dollar

Let's see what Peter Garnry, Head of Equity at Saxo Bank, said about trends in AI investement in 2023 and Google stock expectations amid US Justice Department second antitrust lawsuit against the company. What are the trends in AI investment in 2023? Any specific industry investors are seeking?  AI as a technology has many different branches. The self-driving branch of AI has seen much lower investments over the past year as the technology has been slowing down remaining far from Level 5 autonomy driving. Other branches of AI like the large language models such as the newly released ChatGPT are seeing massive investments and Microsoft's $10bn investment underscores this.   Read next: GBP/USD Pair Is Struggling To Extend Previous Highs, EUR/USD Pair Continued Its Gains| FXMAG.COM The talk about ChatGPT and its potential threat to Google's search engine business is real and has increased the investment risk for Alphabet, but Alphabet's AI unit DeepMind has already proclaimed

Strong Bid In The USD

Strong Bid In The USD

Ivan Delgado Ivan Delgado 14.10.2020 08:48
Daily EdgeIt was turnaround Tuesday as risk-off came back rather aggressively leading to a steady bid in the US Dollar, Japanese Yen and a surprisingly strong Canadian Dollar, decoupled from the underperformance of other commodity-related assets (AUD or Gold). The Pound also suffered from the lack of clarity on Brexit.To see an expanded version, right-click and select ‘open link in new tab‘. The indices show the performance of a currency vs a G8 FX basket. After scanning through the news, there was no specific catalyst that may have been pin pointed to spark the run to safe haven assets. The dominant themes remain the fiscal stimulus talks, with a positive outcome ahead of the US election rather illusive while the Presidential polls continue to show Biden pulling further away in the lead. The deterioration in COVID-related cases worldwide and some setback in vaccine news was attributed as a factor not helping either.When it comes to today’s hot trade of the day, I’ve made a video where I walk viewers through a potential short setup in the AUD/USD during the last European session. This was a short clearly identified via my proprietary order flow script. Traders could have been exposed to a ridiculous 15:1 risk reward assuming they let the position run as it turned out to be a monster of a trade off an hourly supply area.Hot Trade Of The DayTo see an expanded version, right-click and select ‘open link in new tab‘. In this section I pick a market or several ones that presented an opportunity to buy on weakness or sell on strength based on the higher timeframes outlook. My video analysis below will further elaborate on the logic behind the trade.   Insights – Hot Trade Of The DayIn this video analysis I dissect the information above. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter and manage a position, hence the video is intended as educational in nature and not financial advice. 
USD continues to weaken on hopes of further stimulus

USD continues to weaken on hopes of further stimulus

John Benjamin John Benjamin 02.12.2020 10:36
Euro Rises To The Highest Levels Since 2018The euro currency is posting strong gains, rising over one percent on the day. The gains largely on the back of a weakening US dollar.Earlier on Monday, the euro gave back the gains after testing the 1.2000 level. However, this decline saw prices retesting the trend line for support.A rebound from this trend line saw price action breaking past this previous resistance level.At the time of writing, the EURUSD currency pair is trading above the 1.2000 level.The Stochastics oscillator is however posting a lower high. This could signal a possible correction in the near term.The lower price level of 1.1900 is likely to act as support during this retracement.GBPUSD Attempts To Break The Trend LineThe British pound sterling is posting strong gains on the back of a weaker dollar. After price action consolidated above the 1.3300 level, the cable is attempting to push higher.For the moment, prices are stuck near the trend line. As long as the trend line holds as resistance, we could see the sideways consolidation to continue.However, in the event of a breakout off the trend line, then the GBPUSD will be aiming for the 1.3500 level next.For the moment, with the support level firmly established at 1.3300, the GBPUSD will be looking to make further gains to the upside.WTI Crude Oil Losing The 45.00 HandleOil prices are trading weaker on Tuesday. The declines come despite the US dollar taking a strong hit.The move to the downside comes after oil prices failed to make any big moves to the upside.As a result, WTI crude oil was consolidating around the 45.00 level for a considerable period of time.After losing this handle, oil prices are likely to push lower. The next key support is near the 43.50 level.However, we expect the pullback to see prices retracing the 45.00 handle.If resistance is firmly established here, then we could expect to see further declines down to the 43.50 level.Gold Prices Get A Boost From Weaker USDThe precious metal has been posting strong gains on the back of the US dollar. Gold prices are up nearly 2% intraday on Tuesday.The rebound also coincides with the impending correction in gold, as mentioned a day before. For the moment, we expect prices to retrace to the 1817.80 level.If this level holds, then gold prices could establish resistance. This will in turn renew the downside bias in the precious metal.The 1800 level once again comes into the picture, with the potential for gold to post further losses.
USD rises slightly off the two- and half-year lows

USD rises slightly off the two- and half-year lows

FXMAG Team FXMAG Team 09.12.2020 16:00
Euro Drops As ECB Meeting LoomsThe euro currency’s declines accelerated on Wednesday. The common currency is trading below the 1.2100 level which it held over the past few days.The declines come as the ECB will be holding its monetary policy meeting. Speculation is high that the central bank will increase its bond purchases.The current declines could stall near the dynamic support off the rising trend line. This could see a confluence of the 1.2000 level holding up for the moment.However, if the 1.2000 level breaks, then the next key support to look for will be the 1.1900 level.To the upside, price action could stall near 1.2100.GBPUSD Volatile Within A Flat RangeThe British pound sterling is giving back the gains made earlier. The volatility stems as Brexit negotiations drag on with no clear plan yet.The GBPUSD is currently settled within 1.3483 and 1.3300 levels. While the lower end of the range was briefly tested earlier this week, it has held up.The current pace of declines could see the 1.3300 support level coming under pressure once again.If the cable loses this support, then we could expect to see further declines.The next key support level is near 1.3122.Crude Oil Falls Back To 45.50 SupportOil prices continue to trade weak above the 45.50 level. Prices fell once again on Wednesday, testing the 45.50 level of support.So far, no new highs have formed. This consolidation could lead to a potential correction if support gives way.Below the 45.50, the next key support area is seen at the 43.50 level. We could expect this support level to hold in the near term.It would also mean that oil prices could continue trading flat within the newly established range below the 45.50 level.The Stochastics oscillator is also signalling a move lower. This could possibly confirm the downside bias for the moment.Gold Edges Down To 1850 SupportThe precious metal is seen retesting the support level of 1850 once again.This comes as prices barely rose close to the 1880 level before giving back the gains. The market sentiment remains mixed leading to the rather flat price action for the moment.However, the 1850 level will be critical. If gold prices lose this handle, then we could expect further declines to the 1800 level once again.This would come as gold prices will likely test the 1817.80 level to the downside.
Stocks Close Mixed Amid Poor Jobless Data, COVID-19 Fears, and Stimulus Doubts

Stocks Close Mixed Amid Poor Jobless Data, COVID-19 Fears, and Stimulus Doubts

Finance Press Release Finance Press Release 11.12.2020 16:27
Stocks closed mixed on Thursday (Dec. 10) after a new report showed that new jobless claims resurged to their worst level in months, while COVID-19 cases climbed to record numbers, and stimulus gridlock continues.News RecapThe Dow Jones fell 69.55 or .23%, the S&P 500 fell 0.13%, and the Nasdaq rose 0.54%.For the week ended Dec. 5th, 853,000 new jobless claims were reported. This is the worst level since September, the first increase in 4 weeks, and well above the market estimates of 725,000.A U.S. FDA advisory panel voted 17 to 4 to approve Pfizer’s vaccine for emergency use. The full FDA approval could grant emergency use authorization of Pfizer’s vaccine as early as Friday.Stimulus talks continued to slog forward . While lawmakers plan to pass a one-week government funding extension through to Dec. 18, to buy more time to craft a stimulus deal before year’s end, there are still significant hurdles to cross. Democrats and Republicans apparently have found consensus in some areas such as PPP loans, but issues including state and local aid, liability protections, unemployment assistance and stimulus checks are still dividing Congress.After DoorDash (DASH) IPO’d on Tuesday, and surged, AirBnB (ABNB) followed suit and closed nearly 113% higher on Thursday.This has been the most lethal week yet for COVID-19 in the U.S. Thursday saw a record 229,000+ cases and over 3,100 deaths. The worst may not be over yet either. According to the CDC Director Robert Redfield, US COVID-19 deaths are likely to exceed the 9/11 death toll for the next 60 days.There is simply too much short-term uncertainty right now to predict what the next 1-3 months will be like. In the short-term, there will be optimistic days where investors rotate into cyclicals and value stocks, and pessimistic days where there will be a broad sell-off or rotation into “stay-at-home” names. Thursday’s session, for example, was a reflection of pessimistic sentiment, and a rotation back into tech. Other days, such as Wednesday (Dec. 9), tech may sharply sell-off and lead the declines.In the mid-term and long-term, however, there is certainly a light at the end of the tunnel. Once this pandemic is finally brought under control and vaccines are mass deployed, volatility will likely stabilize, while optimism and relief will permeate the markets. The FDA advisory committee’s approval of Pfizer’s vaccine for emergency usage is certainly a step in the right direction. We could be just days away from vaccinations finally happening in America. Stocks especially dependent on a rapid recovery and reopening such as small-caps should thrive.Markets will continue to wrestle with the negative reality on the ground and optimism for a 2021 economic reopening. This is simply the lay of the land nowadays. More positive vaccine news seemingly trickles in by the day despite increasingly horrifying COVID-19 numbers, economic news, and political news.Because of how much the markets have heated the last 6-7 weeks, a correction could be a welcome sign. While short-term downside pressure could certainly persist based on days where bad news outweighs good news, due to this “tug of war” between sentiments, any subsequent move downwards would likely be modest in comparison to the gains since the bottom in March and since the U.S. election at the start of November. The vaccine is simply the “injection” that the markets need right now. It is truly hard to say with conviction that another crash or bear market will come. If anything, the mixed sentiment could keep markets trading relatively sideways.Therefore, to sum it up:While there is long-term optimism, there is short-term pessimism. A short-term correction is very possible. But it is hard to say with conviction that a big correction will happen.The premium analysis this morning will showcase a “Drivers and Divers” section that will break down some sectors that are in and out of favor. As a token of my appreciation for your patronage, I decided to give you a free sample of one “driver” and one “diver” sector. Do me a favor and let me know what you think of this segment! Always happy to hear from you. DrivingMaterials (XLB) The materials sector, as represented by the XLB ETF (shown above) , has been one of the largest beneficiaries of the vaccine rally. Vaccine news briefly sent the XLB ETF to its 2020 high in November. However, since then, the ETF has traded relatively sideways, and has slightly declined this week.Cyclical sectors such as materials are set to be the biggest winners from an economic reopening in 2021. However, ever since peaking at $72.41 a share, the ETF’s volume has plummeted and stayed low. There are not enough strong fundamentals to justify calling this sector a BUY at this time.I do like this ETF’s modest decline on Thursday (Dec. 10), and generally this week. But for me, it is not a large enough pullback for a convincing buy. I believe that the sector could pull back further or stay in a sideways pattern for the rest of the month. For the materials ETF to come back, exceed its 52-week high, and pierce that $72 resistance level, a stimulus package MUST pass ASAP, and a COVID-19 vaccine must be efficiently rolled out and scalable. If this happens and a near-term economic slowdown can be somewhat averted, then materials could benefit. But for now, my view is muddled.For the time being, there is too much uncertainty to make a conviction call. Therefore, this is a HOLD for the short-term. However, I am considerably more bullish on materials in the long-term. DivingUS Dollar ($USD)Although the U.S. Dollar somewhat recovered earlier in the week and pierced the 91 level, it plunge again on Thursday. I have been calling this dollar weakness for weeks despite the low level and expect the decline to continue.The world’s reserve currency is still hovering around its 2-year low and has plunged in excess of 12% since March. After briefly rising above an oversold RSI of 30, it has also returned right back towards that level. The dollar is also significantly trading below both its 50-day and 200-day moving averages, while emerging market indices and currencies continue to grossly outperform this perceived safe asset.Further illustrating the dollar’s decline has been its performance relative to emerging markets. Just compare the performance of the iShares MSCI Emerging Market ETF (EEM) relative to the Invesco DB USD IDX Bullish ETF (UUP) since January. The difference continues to widen too.Many believe that the dollar could fall further as well due to a multitude of headwinds.If the world returns to relative normalcy within the next year, investors may be more “risk-on” and less “risk-off.” Which means that the dollar’s value will decline further.Additionally, because of all of the economic stimulus combined with record low-interest rates, the dollar’s value has declined and could have more room to fall. Do not forget that the Fed plans on holding interest rates this low for at least another two years. For the dollar’s value, rates remaining this low for two years is an eternity.As the world’s reserve currency, this plunge in value is concerning both in the short-term and mid-term for the US economy. A declining dollar means the strengthening of other foreign currencies- and this has already been happening. For example, the Australian dollar has now officially hit its highest level in 2 ½ years against the U.S. dollar . This may not be the end either.While the dollar may have more room to fall, this MAY be a good opportunity to buy the world’s reserve currency at a discount. The RSI at nearly 30 reflects this. But I just have too many doubts on the effect of interest rates this low, government stimulus, strengthening of emerging markets, and inflation to be remotely bullish on the dollar’s prospects over the next 1-3 years.For now, where possible, HEDGE OR SELL USD exposure.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
How Will Gold Perform This Winter?

How Will Gold Perform This Winter?

Finance Press Release Finance Press Release 10.12.2020 15:14
  Brace yourselves, winter is coming! It may be a harsh period for the United States, but much better for gold. Some of you may have seen snow this year already, but the astronomical winter is still ahead of us. Unfortunately, it could be a really dark winter. Instead of joyful snowball battles and making snowmen, we will have to contend with the coronavirus . The vaccines will definitely help (the first doses of Pfizer’s vaccine were administered this week), but their widespread distribution will begin only next year. So, we still have to deal with the pandemic taking its toll here and now – as the chart below shows, the number of daily COVID-19 cases is still above 200,000 in the U.S. The increasing cases are one thing, but the soaring numbers of COVID-19-related hospitalizations is another, even more terrifying, issue. As one can see in the chart below, the number of patients in U.S. hospitals has reached a record of 100,000, due to a surge in the aftermath of Thanksgiving. Importantly, the situation may get even worse , as people spend more time indoors in winter, and large family gatherings during Christmas and Hanukkah are still ahead us… I know that you are fed up with the date about the epidemic . And I don’t write about the pandemic because I’ve become an epidemiologist or want to scary you; for that all you need to do is read the press headlines or watch TV for a while. I cover the pandemic because it still impacts the global economy, and in particular, it explains why the U.S. economic growth is slowing down. You see, in the summer and autumn of 2020, America’s economy roared back. But that might be a song of the past. As I wrote in Tuesday’s (Dec 8) edition of the Fundamental Gold Report , November’s employment situation report was disappointingly weak, and the high frequency data also point to a slowdown. For example, the number of diners and restaurants, as well as hotel and airline bookings, have declined in recent weeks. So, the increased spread of the coronavirus slows the economy down. A growing share of Americans, even those who were previously skeptical about the epidemiological dangers, worry about catching the virus, thereby reducing their social activity. However, there are also other factors behind the most recent economic slowdown. First, the previous recovery was caused by a low base and the end of the Great Lockdown . The deep economic crisis seen in the spring, with accompanying coronavirus restrictions, will not happen again. Therefore, the initial recovery was fast, but the pace of economic growth had to slow down. Second, the easy fiscal policy helped to increase the GDP , but Congress has so far failed to agree on another stimulus package.   Implications for Gold What does it all mean for the yellow metal? Well, the economy could rise again when the vaccines become widely available. However, we will face a harsh winter first. It means that the coming weeks might be positive for gold – especially considering that in recent years, the shiny metal rallied in January (or sometimes even in the second half of December). But what’s next for gold prices? Will they plunge in 2021 after the rollout of the vaccines? Well, the vaccines are in a sense, a real game changer for the world next year. As they revived the risk appetite, they hit the safe-haven demand for gold. So, yes, there is a downward risk, although it could already be priced in. However, the vaccines are a game changer only in a sense . You see, the vaccines might protect us from the virus, but they will not solve all our economic problems , therefore, caution is still required. On Monday (Dec 7), the Bank of International Settlements warned the public that “we are moving from the liquidity to the solvency phase of the crisis”. Actually, the post-winter, post-pandemic environment might be beneficial for gold. You see, gold is a portfolio-diversifier which serves as a safe haven asset during a period of turmoil, but it performs the best during the very early phase of an economic recovery – especially as the central banks will continue the policy of zero interest rates . Thus, the new stimulus package, low real interest rates , worries about the U.S. dollar strength and debt sustainability, and fears of inflation , which will accompany the economic revival in 2021, should support gold prices. If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!
USD flat amid new talks of stimulus bill

USD flat amid new talks of stimulus bill

FXMAG Team FXMAG Team 16.12.2020 09:16
EURUSD Likely To Challenge Previous HighsThe euro currency is once again back on the front foot as price action inches closer to test the previously established two and a half year high at 1.2176.The gains come as the common currency eased back from its declines earlier this week. Currently, the upside momentum is held by the support from the trend line.However, it will now be critical for the euro to break past the previous barrier. Failure to break out from this two and half year high could result in a possible reversal in price action.This would in turn once again shift focus to the downside.The key support level is near 1.1900. Therefore, in the event that the EURUSD fails to break out any higher, we could probably expect a near term correction in price action.GBPUSD Continues To Trade Flat, Above 1.3300The British pound sterling continues to trade flat albeit, price action is firmly supported above the 1.3300 level.Following the gap higher at the start of the week, the GBPUSD has been pushing lower. For the moment, there remains an unfilled gap from Monday’s open.To the upside, price action is trading well below the key upper range of 1.3483. The weakness in the US dollar is currently helping the British pound to push higher.However, it is unlikely to see any major gains coming in the near term.We expect the sideways range to be held until there is some kind of a resolution to the ongoing Brexit talks between the EU and the UK.WTI Crude Oil Advances To A Nine-Month HighOil prices are trading bullish once again following the previous few sessions where price action was rather subdued.As the bullish momentum slowly grips, oil prices are seen advancing to the previously formed nine-month high.A continuation to the upside could possibly see prices testing a new ten-month high shortly. This would mean that prices would near the 48.00 level for the moment.It would also put oil prices just $2 away from the psychological barrier of $50. The current gains to the upside are supported both by the technicals and the fundamentals in the markets.The key support level at 45.00 remains the downside for the moment.However, it is unlikely that we would see a sharp correction coming anytime soon.Gold Prices Back Near 1850 Technical ResistanceThe precious metal is trading over 1% on Tuesday.The gains come amid fresh talks in the US Congress about a new proposed coronavirus stimulus bill. If this bill is passed, this would put an end to the weeks of speculation in the markets.Gold prices have been trading rather flat after rising above the key support level of 1818.80 in early December this year.For the moment, the technical resistance level of 1850 is being tested once again.However, the stochastics oscillator on the four-hour chart is likely to print lower.This could mean that gold prices could once again retreat back and settle within the range of 1850 and 1818.80.
Gold/US Dollar Cycles Show – Part II

Gold/US Dollar Cycles Show – Part II

Chris Vermeulen Chris Vermeulen 16.12.2020 18:20
In the first part of our US$ and Gold research, we highlighted the US Dollar vs. Gold trends and how we believe precious metals have recently bottomed while the US Dollar may be starting a broad decline.  We are highlighting this because many of our friends and followers have asked us to put some research out related to the US Dollar decline.  Back in November, we published an article that highlighted the Appreciation/Depreciation phases of the market.  This past research article - How To Spot The End Of An Excess Phase – Part II - is an excellent review item for today's Part II conclusion to our current article. Custom Metals Index Channels & TrendsOur Weekly Custom Metals Index chart, below, highlights the major bottom in precious metals in late 2015 as well as the continued upside price rally that is taking place in precious metals.  If our research is correct, the bottom that formed in 2015 was a “half cycle bottom” - where the major cycle dates span from 2010 to 2019 or so.  This half-cycle bottom suggests risk factors related to the global market and massive credit expansion after the 2008-09 credit crisis may have sparked an early appreciation phase in precious metals – launching precious metals higher nearly 3 to 4 years before the traditional cycle phases would normally end/reverse.Recently, the upside price trend on this Custom Metals index page suggests a price channel has setup and may continue.  The recent pullback in price has just recently touched the lower price channel and started to stall near these lows.  If precious metals prices resume any upward price trends after reaching these lows, the technical pattern will stay valid and we believe Gold will attempt to rally above $2350 to $2500 in this next leg higher.  Longer-term, we feel it us just a matter of time before precious metals begin another breakout rally.Longer-term Cycle Phases – Why They Are ImportantLastly, we want to leave you with the following longer-term market cycle chart showing the US Dollar, the SPX500 and GOLD.  We know this chart is a bit complicated and cluttered, but we'll try to highlight the key elements for you to understand.  First, look for the rallies and declines in the US Dollar Index in alignment with the “Appreciation” and “Depreciation” phases.  Remember, the left and right edges of this chart are in a “Depreciation” phase thus, the dramatic selloff in the US Dollar index on the left edge of this chart took place near the beginning of a Depreciation Phase.  The rally in the US Dollar Index from 1992 to 2000 took place in an Appreciation Phase.  Currently, we believe we have ended an Appreciation Phase and started a new Depreciation phase in the markets.Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!Now, take a look at the SPX500 line on this chart.  Notice how bigger rallies take place in Appreciation phases and sideways trending (with massive volatility) take place in Depreciation phases?  The last Appreciation Phase started in 2010~11 (or so) and ended in 2018~19 (or so).  If our research is correct, this new Depreciation phase will last until 2027~28 (or so) and may prompt a very big volatility cycle in the US Dollar and the US/Global stock markets.Now, pay attention to how Gold setup a major bottom in late 2015 (mid-cycle phase).  Could this be an indication that precious metals reacted to the peak in the US Dollar index rally phase early 2015 and subsequent peak in the US Dollar in December 2016 (remember, that date was just after a major US election)?  Could the early phase rally in precious metals be warning us that another 600%+  rally in precious metals (just like what happened from 2000 to 2011) take place from the 2015 Gold lows near $1080?  If so, does this mean the ultimate upside price target for Gold is some where above $6,800?If our research is correct, the longer term rotations in the global markets aligned with these major market phases will mean traders will have to learn to identify and trade the best performing assets at all times.  The shifts in how assets and sectors are valued will continue to roll in and out of favor as capital moves from one sector to another.  Precious metals and the US Dollar are just one component of the broader markets – there are hundreds of sector ETFs  and thousands of individual stock symbols to select from.  Skilled traders need to know when sectors perform the best and which asset classes/symbols are poised for the best returns – that is the only way to really try to beat the markets over the next 9+ years.Precious metals should continue to find support and attempt to rally higher if our longer-term research is accurate, but skilled technical traders know we can't simply rely on precious metals over the next 8+ years – we need more diversity and we need to protect our trading capital from losses.  The only way to do that is to learn how to spot the best performing assets and to stay ahead of emerging trends.  Get ready, the next few years are certainly going to be interesting and full of opportunities.We publish this free research to help you stay ahead of broad market trends and to illustrate how we apply our technical analysis skills in helping you find and trade the best performing assets. We are proud of the research we deliver to you fro FREE, but if you want to profit from our knowledge then go to www.TheTechnicalTraders.com to learn more about our BAN trading and review an example of my daily pre-market reports. Please take a minute to visit our web site to see how we can help you survive and prosper from these big future trends.Happy Trading!
The Watchlist: Analysis Of Forex Flows

