• Category Archives Technical Analysis
  • Market Talk- November 17, 2017

    The tax reform bill passing the US House yesterday certainly added to sentiment, after great earnings releases for markets but Asia need more help for cash today. Having opened strong all core markets then drifted and even saw the Nikkei trade negative. For the week it closes down 1.3% which has broken a two month rally. The Hang Seng performed well all day closing up around +0.6% but only off-set the decline in the Shanghai (-0.5%). India traded well following Thursday’s credit upgrade eventually adding an additional +0.7% onto yesterdays gain. All eyes are still on the DXY as we approach the weekend as just below we have the 50 Day Moving Average at 93.50. Oil has bounced following comments from potential output cuts led by OPEC.

    This post was published at Armstrong Economics on Nov 17, 2017.

  • Housing Starts, Permits Rebound In October After Storm-Soaked September

    Following September’s storm-driven tumble, October has seen a big rebound in Housing Starts (+13.7% MoM) and Permits (+5.9% MoM) both beating expectations, as multi-family starts explode.
    Housing starts printed above all analysts’ guesses (4 standard deviations above expectations) for the biggest monthly jump in a year.
    The surge in starts was driven by a major rebound in multifamily units…

    This post was published at Zero Hedge on Nov 17, 2017.

  • China’s 10-year Yield Bumping 4%

    Even before President Trump’s Asia trip, Chinese 10-year sovereign bond yields have been pushing higher. And that means we should expect the same for US 10-year T-Note yields.
    I wrote about this relationship back in May 2017, noting that a big spread between the yields in China and the US can mark an inflection point for US yields. To identify when the spread was getting to an actionable point, I used 50-2 Bollinger Bands. That designation means that the bands are set 2 standard deviations above and below a 50-day moving average. I have left that moving average off the chart just to help reduce visual clutter.

    This post was published at FinancialSense on 11/16/2017.

  • Gold Bounces Off Key Technical Support On Massive Volume

    The last 48 hours has been quite a chaotic one in precious metals markets with massive volumes of ‘paper’ gold flushed in and out of the futures markets. This morning – shortly after the US open failed to spark a panic-bid in stocks – gold futures bounced off their 200-day moving average on huge volume (around $4.5 billion notional) breaking above the 100DMA…

    This post was published at Zero Hedge on Nov 14, 2017.

  • Macro Plan Still on Track for Stocks, Commodities And Gold

    As I’ve been noting again, again, again, again, and again the macro backdrop is marching toward changes. I’d originally thought those changes would come about within the Q4 window and while that may still be the case, it can easily extend into the first half of 2018 based on new information and data points that have come in.
    One thing that has not changed is that stock sectors, commodities and the inflation-dependent risk ‘on’ trades and the gold sector, Treasury bonds and the risk ‘off’ trades are all keyed on the interest rate backdrop; and I am not talking about the Fed, with its measured Fed Funds increases. I am talking about long-term Treasury bond yields and yield relationships (i.e. the yield curve).
    People seem to prefer linear subjects like chart patterns, momentum indicators, Elliott Waves, fundamental stock picks or the various aspects of ‘the economy’ or the political backdrop. They want distinct, easy answers and if they can’t ascertain them themselves, they seek them out from ‘experts’. But all of that crap (and more) exists within an ecosystem called the macro market. When you get the macro right you then bore down and get investment right. That’s the ‘top down’ approach and I adhere to it like a market nerd on steroids. And with the recent decline in long-term bond yields and the end of week bounce, the preferred plan is still playing out.
    So let’s briefly update the bond market picture with respect to its implications for the stock market, commodities and gold.

    This post was published at GoldSeek on 10 November 2017.

  • “The Leaders Are Crashing” – It’s Not Just Junk Bonds That Have Given Up

    We have been warning about significant divergences between equity prices and other asset classes for a few weeks (most notably the decoupling from equity risk and credit risk, junk bonds), but as BofA notes its not just these assets that are breaking away from soaring Nasdaq levels, in fact many of the rally’s leaders are crashing… in a way we have not seen recently.
    High yield risk has suddenly decoupled from equity markets…

    This post was published at Zero Hedge on Nov 10, 2017.

