Potential Pivots Upcoming for Stocks and Gold

Prologue: This is a bearish article written by someone who covered his short (bearish) positions today (except for the euro) and has only long positions now, in precious metals and stocks, along with a heaping helping of cash. In other words, per yesterday’s snapshot, the market had dropped to levels that could see a bounce, especially since the spark to this week’s reaction was not legitimate as a substantial market input. This article is not concerned with short-term ups and downs; it is concerned with what comes in September or in Q4, after da boyz is back from da Hampins and settled in.
The war of words between the TiC (Tweeter-in-Chief) and the LiC (Lunatic-in-Chief) has little to do with the financial market’s intermediate-term fate. In the very short-term? Sure, man, machine, casino patron and Mom & Pop will fly in and out of stocks as the wind (and sentiment backdrop) blows. But before this standoff of the belligerent, the markets had set a course for changes come September or Q4 2017.
We have our 30 month cycle that often coincides with major tops or bottoms. Here’s the ‘C30’ chart once again, with the noise of the 12 month cycle, which caught the 2009 bottom, removed. The C30 caught the major tops in and around 2000 and 2007, and also caught the market top (that wasn’t) in 2015 and the bear market low in 2002.
Simple math states that C30 is batting 5 or 7 with respect to catching at least moderate turning points (2010 may not look like much on the monthly chart, but players in the midst of it were not feeling that way at the time). It’s an impressive batting average and it is fact, not bias or bearish wishful thinking.

This post was published at GoldSeek on 13 August 2017.

The VXX Trade Of The Week – It’s Not Magic, It’s Fibonacci Pinball

Many have asked me to explain how our Fibonacci Pinball method of Elliott Wave analysis works. So, this week, I am going to show you a real-time example of how one of our analysts used it to trade the equity market decline we experienced this past Thursday.
On August 10th, the VXX closed up 14% from the closing price on August 9th. If we count the after-hours data, this move was actually closer to 20%. More impressive than the move higher itself was how well the move followed our Fibonacci Pinball guidelines on its way higher. This adherence to our Fibonacci Pinball guidelines allowed us to not only enter a trade with pre-defined stops and target levels, but also allowed us to manage the trade during the rally, maximizing returns while minimizing risk.
Recent real-time example
While most of the focus over the last several days was on the increased rhetoric between North Korea and Donald Trump, our focus was purely on the price action of the charts. The trades that we entered were done so based on the rules of Elliott Wave and the guidelines of Fibonacci Pinball. We entered, managed and exited all of the trades using this methodology and nothing else. There was absolutely no guessing or questioning how to enter, manage or exit this trade. No exogenous news event played any role whatsoever in how we traded the VXX on August 9th through August 10th.

This post was published at GoldSeek on 13 August 2017.

Shocking Admission From Global Head Of Strategy: “Our Clients Have Given Up On Valuation As A Metric”

For all the recent concerns about an “imminent” nuclear war with North Korea (not happening, according to the head of the CIA), which prompted a stunned reaction from Morgan Stanley which earlier today observed the “70% rise in the VIX index over three days, 2% drop in global equities, and more than a few holidays disrupted”, leading it to conclude “Well, That Escalated Quickly“, the market continues to ignore the real risk: the upcoming central bank balance sheet taper which will have a dire and drastic impact on markets according to Citi’s global head of credit product strategy, Matt King:
Markets seem optimistic that central bank plans to modestly reduce their support for markets in coming months can be achieved without disruption. We are not convinced.
Borrowing an analogy from developmental psychology, King compares the relationship between the Fed and the market to that between a (failed) parent and a child obsessed with their cell phone.
When other people’s children behave badly, the temptation is to presume it’s something to do with the parents. But then one day, even if you managed to avoid the terrible twos, your very own adolescent comes downstairs to breakfast with a look that could curdle the milk in its carton, fails even to grunt a response to your cheery good morning, and makes straight for their mobile phone. It shortly becomes clear that the mere fact of your breathing is something they find deeply offensive. Nothing in their previous twelve-or-so years of almost uninterrupted sweetness gave any hint of this. Where on earth did you go wrong?

This post was published at Zero Hedge on Aug 13, 2017.