The Watchlist: Analysis Of Forex Flows

Ivan Delgado Ivan Delgado 17.12.2020 02:02
Daily EdgeIn the last 24h, since I last sat down to write my take-away in the marketplace, the level of flow imbalances in the Forex market has gone down a notch. The Sterling takes the podium once again as the best performing currency even if the gap opened up against the G8 FX peers was minimal. The CAD, meanwhile, is the exception with sellers overwhelmingly in charge.To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 forex basket. Indicators are available to use these measures via Tradingview and MT4. In terms of the fundamental drivers playing a role in the last movements seen, this is what the script looked like. Early in Asia, the New Zealand Dollar was pressured lower in a move that dragged on through the London session. This occurred despite the release of the half-yearly update from the NZ Treasury saw GDP forecasts boosted and that for the peak unemployment rate lowered.As Europe came online, we learned some encouraging news out of Europe, with the positive French and German PMI prints for December. The Euro and the Swiss Franc, which often move in lockstep, reaped the most benefits as algo-buying activity followed suit in the immediate aftermath. However, we failed to see follow-through demand.The bullish moves in the EUR or the CHF proved legless, and certainly didn’t dispute the dominance of the Pound since early this week as hopes of a trade deal have definitively been brought back to be the forefront as the default narrative the market is buying into. Negotiations between the EU and the UK will likely stretch into the weekend again.Lastly, the one even we were all waiting for, even if the chances to see sustained volatility were pretty slim, came in the form of the FOMC. After all said and done, it proved to be a rather muffled affair. The lack of any new action from the FOMC was well reflected in how the market reacted. After an initial knee-jerk response in the US dollar, vol ended up being short-lived and legless. Fed’s Chairman Powell reiterated for the zillionth time that the Central Bank will remain in hyper-dovish mode with no rush whatsoever to raise rates.When it comes to trading opportunities, there was a phenomenal TT structure to play long CHF/JPY in Europe that ended up being a scratch trade. As I shift gears to the merits of a few selected currency pairs that currently offer for the best contextual settings to find opportunities, the video below invites you into my thoughts of the market for today.Analysis of the Forex trendsIn my video analysis below I use concepts such as momentum, market structures or order flow to come up with the daily outlook in the currency market.Holding trades overnight? Check out Global Prime swap rates.
METALS/MINERS SHIFTING GEARS – ARE YOU READY FOR WHAT'S NEXT? - PART I

METALS/MINERS SHIFTING GEARS – ARE YOU READY FOR WHAT'S NEXT? - PART I

Chris Vermeulen Chris Vermeulen 17.12.2020 20:34
The recent bottom in Metals/Miners has everyone excited to see what this next upside price leg is capable of achieving.  The extended Pennant/Flag formation that setup a peak in August 2020 has nearly reached the Apex.  The upside move in Gold and Silver, as well as Junior Miner ETFs, over the past few weeks suggests a new upside price trend is setting up.  The concept that commodities and metals are very new to historically low price levels sets up expectations that a longer-term price advance could send Gold above $3750 and send Silver above $50 as expectations adjust to the new price cycles.WHERE ARE WE IN THE COMMODITY/METALS CYCLE?Some of my team’s recent research has highlighted our belief that we are just starting a Depreciation cycle for the US/Global stock market which aligns with the historic lows for Commodities/Metals. Take a look at our analysis of the Gold and the US$ cycle, Gold and the SPY and QQQ, and our price targets for Gold using our proprietary ADL tool for some additional background.Using our proprietary price modeling and Adaptive Learning technology, we’ve identified a broad market cycle that lasts between 9 to 9.5 years (on average) and we believe a US stock market appreciation phase ended in 2018~2019.  We feel the current rally in the US stock market is an “excess phase” (blow off top) rally that may extend well into early 2021 before suddenly shaking out the hype.  This same type of enthusiasm is taking place across the globe and in various classes of assets (Cryptos, various market sectors, Metals and Essential Minerals, and others).  The US Fed, and global central banks, are fueling the rally with easy monetary policies – attempting to keep the party going.Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next research report!We suggest traders watch how hedging instruments react to this excess phase over the next 12 to 24 months.  When precious metals, miners and Cryptos (which have now become a new hedging instrument) begin to rally when the US stock market is flat or devaluing – then we may be very close to the end of the excess phase.BLOOMBERG COMMODITIES INDEX BOTTOMThese long-term Bloomberg Commodities Index and Silver to M2Money Supply charts highlight the extended downtrend in commodities over the past 12 years.  Interestingly, this decline in the Commodities Index,hart below, aligns with our longer term Appreciation phase in the US stock market from 2009 to 2018~19. Source : www.Bloomberg.comThe deep lows of the COVID-19 market collapse may have setup a major bottom in the Commodities Index going forward.  If our research is correct, commodities should start a major upward price trend which lasts for 5 to 7 more years.  We have highlighted a mean price range (in RED) from the 2009 to 2013 area suggesting commodity prices could recover to this level fairly quickly in a new Appreciation phase.BLOOMBERG SILVER TO MONEY SUPPLY RATIOThe following Silver to Money Supply Ratio chart highlights how inexpensive Silver is in comparison to historical values.  Even though Silver is trading near $26 per ounce right now, historical mean levels in Appreciation phases suggest Silver could rally 200% to 300% (or more) from these lows.  We’ve highlighted an area in RED on this chart showing a moderate mean average of the last Appreciation phase (2004 through 2011).  www.Bloomberg.comIn the second part of this research article, we’ll go over the setups in various Gold and Silver miner charts that may represent an incredible opportunity for traders.  If you understand the scope and consequences of these broad market cycles, the Appreciation/Deprecation cycles, and what this means for commodities, metals, miners and other assets, then you will quickly understand we are in the midst of a shift in these cycles.  We must prepare for what is next so we can adapt our trading style to profit from these new big trends.Take a minute or two to read the other research articles I’ve linked to at the start of this article.  It is important that you understand the longer-term cycles that are unfolding and how these cycles present very real opportunities for traders.  Then visit www.TheTechnicalTraders.com to learn about our Best Asset Now (BAN) strategy where we identify the best ETFs and other assets in any market trend.  BAN allows us to quickly identify when and how to invest our capital in top performing asset classes. Trading the hottest sectoral ETFs helps us beat market returns without having to scan and pick from thousands of stocks.Happy Trading!
Stocks Surge to New Records on More Optimism

Stocks Surge to New Records on More Optimism

Finance Press Release Finance Press Release 18.12.2020 17:41
Major averages hit both all-time intraday and closing highs on Thursday (Dec. 17), riding on vaccine optimism and hopes that a stimulus package could be passed in a matter of days.News RecapThe Dow Jones climbed 148.83 points, or 0.5%, to 30,303.37 for a record close. Both the S&P 500 and Nasdaq hit intraday and closing records as well and gained 0.6% and 0.8%, respectively. In typical fashion, the Russell 2000 small-cap index once again beat the other indices and gained 1.30%.Senate Majority Leader Mitch McConnell on Thursday (Dec. 17) said that a stimulus deal was closing in. Congress appears to be nearing a $900 million stimulus package that would include direct payments to individuals. However, the package would exclude the partisan issues of liability protections for businesses and aid to state and local governments.Despite the optimistic tone of the day, jobless claims disappointed for a second consecutive week. Jobless claims totaled 885,000 last week, hitting their highest levels since early September. This was also significantly worse than the expected 808,000.An FDA panel officially endorsed Moderna's (MRNA) COVID-19 vaccine. It could officially be cleared for emergency usage as early as Friday (Dec. 18), and be distributed as soon as after the weekend. Upon authorization, government officials plan to ship nearly 6 million doses of Moderna’s vaccine in addition to the 2.9 million Pfizer (PFE) doses already in distribution.Real estate, materials and health care were the best-performing sectors in the S&P 500, each gaining over 1%. Johnson & Johnson (JNJ) rose 2.6% to lead the Dow higher.Tesla (TSLA) gained 5.32% and will now officially join the S&P 500.We are in the darkest days of the pandemic. On average, the U.S. is recording at least 215,729 additional COVID-19 cases a day . More than 114,200 Americans are also now hospitalized , and over 3,400 new deaths were recorded. According to the CDC Director, Robert Redfield, US COVID-19 deaths are likely to exceed the 9/11 death toll for the next 60 days.While sentiment has been positive over the last two trading sessions, there will still be a short-term tug of war between good news and bad news. It’s quite simple really - until a stimulus is passed and the virus is somewhat brought under control, there will be negative pressure on the markets. Even though a stimulus package passing appears to be imminent, time is running short and we may be at a fork in the road.For now, though, hopes that a deal could pass through are sending stocks higher.“Stimulus is still the main driver in the market right now until they get something done, and it does appear there is some motivation on that front to get something done,” said Dan Deming, managing director at KKM Financial, further stating that “the market’s benefiting from that (enthusiasm).”Additionally, Luke Tilley , chief economist at Wilmington Trust, said that another stimulus package was needed to keep the economic recovery from stalling before the mass distribution of a vaccine.“With the continued rising cases and mass vaccinations still a ways out, we could see some further weakness in jobs and even a flattening where we’re not even adding jobs at all ... that’s absolutely a possibility for this next jobs report,” Tilley said. “And if we were to not get another stimulus package, you’re going to have 10 to 11 million people fall off the unemployment rolls right away, and that would hit spending as well.”The overwhelming majority of market strategists are bullish on equities for 2021 though, despite near-term risks. While there may be some semblance of a “Santa Claus Rally” occurring, the general consensus between market strategists is to look past the short-term pain and focus on the longer-term gains. The mid-term and long-term optimism is very real.According to Robert Dye, Comerica Bank Chief Economist :“I am pretty bullish on the second half of next year, but the trouble is we have to get there...As we all know, we’re facing a lot of near-term risks. But I think when we get into the second half of next year, we get the vaccine behind us, we’ve got a lot of consumer optimism, business optimism coming up and a huge amount of pent-up demand to spend out with very low interest rates.”In the short-term, there will be some optimistic and pessimistic days. On some days, the broader “pandemic” market trend will happen, with cyclical and recovery stocks lagging, and tech and “stay-at-home” stocks leading. Sometimes a broad sell-off based on fear or overheating may occur as well. On other days, there will be a broad market rally due to optimism and 2021-related euphoria. Additionally, there will be days (and in my opinion this will be most trading days), when markets will trade largely mixed, sideways, and reflect uncertainty. But if we get an early Christmas present and a stimulus package passes, all bets are off. It could mean very good things for short-term market gains.In the mid-term and long-term, there is certainly a light at the end of the tunnel. Once this pandemic is finally brought under control and vaccines are mass deployed, volatility will stabilize, and optimism and relief will permeate the markets. Stocks especially dependent on a rapid recovery and reopening, such as small-caps, should thrive.Due to this tug of war between sentiments though, it is truly hard to say with any degree of certainty that a correction will happen or more record high rallies will occur.Therefore, to sum it up:While there is long-term optimism, there is short-term pessimism. A short-term correction is very possible, but it is hard to say with conviction that a big correction will happen.The premium analysis this morning will showcase a “Drivers and Divers” section that will break down some sectors that are in and out of favor. As a token of my appreciation for your patronage, I decided to give you a free sample of a “driver” and “diver” sector. Please do me a favor and let me know what you think of this segment! I’m always happy to hear from you. DrivingSmall-Caps (IWM)In typical fashion, the Russell 2000 small-cap index once again beat the other indices and gained 1.30% on Thursday (Dec. 17). I truly love small-cap stocks in the long-term and this small-cap rally is more encouraging than the “stay-at-home” stock rallies from April/May. This is a bullish sign for a long-term economic recovery and shows that investors are optimistic that a vaccine will return life to relatively normalcy in 2021.I do have some concerns of overheating in the short-term however, especially with the headwinds that still exist. The Russell keeps outperforming no matter what the market sentiment of the day or week is. For example, although the week ended December 11th was an overall down week, the Russell 2000 STILL managed to outperform the larger indices and eek out another weekly gain of 1.02%. While it is remarkable, I do not see how this is sustainable in the short-term.The performance of the Russell 2000 index since early November has been nothing short of staggering. Although the Russell index is composed mostly of small-cap value cyclical stocks dependent on the recovery of the broader economy, and may be more adversely affected on “sell-the-news” kind of days, its hot streak since November has not cooled off in the slightest.Since the start of November, the Russell 2000 has skyrocketed and considerably outperformed the other major indices. The iShares Russell 2000 ETF (IWM), in comparison to the ETFs tracking the Dow (DIA), S&P (SPY), and Nasdaq (QQQ), has risen 28.62%. This is at least 13% higher than all of the other major indices. Since the start of December, the Russell ETF has also outperformed the other ETFs between 4%-5%.However, when looking at the chart for the Russell 2000 ETF (IWM) , it becomes pretty evident that small-cap stocks have overheated in the short-term. These are stocks that will experience more short-term volatility. Stocks don’t always go up but the Russell’s trajectory since November has been essentially vertical. The IWM ETF keeps hitting record highs while the RSI keeps overinflating way past overbought levels. I would SELL and trim profits for the short-term but do not fully exit these positions. A stimulus could be imminent and send these stocks soaring more. But if there is a pullback, BUY for the long-term recovery. DivingUS Dollar ($USD)The U.S. Dollar’s plunge continues to its lowest levels in years. I called the return to oversold levels this week despite the currency piercing the 91-level last Wednesday (Dec. 9). I knew it was “fool's gold” and not the sign of any sort of breakout. I have been calling the dollar’s weakness for weeks despite its low levels, and I expect the decline to continue.For the first time since April 2018, the world’s reserve currency is now trading below 90.Why did the dollar plunge so much on Thursday (Dec. 17)? You can thank the Fed! After the Federal Reserve’s dovish tone and reassurance on Wednesday (Dec. 16) that it won’t be soon tapering its bond purchases, bearish traders took this as a sign to continue selling the dollar.“The latest blow to the dollar came from the Fed, which vowed not to touch policy even if the outlook for the U.S. economy brightens as it now expects,” said Joe Manimbo , senior analyst at Western Union Business Solutions.After hitting a nearly 3-year high in March, the dollar has plunged in excess of 13%.Meanwhile, other currencies continued strengthening on Thursday (Dec. 17), relative to the dollar:The euro rose 0.6% to $1.2270, hitting its highest level versus the dollar since April 2018. The euro is up more than 9% year to date.The dollar fell to a more-than-three-year low versus the Japanese yen and declined 0.4% to ¥103.07.The British pound was up 0.5% at $1.3575 - its highest since April 2018.Both the Australian dollar and the New Zealand dollar each gained 0.6% versus the US dollar.The US dollar was off 0.1% vs. the Canadian dollar.After briefly rising above an oversold RSI of 30 last week, the dollar’s RSI is at an alarmingly low 22.96. The dollar is also significantly trading below both its 50-day and 200-day moving averages.Many believe that the dollar could fall further too.If the world returns to relative normalcy within the next year, investors may be more “risk-on” and less “risk-off,” meaning that the dollar’s value will decline further.Additionally, because of all of the economic stimulus and seemingly imminent additional stimulus, the dollar’s value has declined and could have more room to fall. With a dovish Fed and record low-interest rates projected to remain this low for at least another two years, the dollar may not appreciate again for a very long time.While the dollar may have more room to fall, this MAY be a good opportunity to buy the world’s reserve currency at a discount - at least for a quick short-term trade. The low RSI reflects this.But I just have too many doubts on the effect of interest rates this low, government stimulus, strengthening of emerging markets, and inflation to be remotely bullish on the dollar’s prospects over the next 1-3 years.For now, where possible, HEDGE OR SELL USD exposure.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
With Dovish Powell, Can Gold Shine Again?

With Dovish Powell, Can Gold Shine Again?

Finance Press Release Finance Press Release 22.12.2020 13:09
Fed Chair Jerome Powell sounded dovish during his press conference on December 16, where he gave a market update after the Fed’s monetary policy meeting. The Fed will remain accommodative for a long time, which should support gold prices.Last week was full of important events. First, both the Pfizer/BioNTech and Moderna vaccines received emergency-use authorization from the U.S. Food and Drug Administration . In consequence, the first COVID-19 vaccination in the United States has already taken place, which is great news for America, as it marks the beginning of the end of the pandemic .It’s high time for that! As the chart below shows, the U.S. has already lost about 314,000 people to the coronavirus.And what is disturbing, the current wave of infections doesn’t look like it’s going to end quickly. As one can see in the chart below, the number of new daily official cases is still above 200,000 – actually, it has recently jumped to about 250,000.So, the beginning of vaccine distribution is the light at the end of the pandemic tunnel that brings hope for a return to normalcy in 2021. It’s important to note that, contrary to the groundbreaking November news about the efficacy of the vaccines, the approval of vaccines and first injections didn’t plunge gold prices. This suggests that the bridge to normalcy built by the vaccines has already been priced in. That’s good news for the gold bulls .Second, there was renewed optimism about the fresh fiscal support . Indeed, there are higher odds now than at least about $750 billion in aid will be passed and implemented by the end of 2020. Theoretically, the fiscal stimulus is considered to be helpful for the economy, so it should be negative for gold, however, the price of the yellow metal may actually go up amid concerns about rising fiscal deficits , public debt , and inflation .Powell’s Press Conference and GoldThird, the last FOMC meeting took place this year. I’ve already analyzed it in last Thursday’s (Dec. 17) edition of the Fundamental Gold Report , but then I focused on the monetary policy statement and the fresh dot-plot . As a reminder, the Fed tied tapering in its quantitative easing to the progress toward reaching full employment and inflation at two percent, while the economic projections were more optimistic, but they nevertheless didn’t see any interest rate hikes until the end of 2023.However, it was Powell’s press conference that was really crucial, so let’s take a closer look at it. The Fed Chair sounded dovish, as he emphasized the U.S. central bank’s commitment to maintaining its very accommodative stance. In particular, Powell reiterated that the Fed will not hike interest rates or reduce its asset purchase program anytime soon. Actually, Powell said that the bank will normalize its monetary policy only after reaching the maximum employment and price stability:our guidance for both interest rates and asset purchases will keep monetary policy accommodative until our maximum employment and price stability goals are achieved. And that's a powerful message. So substantial further progress means what it says. It means we'll be looking for employment to be substantially closer to assessments of its maximum level, and inflation to be substantially closer to our 2 percent longer run goal, before we start making adjustments to our purchases.In other words, Powell clearly stated that he will keep his foot on the gas until at least 2023, and that he won’t pull the brakes even if inflation increases. This is because Powell believes that although inflation may rebound in 2021, it will be a temporary increase, and the Fed now has a flexible average inflation targeting framework, so it wants inflation to overshoot the target:What we’re saying is we're going to keep policy highly accommodative until the expansion is well down the tracks. And we’re not going to preemptively raise rates until we see inflation actually reaching 2 percent and being on track to exceed 2 percent. That's a very strong commitment. And we think that's the right place to beThis means that in 2021 the Fed is likely to be behind the curve. Higher inflation with the nominal interest rates unchanged imply lower real interest rates – further declines in these rates should push the gold prices up . Moreover, Powell will announce in advance when he wants to take his foot off the gas pedal and start reducing the amount of monetary accommodation. The Fed clearly doesn’t want the replay of the 2013 taper tantrum :And when we see ourselves on a path to achieve that goal, then we will say so undoubtedly well in advance of any time when we would actually consider gradually tapering the pace of purchases.Implications for GoldWhat does it all mean for gold prices? Well, although the Fed did not expand its monetary accommodation in December, Powell was really dovish and he pointed out that the U.S. central bank would continue its current easy stance “as long as it takes until the job is well and truly done.” Gold welcomed Powell’s remarks and gained nearly $40 on Thursday, as the chart below shows.It makes sense – after all, the Fed promised that its monetary policy would remain highly accommodative for a long time. So, although the potential for further accommodation and, thus, a great rally in gold prices is limited (at least until we see a further weakening in the US dollar or an increases in inflation and decrease in the real interest rates), the risk of a sudden tightening in the Fed’s monetary policy , that could plunge the gold prices, has diminished. Therefore, gold could shine again – at least until the markets start to worry about the normalization of monetary policy and start to forecast increases in the interest rates.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Analysis. Care. Profits.
Gold – The bull market continues