  • Psychological Warfare in the Precious Metals Markets

    For almost a year now the PM stock indexes have been building out a triangle trading range that has yet to be determined if it is going to be a consolidation pattern or a reversal pattern. With big patterns one can lose sight of what is really there, as the longer a trading range develops the more trendlines one puts on a chart, and the more confusing things become.
    Tonight I would like to show you, from a Chartology perspective, what the basic patterns are, from the short term to the longer term. The bigger a trading range the more chart patterns can develop before we see the final product. Sometimes it’s totally different from the early stages of the trading range. It’s important to clear ones mind of all the preconceived notions of what they think is happening to just what the charts are suggesting. It’s a hard thing for most investors to do because of all the things we read each and everyday which works on our subconscious. More than anything else we are playing a game of psychological warfare.
    Lets start by looking at a short term daily chart for the HUI which is showing the H&S top we’ve been following since early October. The H&S top is pretty symmetrical and the breakout below the neckline was accompanied by a breakout gap. This is what we know to be true at this point in time. If the price action can trade back above the neckline then this scenario will be thrown out the window, but until that time the H&S top is valid. Also when the neckline gave way so did the 200 day moving average.

    This post was published at GoldSeek on 9 November 2017.

  • Negative Divergence in the Gold Stocks

    After a severe selloff, precious metals have enjoyed a bit of a respite. Corrections are a function of time and/or price. The correction to the recent selloff has been more in time than price. Metals and miners have stabilized over the past nine trading days but have not rebounded much in price terms. Gold has barely rallied $20/oz while GDX and GDXJ have rebounded less than 4% and 5% respectively. In addition to the weakness of this rally, the gold stocks are sporting a negative divergence and that does not bode well for an end of the year rally.
    The negative divergence is visible in the daily bar charts below. We plot Gold along with the gold stock ETF’s and are own ‘mini’ GDXJ index. The price action in Gold since October looks constructive. The market has held its October low and the 200-day moving average. It could have a chance to reach $1300-$1310. However, the miners are saying no to that possibility. Everything from large miners to small juniors made a new low while Gold did not. The second negative divergence is in regards to the 200-day moving average.

    This post was published at GoldSeek on Thursday, 9 November 2017.

  • Is There A Housing Bubble In Your City?

    My analysis below highlights how out of scope house prices are from end-user, shelter-buyer, employment & income fundamentals in the most economically important cities.
    This massive divergence has been driven largely from the things present in all bubbles; unorthodox capital, credit & liquidity driving speculation.
    Like Bubble 1.0, house prices in the most lofty regions have been driven for years by ‘non-end-users’ SPECULATING on rentals, second/vaca homes, and flipping – riding a wave of cheap & easy credit, liquidity & leverage – believing prices always go up.
    While speculative cycles come & go, end-user, shelter-buyer demand is omnipresent. And end-user employment, income & credit fundamentals are what house prices will ultimately gravitate to.
    With between 40% & 50% of buyers putting less than 10% down for years – and because it takes at least 10% equity to sell & rebuy – it doesn’t take much downside to swamp the nation in ‘effective negative equity’ once again.
    Bottom Line: On a ‘national’ basis, it doesn’t look too badly. But, most of the most economically important US cities are experiencing ‘BUBBLE-LIKE’ conditions again.

    This post was published at Zero Hedge on Nov 7, 2017.