Minsky Visits South Carolina

Who pays for excessive risk taking on nuclear power investments? You guessed it.
By Bill Tilles: Last week, the principal investor-owned utility in South Carolina, South Carolina Electric & Gas and its corporate parent SCANA decided to end efforts to build a new nuclear power station called V. C. Summer. The Board of Directors of the utility’s partner, state-owned utility Santee Cooper, had bailed on the project first following revised cost estimates almost 100% above initial cost estimates and an in-service date seven or so years behind schedule.
The governor has recently made noises about putting Santee Cooper up for sale. The purpose of the sale in part is to find a partner willing to complete the now stalled Summer nuclear project. It’s kind of a conservative’s twofer: privatization and they get more nuclear power. I bring this up because nuclear projects are like zombies, they are almost impossible to kill.
But what interested me was the reaction of the stock market. SCANA’s share went up solidly in the face of what should have been interpreted as bad financial news.

This post was published at Wolf Street on Aug 13, 2017.


The following video was published by FinanceAndLiberty.com on Aug 13, 2017
CrushTheStreet chief editor Kenneth Ameduri joins FinanceAndLiberty to discuss the global economy. He explains the US has experienced the worst productivity in 35 years, and money printing has gone into overdrive.
Where are paper currencies headed? “The world is looking for a free market alternative to be able to put their money in,” he says. This shift is why we’re seeing money flow into cryptocurrencies, gold, and silver. Bitcoin and other cryptocurrencies are “big competition for the Dollar, for the Euro.”

GoldSeek Weekly Radio: Gerald Celente and Bill Murphy

Bill Murphy of GATA.org returns with key insights on the PMs market. The world’s largest gold producing / consuming nation, China just announced a 10% decrease in production and a 10% increase in consumption. Our guest suggests a gold price target of $3,000-$5,000 to compensate for underlying real inflation levels. Bill Murphy sees signs that indicate price suppression schemes are failing – the PMs could begin the next leg of an epic ascent. Key takeaway: the cartel is losing control, it may be merely a matter of time before the physical gold market overcomes the paper gold schemes as early as Fall of 2017.

This post was published at GoldSeek on 13 August 2017.

FX Week Ahead: Myopic Markets Hit USD On Inflation Miss

FX Week Ahead – Myopic markets hit USD on inflation ‘miss’ – rest of the major economies in focus ahead.
Once again, sluggish inflation takes a hammer to currency and we saw the USD turn back from a tentative recovery, which many still see as corrective against some of its major counterparts. In comparative terms, we still feel the numbers out on Friday were not as bad as the pundits and markets perceived, but liquidity in the summer is not at its best at short term (reactive) flow gets the ‘benefit’ to some degree, with the usual suspects winning out – for now. The core rate held 1.7% – so that is 3 months in a row now, but the headline was up from 1.6% to 1.7% instead of 1.8% – small potatoes at the moment, but when looking at this as a global phenomenon, the impact was a little too one dimensional/sided, but next week will naturally tell us more.
No surprise then to have seen the EUR shooting back into the mid 1.1800’s again as the revival in Europe continues to draw in investors. As we have seen in the sharp upturn in EUR/CHF, dormant cash on the sidelines is now being deployed, but at a pace which may unnerve the ECB who are ever wary of seeing another taper tantrum get out of hand. Not that they have to worry about the rates market at the present time, with tensions between the US and North Korea driving money back into fixed income and safe haven in general, with the benchmark German 10yr now under 40bps again alongside the T-Notes pulling back further into the low 2.00%’s. The spread has been widening again, but the near term correlation with EUR/USD has diminished (to put it politely) and after the very brief dip under 1.1700, 1.2000 is back on the radar.

This post was published at Zero Hedge on Aug 13, 2017.

Technical Scoop – Weekly Update: August 13, 2017

It hardly seems much of a contest: the world’s most powerful nation both economically and militarily vs. one of the poorest nations on earth but with a strong, or at least large, military. So far, the war has been rhetorical as both sides though their respective leaders hurl superlatives at each other that usually end in one of them being engulfed in a ring of fire. The words, however, have unnerved global markets.
This past week saw upwards of $1 trillion shaved from global stock markets triggered by Donald Trump’s and Kim Jong Un’s ongoing war of words. The last word has so far gone to Donald Trump who did his usual tweet, asserting that ‘military solutions are now in place, locked and loaded, should North Korea act unwisely.’ Earlier, North Korea had threatened to land a missile near the US Pacific territory of Guam in response to Trump’s promise to unleash ‘fire and fury.’ The world can only shudder at the thought of a nuclear exchange. But words are having an impact as stock markets ‘hurled’ and safe havens of Japanese Yen, Swiss Francs, US Treasuries, and German Bunds and gold jumped higher.
US and global stock markets had been hurtling ever higher and valuations are near record. A correction was most likely overdue. The war of words and tensions over North Korea was the trigger. How deep the correction goes is anybody’s guess at the moment. Numerous pundits believe that the odds of actual war between the verbal combatants is low, but that a correction was probably overdue and this could result in a buying opportunity.
The likelihood is that the rhetoric and war of words is liable to continue for some time. Even if North Korea were to launch more missiles into the sea, it most likely would up the ante and rattle markets further. An overvalued market and sabre rattling is a recipe for the correction. Inflation numbers released this past week were benign. As a result, the combination of the sabre rattling and a stumbling market could keep the Fed on the sidelines through the rest of the year. And that is not even getting into the looming fight over the budget, tax reform and the debt ceiling. Also, let’s not forget the ongoing investigation into the Trump campaign and the Russians being conducted by special counsel Robert Mueller.