Gold – The bull market continues

Florian Grummes Florian Grummes 23.12.2020 13:04
Precious metal and crypto analysis exclusively for Celtic Gold on 22.12.2020After four corrective months and a final bloodbath towards the end of November, it looks as if the low is in! Gold – The bull market continues.ReviewOn August 7th, the price of gold hit a new all-time high of US$2.075 . At that time we warned of the temporary end of the gold rush. As a result, over the past four months, there has been tough and stretched correction, with several pullbacks towards the support zone between US$1.850 and US$1.865.By November 9th, gold prices had just recovered back to US$1,965 when the final bloodbath phase began quite abruptly. In the following days, with their fifth attempt the bears were finally able to break through the aforementioned support zone, forcing the gold market into a small panic sell-off. After all, this sell-off ended on November 30th with an intraday double low at US$1,764.Since 9th of November Mondays have become quite challenging for goldSince then, there has been a clear turnaround over the last three weeks. Quickly, the bulls staged an initial recovery to US$1,876 before gold came back down to test US$1,820 one more time. Since the FED press conference last Wednesday, gold bulls came roaring back pushing prices towards US,1906 further upwards. At the start of this trading week, however, as it happened most Mondays in the last eight weeks, gold got strongly pushed lower after reaching new highs at US$1,905. The sharp slide saw gold tumbling down testing its solid support at US$1,855 once again. In the meantime, prices have recovered that vicious attack and are trading around US$1,875 trying to stage another attack towards US$1,900.Overall, the turnaround is not yet completely in dry cloths, but with a very high probability the bull market in the precious metals sector is now starting again fully.Technical Analysis: Gold in US-DollarGold in US-Dollars, weekly chart as of December 21st, 2020. Source: TradingviewWith a low at US$1,764, the timely forecasted correction bottomed most likely on November 30th. Since then, a recovery wave of more than US$140 has already been seen. The decisive element on the weekly chart now is the downtrend trend line of those last four months. Currently, this downtrend trend sits around US$1,915 and is moving a bit lower every day.The mere sight of this strong line of resistance apparently caused a sudden panic attack among the gold bulls at the start of this week. Hence, gold prices briefly went off from US$1,905 towards US$1,855 within a few minutes. However, we expect a first real test of this resistance line above US$1,900 over the next few days and weeks.Oversold weekly stochastic points to a contrarian opportunityOverall, the chances for a breakthrough during the next one or two months are also very good, and thus further price increases until spring are highly likely. In particular, the new buying signal from the stochastic oscillator looks pretty promising. Since the great panic in the summer of 2018 and the beginning of the fulminant uptrend in the gold market (starting from a low at US$1,160 in August 2018), the stochastic oscillator delivered a similarly oversold setup only in spring 2019 and November 2019. Each of those two setups were a great contrarian buy opportunity as each time followed a very strong rally in the gold market.In summary, we can assume the trend reversal for the gold market. Hence, over the next two to three months gold, silver and mining stocks should all move higher. A rally towards the November high at US$1,965 would be the absolute minimum for gold. More likely, however, would be a rally back above the psychological round number at US$2,000, including an extension towards US$2,015 and maybe even US$2,050. Nevertheless, this uptrend might present itself somewhat jerky and unround. Sharp pullbacks that emerge again and again will probably make life not that easy for trend-followers.A new all time is realistic in mid-summerOf course, a new all-time high above US$2,075 could also happen until early spring, given the exponentially increasing currency creations worldwide. Yet, it is not the primary scenario. More realistic would be a new all-time high during the second seasonally strong phase somewhere in midsummer.Gold in US-Dollars, daily chart as of December 21st, 2020. Source: TradingviewOn the daily chart, the resistance zone between US$1,900 and US$1,920 becomes more obvious. This zone will most likely keep the gold bulls busy for a few more weeks. Moreover, as the stochastic oscillator on the daily chart has already reached its overbought zone, expecting a trading range between US$1,850 and US$1,920 likely well into mid of January is crucial.The support zone between US$1,850 and US$1,865 now has a very important catch-up function. If, contrary to expectations, this support does not hold, a further test of the upper edge of the medium-term uptrend channel around US$1,820 would also be acceptable. The 200-day moving avarage (US$1,816) is also approaching this price level. However, gold prices should not fall much lower, otherwise the bullish scenario will have to be questioned.In the conclusion, the daily chart is still bullish. An attack towards downtrend line slightly above US$1,900 is the most likely scenario in the short-term. However, this Monday’s sharp sell-off gives already a taste of the strength of this downtrend line. Pullbacks towards US$1,850 to US$1,865 and in particular another test of the 200-day moving average around US$1,820 would be another good entry opportunity. Only below US$1,800 will the bull market be in jeopardy. On the other side, the breakout above US$1,920 confirms the bullish case and opens up further potential towards US$1,955 and US$1,965.Commitments of Traders for Gold – The bull market continuesCommitments of Traders for Gold as of December 15th, 2020. Source: CoT Price ChartsAccording to the lastest CoT-report, the commercial short position increased again slightly. Overall, however, the constellation of the last one and a half years has hardly changed at all as the commercial traders continue to hold an extremely high short position. This accumulated  position currently sits at 306.342 short contracts.Commitments of Traders for Gold as of December 15th, 2020. Source: SentimentraderOverall, and on its own alone, the weekly CoT-report continues to provide a clear sell signal for gold. This has been the case for more than a year already and continues to signal a great need for correction.Sentiment: Gold – The bull market continuesSentiment Optix for Gold as of December 18th, 2020. Source: SentimentraderWith the sharp sell-off until the end of November, the precious metals sector was at least partially cleaned up with a final bloodbath lasting several days. The great euphoria of the summer has thus turned into the opposite. Although the quantitative sentiment indicators did not signal any real panic, those low levels of optimism should still have been sufficient for a sustained bottom and turnaround.BofA Global Investment Strategy, EPFR GlobalInterestingly enough, November saw exorbitant outflows from the gold ETFs. Here, huge quantities of gold were thrown onto the market in a panic attack with the push of a mouse click. And this despite the fact that the price of gold simply went through a normal and expected correction since the summer. This chart clearly speaks for a cleanup of the weak hands!Overall, the sentiment analysis thus provides a good starting point for the first quarter of 2021. In the short-term, however, optimism is already a little too high. The path towards a higher gold price should therefore not be straightforward in the next few weeks but might be interrupted again and again by treacherous pullbacks.Seasonality: Gold – The bull market continuesSeasonality for Gold as of December 18th, 2020. Source: SeasonaxSeasonal-wise, all traffic lights are green over the next two months, as the price of gold has statistically been mostly able to rise until mid to end of February and often into spring. Hence, from the seasonal perspective, caution is recommended from early march onwards.Overall, seasonality these days provides a strong buy signal.Sound Money: Bitcoin/Gold-RatioWith prices of US$23,400 for one Bitcoin and US$1,865 for one troy ounce of gold, the Bitcoin/Gold-ratio is currently 12,54. That means you have to pay more than 12 ounces of gold for one single bitcoin! In other words, a fine ounce of gold currently costs only 0,079 Bitcoin, which means another loss of more than 30% for gold against bitcoin. Bitcoin has been mercilessly outperforming the price of gold for the last several months.Generally, you should be invested in both: precious metals and bitcoins. Buying and selling Bitcoin against gold only makes sense to the extent that one balances the allocation in the two asset classes! At least 10% but better 25% of one’s total assets should be invested in precious metals (preferably physically), while in cryptos and especially in Bitcoin, one should hold 1% to 5%. Paul Tudor Jones holds a little less than 2% of his assets in Bitcoin. If you are very familiar with cryptocurrencies and Bitcoin, you can certainly allocate higher percentages to Bitcoin and maybe other Altcoins on an individual basis. For the average investor, who usually is primarily invested in equities and real estate, 5% in the highly speculative and highly volatile bitcoin is already a lot!“Opposites compliment. In our dualistic world of Yin and Yang, body and mind, up and down, warm and cold, we are bound by the necessary attraction of opposites. In this sense you can view gold and bitcoin as such a pair of strength. With the physical component of gold and the digital aspect of bitcoin (BTC-USD) you have a complimentary unit of a true safe haven in the 21st century. You want to own both!”– Florian GrummesPatience is recommended if you are not yet (fully) invested in BitcoinOnly a significant pullback in the next one to four months towards and maybe even below the old all-time high at around US$20,000 would result in another opportunity to enter or allocate into bitcoin.Macro update and conclusion: Gold – The bull market continuesTavi Costa, Crescant Capital, December 20th,2020.For almost 16 months, the balance Sheet of the Federal Reserve Bank (FED) in the US has been exploding. In recent weeks, a new all-time high has been reached. Hence, the devaluation of the US-dollar (=fiat money) is therefore unabatedly continuing and is expected to accelerate further next year.Tavi Costa, Crescant Capital, December 22nd,2020.Over US$1 trillion in US Treasuries will be due in the next 15 days alone! The current pace of currency creation of around US$80 billion per month will not be enough, as much more US Treasuries in the order of US$5.8 trillion will be due curing the course of next year. US central bankers are caught in a trap and will have to create ever-increasing amounts of currency out of nowhere.Tavi Costa, Crescant Capital, December 18th,2020.Logically, therefore, inflation expectations in the US as well as worldwide are rising sharply.Tavi Costa, Crescant Capital, December 22nd,2020.At the same time, commodity prices are also on the verge of breaking out above their 12-year downtrend line and are expected to continue to rise strongly during the course of 2021.MoneyWeek, December 4th,2020.Not surprisingly, investors and financial market participants are therefore in a roaring 20s mood!  For the broad population, however, this is a catastrophic development, as inflation will devalue their monthly salary more and more quickly.For precious metals and the price of gold instead, this is the best of all worlds. At least until the spring, a recovery rally is expected for gold towards US$2,000 and silver towards US$30. Hence, another buying opportunities would present itself should gold drop one more time towards US$1,850 and US$1,820, respectively. Following the current “tax loss-selling” and the start of 2021, mining stocks should take over the lead in the sector again and could then outperform gold and silver until spring. Forecasting the full year 2021, silver in particular should be able to benefit from the rising inflation. Over the course of the year, a test of the all-time high around US$50 is conceivable. In midsummer at the latest, the price of gold should also be able to break out above US$2,100.Overall, silver and bitcoin remain the dream-team for the accelerating crack-up boom.Source: www.celticgold.eu
Gold & the USDX: Correlations

Stimulus Hopes Fail to Rally Markets

Finance Press Release Finance Press Release 23.12.2020 15:59
The S&P 500 closed down for the third consecutive day (Dec. 22), despite Congress’s long-overdue approval of an economic stimulus package.News RecapThe Dow Jones declined 200.94 points, or 0.7%, to 30,015.51. The S&P 500 closed down for a third consecutive day and fell 0.2%. Reflecting a return to the “stay-at-home” tech trade, the Nasdaq gained 0.5% on the day (Dec. 22). The small-cap Russell 2000 index managed to outperform yet again, rising 1.01%.Congress finally voted on and approved a $900 billion stimulus package to aid struggling Americans. Attached to this bill was also a $1.4 trillion measure to fund the government through Sept. 30. President Trump is expected to sign the bill into law within the next few days.A mutant strain of COVID-19 discovered in the UK weighed on markets for a second consecutive day. While the vaccine(s) could still be effective on this strain, the strain appears to be more contagious than others. The discovery of this virus strain has caused stricter lockdown measures and travel restrictions worldwide.Travel stocks were the laggards of the day due to fears of the new strain of COVID-19. American Airlines (AAL) fell 3.9% and United (UAL) dropped 2.5%. Cruise lines all fell as well. Carnival (CCL) fell nearly 6%, Royal Caribbean (RCL) dropped nearly 3%, and Norwegian (NCL) plummeted 6.9%Apple (AAPL) led the Nasdaq higher as it jumped 2.9% due to investor excitement about their EV plans to challenge Tesla (TSLA) by 2024Mixed economic data came in on Tuesday (Dec. 22). The final reading on Q3’s GDP growth found that the US GDP grew 33.4% on an annualized basis, compared to the estimated 33.1%. On the other hand, US consumer confidence fell for the second month in a row and missed expectations - despite vaccine optimism.COVID-19 has now killed over 318,000 Americans (and counting). The CDC announced that this is now the deadliest year in American history as total deaths are expected to top 3 million for the first time. Deaths are also expected to jump 15% from the previous year. This would mark the largest single-year percentage leap since 1918, when WWI and fatalities from the Spanish Flu Pandemic caused deaths to rise an estimated 46%.Markets have officially stumbled before Christmas and experienced a predictable tug-of-war between good news and bad news. While the general focus of both investors and analysts has appeared to be the long-term potential of 2021, there are some very concerning short-term headwinds.Although there was some anticipation that a stimulus deal could send stocks higher in the near-term, investors may be simply taking profits before the year’s end and rebalancing for 2021. On the other hand, it is very possible that the stimulus package was “too little too late,” and is being overshadowed by a more contagious strain of COVID-19 discovered over the past weekend in the U.K.While nobody predicted a renegade mutant virus weighing on market sentiment, short-term battles between optimism and pessimism were quite predictable.According to a note released on Monday (Dec. 21) from Vital Knowledge’s Adam Crisafulli“The market has been in a tug-of-war between the very grim near-term COVID backdrop and the increasingly hopeful medium/long-term outlook (driven by vaccines) – the latter set of forces are more powerful in aggregate, but on occasion, the market decides to focus on the former, and stocks suffer as a result.”Meanwhile, the overwhelming majority of market strategists, including myself, are bullish on equities for 2021. It might just be a bit of a bumpy road getting there. I believe that a correction and some consolidation could be very likely in the short-term, on the way towards another strong rally in the second half of 2021. While it is hard to say with conviction WHEN we could see a correction, I believe that the market’s behavior as of late could be a potential preview of what’s to come between now and the end of Q1 2020. There is optimistic potential, but I believe a potential 5% pullback before the year’s end is possible, as well as a minimum 10% correction before the end of Q1 2020.According to Jonathan Golub , Credit Suisse’s chief U.S. equity strategist, choppiness in the economy and markets in the coming months could be expected before a surge in consumer spending by mid-2021. Golub said, “I don’t think that there’s a smooth, easy straight-line story on this...I think for the next three or four months, the reopening process is going to be sloppy.”I believe that the S&P’s three-day losing streak could be an ominous sign of what’s to come in the near-term. I do believe though that this is healthy and could be a good thing.Before Monday’s (Dec. 21) session, I had warned that the market was flashing signs of over-optimism and euphoria. In its most recent survey, for example, the American Association of Individual Investors (AAII) found that 48.1% of investors identified as being bullish - well above the historical average of 38%.A correction could be just what this market needs. Corrections also happen way more often than people realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). I believe we are overdue for one because there has not been a correction since the lows of March. This is healthy market behavior and could be a very good buying opportunity for what I believe will be a great second half of the year.The mid-term and long-term optimism are very real, despite the near-term risks. The passage of the stimulus package only solidifies the robust vaccine-induced tailwinds entering 2021, specifically for small-cap value stocks.In the short-term, there will be some optimistic and pessimistic days. On some days, such as Tuesday (Dec. 22), the “pandemic” market trend will happen - cyclical and COVID-19 recovery stocks lagging, and tech and “stay-at-home” stocks leading. On other days, a broad sell-off based on virus fears may occur as well. Additionally, there will also be days where there will be a broad market rally due to optimism and 2021 related euphoria. And finally, there will be days (and in my opinion, this will be most trading days), that will see markets trading largely mixed, sideways, and reflecting uncertainty.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is very possible. But I do not believe, with conviction, that a correction above ~20% leading to a bear market will happen.The premium analysis this morning will showcase a “Drivers and Divers” section that will break down some sectors that are in and out of favor. As a token of my appreciation for your patronage, I decided to give you a free sample of a “driver” and “diver” sector. Please do me a favor and let me know what you think of this segment! I’m always happy to hear from you. DrivingSmall-Caps (IWM)The Russell 2000 small-cap index once again beat the larger-cap indices and gained 1.01% on Tuesday (Dec. 22). Despite the profit-taking and negative sentiment during Tuesday’s (Dec. 22) session, small-caps didn’t get the memo.I do love small-cap stocks in the long-term and this small-cap rally is more encouraging than the “stay-at-home” stock rallies from April/May. This is a bullish sign for long-term economic recovery and shows that investors are optimistic that a vaccine will return life to relative normalcy by mid-2021.I do have some concerns about overheating in the short-term though. As I mentioned before, I believe that the S&P’s losing streak is only a preview of what could come in the next 1-3 months.According to the chart above for the Russell 2000 ETF (IWM) , it becomes pretty evident that small-cap stocks have overheated in the short-term. Stocks won’t always go up, but the IWM’s trajectory since November has been essentially vertical. The ETF keeps hitting record highs while the RSI keeps overinflating way past overbought levels as the volume shows instability.Since November, the Russell index has been on a run nothing short of astounding. Just look how the iShares Russell 2000 ETF (IWM) compares to the ETFs tracking the Dow, S&P, and Nasdaq in that time frame. Since November, the IWM has risen nearly 28% and has at least doubled the returns of the ETFs tracking the other major indices.Although the Russell index is composed mostly of small-cap cyclical stocks dependent on the recovery of the broader economy and may be more adversely affected on “sell-the-news” kind of days, its hot streak since November has seemingly not cooled off as much as other indices and sectors.But I believe this will eventually happen in the short-term, and I hope it does for a long-term buying opportunity.In the short-term, small-cap stocks may have overheated and could experience the greatest volatility. SELL and take short-term profits if you can, but do not fully exit positions .If there is a pullback, BUY for the long-term recovery. DivingUS Dollar ($USD)If the dollar rallies at all again soon, do not be fooled.Ever since I called the dollar’s rally past the 91 level two Wednesdays ago (Dec. 9) a mirage, the dollar has declined by 1.25%.I believed it to be “fool's gold” then and I believe any subsequent rally that could come will be “fool’s gold” too.I still am calling out the dollar’s weakness after several weeks, despite its low levels. I expect the decline to continue as well thanks to a dovish Fed.The world’s reserve currency is still trading below 90 and has not traded this low since April 2018. Joe Manimbo , a senior analyst at Western Union Business Solutions, seemingly agrees with me as well and said that “the latest blow to the dollar came from the Fed, which vowed not to touch policy even if the outlook for the U.S. economy brightens as it now expects.”Since hitting a nearly 3-year high on March 20th, the dollar has plunged nearly 13% while emerging markets and other currencies continue to strengthen.On days when COVID-19 fears outweigh any other positive sentiments, dollar exposure might be good to have since it is a safe haven. But in my view, you can do a whole lot better than the US dollar for safety.I have too many doubts on the effect of interest rates this low for this long, government stimulus, strengthening of emerging markets, and inflation to be remotely bullish on the dollar’s prospects over the next 1-3 years. Meanwhile, the US has $27 trillion of debt, and it’s not going down anytime soon.Additionally, according to The Sevens Report , if the dollar falls below 89.13, this could potentially raise the prospect of a further 10.5% decline to the next support level of 79.78 reached in April 2014After briefly rising above an oversold RSI of 30 last week, the dollar’s RSI is now at an alarmingly low 27.87. The dollar is also significantly trading below both its 50-day and 200-day moving averages.While the dollar may have more room to fall, this MAY be a good opportunity to buy the world’s reserve currency at a discount as the RSI is oversold. But I just feel you can do a whole lot better than the USD right now.I’m not a crypto guy either myself, but Bitcoin’s run compared to the dollar’s disastrous 2020 has to really make you think sometimes….For now, where possible, HEDGE OR SELL USD exposure.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
As USDX is Poised to Pop, What Happens to Gold?

As USDX is Poised to Pop, What Happens to Gold?

Finance Press Release Finance Press Release 28.12.2020 16:50
After awakening from its slumber last week, the USD Index may be in the early innings of a short-term breakout. Bursting with energy, the dollar basket closed (on Dec. 22) above its declining resistance line (although more data is needed to confirm a larger move).And to quote Francis Bacon, because “we rise to great heights by a winding staircase of small steps,” Tuesday’s ‘small step’ may be the beginning of an epic comeback.Please see below:In this week’s early trading, the USDX moved lower and then rallied back up, after touching its previous resistance line, which now appears to have turned into support. Despite the initial decline, the USDX is now more or less where it had started this week’s trading. Its ability to reverse the initial decline appears bullish.While the USDX traded lower-to-flat from Dec. 23 – 25, the price action still follows a familiar playbook: In 2018, the USDX dipped below the 1.618 Fibonacci extension level before circling back with a vengeance (The initial bottom occurred in early 2018, with the final bottom not far behind.) Moreover, the 2018 USDX bottom also marked the 2018 top in gold, silver and the gold miners (depicted in charts 2 and 3 below).I previously wrote that the USDX was repeating its 2017 – 2018 decline to some extent. The starting points of the declines (horizontal red line) as well as the final high of the biggest correction are quite similar. The difference is that the recent correction was smaller than it was in 2017.Since back in 2018, the USDX’s bottom was at about 1.618 Fibonacci extension of the size of the correction, we could expect something similar to happen this time. Applying the above to the current situation would give us the proximity of the 90-level as the downside target.“So, shouldn’t gold soar in this case?” – would be a valid question to ask.Well, if the early 2018 pattern was being repeated, then let’s check what happened to precious metals and gold stocks at that time.In short, they moved just a little higher after the USDX’s breakdown. I marked the moment when the U.S. currency broke below its previous (2017) bottom with a vertical line, so that you can easily see what gold, silver, and GDX (proxy for mining stocks) were doing at that time. They were just before a major top. The bearish action that followed in the short term was particularly visible in the case of the miners.Consequently, even if the USD Index is to decline further from here, then the implications are not particularly bullish for the precious metals market.And as we approach the New Year and beyond, I expect a similar pattern to emerge.Why so?First, the USDX is after a long-term, more-than-confirmed breakout. This means that the long-term trend for the U.S. currency is up.Second, the amount of capital that was shorting the USDX was excessive even before the most recent decline. This means that the USD Index is not likely to keep declining for much longer.In addition, after last week’s drawdown in gold and the gold miners, the sun appears to be setting on the yellow metal. As ‘buy the dip’ morphs into ‘sell the rally,’ gold’s downtrend is likely to resume. Furthermore, the 2018 analogue signals that the SPX’s (S&P 500 Index) days are also numbered (If you analyze the chart above, you can see that the USDX bottom coincided with the SPX top.)Fundamentally, the USDX is also poised to pop.On Tuesday (Dec. 22), I highlighted the misguided narrative plaguing the U.S. dollar. In short:With liquidity spigots on full blast around the world, the U.S. isn’t the only region expanding its money supply (And remember, currencies trade on a relative basis.) In fact, the European Central Bank (ECB ) has more assets on its balance sheet than the U.S. Federal Reserve (FED).And after another update, the ECB’s spending spree has now reached a record €7 trillion (As a point of reference, the Dec. 22 ECB chart was relative to the FED, so both balance sheets were presented in U.S. dollars. The chart below depicts the ECB’s balance sheet in euros).Week-over-week, the ECB’s balance sheet increased by €59 billion. But the real story? The ECB’s total assets now equal 69% of Eurozone GDP – nearly double the FED’s 35%. So while EUR/USD clawed back some of its early-week losses (after the EU and the U.K. reached a Brexit agreement), its prior three-day downtrend (Dec. 18 – 22) is likely to continue (Remember, movement in the euro accounts for nearly 58% of the movement in the USDX.)Consequently, the implications for the precious metals market are not as bearish as everyone and their brother seems to tell you. Conversely, the forex market could provide the PMs and mining stocks with a substantial bearish push in the coming weeks – or even days.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the target for gold that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Major Averages Hit More Record Highs