  • “One Simple Reason The Yield Curve Is Collapsing”

    The divergence between the ‘hope’ melt-up in stock markets and the ‘nope’ collapse of the US Treasury yield curve has never been so wide… and has never engendered so many excuses by commission-takers and asset-gatherers for why the latter is wrong and the former correct.
    One thing is clear, as The Fed tightens rates, the market is increaingly insensitive to the next tightening as financial conditions have eased dramatically as the Fed tightens. Former fund manager Richard Breslow suspects ‘you ain’t seen nothing yet’ as the linkage between FOMC raising rates and a flattening yield curve suggests this tradable trend is far from over.
    Via Bloomberg,
    The yield curve in the Treasury market has continued on its flattening way. Look at a one-year chart and it shows a relentless, if at times choppy, move from its widest at the beginning of the period to today’s new tight. Everyone seems to have their theories why and what it means, giving clear proof that great minds can differ. And even the bond market isn’t simply well-established science. One thing that they do agree upon is the obvious: it’s been a clear, tradable trend. But before we start waxing eloquent on the historic magnitude of the move, keep in mind, this tightening absolutely pales in comparison to several others of the last 25 years.

    This post was published at Zero Hedge on Nov 7, 2017.

  • Global Stock Meltup Sends Nikkei To 25 Year High

    The global risk levitation continues, sending Asian stocks just shy of records, to the highest since November 2007 and Japan’s Nikkei topped 22,750 – a level last seen in 1992 – while European shares and US equity futures were mixed, and the dollar rose across the board, gains accelerating through the European session with EURUSD sumping below 1.16 shortly German industrial output shrank more than forecast, eventually dropping to the lowest point since last month’s ECB meeting. Meanwhile soaring iron-ore prices couldn’t provide relief to the Aussie as the RBA held rates unchanged as expected; Oil traded unchanged at 2.5 year highs, while TSY 10-year yields rose while the German curve bear steepened, both driven by selling from global investors.
    The Stoxx Europe 600 Index edged lower, erasing an early advance, despite earlier euphoria in stocks from Japan to Sydney, which reached fresh milestones. Disappointing reports from BMW AG and Associated British Foods Plc weighed on the European index as third-quarter earnings season continued. Earlier, the Stoxx Europe 600 Index rose as much as 0.3%, just shy of a 2-year high it reached last week. Maersk was among the worst performers after posting a quarterly loss, saying a cyberattack in the summer cost more than previously predicted. Spain’s IBEX 35 gains crossed back above its 200 day moving average. European bank stocks trimmed gains after European Central Bank President Mario Draghi said that the problem of non-performing loans isn’t solved yet, though supervision has improved the resilience of the banking sector in the euro region. Draghi was speaking at a conference in Frankfurt.
    Over in Asia, equities rose to a decade high, with energy and commodities stocks leading gains as oil and metals prices rallied. The MSCI Asia Pacific Index gained 0.8 percent to 171.40, advancing for a second consecutive session. Oil-related shares advanced the most among sub-indexes as Inpex Corp. rose 3.7 percent and China Oilfield Services Ltd. added 4.6 percent. The MSCI EM Asia Index climbed to a fresh record. The Asia-wide gauge has risen 27 percent this year, outperforming a measure of global markets. The regional index is trading at the highest level since November 2007. Hong Kong’s equity benchmark was at its highest since December 2007 as Tencent Holdings Ltd. advanced for an eighth session. Australia’s S&P/ASX 200 index closed at its highest level since the financial crisis.

    This post was published at Zero Hedge on Nov 7, 2017.

  • Gold Spikes Above Key Technical Level As USDJPY, Bitcoin Tumble

    As European markets closed this morning, all bids disappeared from USDJPY and the pair dropped back below 114.00. In its mirror-like manner, gold reflected this tumble and surged above its 100-day moving average over $1280.
    As USDJPY rolled over so Bitcoin hit an airppocket at the european close…

    This post was published at Zero Hedge on Nov 6, 2017.