This post was published at GoldSeek on 13 August 2017.

Stocks and Precious Metals Charts – Weekend Edition

Stocks bounced back a bit on Friday after the big selloff, while the metals continued their upward push into what could be some fairly stiff resistance.
The task for told this week is to take out the psychological 1300 resistance and stick a close above it.
As for silver, the 18 handle looms above.
Stocks need to hang on to the bounce.
With Twitter Man predicting that a trade war with China will commence on Monday, we’ll have to see what happens.
Relatives came over from Maryland and Pennsylvania this weekend. I was able to obtain some much appreciated sleep and the time to go to the store. And it was nice to have some company. Periods of illness of a loved one can become isolating experiences. A visit from a friend, or a kind word and a smile or gesture from a stranger, become very welcome when keeping the long vigil of duty and love.

This post was published at Jesses Crossroads Cafe on 13 AUGUST 2017.

Could Bitcoin Help Venezuelans As Crisis Deepens?

Protests continue to rage in Venezuela as inflation soars to unprecedented levels and the price of oil remains low. The country’s national currency is now worth less than fictional gold in Azeroth, the setting of the popular massively multiplayer online role-playing game World of Warcraft, pushing Venezuelans to bitcoin to hedge against the nation’s struggling economy.
So, What Happened?
Under President Hugo Chavez, Venezuela underwent a revolution, bringing social programs such as education and health care to the people, propped up by increasing oil prices. During his presidency, however, Chavez was accused of bending the economy for personal gain, human rights violations, and intimidation of the media. Price controls placed on basic goods, including food, initially meant to redistribute wealth and reduce costs, led to hyperinflation and shortages. Crime and violence also increased drastically under Chavez, leaving the country as one of the most violent in the world. Venezuela’s misfortune increased, however. In 2013, Chavez passed away and his Vice President, Nicols Maduro, took power. Worries of corruption mounted while plummeting oil prices created an economic climate which was less than desirable. Maduro’s inherited economic burden, in addition to the leader’s failure to diversify the country’s economy led to widespread protests in 2014.

This post was published at Zero Hedge on Aug 13, 2017.

Battle of the Behemoths

As the empire deliquesces into a fetid slurry of economic failure, we stand ankle deep in the rising swamp waters witnessing the futile battle of the giants, Walmart and Amazon.
Neil Howe, co-author of The Fourth Turning, wrote this week that ‘[t]he Amazon-Walmart rivalry will determine the future of retail.’ Well, it seems that way, perhaps, and I understand why a lot of people would imagine it, but I would draw some different conclusions. What we’re seeing is more like the battle between Godzilla and King Kong, two freaks of nature produced by a toxic culture, fixing to finish each other off.
The condition that will flavor events going forward is scale. Everything organized at the giant scale is going to fail. We have made all the systems of daily life too large and they will not function in the long emergency (and the fourth turning), an age characterized by universal contraction. This is true of corporations, institutions, schools, hospitals, farms, governments, virtually all organized enterprise. Retail is currently just the most visible example at the moment, since it is a commercial battleground that doesn’t enjoy public subsidies. The organisms on that field are exquisitely sensitive to economic reality, and the salient reality these days is the impoverishment of their customers, the former middle class.

This post was published at Wall Street Examiner on August 11, 2017.