Major Averages Hit More Record Highs

Finance Press Release Finance Press Release 29.12.2020 19:27
Quick UpdateAs a quick update to kick off today’s newsletter, I would like to summarize my correct calls and what I profited on since beginning to publish these updates. While nobody can predict the future, the major calls I am most proud of since producing these letters are 1) adding emerging market exposure and 2) hedging or selling the U.S. Dollar.Emerging markets have been some of the best performers in 2020, and I have made some bullish calls on specific regional markets for 2021 as well. I have been touting emerging markets since my first report, but when I switched my focus to specific regions, my calls became even more correct. On December 3rd, I called Taiwan ( EWT ETF) the best bet for emerging market exposure while avoiding the risks and baked in profits of China. Since then, the EWT ETF which tracks Taiwan has gained over 4.3% while the MCHI ETF which tracks China has fallen over 3.3%. The Taiwan ETF has also outperformed the SPY S&P 500 ETF and the IEUR ETF which tracks Europe.My calls on the U.S. dollar were also correct. Since I started doing these newsletters about a month and a half ago, I consistently reiterated that the dollar should be hedged or avoided because of the Fed’s policies, effect of interest rates this low for this long, government stimulus, strengthening of emerging markets, and inflation. I also said that any minor rally the dollar would experience would be fool’s good. In the last month and a half, the dollar has fallen around 2.3%, and since it briefly pierced the 91-level on December 9th , it has fallen another 1%.Markets kicked off the final week of 2020 with a surge towards record highs after President Trump finally signed off on the stimulus bill.News RecapAll major indices closed at record highs. The Dow Jones rose 204.10 points higher, or 0.7%, to close at 30,403.97. The S&P 500 climbed 0.9% to 3,735.36, and the Nasdaq rose 0.7% to 12,899.42. Meanwhile, the small-cap Russell 2000 underperformed and declined 0.38%.After President Trump called the $900 billion stimulus package an unsuitable “disgrace,” and alluded to possibly vetoing the bill, over the weekend the president signed the bill into law . By signing off, a government shutdown was averted while unemployment benefits were extended to millions of Americans.After President Trump demanded stimulus checks for Americans to be raised from $600 to $2,000 each , the Democrat-led House voted for this measure on Monday (Dec. 28). The ball is now in the GOP-led Senate’s court on the measure. They are not expected to approve the measure.Apple led the Dow higher, and gained 3.6%. Disney also climbed nearly 3%.Communication services, consumer discretionary and tech were the best performing sectors in the S&P 500, with each rising over 1%.Amidst fears of a COVID-19 “surge on top of a surge” after the Christmas holiday, over one million people in the U.S. have now been vaccinated. Meanwhile, the U.S. has averaged at least 184,000 new infections per day.Markets cheered President Trump’s signing of the stimulus package and are further encouraged by the possibility of larger stimulus checks. After the market traded flat last week, it kicked off the final week of 2020 with a bang. Although it is still very possible that consolidation, profit taking, and rebalancing could happen in this shortened week, the general focus of both investors and analysts has appeared to be the long-term potential of 2021.As Tom Essaye, founder of The Sevens Report said :“The five pillars of the rally (Federal stimulus, FOMC stimulus, vaccine rollout, divided government and no double dip recession) remain largely in place, and until that changes, the medium and longer-term outlook for stocks will be positive.”While I still do believe that there will be a short-term tug of war between good news and bad news, I am now convinced that these moves are manic and based on sentiment. There has not been a pullback to end the year as I anticipated. But I still do believe that markets have overheated, and that between now and the end of Q1 2020 a correction could happen.There is optimistic potential, but the road towards normalcy will hit inevitable speed bumps.I do believe though that a correction is healthy and could be a good thing. Corrections happen way more often than people realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). I believe we are overdue for one since there has not been one since the lows of March. This is healthy market behavior and could be a very good buying opportunity for what I believe will be a great second half of the year.The mid-term and long-term optimism are very real, despite the near-term risks. The passage of the stimulus package only solidifies the robust vaccine-induced tailwinds entering 2021.The general consensus is that 2021 could be a strong year for stocks, despite short-term headwinds. According to a new CNBC survey which polled more than 100 chief investment officers and portfolio managers, two-thirds of respondents said the Dow Jones will most likely finish 2021 at 35,000 - a roughly 16% gain from Thursday’s close of 30,199.87. Five percent also said that the index could climb to 40,000 by the end of 2021.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is very possible. But I do not believe, with conviction, that a correction above ~20% leading to a bear market will happen. Will the Dow Approach 31,000 or 29,000 Before Mid-2021?Figure 1 - Dow Jones Industrial Average ($INDU)After trading as low as around 29,650 at one point last Monday (Dec. 21), the Dow has been firmly back above 30,000 for the last week. The blue-chip index also closed at yet another record high on Monday (Dec. 28).I do think that the Dow has some more room to run in the next few days to close off the year. Trump’s signing of the stimulus bill was a belated Christmas gift for investors everywhere. If the Senate approves $2,000 stimulus checks, then another short-term pop can certainly happen.My short-term questions though still remain as to whether or not the Dow can not only stay above 30,000 for more than a week at a time but also hit more all-time highs before March. The volume has also been very unstable as of late, but that is likely due to shortened trading weeks to close off the year.In the short-term, I believe it is just as likely for the Dow to approach 29,000 as it is to approach 31,000 in the early months of 2021.While I think a 35,000 call to close out 2021 is a bit aggressive, I do believe that the second half of 2021 could show robust gains for the index.With so much uncertainty and the RSI still firmly in hold territory, the call on the Dow stays a HOLD.This is a very challenging time to make calls with conviction. But one thing I do believe is that if and when there is a drop in the index, it will not be strong and sharp relative to the gains since March, let alone November. I believe that more likely than not we will be in a sideways holding pattern until vaccines are available to the general public by mid-2021.For an ETF that attempts to directly correlate with the performance of the Dow, the SPDR Dow Jones ETF (DIA) is a strong option.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Japanese Firm Scores BitLicense in New York for Yen Stablecoin

Japanese Firm Scores BitLicense in New York for Yen Stablecoin

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 30.12.2020 07:35
Japanese internet firm GMO has obtained approval from regulators in New York to issue a yen-pegged stablecoin. This makes GMO the 27th BitLicense recipient to be allowed to engage in virtual currency operations in the state. First Yen-Pegged Stablecoin in New York According to a press release by the New York Department of Financial Services (NYDFS), GMO has been granted a charter to issue Japanese yen (JPY)-pegged stablecoins in the state. Based on the approval, the Tokyo-based firm will also be able to issue and redeem U.S. dollar-pegged stablecoins as well. Like many Asian conglomerates, GMO has a history of significant involvement in the crypto and blockchain space. Indeed, the approval now adds another chapter to the company’s virtual currency foray with previous enterprises in the mining and trading arena. Commenting on the license approval, Ken Nakamura, CEO of GMO-Z Trust company remarked: We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset. But we are also pioneers and innovators in this space who envision building new applications of blockchain technology that transforms our relationship with traditional financial services. Apart from numerous crypto and blockchain pursuits, GMO also owns GMO Click, one of the largest forex trading platforms in the world. New Regulations in 2021 GMO’s BitLicense approval to issue stablecoins in New York is coming amid increasing scrutiny by regulators in major economies. Earlier in December, a proposed legislative piece by some members of the U.S. Congress to regulate stablecoins like banks caused rumblings within the cryptocurrency community. In Europe, many mainstream finance stakeholders including European Central Bank (ECB) President Lagarde continue to rail against private stablecoins. As previously reported by BeInCrypto, the Bank for International Settlements (BIS) called for embedded supervision for stablecoins back in November. Indeed, the regulatory pushback has seen Facebook water down its ambitious Diem digital currency platform to appease regulators opposed to the project. The post Japanese Firm Scores BitLicense in New York for Yen Stablecoin appeared first on BeInCrypto.
Miami Mayor ‘Open’ to Bitcoin Investment with Treasury Reserves

Miami Mayor ‘Open’ to Bitcoin Investment with Treasury Reserves

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 30.12.2020 11:32
As Bitcoin continues on its historic bull run breaking all-time price records, Francis Suarez, the Mayor of Miami has said he is ‘open to exploring’ putting a percentage of Miami’s treasury reserves into Bitcoin. This topic of conversation was initiated on Twitter by Anthony Pompliano. The co-founder of the blockchain-based investment firm Morgan Creek Digital Assets Tweeted out, “Retweet this if you would move to Miami if Mayor Francis Suarez puts 1% of the city’s treasury reserves into Bitcoin.” Pompliano received a prompt response from Mayor Suarez, who Tweeted back: Definitely open to exploring it.— Mayor Francis Suarez (@FrancisSuarez) December 29, 2020A consideration of this magnitude by a mayor of a major U.S. city is a massive step in the mainstream adoption of Bitcoin. A Would-Be Bitcoin Milestone If Mayor Suarez actually decides to invest a portion of Miami’s treasury reserve into Bitcoin, it would be the first U.S. city to own an allocation in its reserves. According to the Miami Herald, as of April of 2020, Miami had reserves amounting to approximately $95 million, meaning that just a one percent allocation would represent nearly $1 million. This would be a very small investment for the city’s treasury but would represent a massive milestone in terms of how Bitcoin is viewed. If the treasury from one of the biggest cities in America invests in Bitcoin, it could start to set a standard. A Trend that’s Already Begun So far in 2020, we have seen many different companies, both public and private, invest part of their treasury reserves into Bitcoin. The largest and most outspoken investment has come from MicroStrategy, a business intelligence firm that has invested over $1.3 billion of its treasury reserves in Bitcoin. Michael Saylor, the CEO of MicroStrategy, also personally owns $100s of millions worth of Bitcoin as becoming a vocal proponent for the cryptocurrency as a hedge against inflation. With the continued economic global uncertainty on top of the massive levels of inflation fiat currencies like the U.S. dollar is facing, many companies and organizations have started to turn to Bitcoin as a potential remedy. It’s hard to say if this friendly Twitter proposal will ever come to fruition, but the idea even being discussed by government officials is an extremely positive sign for Bitcoin. The post Miami Mayor ‘Open’ to Bitcoin Investment with Treasury Reserves appeared first on BeInCrypto.
Institutional Investors Finally Arrive in 2020

Institutional Investors Finally Arrive in 2020

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 30.12.2020 13:04
Institutional and enterprise investors began to pile into the crypto world en masse in 2020. Institutional investors deal in large amounts of crypto, usually bitcoin (BTC). Until now, large investors, or whales, had been private or, at least, rather quiet, about their operations. Not any longer. Institutional and enterprise investors have to declare their movements, so hiding isn’t an option. This lets us take a look at the biggest movers in bitcoin in 2020. MicroStrategy In August, business intelligence company MicroStrategy burst onto the crypto scene. In August and September, the company started buying bitcoin in bulk. MicroStrategy CEO Michael Saylor replaced $50 million of its cash reserves with bitcoin.  Saylor’s “why” was as stark as his buying spree. He claimed that the COVID-19 relief spending in the United States had devalued the currency, and that bitcoin was a safe bet against that.  Also, on Oct. 28, Saylor disclosed that he personally owned 17,730 BTC. Paul Tudor Jones Legendary hedge fund manager Paul Tudor Jones told CNBC in May that he had between 1 per cent to 2 per cent of his $5.8 billion in bitcoin. While his purchases have not been public, his bullishness on BTC is a matter of public record. On Oct. 22, he stated on CNBC that he appreciated bitcoin more, at that time, than he did back in March when news of his investment into crypto broke. Grayscale At the head of the class, or, since these are whales, head of the pod, is Grayscale. The largest bitcoin purchaser has upended the market by buying more BTC in November than was created. Grayscale Bitcoin Fund’s holding in bitcoin is so big that even investors buying into it make news. In November, Guggenheim Funds filed with the Securities and Exchange Commission (SEC) that it was going to engage in a $500 million investment into Grayscale Bitcoin Fund.  Square BeInCrypto wrote in October, that “if you’re wondering what was behind the change in sentiment in the bitcoin price, you might want to thank Jack Dorsey.” That’s because Jack Dorsey is the CEO of Square, which has an unusual place in the bitcoin universe.  Square was created as a small-business payments solution. Along the way, the company began to buy bitcoin for its users to purchase. The concept’s taken off, and in Q2 2020, the company did $875 million in bitcoin revenue.  The reason why Dorsey gets mentioned, though, is that on Oct. 8, Square bought 4,709 BTC, or $50 million worth of bitcoin to keep on its balance sheet. This amount equals 1 per cent of Square’s total assets. Compared to Grayscale, it’s not huge, but this is another enterprise moving assets into bitcoin, a la MicroStrategy. Maybe the cryptocurrency community should be thanking Michael Saylor, but sentiment changed with Square’s purchase. PayPal PayPal started showing up on crypto radar in 2019 when it was supposed to partner with Facebook on the Libra coin. Later, news that CEO Dan Schulman owns bitcoin gained attention. In 2020, PayPal announced that it would not be working on Libra. Two other pieces of news put the company on our list for 2020, though.  First, on June 22, PayPal announced that it would allow the direct purchase of cryptocurrency on its platform. Users had previously been able to use PayPal for transactions on Coinbase, but directly opening the company’s then 325 million clients to crypto was seen by analysts as a turning point in the industry. Second, and closer to the point, was related to a report in November. Pantera Capital claimed that the rise in bitcoin’s price was due to Square and PayPal combined buying up more bitcoin than was being mined. According to Pantera Capital, PayPal was buying an equivalent to 70 per cent of the new bitcoin being mined. At the same time, Square’s cash app is driving purchases of 40 per cent of new BTC. These two alone are buying 110 per cent of new bitcoin. What Pantera misses, though, is that at the same time, Grayscale alone is also buying more bitcoin than is being created. Massachusetts Mutual Life Insurance Co. Amid the headlines created by MicroStrategy and friends, other companies entered the market in a big way. For example, Massachusetts Mutual Life Insurance stocked up on $100 million of bitcoin for its general investment account. Mass Mutual is massive, with nearly $235 billion in its general investment account. This makes the bitcoin investment relatively small for the company, but big enough for the industry to take note.  Ruffer On Dec. 15, Ruffer LLP of Great Britain announced that it was adding bitcoin exposure to its portfolio. Ruffer’s parent company has 20.3 billion British pounds in AUM. However, the allocation is $15 million. Jefferies This one doesn’t have a dollar value attached to it. However, the news is golden. On Dec. 19, Christopher Wood, global head of equity strategy at Jefferies, announced that the firm was buying bitcoin. The $51 billion investment firm is drawing down its gold position from 50 per cent of its long-only global portfolio to 45 per cent and investing that amount into bitcoin. Expect more The mantra, “past performance is not indicative of future results,” exists for a reason. With that caveat in mind, exploring the fallout from the influx of enterprise and institutional investors seems warranted. JP Morgan’s analysts see trends for 2021 that further the trends seen in this article. First, they see more institutional investors. Corporates ostensibly replacing dollars in their treasuries — or covering a crypto play thereby —  should continue as well. A tendency among the investment firms is notable. Gold is being replaced with bitcoin. This fits the change in view of bitcoin as a means of storing value, instead of a currency, as was the case during the 2017 bull run. That alone makes bitcoin a more interesting investment asset for institutional investors than before.Another aspect of the change from gold to bitcoin is that bitcoin is now seen as part of a risk-on inflation hedge. Gold is losing some of its luster, at least for this part of the investment cycle, and the bitcoin community stands to benefit from it. The post Institutional Investors Finally Arrive in 2020 appeared first on BeInCrypto.
Gold Seeks Direction as USDX Slips

Gold Seeks Direction as USDX Slips

Finance Press Release Finance Press Release 30.12.2020 17:36
As of Wednesday (Dec. 30) morning, gold is range trading and remains more or less flat as it seeks momentum. As we wait for the precious metals to act on a catalyst, let’s also take a look at the Euro’s relation to the U.S. Dollar and how both impact gold.Over the last 24 hours, the precious metals market did more or less nothing, despite the new daily decline in the USD Index. The latter is now testing its monthly and yearly lows, while the PMs are not. PMs – as a group – are not reacting to what should make them rally, and this is yet another bearish sign for the precious metals market.Figure 1 - USD Index (Sept – Dec 2020)The USDX is at its monthly and yearly lows and at the same time…Figure 2 - COMEX Gold Futures (Jan – Dec 2020)Gold is about $30 below its monthly high, and about $200 below the yearly low.After a temporary breakout, gold is back below its 2011 high. The breakout above the latter was clearly invalidated.Figure 3 - COMEX Silver Futures (Jan – Dec 2020)Silver is not even close to its 2011 high, and while it’s relatively strong compared to gold and miners on a short-term basis, it’s not at its December high right now. It’s also a few dollars below its yearly high.Figure 4 - GDX VanEck Vectors Gold Miners ETF (Feb – Dec 2020)Miners remained relatively quiet on Tuesday (Dec. 29).We see that the GDX ETF moved lower once again despite the intraday attempt to rally. During Monday’s (Dec. 28) session, miners once again moved back to their 50-day moving average and… Once again verified it as resistance. The implications are bearish.Let’s get back to silver once again. On its chart, you can see a triangle-vertex-based reversal at the end of the year. Before the price moves close to the reversal, it’s relatively unclear what kind of implications a given reversal is likely to have. Well, including today’s (Dec. 30) session, there remain only two sessions until the end of the year, so we’re likely to see the reversal shortly.Based on the likelihood that the next big move is going to be to the downside, it would fit the overall picture more if the upcoming reversal was a top, not a bottom. A bottom would imply a rally in the following days or weeks, and the relative performance (as described above) along with other factors continues to favor a bigger decline.This means that we might not see a meaningful decline for a few more days, and we might even see one final move higher before the top is formed. This could be something that takes place in silver only, or something that we see in gold and miners as well. Still, I don’t expect it to be really significant in case of the latter. They are underperforming the metals, after all.Before summarizing, let’s discuss the USD Index’s main part – the EUR/USD currency pair in greater detail. After all, this pair often moves in tandem with gold.EUR/USD Decouples from FundamentalsJohn Maynard Keynes once said, “Markets can remain irrational longer than you can remain solvent.”And right now, EUR/USD is putting his theory to the test.Because the euro accounts for nearly 58% of the movement in the USD Index, its rise (and likely fall) will determine if/when the war is won.But brimming with confidence and unwilling to wave the white flag, the EUR/USD has been green for five straight days and has rallied during nine of the last 12 trading days. And while sentiment and momentum are warriors that don’t die easy, the euro is losing fundamental soldiers left and right.Please see the chart below:Figure 5 - European Central Bank (ECB) Balance SheetAnother weekly update shows the European Central Bank’s (ECB) money printer continues to work overtime. And as I mentioned on Monday (Dec. 28), the ECB’s total assets now equal 69% of Eurozone GDP – nearly double the U.S. Federal Reserve’s (FED) 35%.And why is this necessary?Because the Eurozone economy is in free-fall.Remember, currencies trade on a relative basis. Thus, a less-bad U.S. economy is good news for the U.S. dollar.Please see below:Figure 6 - 2020 Economic Indicators for Germany, France, Italy, SpainAcross Europe’s largest economies – Germany , France, Italy and Spain – economic activity is rolling over (To explain the chart, alternative economic indicators are high-frequency data like credit card spending, indoor dining traffic, travel activity and location information.)And underpinning the irrationality, the deceleration is happening as the euro is strengthening.Makes sense?Well, considering Spain’s retail sales dipped further into negative territory on Monday (Dec. 28) – coming in at – 5.8% vs. – 5.3% expected – the data speaks for itself.Figure 7 - Spain Retail Sales Constant Prices (Source: Bloomberg/Daniel Lacalle)The bottom line is: the euro bulls are fighting a war they’re unlikely to win. And as the fundamental data worsens, it’s analogous to a platoon losing more and more soldiers. Eventually, the infantry runs out of reserves and it’s time to wave the white flag.And then what happens?Well, then history tries to explain how it all went wrong.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the target for gold that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
What Are Gold’s New Year’s Resolutions?

What Are Gold’s New Year’s Resolutions?

Finance Press Release Finance Press Release 31.12.2020 16:07
2020 is dead! Long live 2021! The new year should be positive for gold, but to a lesser extent than the previous year.Finally, 2020 has drawn to a close! It was a strange year all right, bringing with it disaster for many people all over the world, so it’s a good thing that it’s passing. Few will miss 2020... but gold bulls should count themselves among this small group of people. After all, as the chart below shows, the yellow metal jumped from $1,515 to $1,874, gaining more than $350, or almost 24 percent!Gold prices have been rising since May 2019, amid the Fed’s interest rate cuts. The pandemic was the catalyst for the rally in 2020, and increased the safe-haven demand for the yellow metal . The epidemic in the U.S. also triggered an expansion in monetary policy easing that led to abundant liquidity and negative real interest rates , which pushed the gold prices higher. Last but not least, the loose fiscal policy expanded the fiscal deficits , which ballooned the public debt and increased fears about the debt crisis and inflation . So, gold shined in 2020 , although the aggressive March asset selloff and shift into cash plunged the gold prices for a while.Implications for Gold in 2021We know what happened in 2020, but the key question is what will 2021 bring for the gold market? Given that the price of gold peaked in August and has been unable to return above $1,900, there are justified worries that the best of times are already behind the yellow metal. However, others claim that we are just witnessing an interlude within gold’s bull market ? Who is right?Well, both sides are right. How is that possible? In my view, 2021 should be positive for the yellow metal, but to a lesser extent than the previous year . This claim is based on a careful comparative analysis. Long story short, 2021 should be economically better compared to 2020 (unless we see a solvency crisis). Armed with vaccines, we will eventually win the battle with the coronavirus and the era of economic lockdowns will end.In consequence, although the monetary policy will remain accommodative, room for further easing is limited. Actually, there is a downward risk for gold that the interest rates will normalize somewhat during the economic recovery in 2021. The same applies to fiscal policy: although it will stay loose, the ratio of public debt to GDP should stabilize, especially if Republicans maintain control over the Senate and will block the most extravagant Democrats’ spending proposals. In other words, the economic normalization and strengthened risk appetite could create downward pressure on the yellow metal .However, there are also some upward risks for gold in 2021 . One tailwind is a weakening of the U.S. dollar amid a zero interest rate policy , large fiscal deficits, and capital outflows into foreign markets. Another positive macroeconomic trend for gold is reflation , i.e., the possibility that inflation will increase next year due to the disruptions in the global supply chains, a surge in the money supply , and economic recovery with the realization of pent-up demand.Hence, the greenback’s depreciation and the continuation of easy monetary and fiscal policies should support the price of the yellow metal. History also shows that gold shines during the early phase of economic recovery, so gold bulls don’t have to be worried that the effects of the pandemic are over. At least not immediately, as January is historically positive for gold prices. And inflation may increase finally, creating downward pressure on the real interest rates, although there might be a significant lag between the surge in the broad money supply and increase in the consumer price index .However, with the federal funds rate already at zero and no indications that the Fed wants negative interest rates , investors could start anticipating higher interest rates later in 2021, which should prove negative for the price of gold.If you are interested in a more detailed outlook for gold in 2021, I will provide a thorough analysis in the upcoming January edition of the Gold Market Overview . Here’s a toast to gold in 2021!If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Analysis. Care. Profits.
MicroStrategy Stock Up Over 200% Since Initial Bitcoin Purchase

MicroStrategy Stock Up Over 200% Since Initial Bitcoin Purchase

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 01.01.2021 08:15
One of the most aggressive investments in Bitcoin during the past year has come from MicroStrategy, a NASDAQ-traded business intelligence firm. Led by CEO and Bitcoin mega bull, Michael Saylor, MicroStrategy has purchased over $1.3 billion in BTC. This $1.3 billion does not include the hundreds of millions of dollars in BTC that Saylor owns personally. Since MicroStrategy’s initial purchase of Bitcoin, not only has it made $1 billion in unrealized profits, but its stock increased by over 200 percent over the course of five months. MicroStrategy Enters the Bitcoin Arena Saylor was initially skeptical of Bitcoin, but once he changed his mind, things moved fast. A big catalyst to Saylor’s switch was the ongoing inflation the U.S. dollar is facing. In 2020 alone, the U.S. has printed about 35 percent of all dollars ever created, a staggering and scary amount for anyone who stores the majority of their wealth in USD. With continued economic uncertainty due to a global pandemic and increased inflation, Saylor decided that it would be safer to convert a portion of MicroStrategy’s treasury reserves into Bitcoin. Since this first transaction, Saylor has become one of the most prominent proponents of Bitcoin in the industry. He even said that he thinks Bitcoin will one day overtake gold’s market cap, Tweeting out; “It’s dangerous to think that gold and Bitcoin are similar & complementary investments. When the Bitcoin Dragon emerges from its lair, the first thing it will eat is the Kingdom of Gold.” So far, MicroStrategy has purchased over $1 billion in Bitcoin at different prices through different fundraising methods. In its most recent purchase, MicroStrategy raised $650 million in a debt offering and used the proceeds to purchase more BTC for its treasury reserves. Looking At the Charts When looking at the year-to-date MicroStrategy (MSTR) price chart, we can see a relatively flat line throughout the whole year as the price hovered around the $150 range. Starting in November, when Saylor first started purchasing Bitcoin for MicroStrategy, the stock price began to rise. By the end of November, the stock price jumped up to over $340 before eventually falling back down to $280. The price drop didn’t last long though, as MSTR quickly recovered and is now just dollars away from breaking the $400 mark. The post MicroStrategy Stock Up Over 200% Since Initial Bitcoin Purchase appeared first on BeInCrypto.
Bitcoin Volume Explodes as BTC Targets $35,000