  • In Bizarre Warning JPMorgan Says “Beware The Shadow World” As “Speed Of Asset Rally Is Scary”

    While the Fed may still be confused by the lack of inflation, if only in the “real economy”, if not in financial assets, increasingly more analysts have realized that what the Fed has done is tantamount to blowing an roaring inflationary bubble, if largely confined to the realm of asset prices. And while we used a Goldman chart to demonstrate this divergence a little over a month ago…
    … now it’s JPMorgan’s turn to undergo the proverbial epiphany.
    In a note from JPM’s Jan Loeys, titled “Financial overheating a problem yet?”, the strategist writes that “growth-sensitive assets, such as equities, credit, cyclicals, and commodities continue to gain and outperform, keeping us comfortably in the Growth Trade. Growth prospects have been rising and accelerating over the past two months from the only slow and dispersed upgrades of the previous 12 months. By now, we are in a full-fledged and globally synchronized move up in growth optimism.” Perhaps, but there is a catch as JPM unwillingly concedes:
    The speed of these upgrades and asset price rallies is both exhilarating and scary. The faster we rally, the greater the joy, but the more one should be worried about the eventual reckoning. How far from now is that and what should we do about it?

    This post was published at Zero Hedge on Nov 5, 2017.

  • Something Wicked Part 2 – The Roach Motel

    In Something Wicked This Way Comes, we provided an in-depth look at how stock repurchases are distorting McDonald’s (MCD) earnings per share and making the company look more profitable than it truly is. When such financial wizardry is considered alongside the growing popularity of passive investment strategies and overall sense of market euphoria, we have a better appreciation for why MCD trades at a valuation higher than fundamentals suggest would be appropriate.
    We thought it would be helpful to extend this analysis to the entire S&P 500 to see if we can uncover other companies demonstrating fundamental and valuation divergences similar to MCD.
    Who Else?
    Similar to the MCD analysis, we evaluated changes in fundamentals, equity price and valuation data over the last five years for most companies that comprise the S&P 500. The data below, summarizing our broad findings, is based on 475 of the 505, S&P 500 companies. 30 companies were omitted from the analysis due to insufficient data.
    141 companies, or about 30% of the S&P 500, had annualized five-year sales growth rates of 1% or less. Of these 141 companies:

    This post was published at Zero Hedge on Nov 1, 2017.

  • Gold Stock ETFs: New Kid On Block

    I’ve suggested that investors may need to look beyond the head and shoulders top formations that recently appeared on bullion and many precious metal stocks. Pleaseclick here now. Double-click to enlarge this daily gold chart. Intermediate uptrends often consist of three legs. In 2017, gold has had two legs up. The next US jobs report is scheduled for release on Friday. Will it be the catalyst that launches a third leg higher for gold? I’m not sure, but I am sure of what’s important for gold, which is that it is generally very well supported here, both technically and fundamentally. The bottom line: Gold held in ETFs is quite steady. China’s economy has softened, but only modestly. That light softness is almost certainly related to the government’s action taken to reduce pollution.

    This post was published at GoldSeek on Tuesday, 31 October 2017.

  • Keeping A Close Eye On Momentum In The US Equity Market

    Authored by Steven Vanelli via Knowledge Leaders Capital blog,
    Over the last 20 days, the US equity is showing early signs of exhaustion, and momentum is beginning to weaken.
    In the following charts, we’ll highlight the various technical measures we calculate each day to illustrate the early turn in momentum. Our KLSU DM Americas Index represents the top 85% market-cap of the US and Canada.
    First, after peaking near 80% above the moving average a month ago, now only 55% of stocks are above their own 20-day moving average.

    This post was published at Zero Hedge on Oct 27, 2017.

  • New Home Sales Explode In Storm-Soaked September – Biggest Jump In Over 25 Years

    Following existing home sales modest bounce, new home sales in September exploded by 18.9% MoM – the biggest jump since January 1992.
    Against expectations of a 1.1% decline, new home sales soared 18.9% MoM in September – 9 standard deviations above expectations…

    And the biggest jump in 25 years…

    This post was published at Zero Hedge on Oct 25, 2017.