Passport Passport Slammed With Over 60% In Redemptions In Q2

Back in April, we reported that the Long-Short Strategy Fund of John Burbank, one of the handful of investors who made a killing from shorting subprime, and head of what was at the time the $2.4 billion Passport Capital, was shutting down after a series of negative returns: according to HSBC, the fund – which had an AUM of $636 million as of March – had lost 2.1% in the first two months of this year and was down 11.8% in 2016. As we further reported, a catalyst for the closure appears to have been the January 2017 decision by the San Bernardino employees fund to pull its funds from Passport.
Fast forward to today, when in his latest letter to investors, Burbank reports that at what was once a multi-billion fund, total firm assets at Passport Capital have as of June 30 shrunk to just $900 million as a result of net outflows (not including the Long Short hedge fund strategy liquidation, effective 4/30/2017) which totaled a whopping $565 million, or a nearly 40% loss of AUM due to redemptions.
Worse, Burbank also reports that his flagship Passport Global fund has been virtually wiped out, and following $480 million of outflows, or a stunning 63% in assets under management, net of redemptions Fund assets as of June 30 stood at only $275 million, to wit:

This post was published at Zero Hedge on Aug 13, 2017.

Morgan Stanley: “Well, That Escalated Quickly”

“Well, that escalated quickly.”
That’s how Morgan Stanley’s chief cross-asset strategist Andrew Sheets summarizes events in the last week in his latest Sunday Start note, in which he describes how following one of the calmest stretches for stocks since the 1960s, an escalating war of words with North Korea hit late summer markets priced for relatively little vol with the result sharp and sudden: a 70% rise in the VIX index over three days, a 2% drop in global equities, and more than a few holidays disrupted. Fear not, though, because according to Morgan Stanley, whose outlook on the S&P is one of the most bullish on Wall Street, views last week’s events “as a standard equity correction within an ongoing bull market.” With volatility bearing the brunt of the repricing over the last several days, that’s where some of the most interesting changes lie.
And while Sheets lays out his reasons why the bank’s advice to clients is just to BTFD – or in the context of N. Korea, BTFAONW – Morgan Stanley does caution that things could get serious if the one scenario many – most recently Jeff Gundlach – have been dreading, namely the rise in volatility, becomes self-fulfilling, with investors selling as volatility rises and markets move lower, driving more of both. As Sheets writes, “for this risk, I’d be watching if new lows in the S&P 500 are confirmed by new highs in the VIX. This scenario is also scarier if realised volatility can stay near implied (if it doesn’t, implied volatility can fall, reversing the cycle). As of noon Friday, 3m S&P 500 was priced for a daily move of 0.8% and EuroStoxx was priced for a daily move of 0.9%.”
Finally, while the bank remains optimistic on equities, it adds that there is an exception: “we would not ‘buy the dip’ in US credit, where [we] see more risks, given weaker fundamentals, expensive pricing and limited upside in exchange for swimming against the recent tide.”

This post was published at Zero Hedge on Aug 13, 2017.

Market Report: Good advance above overhead supply

Gold and silver stormed through minor overhead supply this week, to mount an attack on the June highs at $1296 and $17.70 respectively. From last Friday’s close, gold rose from $1259 to $1285 in early European dealing this morning, having hit a peak in Asian markets last night of $1289. This was within $6 of breaking above the June high. Silver has some way to go, with the price this morning at $17.05, still 65 cents below its June high.
Silver is repeating gold’s action in its run-up to the August Comex contract expiry, when unusually the closing of short positions, evidenced by the fall in open interest, drove the price higher. Regular readers of this weekly report will know that at contract expiry, the price usually falls, as hedge fund managers are nearly always net long, and vulnerable to having their stops taken out by the bullion banks. In silver’s case, the active contract is September, so the same situation to that of gold last month, applies. The effect is illustrated in our next chart, of silver’s open interest and the price.

This post was published at GoldMoney on August 11, 2017.

Are We Already in Recession?

If we stop counting zombies, we’re already in recession.
How shocked would you be if it was announced that the U. S. had just entered a recession, that is, a period in which gross domestic product (GDP) declines (when adjusted for inflation) for two or more quarters? Would you really be surprised to discover that the eight-year long “recovery,” the weakest on record, had finally rolled over into recession? Anyone with even a passing acquaintance with the statistical pulse of the real-world economy knows the numbers are softening. — Auto/light truck sales: either down or off a cliff, depending on how much lipstick has been applied to the pig. — Restaurant/dining sales: down. — Tax receipts: down. — Retail sales: flat, stagnant or down, depending on the sector and if the numbers have been adjusted for inflation/loss of purchasing power.

This post was published at Charles Hugh Smith on SUNDAY, AUGUST 13, 2017.