Bitcoin Volume Explodes as BTC Targets $35,000

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 03.01.2021 10:58
2021 is starting off great for Bitcoin as it continues to break new all time high prices. Now, as the price of Bitcoin closes in on $35,000, we are reaching massive volume levels that have barely been seen before. In the past 24 hours, Bitcoin is up about 15 percent. However, it is the increase in volume that is shocking. According to CoinMarketCap, the largest online cryptocurrency market capitalization aggregator, Bitcoin volume has increased by almost 104% in the last 24 hours. This is momentous, as this increase in volume on top of major price growth is an extremely bullish sign for the world’s largest cryptocurrency. What is causing this massive volume spike? One of the most interesting factors to this sharp increase is that there is no immediately identifiable catalyst. Since the beginning of the new year, Bitcoin is already up over 20 percent. However, Bitcoin was already seeing daily/weekly all time high prices before 2021 even started. One possible reason for this price increase is FOMO, or fear of missing out. Since the rise of Bitcoin is becoming mainstream news globally, investors and speculators may feel that if they do not purchase Bitcoin now, they will continue to miss out on massive price gains. One point to consider is that this overnight volume increase took place from a Saturday to a Sunday. Thus, it is possible that institutional investors and their employees were not working. That leaves this volume increase up to retail investors. Institutional interest support This Bitcoin bull run is fundamentally different than the previous all time price run in 2017 in almost every way. In 2017, retail investors drove the market. When the price peaked around $20,000, it quickly dropped and was not able to maintain support. This bull run is different because institutional and enterprise investors are driving it, overall. Take for example MicroStategy, one of the biggest publicly traded business intelligence firms in the world. Michael Saylor, the CEO of MicroStrategy, was extremely skeptical of Bitcoin, but in August 2020, became one of Bitcoin’s biggest proponents. Due to economic uncertainty, dollar devaluation, inflation, hedging, and other factors, Saylor made the executive decision to use MicroStrategy’s reserve treasury to purchase Bitcoin. These purchase grew incrementally, with MicroStrategy raising $650 million via a debt offering to purchase Bitcoin. There are a lot of other companies either integrating or investing in Bitcoin, sometimes to the tune of tens if not hundreds of millions of dollars. PayPal, Square, and Mass Mutual have also started getting involved with Bitcoin and cryptocurrencies. This could set the pace for the rest of the financial industry. All this may speak to why Bitcoin has seen all time high prices and regular price increases. However, it doesn’t exactly explain the overnight growth in volume. There may not be an obvious factor that caused this explosion in volume. The factors leading up to it are undeniable, though. The post Bitcoin Volume Explodes as BTC Targets $35,000 appeared first on BeInCrypto.
GBPUSD Settles Comfortably Higher. Dollar strengthens slightly on year end flows

GBPUSD Settles Comfortably Higher. Dollar strengthens slightly on year end flows

John Benjamin John Benjamin 04.01.2021 08:22
EURUSD Drops Into The Year-End The euro currency was down over 0.63% into the yearly close. The declines come amid thin trading and the US dollar posting a modest rebound. The euro currency has been consolidating near the rising trend line over the past few days. While price action was making modestly higher highs, the pace of gains was gradual. The slowing momentum has led to a decline off the trendline consolidation. If the current declines continue, the euro could be looking to test the 1.2177 level of support. However, with the Stochastics oscillator somewhat oversold we may expect to see a modest rebound in prices. The British pound sterling is maintaining a bullish hold with prices posting a gradual rally since 29 December. The pace of gains, however, is likely to stall given the Doji candlestick patterns near the current levels. A bearish follow-through is required in order to confirm the downside. This could potentially see the GBPUSD falling to the 1.3500 level of support. As long as this support holds, the GBPUSD could be looking to make a rebound once again. With the threat of a hard Brexit now out of the way, the GBPUSD is likely to focus back on the fundamentals. The Stochastics oscillator remains overbought at the moment, indicating a possible correction in the near term. WTI Crude Oil Consolidates Near Current Highs Oil prices are trading flat ever since prices touched intraday highs of 49.29 on 21 December. Since then, oil prices pulled back and are trading in a sideways range. For the moment, this sideways range is likely to continue. However, the OPEC+ meeting today could offer something for oil investors. Depending on the outcome, oil prices could see a possible move in either direction. To the downside, support at 47.17 remains. As long as this support holds, oil prices are likely to maintain the upside bias. To the upside, a close above the 21 December highs of 49.29 is required in order to confirm further gains. Will Gold Breakout Higher? The precious metal was seen consolidating near the 1900 level. Price action previously tested this level before pulling back recently. In the process, we have a potential ascending triangle pattern emerging. If the 1900 level of resistance breaks, then we expect to see further gains coming. A breakout above 1900 will validate the bullish ascending triangle. It puts the next minimum target in price action toward 1922 at the very least. But this would also put gold prices above the 1900 level which has proven hard to break as both a resistance and support level previously.
What Will the U.S. Dollar Ring in for 2021?

What Will the U.S. Dollar Ring in for 2021?

Finance Press Release Finance Press Release 04.01.2021 15:16
The fate of the U.S. Dollar will weigh heavily on the future of the precious metals in 2021. At first glance, the USDX’s prospects look rather bleak in the first months of the year, but as the pages of the book turn, the dollar’s likely later ascension could prove rather bearish for gold and the PMs.Breaking hearts as the USD Index falls in and out of love, the greenback continues to leave bulls at the altar, which is likely to have important implications for the gold market in the following weeks . Dressed to impress, investors lined the cathedral aisles as the USDX looked ready to commit to the 90-level.But as cold feet turned into a dash for the exit, 2020 ended without a celebration.However, as we enter 2021 and net-short futures positions (non-commercial traders) remain at their highest level since 2006, the slightest shift in sentiment could have wedding bells ringing again.Please see below:Figure 1 – Net-short Futures PositionsIf you analyze the second red box (on the right side), you can see that the 2018 top in net-short futures positions ended with a violent short-covering rally, which propelled the USDX nearly 11% higher from trough to peak.Figure 2 – U.S. Dollar IndexIn this week’s early trading, the USDX moved lower, almost back to the 2020 lows. This was disappointing to anyone hoping that the December 31 rally was the beginning of a sharp rally, somewhat similar to what we saw in early September. In reality, the Dec. 31 rally and today’s decline don’t change much. It is not the immediate-term that is particularly important right now, but the medium and long-term pictures. The indications coming from them are much more decisive, and more important.And while the USDX remains indecisive right now, its price action still follows a familiar playbook: In 2018, the USDX dipped below the 1.618 Fibonacci extension level before circling back with a vengeance (The initial bottom occurred in early 2018, with the final bottom not far behind.) Moreover, the 2018 USDX bottom also marked the 2018 top in gold, silver and the gold miners (depicted in the below).Figure 3 – USDX, USD, GOLD, GDX, and SPX ComparisonAlso reprising its former role, the USDX’s RSI (Relative Strength Index) mirrors the double-bottom seen in 2017-2018 (the green arrows at the top-left of the chart). As the initial pattern emerged (with the RSI below 30 in 2017), it preceded a significant rally, with the USDX’s RSI surging to nearly 70. And just like the chorus from your favorite song, the pattern repeated in 2018 with nearly identical results.Today, it’s more of the same.If you look at the pattern at the top-right of the chart (the green arrows), the only difference is time. And in time, the USDX’s likely ascension will put significant pressure on gold, silver and the gold miners. In addition, the precious metals’ underperformance relative to the USDX further implies that a drawdown is the path of least resistance.Moreover, let’s keep in mind the similarity in cryptocurrencies – we now have a parabolic upswing, just like what we saw in early 2018. The history does seem to be rhyming, and this doesn’t bode well for the stock market (there are some individual opportunities, e.g. Matthew Levy, CFA managed to reap great gains in the Taiwanese ETF – it gained over twice as much as the S&P since Dec. 3 ), as well as the precious metals market.It appears that the USD Index is repeating its 2017 – 2018 decline to some extent. The starting points of the declines (horizontal red line) as well as the final high of the biggest correction are quite similar. The difference is that the recent correction was smaller than it was in 2017.Since back in 2018, the USDX’s bottom was at about 1.618 Fibonacci extension of the size of the correction, we could expect something similar to happen this time. Applying the above to the current situation would give us the proximity of the 90 level as the downside target.“So, shouldn’t gold soar in this case?” – would be a valid question to ask.Well, if the early 2018 pattern was being repeated, then let’s check what happened to precious metals and gold stocks at that time.In short, they moved just a little higher after the USDX’s breakdown. I marked the moment when the U.S. currency broke below its previous (2017) bottom with a vertical line, so that you can easily see what gold, silver, and GDX (proxy for mining stocks) were doing at that time. They were just before a major top. The bearish action that followed in the short term was particularly visible in the case of the miners.Consequently, even if the USD Index is to decline further from here, then the implications are not particularly bullish for the precious metals market.To summarize, gold’s recent strength is underpinned by a dormant U.S. dollar. But with the greenback more unloved than the villain in a superhero movie, it won’t take much to change the narrative. Furthermore, with net-short futures positions going from excessive to extreme, the game of musical chairs is likely to end with the shorts capitulating and the USDX moving higher. The implications may be unclear for the next few days, but they are bearish for the next few weeks to months.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the target for gold that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Chinese Lottery Winners to Receive Free Digital Yuan

Chinese Lottery Winners to Receive Free Digital Yuan

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 04.01.2021 18:51
China is looking to continue establishing its financial capabilities globally by extending the number of lottery winners using its central bank digital currency, the digital yuan. The central bank digital currency, or CBDC, is a permissioned, state-run cryptocurrency that allows China to track the spending habits of its yuan users. It can also adjust inflation rates and even block citizens from accessing their accounts. In a world where many countries face extreme financial instability, the digital yuan acts as a somewhat easily accessible intermediary currency. Although the introduction of the digital yuan gives China a lot more control over its users, it is nevertheless being widely adopted. In the latest initiative to increase adoption and normalize the CBDC, Chinese authorities have arranged a lottery for citizens from certain towns, giving them the chance to earn free digital currency. According to an official announcement from the Shenzhen Government, a city in China with a population of 12 million people, citizens are eligible to sign up for a municipal lottery reward. The lottery was available on a government-run app for three days with registration officially closing today. 100,000 Yuan Winners The city will choose 100,000 lottery winners, each of which will receive 200 digital yuan, worth a little over $30. The Chinese Government will likely continue promoting these lotteries in cities across the country. This one, in particular, cost slightly over $3 million. One perhaps disturbing aspect of Chinese digital fiat is the ability of network administrators to control certain outcomes. Lucky lottery winners can spend digital yuan winnings at 10,000 preregistered merchants, but they’ll only have ten days to do so before the winnings are no longer active. One of the Government’s goals for the CBDC appears to be to make it widely accessible and compete globally against other dominant currencies, like the US dollar. Since all users will need to interact with the digital yuan via a compatible wallet, it may appeal to citizens of other countries looking for a better store of value. Whether or not this plays out, though, is still largely unproven. The digital yuan is already widely adopted in China, with over four million individual transactions at the end of November 2020. The value transacted equates to more than two billion yuan, approximately $300 million. The post Chinese Lottery Winners to Receive Free Digital Yuan appeared first on BeInCrypto.
USD extends losing streak into 2021

USD extends losing streak into 2021

John Benjamin John Benjamin 05.01.2021 09:19
Euro Gaps Higher Testing December HighsThe euro currency gapped higher on the open on Monday as traders returned from the year-end holiday.The US dollar resumed its declines from 2020 pushing currencies such as the euro higher. The common currency briefly rose to test the Dec 30, 31 highs before pulling back.If price action continues on the pullback, we could see a near term decline. This would potentially make way for a triple top pattern as well.A break down below January 1 lows of 1.2121 could validate the bearish pattern. For the moment, the EURUSD is likely to trade within the highs and lows of 1.2312 and 1.2121 respectively.Sterling Falls On Risk Of Lockdown MeasuresThe British pound sterling is posting steep losses on Monday.The declines come amid threats of new tougher lockdown measures in the United Kingdom. The one day implied volatility is once again pushing higher.After trading near the highs, Monday’s bearish close could confirm the downside. This would potentially open the way for the GBPUSD to test the 1.3500 level of support.As long as this support holds, it remains within the long term uptrend. However, the GBPUSD will need to post higher highs to confirm this.Failure near the 1.3500 could open the way for the GBPUSD to extend declines lower to the 1.300 level.WTI Crude Oil Pulls Back From Multi-Month HighsOil prices rose to multi-month highs on Monday in anticipation of the OPEC+ meeting. Furthermore, tensions in the Middle East also added to the bullish fundamentals.Prices rose to highs of 48.97 before giving back the gains. For the moment, oil prices remain consolidated near the current levels between 46 and 49.The uptrend since early November remains intact for the moment. Only a strong close and a lower high around the 46.00 level will confirm otherwise.For the moment, oil prices will need to establish support near the 48.00 level to continue pushing higher.Gold Rises To An Eight-Week HighGold prices popped higher as the US dollar continued to extend declines. The pace of gains in the precious metal was however bigger, rising almost 2% intraday.The gains come amid a mixed set of narratives, including the Georgia senate runoff election.Price action has finally emerged from the consolidation from which there has been an ascending triangle pattern.The current gains put gold prices within reach of the 1950 level next. A strong close above this level is required to confirm further upside.To the downside, we expect prices to retest the 1900 – 1911 level in the short term to establish support.
Three Arrows Capital Eclipses $1 Billion in Bitcoin Purchases

Three Arrows Capital Eclipses $1 Billion in Bitcoin Purchases

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 05.01.2021 05:28
Within the last year, some of the biggest hedge funds and venture capital firms in the world have been investing in Bitcoin. Many chose to invest in Bitcoin as a potential hedge against inflation and as a more efficient store and transfer of value. Three Arrows Capital, a Singapore-based hedge fund, is the second company besides MicroStrategy to invest in over $1 billion in BTC. Three Arrows does not directly own the Bitcoin, however, as it’s managed by digital asset management firm Grayscale. Grayscale is a highly regulated and secure firm that offers the ability for investors and institutions to invest in a more secure Bitcoin product. Grayscale offers a variety of different cryptocurrency trusts that are publicly traded, with the largest by far being its Bitcoin Trust ($GBTC). Three Arrows owns 38888888 GBTC, which is equivalent to 36969 bitcoins. Kyle Davies, the co-founder of Three Arrows Capital, made a tweet confirming the news: 38888888 $GBTC, 36969 $BTC https://t.co/4ZDyLs8Fxf— Kyle Davies (@kyled116) January 4, 2021Three Arrows Capital is the latest firm to invest a large sum of money into Bitcoin, but it certainly isn’t the only one. Billions of dollars of institutional investment has already entered the Bitcoin market, both with and indpenedent of Grayscale, and it doesn’t look like this investment trend will be slowing down anytime soon. As Bitcoin faced its first 10 percent retracement since breaking the $20,000 price point, Samson Mow, CSO at Blockstream tweeted, “I know you guys aren’t really panicking about #Bitcoin, but in case you are… One River ($1.6B fund) bought $600M & will buy $400M more, Guggenheim ($5.3B fund) will buy $530M, SkyBridge ($9.2B fund) bought $182M, Ruffer ($27B fund) bought $744M, MassMutual ($675B AUM) bought $100M.” I know you guys aren't really panicking about #Bitcoin, but in case you are…One River ($1.6B fund) bought $600M & will buy $400M moreGuggenheim ($5.3B fund) will buy $530MSkyBridge ($9.2B fund) bought $182MRuffer ($27B fund) bought $744MMassMutual ($675B AUM) bought $100M— Samson Mow (@Excellion) January 4, 2021With some of the largest and most influential companies and investment firms in the world getting on the Bitcoin train, it can be expected that this is just the beginning of the capital inflow that will be entering the cryptocurrency market. Influential CEO’s-turned-Bitcoin evangelists like Davies and MicroStrategy’s Michael Saylor will likely continue to be vocal about this technology and its potential. The post Three Arrows Capital Eclipses $1 Billion in Bitcoin Purchases appeared first on BeInCrypto.
Major Averages Plummet to Start 2021

Major Averages Plummet to Start 2021

Finance Press Release Finance Press Release 05.01.2021 17:11
Quick UpdateIn a quick update to kick off 2021, I wanted to summarize my correct calls, and what I profited on since beginning to publish these updates. While nobody can predict the future, the major calls I am most proud of since writing these letters are calling the short-term downturn in small-cap stocks, adding emerging market exposure, and hedging or selling the U.S. dollar.I switched my call on small-caps, specifically the Russell 2000 from a HOLD to a short-term SELL on December 16th. The iShares Russell 2000 ETF (IWM) surged to unprecedented record gains since November 2020, however, I believed then and still believe that the index has overheated by many measurements. Since December 16th, the IWM ETF is largely flat. However, since peaking on December 23rd, the IWM has underperformed ETFs tracking the larger indices and has declined by nearly 3%. While I am still bullish on small-caps in the long run and maintain my STRONG BUY call on the Russell for the long-term, it is contingent on a pullback . I believe that pullback may have begun. I am hoping for a minimum 10% decline before jumping back in for the long-term.Emerging markets have been some of the best performers in 2020, and I have made some bullish calls on specific regional markets for 2021 as well. I have been touting emerging markets since my first report, but when I switched my focus to specific regions, my calls became even more correct. I called Taiwan ( EWT ETF) the best bet for emerging market exposure while avoiding the risks and baked in profits of China on December 3rd. Since then, the EWT ETF which tracks Taiwan has gained over 7% while the MCHI ETF which tracks China has barely gained over 1.4%. The Taiwan ETF has also outperformed the SPY S&P 500 ETF and the IEUR ETF which tracks Europe.In conjunction with my bullish calls on emerging markets, my bearish calls on the U.S. dollar were also correct. Since I started doing these newsletters about a month ago, I consistently said that the dollar should be hedged or avoided because of the Fed’s policies, effect of interest rates this low for this long, government stimulus, strengthening of emerging markets, and inflation. I also said that any minor rally the dollar would experience would be fool’s good. Since the dollar briefly pierced the 91-level on December 9th, it has fallen nearly 1.4%. Despite it experiencing another mini-rally and nearly piercing the 91-level again on December 22, I remained steadfast in my bearish outlook of the dollar. Since the open on December 23rd, the U.S. Dollar has declined another 0.77%. I believed it would drop back below 90 before the new year, and here we are to start off 2021, with the dollar at 89.85.Markets kicked off the first trading day of 2021 with a dud, due to further concerns of COVID-19 cases and the Georgia Senate run-off elections.News RecapMonday (Jan.4) marked the first negative start to a year for the Dow Jones since 2016. The Dow Jones closed 382.59 points lower, or 1.3%, at 30,223.89. The Dow at one point fell more than 700 points.The S&P 500 also fell 1.5% to 3,700.65, the Nasdaq fell 1.5%, and the small-cap Russell 2000 fell 1.47%.This was the biggest one-day sell-off since Oct. 28 for the Dow and S&P 500, and the Nasdaq’s worst sell-off since Dec. 9.While the sell-off to start the year could be due to natural consolidation, the growing number of COVID-19 cases around the world and its potential impact on the global economic recovery weighed on investors. To start the year off, U.K. Prime Minister Boris Johnson announced a national lockdown to slow the spread of a new, more contagious, coronavirus strain. With this lockdown, people are only allowed to leave their homes for essentials, work if they can’t from home, and exercise. Most schools, including universities, will also move to remote learning.According to data compiled by Johns Hopkins University , more than 85 million COVID-19 cases have been confirmed globally, including 20.7 million in the U.S. and 2.7 million in the U.K.Pay very close attention to the Georgia Senate run-offs on Tuesday (Jan. 5). The balance of power in the Senate is hanging on the vote and markets could be volatile due to the results. If the Democrats gain a majority, it could impact market performance and leave Biden’s powers largely unchecked. If the Republicans keep just one seat, it could likely check Biden’s more progressive ambitions.Coca-Cola (KO) and Boeing (BA) were the laggards on the Dow, falling 3.8% and 5.3%, respectively. Real estate stocks were the worst performing on the S&P and fell 3.2%. Utilities also declined 2.6%.About 4.6 million people in the U.S. have now gotten a COVID-19 vaccine.Stocks dropped sharply on Monday (Jan. 4), to kick off 2021. It was the first time since 2016 that the Dow Jones started a year off with declines and was the biggest one-day sell-off since Oct. 28 for the Dow and S&P 500. It was also the Nasdaq’s worst one-day decline since Dec. 9.Several catalysts can be blamed for the gloomy start to the year: natural consolidation, COVID-19, and the Georgia Senate runoff elections.First and foremost, a decline like this was bound to happen, and I called this happening in the early part of the year. I still believe that there will be a short-term tug of war between good news and bad news, and that these moves are manic and based on sentiment. There was no pullback to end 2020 as I anticipated, but I still believe that markets have overheated in the short-term. Was Monday (Jan. 4) the start of a correction? Possibly. But either way, I think that between now and the end of Q1 2020, a correction could happen.Carl Icahn seemingly agrees with me, and told CNBC on Monday (Jan. 4), “in my day I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction.”I believe, though, that corrections are healthy and could be a good thing. Corrections happen way more often than people realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). I believe we are overdue for one since there has not been one since the lows of March 2020. This is healthy market behavior and could be a very good buying opportunity for what I believe will be a great second half of the year.Meanwhile, COVID-19 continues surging and there are very real fears of new strains discovered in the U.K. and South Africa that could be more contagious. U.K. Prime Minister Boris Johnson announced a national lockdown that could potentially last until mid-February. With this lockdown, people are only allowed to leave their homes for essentials, work if they can’t from home and exercise. Most schools, including universities, will also move to remote learning. This could be an ominous sign for stricter lockdowns to be implemented in other regions across the world.Outside of COVID-19, political uncertainty has returned to the markets. The balance of power in the U.S. Senate is at stake, with Georgia run-off Senate elections set to occur on Tuesday (Jan. 5). Investors are likely to prefer a divided Senate. If the Democrats win both elections and wrestle away Senate control from the Republicans, it could leave President Biden’s powers largely unchecked, and enable him to pass more of his ambitious and progressive policies. Many investors do not anticipate these to be very market friendly. As results start to come in Tuesday evening, markets could react in a volatile manner.According to John Stoltzfus , chief investment strategist at Oppenheimer Asset Management, the S&P 500 could fall by 10% if the Democratic candidates win the Georgia runoffs.“It is thought by not just a few folks on Main Street as well as on Wall Street that if tomorrow’s run-off results in a sweep for the Democrats — providing them with control of the Senate as well as the House — that it would bode ill for business with the likelihood that corporate tax rates could rise substantially,” Stoltzfus said.This will also be a busy week for economic data with the manufacturing PMI report said to be released Tuesday (Jan. 5) and the non-farm payrolls report set to be announced Friday (Jan. 8).Monday's sell-off (Jan. 4) serves as a very painful reminder that markets will still have to weigh the near-term risks against some of the more positive mid-term and long-term hopes on vaccines and re-opening.The general consensus is that 2021 could be a strong year for stocks, despite short-term headwinds. According to a CNBC survey which polled more than 100 chief investment officers and portfolio managers, two-thirds of respondents said the Dow Jones will most likely finish 2021 at 35,000, while five percent also said that the index could climb to 40,000.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is very possible. But I do not believe, with conviction, that a correction above ~20% leading to a bear market will happen. Does the Dow Approach 31,000 or 29,000 Before Mid-2021?I have too many short-term questions for the Dow Jones. I believe it’s just as likely for the Dow to touch 29,000 again as it is to touch 31,000 before March.After trading as low as around 29,650 at one point before the new year (Dec. 21), the Dow has remained firmly above 30,000. However, it has traded largely sideways over the last few weeks, despite opening Jan. 4 with a record high.Despite some long-term optimism, for now, my short-term questions take precedence. I don’t like how COVID-19 is trending (who does?), I am disappointed in the vaccine roll-out, and I am concerned about the Georgia election. In the short-term, I am not convinced that the Dow will stay above 30,000 for more than a week at a time and I am also not convinced that it will hit more all-time highs before March.In the short-term, I believe it is just as likely for the Dow to approach 29,000 as it is to approach 31,000 in the early months of 2021.While I think a 35,000 call to close out 2021 is a bit aggressive, I do believe that the second half of 2021 could show robust gains for the index.With so much uncertainty and the RSI still firmly in hold territory, the call on the Dow stays a HOLD.This is a very challenging time to make a call on the Dow with conviction. But one thing I do believe is that if and when there is a drop in the index, it will not be strong and sharply relative to the gains since March 2020. I believe that it is more likely than not that we will be in a sideways holding pattern until vaccines are available to the general public by mid-2021.For an ETF that attempts to directly correlate with the performance of the Dow, the SPDR Dow Jones ETF (DIA) is a strong option.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Despite Signs to the Contrary, Gold at or Near Top

