gold bug orthodoxy. Fortunately, a casual look around the Bug-o-Sphere does not yield too many obvious conspiracy theorists or importantly, cheerleaders.

Indeed, it seems that all too many bugs expected this correction in gold, silver and the miners. That is a good thing because when the real top comes these ladies are going to be out front and greed will be running rampant (quite possibly against a negative fundamental or valuation backdrop as in 2008).

 

Instead, everybody, it seems knew about the high-risk Commitments of Traders situation for gold and silver. The CoT is not a timer, but for weeks now it had been a condition that’s been in place for a correction. It’s not a “takedown”, it’s a condition of too much speculation that had to be addressed. Now it is. Other CoT data available here.

gold cot

silver cot

As the CoT, Hulbert’s HGNSI and the extreme overbought readings first in the gold price, but then dynamically in the silver price and the miners gathered to form a high-risk situation, the time to take some profits was over the last couple of weeks, not now. Gold oriented newsletters appear to have jerked over bullish with the latest head-fake rise in the gold price. Continue reading "Precious Metals Were Ripe For A Pullback"

Macro Implications, As Silver Takes Leadership From Gold

Since we noted the initial move to break the 200 day moving average – and at least temporarily break the downtrend on August 27th – the Silver/Gold ratio (SLV/GLD) has held its breakout, looking to close the week and the month of August on a signal that we have long anticipated.

silver gold ratio

Okay, but the monthly chart of the Silver/Gold ratio makes abundantly clear that nothing has happened that has not happened before during the precious metals bear market. So that is the caveat to a macro thesis that would see a change to inflationary (as led by Silver/Gold), thereby letting commodities of all stripes and many global markets out of the barn. The monthly EMA 30 (grey dotted line) is a reasonable marker for the ratio’s post-2011 containment. The ratio’s price is below that marker. Continue reading "Macro Implications, As Silver Takes Leadership From Gold"

Bitcoin Is Running Out Of Time

Last month I updated the Bitcoin chart after this cryptocurrency made a buzz at the end of the June pushing through $13,000. In the same post, I shared with you the 4-hour chart where the horizontal consolidation had been spotted. The Bitcoin price was at the $11,500 level then, and I expected it to drop lower to complete the correction.

Let’s see below what you were waiting for Bitcoin then.

Bitcoin Poll

The majority of you expected Bitcoin to drop to the $7,800. Bitcoin haters were second to see head much lower. And the fans were in the third place with an immediate reversal option (stops here).

So far the least liked option of CD=AB at the $8,980 was the most accurate prediction as the Bitcoin indeed dropped lower but only to the $9,071. I think that time emotions were above the calm mind as the 5-digit price tag of the crypto spurred both euphoria and hatred as opinions were divided. Continue reading "Bitcoin Is Running Out Of Time"