  • Greg Weldon: Debt-Driven Consumer Economy Breaking Down

    Mike Gleason: It is my privilege now to welcome in Greg Weldon, CEO and President of Weldon Financial. Greg has over three decades of market research and trading experience, specializing in metals and commodity markets and even authored a book in 2006 titled Gold Trading Bootcamp, where he accurately predicted the implosion of the U. S. credit market and urged people to buy gold when it was only $550 an ounce.
    He is a highly sought-after presenter at financial conferences throughout the country, and is a regular guest on financial shows throughout the world, and it’s good to have him back here on the Money Metals Podcast.
    Greg, thanks for joining us today. And it’s nice to talk to you again. How are you?
    Greg Weldon: I’m great, thanks. My pleasure, Micheal.
    Mike Gleason: Well, when we had you on back in mid-August you were optimistic about gold at the time. We had a pretty good move higher, shortly thereafter that ended up with gold hitting a one year high. But it stalled out around $1,350 in early September and we’re currently back below $1,300 as we’re talking here on Wednesday afternoon. Gold hit resistance at about the same level in the summer of last year, so give us your update as to your current outlook. What drivers, if any, do you see that can push gold through that $1,350 resistance level in the months ahead, Greg?
    Greg Weldon: Yeah, well, exactly as you said. You had the move that we were anticipating when we last spoke and it kind of had already started from the 1205-ish level. All of this fitting into the kind of bigger picture, technical structure that still leads to a bullish resolution. But as you accurately mentioned, you got up to what have been close to, not quite even towards last summer’s highs around $1,375, $1,377. In this case, around $1,360 and ran out of steam.
    The dollar kind of changed some of the picture and the thought process linked to the Fed changed some of the picture. So, you embarked on a downside correction. $1,260 was the low, you have a nice little correction from that level. That was the level that equated to 200-day exponential moving average. It’s a level that was just below the 38% Fibonnaci retracement of the move up from $1,205. Actually, the move up from $1,123 back at the end of 2016. So you had real, critical support there. So, to me, everything’s kind of mapped out the way you might expect it to, structurally, in this market.

    This post was published at GoldSeek on 23 October 2017.

  • Time for Caution in Gold Miners

    Last week we noted the likely negative impact of a sustained rebound in the US Dollar on Gold. Recent weakness in precious metals has not been much of a surprise considering the sector’s relative weakness months ago amid a weak US Dollar. While the greenback has bottomed, it has yet to push above resistance at 94. Nevertheless, Gold and in particular the gold stocks are threatening more losses even before a push higher in the greenback. It is time to be defensive and cautious.
    Although GDX is holding its 200-day moving average and has yet to pierce its October low, GDXJ already has. The juniors (GDXJ) closed below their October low and broke their uptrend line from May. This, after failing twice at the 200-day moving average. The break below $33.50 projects down to $32.00. The juniors lack strong support until $30 while GDX’s initial support levels are $22 and $21.

    This post was published at GoldSeek on 22 October 2017.

  • Working-Age Depopulation Is Hugely Bullish For Assets… Bearish For Mankind

    Population growth is the primary, if not sole, contributor to growth in consumption and the resultant economic growth. But not simply any population, but it is the growing population of the working age or “core” population of 20 to 65 year olds (particularly among the wealthy or developing nations) that is hyper-critical. The chart below shows the average household income and expenditures by the age of the head of the household. Not surprisingly, the 35 to 64 year old age group makes and spends more than double the younger or older age groups. Although the dollar amounts vary, this principle is true worldwide.
    The rise, peak, and deceleration of core population growth among the nations with income, savings, and/or access to credit goes an awful long way in explaining the deceleration of economic growth. That decelerating growth explains the interest rate cuts, rise in debt, and now the rise in central bank monetization. This change in core growth (and the central banks reactions to it) explains the great and accelerating divergence of negative economic activity vs. positive asset valuations. The charts below show core population growth (which is determined through 2035, and estimates from there on all taken from the United Nations).

    This post was published at Zero Hedge on Oct 22, 2017.