Despite Signs to the Contrary, Gold at or Near Top

Finance Press Release Finance Press Release 06.01.2021 16:13
The thing that most likely raised quite a few eyebrows this week was – in addition to gold’s recent move by itself – the fact that gold rallied mostly without the dollar’s help. Yesterday (Jan. 5) I wrote that one swallow doesn’t make a summer and that a single session rarely changes much.We didn’t have to wait for long – the situation seems to be getting back to normal.Figure 1 - COMEX Gold FuturesAfter the January 4th rally, gold moved only insignificantly higher, and it’s even a bit lower in today’s pre-market trading.Figure 2 - USD IndexWhile the USD Index didn’t decline on Jan. 4, it did in the following days – yesterday and in today’s pre-market trading. So, the gold-USD link seems to be relatively normal after all; it doesn’t – by itself – indicate further relative strength in gold .There are three important things that one needs to note here.The first one is what I already wrote previously – gold is not even above its Nov. 2020 high, while the USDX is below its 2020 low, which means that gold is weak relative to the USD Index and Monday’s (Jan. 4) rally seems to have been an exception.The second one is also something that I wrote about previously – gold is right at its triangle-vertex-based reversal and it might have just topped (given its tiny decline despite a decline in the USDX).The third one is that the USD Index has quite a steep declining resistance line that’s based on the early-November and late-November highs. Each previous attempt to break above it that we saw in the last few weeks failed. But thanks to the steepness of the line, the USD Index is at this line even despite today’s decline. All it takes for the USD Index to break above it is for it to do… nothing. This should be relatively easy given how excessive the bearishness is in this market, how similar it is to what we saw in early 2018, what’s happening in the RSI and even given the similarity between 2018 and now in the cryptocurrencies. You can see details on the chart below.Figure 3 - USDX, USD, GOLD, GDX, and SPX ComparisonBy the way, someone who is not interested in markets or investments at all just called me yesterday to ask if I can help an individual they knew with cryptos – this is a classic case study of something that you see in the final stages of a price bubble. It’s an example of the general public buying, and they tend to enter at the tops. Bitcoin is at about $35,000 when I’m writing these words - you have been warned.How does it all combine? The gold-USD link is intact and a soaring USDX would likely trigger a sell-off in gold. There are many reasons due to which the USDX is likely to rally soon, even the situation in the cryptocurrency market makes the current time similar to early 2018. The triangle-vertex-based reversal in gold is right about now, so it seems that we won’t have to wait for long.Figure 4 - COMEX Silver FuturesAdditionally, silver is showing strength.Figure 5 – VanEck Vectors Gold Miners ETFMiners, however, are not showing strength. They even declined yesterday (by just one cent, but still) while gold moved a bit higher, but this is just a small confirmation of what we’ve been seeing for many weeks.Let’s study the above chart:Miners were underperforming gold for many days and weeks, and they showed strength on Monday (Jan. 4). Just like in the case of gold – it was a one-day phenomenon, and one swallow doesn’t make a summer.During the day, the GDX ETF managed to rally above its 50-day moving average – just as it did at its November top. Unlike gold, miners are not very close to their November high. They corrected about 61.8% of the decline from this top. Moreover, please note that miners have corrected about 38.2% of the August – November decline. They haven’t even erased half of the decline that occurred in the previous months – so it’s definitely too early to say that miners started a new powerful rally here. Instead, we see that miners are making lower lows and lower highs.Moreover, please take note of the spike in volume that we saw on Monday. There were very few cases when we saw something similar in the previous months, which was at the November high and at the July high, right before the final 2020 top. The implications are bearish.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the target for gold that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Markets Recover Some Losses, While Eyeing Georgia

Markets Recover Some Losses, While Eyeing Georgia

Finance Press Release Finance Press Release 06.01.2021 16:28
Stocks gained on Tuesday (Jan. 5) after the major indices all sold off to start the year on Monday (Jan. 4).News RecapThe Dow Jones closed 167.71 points higher, or 0.6%, at 30,391.60. The S&P 500 advanced 0.7% and the Nasdaq climbed nearly 1%The Georgia Senate run-off elections on Tuesday (Jan. 5) were the main focus of investors. At the time of publication, Democrat candidate Raphael Warnock was declared the winner over the incumbent Republican Kelly Loeffler for the first Senate seat up for grabs. The other contested seat between Democrat Jon Ossoff and incumbent Republican David Perdue had yet to be called.The balance of power in the Senate depends on these results and markets could be volatile. Many believe that if the Democrats sweep the Georgia seats and win control, then higher taxes and progressive policies could hurt the market. On the other hand, others believe that a Democrat sweep could bring on larger and quicker stimulus relief.Better-than-expected ISM U.S. manufacturing data came in and helped stocks higher. According to the ISM, manufacturing rose to 60.7 in December from 57.5 in November. The consensus was that the index would slightly decline to 57.Energy stocks led the S&P higher and soared by 4.5% after Saudi Arabia agreed to voluntary production cuts in February and March. Oil giants such as Chevron (CVX) rose 2.7% as a result.Oil futures surged by 4.9% and briefly broke past $50 a barrel for the first time since February.Copper is a precious metal traditionally seen as a leading indicator for the global economy. On Tuesday (Jan. 5), it hit its highest level in nearly eight years and gained more than 2%.Gold also reached an 8-week high due to more declines from the dollar.Boeing (BA) was the best-performing Dow stock and gained 4.4%.U.K. Prime Minister Boris Johnson on Monday (Jan. 4) announced a national lockdown to slow the spread of a new, more contagious, coronavirus strain. Under these restrictions, people are only allowed to leave their homes for essentials, work (if they can’t from home) and exercise. Most schools, including universities, will also move to remote learning.According to data compiled by Johns Hopkins University , more than 85 million COVID-19 cases have been confirmed globally, including 20.8 million in the U.S. and 2.7 million in the U.K.Meanwhile, over 5 million people in the U.S. have now received a COVID-19 vaccination.After stocks sharply dropped on Monday (Jan. 4) to kick off 2021, widespread gains on Tuesday (Jan. 5) offset some of these losses. While Monday (Jan. 4) was the first time since 2016 that the Dow Jones started a year off with declines, two major catalysts sent the major averages higher: the oil production agreement reached between OPEC and Russia, and better than expected manufacturing results from December.This tug of war between good news and bad news can be expected in the early part of this new year. Although Monday (Jan. 4) witnessed a sharp pullback (and in my opinion, a predictable one), Tuesday (Jan. 5) witnessed a reversal. In general, though, I still believe that markets have overheated and that between now and the end of Q1 2020, a correction could likely happen.Markets have overheated, and I believe that much of the good news ranging from economic stimulus to vaccines has been baked in. Eventually, the reality on the ground will outweigh the positive news in the short-term.National Securities’ chief market strategist Art Hogan put it best in my opinion, saying that he believes we could see a 5%-8% pullback as early as this month. Hogan said that“we have a tug of war between virus news and vaccine news the better part of six months, and that’s been balanced off by stimulus...That seems to be behind us, and right now I think the virus news takes over a little bit.”Additionally, if the Georgia elections on Tuesday (Jan. 5) go as I think they’ll go (Democrat sweep), it could be a short-term catalyst leading to a potential correction. The balance of power in the U.S. Senate is at stake with these elections. Investors are likely to prefer a divided Senate. If the Democrats sweep and wrestle away Senate control from the Republicans, it could leave President Biden’s powers largely unchecked, and enable him to pass more ambitious, progressive, and less market-friendly policies.At the time of this publication, Democrat candidate Raphael Warnock was declared the winner over the incumbent Republican Kelly Loeffler for the first Senate seat up for grabs. The other contested seat between Democrat Jon Ossoff and incumbent Republican David Perdue had yet to be called.According to John Stoltzfus , chief investment strategist at Oppenheimer Asset Management , the S&P 500 could fall by 10% if the Democratic candidates sweep the Georgia runoffs.“It is thought by not just a few folks on Main Street as well as on Wall Street that if tomorrow’s run-off results in a sweep for the Democrats — providing them with control of the Senate as well as the House — that it would bode ill for business with the likelihood that corporate tax rates could rise substantially,” Stoltzfus said.On the other hand, a Democrat sweep could mean potentially larger stimulus packages - and soon.There is optimistic potential, but the road towards normality will hit inevitable speed bumps and uncertainty. This Senate election and the potential market reactions reflect that.If and when a correction does happen, I believe it will be healthy and a good thing. Corrections are normal market behaviors and happen more frequently than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). Since we have not had one since March 2020, I believe we are long overdue, and the catalysts are there. Most importantly though, a correction could be a great buying opportunity for what I believe will be a strong second half of the year.While there will certainly be short-term bumps in the road, I love the outlook in the mid-term and long-term once vaccines become more widely available. The pandemic is awful right now, and these new infectious strains are quite concerning. But despite this, I believe the positive manufacturing data released on Tuesday (Jan. 5) is a step in the right direction, especially considering all the restrictions that most countries are living through.The consensus is that 2021 could be a strong year for stocks. According to a CNBC survey which polled more than 100 chief investment officers and portfolio managers, two-thirds of respondents said the Dow Jones will most likely finish 2021 at 35,000, while five percent also said that the index could climb to 40,000.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is very possible. But I do not believe, with conviction, that a correction above ~20% leading to a bear market will happen.The premium analysis this morning will showcase a “Drivers and Divers” section that will break down some sectors that are in and out of favor. As a token of my appreciation for your patronage, I decided to give you a free sample of a “driver” and “diver” sector. Please do me a favor and let me know what you think of this segment! I’m always happy to hear from you. DrivingSmall-Caps (IWM)Figure 1 - iShares Russell 2000 ETF (IWM)After seeing a sharp pullback since Christmas week, the Russell 2000 briefly returned to its winning ways on Tuesday (Jan. 5). The IWM Russell 2000 ETF which tracks the small-cap index witnessed a 1.55% gain - its best day in a while.Although I genuinely love small-cap stocks in the long-term as the world will eventually reopen, I believe that in the short-term the index has overheated. Until the start of this week, the RSI for the IWM Russell 2000 ETF was at an astronomical 74.54. Although the RSI is at a more manageable 62.84, I still believe that the party of seeing vertical gains is over for now.Small-caps in the short-term will be more sensitive to bad news, and right now there is a lot. Vaccine gains have possibly been baked in by now and stocks just don’t go up vertically the way that the Russell 2000 did between November and late December. It is very possible that small-caps in the near-term could trade sideways before an eventual larger pullback. I truthfully hope small-caps decline a minimum of 10% before jumping back in for long-term buying opportunities.For now, SELL and take short-term profits if you can - but do not fully exit positions .If there is a pullback, this is a STRONG BUY for the long-term recovery. DivingUS Dollar ($USD) Figure 2 - U.S. Dollar ($USD)I have zero faith in the U.S. Dollar as a safe asset, even if we may see some short-term volatility and “risk-off” trades. I still am calling out the dollar’s weakness after several weeks despite its low levels. I expect the decline to continue as well thanks to a dovish Fed.Any time the U.S. Dollar rallies, it is simply “fool’s gold.” Since I started doing these newsletters about a month ago, I have consistently said that any minor rally the dollar would experience would be a mirage. Since the dollar briefly pierced the 91-level on December 9th, it has fallen over 1.8%. Despite the dollar experiencing another mini-rally and nearly piercing the 91-level again on December 22, I remained steadfast in my bearish outlook of the dollar. Since the open on December 23rd, the U.S. Dollar has declined another 1.25%. I believed the dollar would drop back below 90 before the new year, and here we are to start off 2021 with the dollar at 89.41. Since hitting a nearly 3-year high on March 20th, the dollar has plunged nearly 13.8% while emerging markets, foreign currencies, precious metals, and cryptocurrencies continue to strengthen. Gold for example reached an 8-week high on Tuesday (Jan. 5)On days when COVID-19 fears outweigh any other positive sentiments, dollar exposure might be good to have since it is a safe haven. But in my view, you can do a whole lot better than the U.S. dollar for safety.I have too many doubts on the effect of interest rates this low for this long, government stimulus, strengthening of emerging markets, and inflation to be remotely bullish on the dollar’s prospects over the next 1-3 years. Meanwhile, the US has $27 trillion of debt, and it’s not going down anytime soon.Another headwind to consider for the dollar is the Georgia Senate election. If Democrats sweep, there could be more aggressive stimulus in the near term. With Democrats controlling both the House and the Senate, more stimulus could be bearish for the dollar.Additionally, according to The Sevens Report , if the dollar falls below 89.13, this could potentially raise the prospect of a further 10.5% decline to the next support level of 79.78 reached in April 2014. With the dollar now at 89.41, we are coming dangerously close.The dollar’s RSI is also nearly oversold once again and is trading significantly below both its 50-day and 200-day moving averages.For now, where possible, HEDGE OR SELL USD exposure.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stellar’s XLM up Almost 150% in Last 7 Days

Stellar’s XLM up Almost 150% in Last 7 Days

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 06.01.2021 17:09
Has alt season arrived? It just might have. Stellar Lumens (XLM) has appreciated dramatically over the past week. Before altcoin season commences, bitcoin and ether may need to see drastic price increases. Bitcoin has already broken the $35,000 handle for the first time, and ether is up over 50% in the last week. Although the number one and two cryptocurrencies have been stealing the show, Stellar’s XLM token has been the biggest gainer of the week, by far. In the last seven days, XLM is up over 140%, increasing its price by over 90% in the last 24 hours alone. According to CoinGecko, an online cryptocurrency market capitalization aggregator, this makes XLM the top-performing cryptocurrency out of the 100 largest tokens. What Caused the Recent Price Spike? It’s hard to pinpoint what caused XLM to take off, as there have been few announcements that would point to such a massive increase in growth. The US Treasury of the Office of the Comptroller of the Currency (OCC), the largest US-based banking regulator, recently issued guidance on banks using stablecoins for settlement. Some users think Stellar is particularly positioned well for adoption. Since the announcement doesn’t point to any specific blockchain protocol, those users are mostly just speculating, though. XLM massively appreciating this week against the dollar | Source: TradingViewWhat is Stellar and XLM? The Stellar network is a decentralized, open-source protocol that allows cross border transactions between any pair of currencies. Its native cryptocurrency, XLM, is a governance token that serves as a reward mechanism for users who help secure the network. As the ninth-largest cryptocurrency by market capitalization with a current valuation of almost $9 billion (according to CoinGecko), the Stellar network is one of the biggest players in the blockchain space. Managed by the Stellar Foundation, a non-profit oversight board, Stellar is looking to position itself as an easy and accessible bridge between cryptocurrency and fiat currencies. Since the inception of the Stellar network in 2015, the network has processed over 450 million unique transactions made by over four million individuals. With Stellar’s open-source and decentralized technology, both small-sized developers and gigantic conglomerates can take advantage of the network to potentially increase transaction efficiency. Stellar is looking to continue its mainstream adoption growth by offering users transactions with any currency on the blockchain. It’s unclear whether Stellar will rise at the astronomical rate it currently is, but it may be a project to keep an eye on. The post Stellar’s XLM up Almost 150% in Last 7 Days appeared first on BeInCrypto.
Uniswap Liquidity Surges to $3 Billion Amid Gas Price Crisis

Uniswap Liquidity Surges to $3 Billion Amid Gas Price Crisis

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 07.01.2021 06:52
Liquidity on the world’s most popular decentralized exchange, Uniswap, has skyrocketed despite a massive surge in gas prices. It seems that cryptocurrency traders can’t get enough of token swapping as decentralized exchange popularity continues to grow and eat the market share of their centralized cousins. Uniswap suffered a major liquidity decline when yield farming incentives ended in mid-November 2020. A governance vote was carried out and the decision was not to extend them, resulting in an exodus from the DEX. Fast forward six weeks and that liquidity has returned despite the lack of yield farming pools on the platform. Uniswap Liquidity Tops $3 Billion Uniswap founder Hayden Adams noted the achievement stating that liquidity had surpassed $3 billion and was approaching its all-time high. According to the exchange’s own analytics, that number was $3.36 billion on Nov. 13.   Liquidity on @UniswapProtocol just passed $3.1b, approaching an all time high This time without any UNI liquidity mining incentives Just hundreds of thousands of real users generating millions of dollars in daily trading fees ($14.1M this week) pic.twitter.com/w8OpIK9gXV— Hayden Adams (@haydenzadams) January 6, 2021The liquidity spike began on Jan. 2 and a billion dollars was added over the next five days according to those charts. The top pair on the DEX is wBTC/ETH generating $43 million in volume and $129,000 in trading fees over the past 24 hours. Without any token farming incentives, liquidity providers only get a share of the 0.3% trading fee for their respective pools. 24-hour trading volumes are currently around $750 million according to Uniswap. Better yields can be found elsewhere, but Uniswap still appears to be the preferred choice for token swaps. DeFi Pulse reports slightly different figures with a total value locked of $2.65 billion, but the trend and chart pattern is similar. It also reports that the TVL figure has increased by 7.6% over the past 24 hours but the amount of ETH locked continues to decline. The surge in DeFi activity, and Ethereum’s pumping prices, has added to the gas crisis as average transaction fees hit a record high of $16 on Jan. 4 according to BitInfoCharts. Fee costs have retreated a bit since and the analytics website is currently reporting the average fee at around $9, which is still very painful for anyone not shifting large quantities. UNI Price Update Uniswap’s native UNI token has been flying recently, along with the rest of the cryptocurrency market. UNI prices are flat on the day at $6.24 according to Coingecko but have made an impressive 50% over the past seven days. Prices for the DEX governance token are now not far off its all-time high of just over $7 which came in mid-September when its token farming incentives were launched. The post Uniswap Liquidity Surges to $3 Billion Amid Gas Price Crisis appeared first on BeInCrypto.
Gold Began 2021 With a Bang, Only to Plunge

Gold Began 2021 With a Bang, Only to Plunge

Finance Press Release Finance Press Release 07.01.2021 15:44
2021 started off well for gold. It’s not surprising, as January is usually positive for the yellow metal, but the Georgia runoff results may constitute an additional bullish factor in the longer term.What a start to the new year! Gold has begun 2021 very well : as the chart below shows, the price of the yellow metal (London A.M. Fix) increased from $1,891 on December 31, 2020 to $1,947 on January 5, 2021.Should we be surprised? Not at all! Our readers are perfectly aware that January is historically a good month for gold, so the recent gains are perfectly understandable.And, as a reminder, although I’m cautious in formulating my bullish outlook for gold in 2021, especially later this year, my view remains optimistic and I expect the continuation of gold’s bull market . Although there are some reasons to worry, I don’t think that gold has had its last word.After all, gold’s fundamentals are staying positive . The Fed continues its dovish monetary policy and the real interest rates are kept deeply under zero. The fiscal policy is also loose and the public debt is rising. Meanwhile, the U.S. dollar has been weakening since March 2020, as the chart below shows.Georgia Runoff’s Implications for GoldGold’s positive fundamentals in the long term can be strengthened by Georgia runoffs. At the time of writing this article, Democrats have already won the U.S. Senate race in Georgia – as Raphael Warnock beat Republican incumbent Kelly Loeffler – and lead in the second, edging closed to control of the chamber.You see, if Democrats win both races in Georgia, they will have 50 Senate seats, the same as Republicans. However, in case of split voting results in the Senate, the Vice President (as president of the upper chamber), is the tiebreaker. So, with Kamala Harris as Vice President, Democrats would have control over the Senate.Along with a change in the White House and a narrow majority in the House of Representatives, we would be seeing a “blue sweep” of Congress. Such a revolution could lead to a higher fiscal stimulus, stricter corporate regulation and higher taxes. In other words, investors expect that a Democrat-controlled Senate would expand the U.S. fiscal deficits even further.Indeed, some analysts expect another big stimulus package of about $600 billion to accelerate the economic recovery from the coronavirus-related recession , if Democrats take over the Senate. With unified control over Washington, really big opportunities lie in front of Democrats, including $2,000 stimulus checks. The expectations of larger government spending is positive for gold prices , as higher expenditures would increase the public debt, weaken the greenback (indeed, the dollar fell on January 6), and they could also bring some inflationary effects, if the Fed decides to monetize the new debt (and why should it refuse to do what it’s done for so many years).However, the prospects of larger government borrowing have increased bond yields , which could be negative for the yellow metal in the short-term. This is probably why the price of gold declined on January 6 (although there was also normal profit taking in the gold market). Wall Street’s main indexes opened lower that day, so equities were also hit by the increased possibility of a blue wave and prospects of stricter regulations and higher taxes. With both bond and equities hit by the vision of a Democratic-controlled Senate, gold could be the biggest beneficiary of the Georgia runoff. As a reminder, this scenario (the blue wave) for the U.S. November elections was considered to be the most positive for the gold prices – and nothing changed here for the past two months.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care
Early 2021 BAN Trader Setups Show Incredible Success

Early 2021 BAN Trader Setups Show Incredible Success

Chris Vermeulen Chris Vermeulen 09.01.2021 02:33
Even though our BAN Trader Pro technology has just been released to members, the early price rotation in 2021 has shown incredible success the first week. Early 2021 BAN Trader Protriggers, used as discretionary trading signals for members, have caught some incredible early success recently.The BAN Trader Pro system allocates trading capital into four high momentum ETFs with each new leg up in the stock market that meets the BAN trigger setup. This allows BAN Trader Pro members to capitalize on the strongest sectors presenting the highest BAN momentum ranking. Over many weeks and months, continuing to focus on the best assets to own (BAN: Best Asset Now) and trading only the best assets when proper alignment between the market and these momentum sector BAN setups occur, we are able to target stronger trends with reduced draw-downs and risks.How to Benefit Using BAN Trader Pro HotlistYet, one of the best added values for our BAN Trader Pro members is the BAN Hot List. This is a Daily list of the BAN sectorsetups which also includes new BAN triggers that fall somewhere below the top ten BAN ranking sectors. This allows our BAN Trader Pro members to take additional trades, as they like as a discretionary trade. These explosive trade setups coupled with our detailed position management guidelines packs a powerful punch for the growth of any account using them.This partial screen capture of our current BAN Trade Pro Hotlist (blurred to protect Member-only content), highlights how to view the best ETFs to ownas any given time and all market conditions. The focus is on the top 10 sector ETFs and we want to see a new trigger, and for the long-term STAGE analysis to be BULLISH, the short-term TREND to be UP, and overall stock market sentiment to be RISK-ON, whichmeans investors are taking risks and betting on high growth in these sectors.As you will see there have been a lot of great opportunities recently. They are all listed low on the BAN Hotlist software which we post every day for our premium subscribers.The strength of the BAN Trader Pro technology is the ability to catch strong momentum/trend trades in an “aligned” market trend format across various market sectors. We call this the Best Asset Now (BAN) system for a reason. The higher the rankingof the BAN technology, the stronger the potential future trends. When a symbol moves up the BAN Trade Hotlist, it is growing in strength andmomentum. This is where we look for the best BAN trade setups when the stock market gives us a new buy signal fora major leg higher.The additional BAN trade signals that fall below a new major market buy signal, and the end of the stock market trend are power setups for 7-15% moves within a couple weeks of a new trigger. We only want to trade the best assets in thestrongest trends. Our members are given the BAN Trader Pro Hotlist every morning before the opening bell. This allows them to make their own trading decisions using the BAN setups and to execute any valid BAN trade they want when looking for another trade to keep their portfolio working hard for them.Daily & 10-Minute Chart of BAN TradeThis daily and 10-minute chart of the BAN trade trigger that was generated at the end of the trading day as all signals are (EOD).Daily & 10-Minute Chart of BANTradeThis is another BAN trade trigger, generated. Trigger was 21 days ago, its moved up 13.47% and its likely going much higher.2021 is going to be an incredible year for BAN Trader subscribers because of the big trends, high volatility, stimulus,and policies with the Biden administration. The time is now to learn and trade the Best Assets Now using our proven sector rotation strategy. Our BAN Trader Pro technology is proving to be an incredible technology advancement allows us to dominate the generate Alpha. We urge you to take advantage of the BAN Trader Pro technology and prepare for the big trends that should continue throughout all of 2021 and into 2022 and beyond.I am teaching this BAN trading strategy free this week in this 1-hour webinar.Its everything you need to trade this on your own, no proprietary trading tools, or strings attached. Learn this strategy now and join me in this webinarhttps://joinnow.live/s/ClJSoPWe believe everytrader needs an edge to gain an advantage in the markets and that is exactly what we teach and deliver atwww.TheTechnicalTraders.com. After two decades of R&D, and hundreds of thousands of dollars building and testing, we've built the BAN Trader Pro so that we can maintain that edge over the markets and generate oversized annual return on investment.Happy TradingChris VermeulenFounder of Technical Traders Ltd.NOTICE : Our free research does not constitute a trade recommendation, or solicitation for our readers to take any action regarding this research. It is provided for educational purposes only. Our research team produces these research articles to share information with our followers/readersin an effort to try to keep you well informed.
What Underperforms Gold and Heralds More Declines?

What Underperforms Gold and Heralds More Declines?

Finance Press Release Finance Press Release 11.01.2021 17:03
With the gold miners underperforming gold, and gold underperforming the USDX, it was only a matter of time before the house of cards came crashing down.The writing has been on the wall all along with signs for all to see. On Jan. 5, I warned that the GDX was approaching an inflection point in the following way:The GDX ETF managed to rally above its 50-day moving average – just as it did at its November top. Moreover, please take note of the spike in volume that we saw yesterday. There were very few cases when we saw something similar in the previous months, which was at the November high and at the July high, right before the final 2020 top. The implications are bearish.And despite Friday’s (Jan. 8) 4.82% sell-off, the GDX’s last hurrah is likely to end with even more fireworks.Please see the chart below:Figure 1 - VanEck Vectors Gold Miners ETF (GDX), GDX and Slow Stochastic Oscillator Chart Comparison – 2020With technicals foretelling the decline, many bullion bulls closed their eyes to the plethora of warnings signs that you can find in the previous Gold & Silver Trading Alerts.For example:A huge volume spike in the first session of 2021 was very similar to what we saw at the November 2020 and July 2020 tops – this heralded declines.The GDX’s stochastic oscillator bounced above 80, mirroring similar readings that preceded five pullbacks since September.Arguably the most important indication that keeps on flashing the very bearish signals , the GDX’s underperformance relative to gold remained intact.In addition, the GDX is on the cusp of forming a head and shoulders pattern . If you analyze the chart above, the area on the left (marked S) represents the first shoulder, while the area in the middle (H) represents the head and the area on the right (second S) represents the potential second shoulder.Right now, $33.7-$34 is the do-or-die area. If the GDX breaks below this (where the right shoulder forms) it could trigger a decline back to the $24 to $23 range (measured by the spread between the head and the neckline; marked with green).Since there’s a significant support at about $31 in the form of the 50% retracement based on the 2020 rally, and the February 2020 high, it seems that we might see the miners pause there. In fact, it wouldn’t be surprising to see a pullback from these levels to about $33, which could serve as the verification of the completion of the head-and-shoulder pattern. This might take place at the same time, when gold corrects the decline to $1,700, but it’s too early to say with certainty.Also, let’s not forget that the GDX ETF has recently invalidated the breakout above the 61.8% Fibonacci retracement based on the 2011 – 2016 decline.Figure 2 - GDX VanEck Vectors Gold Miners ETF (2009 – 2020)When GDX approached its 38.2% Fibonacci retracement, it declined sharply – it was right after the 2016 top. Are we seeing the 2020 top right now? This is quite possible – PMs are likely to decline after the sharp upswing, and since there is just more than one month left before the year ends, it might be the case that they move north of the recent highs only in 2021.Either way, miners’ inability to move above the 61.8% Fibonacci retracement level and their invalidation of the tiny breakout is a bearish sign.The same goes for miners’ inability to stay above the rising support line – the line that’s parallel to the line based on the 2016 and 2020 lows.In summary, the GDX’s train has likely gone off the rails, with silver in the front car and gold in the back. And as the technical derailment unfolds, a resurgent U.S. dollar is likely to accelerate the impact. Furthermore, if the S&P 500 hops on board – and declines from its current state of euphoria – damage to the precious metals mining stocks could be particularly violent.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the target for gold that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stocks Post Records to Start 2021

Stocks Post Records to Start 2021

Finance Press Release Finance Press Release 11.01.2021 21:31
The indices hit record highs yet again to close off the first week of 2021 and weighed unrest, poor jobs data, and further prospects of economic stimulus.News RecapBoth the Dow and S&P 500 closed the week off with four-day win streaks. The Dow climbed 56.84 points, or 0.2%, at 31,097.97. The S&P 500 rose 0.6% to 3,824.68, and the Nasdaq popped 1% to 13,201.98. The small-cap Russell 2000 declined 0.25%.The Dow and S&P 500 each gained more than 1% on the week, while the Nasdaq gained 2.4%, and the Russell 2000 surged by nearly 6%. These gains to start the year came despite the unprecedented unrest and invasion of the Capitol by Trump supporters on Wednesday (Jan. 6).Despite Democrats winning full control of the Senate, the Dow briefly declined 200 points midday after moderate Democrat Senator Joe Manchin from West Virginia told The Washington Post that he would “ absolutely not ” support a round of $2,000 stimulus checks. Manchin mildly walked back those comments later in the day and said he was “undecided,” and not outright opposed to it.The U.S. economy lost 140,000 jobs in December , according to the Labor Department. This is significantly worse than the estimated gain of 50,000 according to economists polled by Dow Jones.The 10-year yield rose to its highest level since March 20, and broke above 1.1%.Coca-Cola (KO) rose 2.2% to lead the Dow higher. The consumer discretionary and real estate sectors each rose more than 1%, lifting the S&P 500. The Nasdaq got a boost from Tesla, which popped 7.8%.The first week of 2021 largely continued where 2020 left off- with turmoil, tension, and a barrage of news. Another 2020 pattern continued to kick off the new year- a resilient market.A week that started off with a sharp sell-off concluded with sharp weekly gains, all-time highs, and a four-day winning streak for the Dow and S&P 500. This is despite the first assault on the U.S. Capitol since 1814, despite COVID-19 cases continuing to wreak havoc, and despite a disastrous jobs report.How could this be?The results of the Georgia election can first and foremost be credited for the market surge.Although tech initially plummeted due to fears of higher taxes and stricter regulations, with full Democrat control of the Presidency, Senate, and House, there is finally clarity and expectations of further spending and government stimulus.Although President-elect Joe Biden had promised to pass a measure for bigger stimulus checks if Democrats secured control of the Senate, comments from West Virginia Senator Joe Manchin, a moderate Democrat, spooked investors for a time on Friday (Jan. 8). Although Manchin briefly walked these comments back, according to Bill Miller, founder of Miller Value Partners , “Nothing is going to get passed if they can’t get the moderates in the Democratic Party, or the Republican Party for that matter, to go along with (further stimulus).”President-elect Biden said Friday (Jan. 8) that a new aid package would be “ in the trillions of dollars .” This comes after Goldman Sachs stated that it expects another big stimulus package of around $600 billion . Value stocks and small-cap stocks have surged as a result of these prospects.Despite the prospect of further stimulus that could heat up the economy, the short-term tug of war between good news and bad news will continue. Many of these moves upwards or downwards are based on emotion and sentiment, and there could be some serious volatility in the near-term. Although markets have kicked off the new year with excitement from the “Blue Wave”, consider this.Stocks have overstretched valuations, the Capitol was invaded, the pandemic is out of control, and the vaccine roll-outs have been clunky at best.Even though the markets saw a nice weekly gain to kick off 2021 and the 10-year treasury is at its highest level in months, a correction between now and the end of Q1 2020 is likely.National Securities’ chief market strategist Art Hogan also believes that we could see a 5%-8% pullback as early as this month.Generally, corrections are healthy, good for markets, and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). I believe we are long overdue for one. We haven’t seen a correction since March 2020. This is healthy market behavior and could be a very good buying opportunity for what I believe will be a great second half of the year.While there will certainly be short-term bumps in the road, I love the outlook in the mid-term and long-term once the growing pains of rolling out vaccines stabilize. The pandemic is awful and the numbers are horrifying. But despite this, and despite the horrendous jobs report, there is one report released this past week that could be a step in the right direction - the ISM manufacturing data.The consensus is that 2021 could be a strong year for stocks. According to a CNBC survey which polled more than 100 chief investment officers and portfolio managers, two-thirds of respondents said the Dow Jones will most likely finish 2021 at 35,000, while five percent also said that the index could climb to 40,000.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is very possible. I don’t think that a correction above ~20% leading to a bear market will happen. Can Small-caps Own 2021?Figure 1- iShares Russell 2000 ETF (IWM)Small-caps were the comeback kids this week. Although I believed that the Russell 2000’s record-setting run since the start of November was coming to an end, the iShares Russell 2000 ETF (IWM) had itself quite a week and rallied 7.35% since January 4th. Small-cap stocks were the most excited from the Democrat sweep in Georgia due to hopes of further economic stimulus on the horizon.I love small-cap stocks in the long-term, especially as the world reopens. A Democrat-dominated Congress could help these stocks too, but in the short-term, the index, by any measurement, has simply overheated. Before January 4th, the RSI for the IWM Russell 2000 ETF was at an astronomical 74.54. I called a pullback happening in the short-term due to this RSI, and it happened. Well now the RSI is back above 74 again, and I believe that a more significant correction in the near-term could be imminent.Stocks simply just don’t always go up in a straight line, and that’s what the Russell 2000 has essentially been between November and December. It’s looked eerily similar this week.What this also comes down to, is that small-caps are more sensitive to the news - good or bad. I think that vaccine gains have possibly been baked in by now. There could be another near-term pop due to further stimulus hopes, but it’s likely that small-caps in the near-term could trade sideways before an eventual larger pullback.I hope small-caps decline a minimum of 10% before jumping back in for long-term buying opportunities.SELL and take this week’s profits if you can - but do not fully exit positions .If there is a pullback, this is a STRONG BUY for the long-term recovery.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Sterling Snaps Back Higher On BoE Official Comments

Sterling Snaps Back Higher On BoE Official Comments

John Benjamin John Benjamin 13.01.2021 09:17
USD gains ease following a three-day winning streakEURUSD Consolidates Below 1.218The euro currency is catching a bid following the dollar weakness on Tuesday.The dollar’s gain came to a halt after three consecutive days of gains. This has pushed the euro to test the 21 December lows of 1.2133.Price action has been broadly flat after pulling back off the lows intraday. However, the euro will need to break out strongly above the 1.2180 level.Only a strong close above this level will see further gains coming up. To the downside, a continuation could see the 1.2050 level of support coming under the test of support next.The British pound sterling is posting strong gains on Tuesday. This comes following comments from a BoE official who was speaking out against negative rates.The gains saw the GBPUSD breaking past the 1.3500 level. This invalidates the descending triangle pattern. Prices continue to rise past the trend line as well.This has pushed the GBPUSD to test a two day high following the recent declines over the last week.Despite the short term gains, the bias still remains to the downside. But this could change if the GBPUSD can rise above the January 4 highs of 1.3700.WTI Crude Oil Inches HigherOil prices continue to post modest gains with price action managing to rise above the trend line. As a result, WTI crude oil prices are now close to the next round number level of 53.00.On the intraday charts, we see the bearish divergence on the Stochastics which is suggesting a lower high.Therefore, there is a risk of prices posting a correction in the near term unless oil prices can continue higher.To the downside, the recent swing lows near 51.53 remain the key level to watch.A break down below this level could potentially set the stage for a correction down to the 49.00 handle.Gold Prices Set To Close Flat Yet AgainThe precious metal is likely to close flat once again, marking a flat print for the second consecutive day.Although prices rose higher intraday, the gains quickly disappeared. There is a possibility of prices forming a bearish flag pattern currently.Therefore, if gold prices break down below the 1817.80 level of support, this view will be validated.The bearish flat pattern potentially signals a stronger correction to the downside. This could push prices down to the November 30th lows near 1770.00.
Sterling Rebounds As BoE Negative Rate Talk Fades

Sterling Rebounds As BoE Negative Rate Talk Fades

John Benjamin John Benjamin 15.01.2021 09:12
USD steadies on prospects of new stimulus talksEURUSD Rebounds From A 4-Week LowThe euro currency is posting a modest rebound intraday after falling to a four week low earlier on Thursday.The rebound comes as the recent dollar gains take a pause, awaiting more news on the new stimulus talks.Price action in the euro remains currently below the 1.2177 level. Therefore, a continuation to the upside could see this level coming in as resistance.Only a strong breakout above this level could rekindle the upside bias. The Stochastics oscillator is currently signaling a bullish divergence in this aspect.Therefore, the price action near 1.2177 will be critical. To the downside, a continuation below current lows could see the 1.2050 level coming into the picture next.The British pound sterling is posting strong gains, recovering from the declines on Wednesday. The rebound comes following speculation that the Bank of England will not be considering negative interest rates.This has proven to be bullish for the cable which has made a strong rebound. Price action will now be testing Wednesday’s highs of 1.3701.A breakout above this level could post further price gains in the currency pair.To the downside, support is firmly established near 1.3624 which could hold against any pullbacks for the moment. The Stochastics oscillator is also likely to turn higher, adding to the bullish bias.Oil Prices Consolidate Near Highs As Bullish Momentum Slows WTI crude oil prices are trading flat having risen to highs of 53.90 intraday on Wednesday.The declines push the price action back below the rising trend line. This could potentially see the trend line being retested from below.The Stochastics oscillator is nearing the oversold levels and therefore could see a possible move higher once again.However, oil prices will need to break out above the recent highs to continue higher. The next key target will be the 55.00 level.To the downside, if the trendline acts as resistance, then a close below 52.20 is required.Only a strong daily close below this level will open the way for a correction toward the 49.00 handle.Gold Prices Continue To Remain Muted The precious metal is trading subdued, in anticipation of further news on the stimulus proposal from the new Biden administration.Price action is strongly consolidating near the 1850 handle for the moment. This could continue for a while before leading to a strong breakout.The bias also remains mixed at the moment. To the upside, gold prices need to post a strong breakout above the 1850 handle, which will open the way to the 1911 – 1900 resistance level next.To the downside, the 1817.80 level of support once again comes into the picture.
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold?

Pandemic 2020 Is Gone! Will 2021 Be Better for Gold?

Finance Press Release Finance Press Release 15.01.2021 11:52
Hurray! The disastrous year of 2020, which brought about the COVID-19 pandemic , the Great Lockdown , and the economic crisis , is over! Now, the question is what will 2021 be like – both for the U.S. economy and the gold market.To provide an answer, below I analyze the most important economic trends for the next year and their implications for the yellow metal.Society gains herd immunity by vaccination and the health crisis is overcome.With herd immunity approaching, the social fabric returns to normality, and the economy recovers.The vaccine rollout increases the risk appetite, reducing the safe-haven demand for both gold and the greenback .The return to normality and realization of the pent-up demand (comeback of spending that was put on hold during the U.S. epidemic ) accelerates the CPI inflation rate .The Fed stays accommodative, but the recovery in the GDP growth and the labor market makes the U.S. monetary policy less aggressively dovish than in 2020.However, the Fed continues to use all of its tools to support the economy in 2021 and, in particular, it does not hike the federal funds rate , even if inflation rises.As a result, the real interest rates stay at ultra-low levels. However, the potential for further declines, similar in scale to 2020, is limited, unless inflation jumps.The American fiscal policy also remains easy, although relative to 2020, government spending declines, while the budget deficit narrows as a share of the GDP.However, the public debt burdens continue to rise. Although the ratio of debt to GDP decreased in Q3 2020 amid the rebound in the GDP, it’s likely to increase further in the future, especially if Congress approves the new fiscal stimulus.Given the dovish Fed conducting a zero-interest rate policy , increasing debt burden, and strengthened risk appetite amid the vaccine rollout, the U.S. dollar weakens further. The American currency has already lost more than 11 percent against a broad basket of other currencies since its March peak.What does this macroeconomic outlook imply for the gold prices? This is a great question, as some of the trends will be supportive for the yellow metal, while others might constitute headwinds, and some factors could theoretically be both positive and negative for the price of gold. For instance, the end of the recession seems to be bad for the yellow metal, but gold often shines during the very early phase of an economic recovery, especially if it is accompanied by reflation , i.e., a return of inflation.The tailwinds include the continuation of easy monetary and fiscal policies . The federal debt will remain high, while the interest rates will stay low, supporting the gold prices, as was the case in the past (see the chart below).There is also an upward risk of higher inflation. In such a macroeconomic environment, the U.S. dollar should weaken against other currencies, thus supporting gold prices . As a reminder, the relative strength of the greenback in recent years (see the chart below) limited the gains in the precious metals market.However, there are also headwinds . You see, levels are significantly different concepts than changes. The latter often matter more for the markets. What do I mean? Well, although both monetary and fiscal policies will remain accommodative, they will be less accommodative than in 2020. Although the real interest rates should stay very low, they will not decline as much as last year (if at all).In other words, the economy will normalize this year after suffering a deep downturn in 2020, so the economic policy will be less aggressive. Hence, the level of bond yields and the ratio of federal debt to GDP should stabilize somewhat – actually, thanks to the rebound in the GDP in the third quarter of 2020, the share of public indebtedness in the U.S. economy has decreased, as the chart below shows.Hence, although the price of gold could be supported by the continuation of easy monetary and fiscal policies, low real interest rates, and weak dollar, it’s potential to rally could be limited. The accommodative stance of central banks and unwillingness to normalize the monetary policy for the coming years should prevent a significant bear market in gold , but without any fresh triggers of further declines in the bond yields or without the spark of inflation, the great bull market is also not very likely. So, unless we either see a serious solvency crisis or sovereign debt crisis , or an substantial acceleration in inflation, gold may enter a sideways trend . Or it can actually go south, if it smells the normalization of monetary policy or increases in the interest rates.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Gold & the USDX: Correlations

Stocks Decline - Don’t get Caught

Finance Press Release Finance Press Release 15.01.2021 17:09
This market reminds me of the days leading up to Christmas Eve 2018. For those who don’t remember, it was a pretty dark day for those trading in financial markets.I was in the office, alone, and felt particularly responsible for my clients that day. You see, since October of that year, markets had been in a tailspin lower.“Fundamentals look good, add some exposure to equities here” I found myself saying, more than once. And just when I thought I would get a break, have a half day in the markets, and take a couple days off - boom. Markets fell 2 to 3 percent on the day .I still remember the feeling, it was like a gut punch. We were unprepared and had added more equity exposure for most of our clients in the prior few weeks. My boss was furious, as I was responsible for allocating hundreds of millions of dollars and we were having our worst quarter ever. I vowed to never be caught unprepared and foolhardy about markets ever again after that quarter.It was a great lesson, and one that allowed me to flourish in 2020. While I did not foresee a global pandemic, back in January of 2020, things were looking eerily similar to 2018. Markets were frothy, and it appeared that no downside was possible. And I cut exposure for my family assets significantly.That allowed me to avoid the worst of the pullback, and in March, with an eye on the long run, I took my family assets and picked up several companies at mouth watering valuations, some we hadn’t seen in years.So far, so good. My old boss would have been pleased - not that it matters…And now? Well. We’re falling into the same song and dance lately, aren’t we. I have some tips below for those interested, and if you want to know how my personal portfolios have performed, slip into my DMs.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra high net worth. Hopefully, you’ll find the below enlightening from my perspective, and I welcome your thoughts and questions.Although stocks closed mildly lower on Thursday (Jan. 14), stocks have overall had a strong start to 2021.Be that as it may, I am still concerned about overheated valuations for stocks and the return of inflation. The S&P 500 is trading at its highest forward P/E ratio since 2000, and the 10-year treasury is at its highest level since March. The Russell 2000 is also up over 37% from its 200-day moving average for the first time in its history.Overvalued stocks combined with inflation returning by mid-year is quite concerning for me. I feel that a correction between now and the end of Q1 2020 is likely.I like how economist Mohammed El-Erian described the market as a “ rational bubble .” But he did caution against four major risks that could cause a downturn.The first two risks, and the least likely are the Fed pulling back on monetary stimulus and the potential for corporate bankruptcies. As Fed Chair Jay Powell said himself Thursday though, (Jan. 14) “be careful not to exit too early,”The last two risks could be riskier.The first is “some sort of market accident” akin to the dot-com bubble popping in 1999. THIS is what concerns me most right now. The IPO market is simply absurd right now. The DoorDash (DASH) and AirBnB (ABNB) IPOs were ridiculous, and other IPOs are looking more and more like a circus. Lender Affirm went public on Wednesday (Jan. 13) and nearly doubled. Shares of Poshmark also surged more than 130% in its debut Thursday (Jan. 14).The other risk is the bond market and its effect on inflation. According to El-Erian, “If we were to see another 20 basis point move in yields, that would be bad news.”Despite my concerns, it is clear to me that investors are loving the potential for a $1.9 trillion stimulus package under President-elect Biden.Although a short-term tug of war between good news and bad news could continue, it seems to me that investors (for now) would just prefer to ride this out for what could be a strong second half of the year. According to CNBC’s Jim Cramer , there appears to be a lack of “people willing to sell”.Be that as it may, jobless claims surged to their highest levels since August, and the pandemic is still out of control. According to Goldman Sachs’ Chief Economist Jan Hatzius, U.S. stocks and bond markets could possibly “ take more of a breather ” in the near term.Generally, corrections are healthy, good for markets, and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). Because we haven’t seen a correction since March 2020, we could be well overdue.This is healthy market behavior and could be a very good buying opportunity for what should be a great second half of the year.The consensus is that 2021 could be a strong year for stocks. According to a CNBC survey which polled more than 100 chief investment officers and portfolio managers, two-thirds of respondents said the Dow Jones will most likely finish 2021 at 35,000, while five percent also said that the index could climb to 40,000.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is very possible. I don’t think that a correction above ~20% leading to a bear market will happen.Hope everyone has a great day. Best of luck, and happy trading! S&P 500’s Valuation is its Highest in Years Figure 1- S&P 500 Large Cap Index $SPXConventional wisdom would tell you that the S&P had overheated and valuations are crazy. The index’s forward P/E ratio is the highest it’s been in two decades.But did you just see JP Morgan ’s (JPM) earnings report?Wow.The big bank crushed both top and bottom line estimates, and saw a net income growth of 42% from a year ago.But look deeper into the earnings call, and there are some things to worry about. JP Morgan reported a net benefit of $1.89 billion in credit reserves and is maintaining a reserve topping $30 billion.Why is this worrying? According to CEO Jamie Dimon, this is because of “significant near term uncertainty” due to the pandemic.Dimon further added that despite vaccine and stimulus-related optimism, JP Morgan is holding onto these reserves in order to “withstand an economic environment far worse than the current base forecast by most economists.”That’s a bit troubling.The S&P 500 has been trading in a streaky matter as of late and reflects the broader tug-of-war between good news and bad. The index seemingly goes on multiple day winning streaks and losing streaks on a weekly basis. After seeing its worst sell-off since October last Monday (Jan. 4), for example, it went on a four-day win streak and broke past 3800.We are now back below 3800. Although I always cheer stocks going up and hitting records, I want buying opportunities. I would like to see a drop to around 3600 or below before making a BUY call for the long-term.For now, my near-term outlook is murky. A short-term correction could inevitably occur by the end of Q1 2021, but for now, I am calling the S&P a HOLD. I would like to see a sharp correction before initiating S&P exposure at a discount. There is clear upside for the second half of 2021, but I would just prefer to maximize the upside from a lower level.For an ETF that attempts to directly correlate with the performance of the S&P, the SPDR S&P ETF (SPY) is a good option.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stocks Decline, More May be Coming

Stocks Decline, More May be Coming

Finance Press Release Finance Press Release 18.01.2021 22:15
We’ve reached a very critical juncture in the markets. Last week, I mentioned how this reminded me of the Q4 2018 pullback ( read my story here ), and still maintain that there is way too much complacency in this market. Stock markets are risky for a reason, something many Robinhood traders are sure to find out this year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth. Hopefully, you’ll find the below enlightening from my perspective, and I welcome your thoughts and questions.Stocks closed the week with their first weekly declines in nearly a month.The pullbacks weren't anything astronomical, but it could potentially be the start of the Q1 declines that I have been predicting.For one, valuations are insane, and the tech IPO market is looking like clown school. The S&P 500 is trading near its highest forward P/E ratio since 2000, while the Russell 2000 has never traded this high above its 200-day moving average.Signs are starting to point towards the return of inflation by mid-year as well. As the 10-year yield ticked up to its highest level since March, economist Mohammed El-Erian said “if we were to see another 20 basis point move in yields, that would be bad news.”Expectations haven’t been this high for inflation in years either. According to Edward Jones , the 10-year breakeven rate hit its highest level since 2018 last week due to rising commodity prices, a weaker dollar, and broad stimulus policy. The 10-year breakeven rate is a market-based measure of inflation expectations.What’s also concerning is that investors didn’t seem to bat an eye at Joe Biden’s $1.9 trillion stimulus package !What does this tell me?That maybe this was anticipated and priced in already. According to Jim Cramer on his Mad Money show on CNBC, “When an event occurs and the market gets exactly what it wants, but nothing more, it’s treated as a reason to sell, not to buy.”Although this week's decline was moderate, I still feel that a correction between now and the end of Q1 2020 is likely amidst a tug of war between good news and bad news.Generally, corrections are healthy for markets and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017). The last time we saw one was in March 2020, so we could be well overdue.Corrections are healthy market behavior and could be an excellent buying opportunity for what should be a great second half of the year.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is possible. I don't think that a decline above ~20%, leading to a bear market will happen.I hope everyone has a great day. Best of luck, and happy trading! Time to Wager - Is the Dow Over/Under 31,000 Before the End of January?Figure 1- Dow Jones Industrial Average $INDUIs it possible to choose "push" on this gamble?I have too many short-term questions and concerns about the Dow Jones to unequivocally say it's overheated like the Russell or tech IPOs, or if it's at the right buying level.Although the Dow's RSI is comparable to the Nasdaq's on the surface, it has also not exceeded overbought levels as much.I do like the Dow's decline this week. But I'd like to see a more profound dip before buying back in.If someone wanted to make an over/under bet with me on the Dow's 31,000 level by the end of January, the truth is I'd probably choose "push." You'd have better luck betting on the AFC Championship game this year (but only if Mahomes plays).I don't like how COVID-19 is trending (who does?), I am disappointed in the vaccine roll-out (although it's improving), and I am concerned about short-term economic and political headwinds. But I think it's more likely than not that the Dow hovers around 31,000 by month's end rather than make any significant move upwards or downwards. It is very hard right now to make a conviction call on this index.If and when there is a drop in the index, it probably won't be anything like we saw back in March 2020.While a 35,000 call to close out 2021 is a bit aggressive, the second half of 2021 could show robust gains for the index once vaccines are available to the general public.With so much uncertainty, the call on the Dow stays a HOLD. I am closely monitoring the RSI if it exceeds 70.For an ETF that looks to directly correlate with the Dow's performance, the SPDR Dow Jones ETF (DIA) is a strong option.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
GBPUSD Trades Flat Above The 1.3050 Technical Support

GBPUSD Trades Flat Above The 1.3050 Technical Support

John Benjamin John Benjamin 19.01.2021 09:12
USD rises to a one-month high as Yellen TestifiesEURUSD Reversing Just Off 1.2050 Technical Support The euro currency posted a steady decline as price action reversed just a few pips of the 1.2050 level of support. The declines come on the back of a strengthening US dollar.Speculation that the new Treasury Secretary, Janet Yellen will not be pursuing a weaker dollar policy has pushed the greenback higher. This has led to the euro posting a steady decline over the week.Despite the rebound just above the 1.2050 level, the bias remains to the upside. Any gains are likely to stall near the 1.2177 level at best. A reversal near this level will confirm a further continuation lower.On the other hand, we could expect the EURUSD to firmly test the current support near 1.2050.The British pound sterling extended declines but managed to post a reversal above the 1.3050 level of technical support. The rebound comes as prices fell through the 1.3611 level of support late last week.The declines open the way for the cable to retest the support level near the 1.3506 region. However, at the current reversal, we could expect the cable to retest the 1.3611 level once again.Establishing resistance at this level will likely confirm further downside. But this could change if the GBPUSD manages to close back above the 1.3611 level.To the downside, the declines could stall near the 1.3506 level of support keeping prices to move in a sideways range.Oil Prices Attempt A Modest Rebound WTI crude oil prices posted a rebound following the declines from last week. Prices got a boost early on Monday following stronger GDP numbers out of China.However, the current retracement remains somewhat subdued. Unless we see a breakout above the previous highs of 53.74, we could expect a continuation lower.This will mark a correction in crude oil prices which has been in a steady trend for a while.The immediate downside target for oil prices is the 49.00 area. Establishing support there could potentially mark a correction into the longer-term uptrend that oil prices are in currently.Gold Rebounds Off 1817 Support Level The precious metal touched down below 1817 intraday to a one-month low. However, prices quickly reversed losses to rise above this technical support.For the moment, prices remain above the 1817 level and could see some upside. But only a close above the 1850 level can confirm this.In such an event, gold prices are likely to extend gains further. This will open the way for the precious metal to test the next key resistance level near 1911.50.To the downside, only a strong close below the 1817 level will confirm further downside in prices.
GBPUSD Back Above 1.3611, The Double Top Low

GBPUSD Back Above 1.3611, The Double Top Low

John Benjamin John Benjamin 20.01.2021 08:35
USD turns weaker after rising to a one-month highEURUSD Retraces To the 1.2144 Price Level The euro currency is posting a strong retracement following the decline close to the 1.2050 level of technical support.The current rebound has pushed price action to test a minor support level near 1.2144. With the stochastics oscillator currently showing a hidden bearish divergence, price action will either have to break out above 1.2177 resistance or it is likely that we could see a continuation to the downside.This could mean that the technical support near 1.2050 will once again come under pressure. If prices break below this level, then the EURUSD could be looking towards posting their correction down to 1.1900 level.To the upside, price action will need to post or strong gain about 1.2177 in order to keep the upside bias intact.The British pound sterling continues its strong reversal price action as prices our trading currently above the 1.3611 level.This was the low from the double top pattern that had formed previously. If we see a strong close above 1.3611, then it would potentially keep the GBPUSD within a sideways range.This would mean that the cable will be trading back within the 1.3701 and 1.3611 levels.For the moment, however, the stochastics oscillator still remains somewhat weak as far as the bullish bias is concerned.As a result, a reversal near 1.3611 could potentially reiterate the downside buyers. This would then open the way for the cable to test the 1.3506 level of support.WTI Crude Oil Rebounds. But Can It Post Further Gains? WTI crude oil prices are posting a strong recovery with price action attempting to retest the previously formed highs.However, the reversal looks to be a bit fragile at the moment. As a result, if prices fail to break out above the trend line once again and above the previous highs near 53.80, then we could expect to see some downside correction taking place.For the moment, the oil prices remain somewhat mixed in their bias.Price action on the daily chart shows a bullish reversal following the Doji pattern which comes after the strong declines from Monday.However, from here on, oil prices will need to close above the previous highs in order to continue to post further gains.Gold Stays Muted Despite A Weaker USDThe precious metal is trading subdued, unmoved by the weaker US dollar. As a result, prices remain rangebound within the 1850 and 1818 levels for the moment.The stochastics oscillator also remains rather flat suggesting the sideways movement is likely to continue on for a bit further.Only a strong breakout within this range could result in a potential direction being established in the near term.The bias also remains mixed at this moment. On the daily chart, following the strong rejection below 1817.79, prices have managed to close bullish.However, the resistance level near 1850 will prove to be critical at this point.The stochastics on the daily chart timeframe remains near the oversold level, therefore giving support to the upside buyers if there is a breakout above 1850.
Gold & the USDX: Correlations

The Tug of War Continues

Finance Press Release Finance Press Release 20.01.2021 15:39
This market continues trudging forward and weighing good news with bad. After stocks closed last week with their first weekly declines in nearly a month, stocks staged a mild recovery on Tuesday (Jan. 19th) led by tech, big banks, and small-caps.Today's gains were primarily thanks to renewed stimulus hopes, faster vaccine distributions, and strong bank earnings. However, this is far from an “all clear.”It still reminds me of the Q4 2018 pullback ( read my story here ). I remain steadfast that there is way too much complacency in today’s market- despite long-term tailwinds. In the short-term, we are truly walking on ice.For one, valuations are absurd. Tech IPOs seem more like Barnum and Bailey than a capital market, the S&P 500 is trading near its highest forward P/E ratio since 2000, and the Russell 2000 has never traded this high above its 200-day moving average.Signs are starting to point towards the return of inflation by mid-year as well. Despite declining Tuesday (Jan. 19), the 10-year yield remains around its highest level since March. Economist Mohammed El-Erian believes that “if we were to see another 20 basis point move in yields, that would be bad news.”Edward Jones also claims that the 10-year breakeven rate, a market-based measure of inflation expectations, is at its highest level since 2018 thanks to rising commodity prices, a weaker dollar, and broad stimulus policy.There are also some signs that the market is already pricing in Joe Biden's $1.9 trillion stimulus package .On the one hand, according to Jim Cramer , “when an event occurs and the market gets exactly what it wants, but nothing more, it’s treated as a reason to sell, not to buy.” What happened in the market last week reflects this.On the other hand, some of the economic benefits may not have been priced in yet. For example, JP Morgan believes that this stimulus plan could cut unemployment to less than 5% by year’s end.But remember- the stock market is not the economy.I remain firm that a correction between now and the end of Q1 2020 could happen thanks to this neverending pay-per-view bout between good news and bad news.We may trade sideways this quarter- that would not shock me in the least. But I think we are long overdue for a correction since we haven’t seen one since last March.Corrections are healthy for markets and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what should be a great second half of the year.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is possible. I don't think that a decline above ~20%, leading to a bear market will happen.In a report released Tuesday (Jan. 19), Goldman Sachs shared the same sentiments.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth. Hopefully, you find my insights enlightening, and I welcome your thoughts and questions.Have a great shortened trading week! Best of luck. The Nasdaq’s RSI Indicates Hold- Deeper Pullback Coming?Figure 1- Nasdaq Composite Index $COMPIf utility stocks are Subarus, tech stocks are Ferraris.These stocks get the most glory, show the most growth potential, and are innovators and disruptors.Pay close attention, especially to cloud computing, e-commerce, and fintech in 2021.I am sticking with the theme of using the RSI to judge how to call the Nasdaq. An overbought RSI does not automatically mean a trend reversal, but with the Nasdaq, I always keep a close eye on this . Over the last several weeks, the Nasdaq’s RSI has indicated a consistent pattern.The Nasdaq pulled back on December 9 after exceeding an RSI of 70 and briefly pulled back again after passing 70 again four weeks ago. We also exceeded a 70 RSI just before the new year, and what happened on the first trading day of 2021? A decline of 1.47%.The last time I changed my Nasdaq call from a HOLD to a SELL on January 11 after the RSI exceeded 70, the Nasdaq declined again by 1.45%.Despite ticking back up on Tuesday (Jan. 19), the Nasdaq is still no longer technically overbought. But the tech IPO market screams dot-com bubble to me.Last week, Lender Affirm nearly doubled in its public debut, while Poshmark surged by over 130% during its world premiere.I have no other words to describe it besides a circus.I still love tech and am generally bullish for 2021. But I need to see the Nasdaq have a legitimate cooldown period and move closer to its 50-day moving average before considering it a BUY.I also have some worries about how full Democrat control could affect tech stocks thanks to higher taxes and stricter regulations. A Blue Wave is better for small-caps than tech.For now, because the RSI is still a HOLD, I’m keeping my HOLD call.If the RSI ticks back up above 70, I’m switching back to SELL. The Nasdaq is trading in a precise pattern.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Emerging Markets Stocks and ETFs for 2021

Emerging Markets Stocks and ETFs for 2021

Finance Press Release Finance Press Release 22.01.2021 16:41
There’s not a rigid definition of what an emerging market is. For example, China is still the leading country in many emerging market ETFs and funds. But is it fair to consider China an emerging market any longer? It has nearly 1.4 billion people and was the only major economy globally to see GDP growth in 2020.That’s like calling Giannis Antetokounmpo an up and coming superstar despite winning the last two NBA MVP awards.But even if I did see China as an emerging market, it wouldn’t be my top choice for 2021.If you’ve been reading my newsletters, you know that I love emerging market exposure this year. The dollar is weakening and should continue to weaken with trillions more in stimulus and rising commodity prices.Meanwhile, emerging markets are perfectly positioned to exploit this and grow as a result.You also know that I’ve been talking about specific emerging markets like Taiwan, Thailand, and Russia.But in this special emerging markets newsletter , I will aim to further talk about what to look for when investing in a country, what other emerging markets to consider, and why I think they are set to outperform the US markets this year, after many years of underperformance.Why emerging markets?For several reasons!For one, did you know these facts about emerging markets? They have:-85% of the world population-77% of the land mass-63% of global commodities-59% of global GDP (using PPP)-12.5% of world’s market capConsider this for long-term investing too. Advanced economies are aging rapidly while emerging economies have youthful demographics.That’s why PWC believes that emerging markets (E7) could grow around twice as fast as advanced economies (G7) on average.For emerging markets, this could be very advantageous in the coming decades.With American debt building up at an alarming rate, and the U.S. Dollar set for broader declines, this trend could begin sooner than we realize.U.S. investors also usually have >5% exposure to emerging markets, making this an even more untapped opportunity.Aren’t emerging markets risky?Of course, you have to consider political risk, credit risk, and economic risk for emerging markets.But did you see the U.S. Capitol two weeks ago? Have you noticed how its currency has performed since March? Figure 1- U.S. Dollar $USD Have you also seen the Fed’s balance sheet? Have you seen the S&P’s valuation and the tech IPO market?I would even argue that emerging markets could hedge against America’s political, economic, and currency risks right now. The pandemic only exacerbated this.Furthermore, if you look at the returns of the emerging markets I will discuss today: Taiwan (EWT), Russia (ERUS), Thailand (THD), Vietnam (VNM), South Korea (EWY), Indonesia (EIDO), Chile (ECH), and Peru (EPU), you will see that all have outperformed the S&P 500 (SPY) since September. Figure 2-SPY, EWT, ERUS, THD, VNM, EWY, EIDO, ECH, EPU comparison chart- Sep. 1, 2020-Present Taiwan iShares ETF (EWT) Figure 3-iShares MSCI Taiwan ETF (EWT) The Taiwan iShares ETF (EWT) has overheated more than the other emerging market ETFs based on its RSI that I will discuss. But if you’ve been reading my newsletters, you know I love Taiwan.Taiwan has also arguably been the best call I’ve made since starting these newsletters.I have been consistently calling Taiwan a better buy than China, despite China’s undeniable upside. Taiwan has the same sort of regional upside, without the same kind of geopolitical risks.Consider this too. Despite China’s robust economic response to COVID-19, retail sales still fell 3.9% over the full year, marking the first contraction since 1968. Lockdowns have also returned to China with a vengeance thanks to a new wave in COVID-19 infections.Ever since I called the EWT a buy on December 3rd, it has gained nearly 16% and outperformed the MSCI China ETF (MCHI) by approximately 3%.It has also outperformed the SPY S&P 500 ETF by nearly 11%.Taiwan also is unique for a developing country because of its stable fundamentals. It has low inflation, low unemployment, consistent trade surpluses, and high foreign reserves.It also has a diverse and modern hi-tech economy, especially in the semiconductor industry. With a diverse set of trade partners, Taiwan could only be scratching the surface of its potential.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Gold & the USDX: Correlations

Recent triggers in these sectors suggest US Stock Markets may enter a rally phase

Chris Vermeulen Chris Vermeulen 22.01.2021 21:30
Recently, our Best Asset Now (BAN) Hotlist generated a new trigger on the SPY chart.  Typically, this type of trigger suggests the SPY is starting a new, potentially explosive, upside price rally.  But what really interests us is the potential that the strongest sectoral ETFs may continue to see a much stronger upside price rally as a result of this new trigger.RECENT BAN SPY TREND TRIGGERThe strength of the BAN Hotlist is not the general market triggers it gives, such as the SPY, Dow Jones, or NASDAQ, but instead the ability to align these major market triggers with the strongest performing sectoral ETFs. This allows those using the Hotlist and BAN strategy to take advantage of the best-performing assets in the markets in any market trend.  The new SPY trigger, seen on the chart below, suggests the US stock markets may be starting a new upside price trend, which will cause capital to rotate into different sectors.  Our simple BAN Hotlist and strategy helps us identify these sectoral opportunities.QQQ GENERATES A SIMILAR TYPE OF BREAKOUT TRIGGERTraders love when ideas drawn from one chart is corroborated by other charts. As we can see from the chart below, the QQQ appears to have confirmed this BAN trigger with a similar type of upside price breakout. This upside move in the QQQ aligns with some of our recent research that suggested the Technology sector had stalled after having been one of the fastest-growing sectors for several months now.  We may start to see certain sub-sectors of technology really start to advance faster than the SPY/QQQ – which creates explosive opportunities for traders/investors.Recently, we published a research article suggesting a lower US Dollar would prompt major sector rotations in the US and global markets. Within that article, we highlighted the fact that the Materials, Industrials, Technology, and Discretionary sectors had been the hottest sectors of the past 180 days, but the Energy, Financials, Materials, and Industrials had shown the best strength over the past 90 days.  Technology had fallen/stalled dramatically over the past 90+ days.Overall, we believe the best performing sectors are likely to be sub-sectors of the SPY and QQQ. Potentially, certain components of the Technology, Health Care, Discretionary & Utility sectors.  Beyond that type of general analysis, we rely on the BAN Trader system to rank the “Best Assets Now” and tell us when new trade entry triggers are generated. It is very likely that this new SPY BAN trigger will prompt an extended upside price rally across a number of assets over the next few days/weeks.  Are you ready for these big market rotations expected in 2021?  Do you want to learn how BAN can help you find and trade the “Best Assets Now”? You too can also trade Best Assets Now with no proprietary indicator, scanners, or algorithms just by watching my FREE webinar. Not only will it show you a strategy you can implement tomorrow, but you will also receive over $100 worth of free goodies designed to make you an even better trader... no strings attached. Go ahead and watch the webinar now - click here to start! If you want to improve your own trading strategy and win-rate, then you need to subscribe to BAN Trader Pro to get my daily BAN Hotlist, my pre-market video walkthrough of the charts every morning, and my BAN strategy trade alerts.Happy Trading!
Technology & Energy Sectors Are Hot – Are You Missing Out?

Technology & Energy Sectors Are Hot – Are You Missing Out?

Chris Vermeulen Chris Vermeulen 24.01.2021 21:22
We have seen some really big moves in various S&P sectors over the past 60+ days and these trends look like they may continue for a while.  Near the end of 2020, in October and November, the markets seemed to stall a bit before the US elections, but they have really started to trend much higher over the past 60+ days.  Technology and Energy seem to be leading the charge in some respects. The most important thing for traders is to find decent breakout trends in stocks and sectors that have a real potential for strong continued trending.  When we find these types of longer-term trends, we can scale in and out of the typical up/down price trends, over time, to generate some incredible returns.Technology Heating Up AgainThe move in the IXN Global Technology ETF charted below, looks like it is starting to accelerate higher.  It has already moved +17% over the past 60+ days, but there is a real potential that global investors are starting to pile back into technology ahead of the Q4:2020 earnings reports.  This may prove to be one of the hottest sectors in 2021 – so keep an eye on this new breakout rally.Energy and Exploration Setting Up For Another Move HigherOne of the biggest movers over the past few months has been the recovery of the Oil/Gas/Energy sector after quite a bit of sideways/lower price trending.  You can see from this XOP chart, below, a 44% upside price rally has taken place since early November, and XOP has recently rotated moderately downward – setting up another potential trade setup if this rally continues.  Traders know, the trend if your friend.  Another upside price swing in the XOP, above $72, would suggest this rally mode is continuing.Recently, we published a research article suggesting a lower US Dollar would prompt major sector rotations in the US and global markets where we highlighted the fact that the Materials, Industrials, Technology, and Discretionary sectors had been the hottest sectors of the past 180 days, but the Energy, Financials, Materials, and Industrials had shown the best strength over the past 90 days.  Technology, Healthcare, Financials, Energy, Consumer Products/Services, Foreign Markets have all been hot over the past 4+ months, but what is trending right now?  We believe the best performing sectors are likely to be sub-sectors of the SPY and QQQ. My research team and I believe Technology and Energy still have lots of room to run.  Financials could be a big winner too if the recent upside trend continues. We rely on the BAN Hotlist to rank the “Best Assets Now” and tell us when new trade entry triggers are generated.In short, 2021 is going to be an incredible year for BAN Trader subscribers because of the big trends, high volatility, stimulus, and policies with the Biden administration. The time is now to learn and trade the Best Assets Now Hotlist using our proven sector rotation strategy. Our BAN Trader Pro strategy is proving to be an incredible advancement that allows us to dominate and generate Alpha. We urge you to take advantage of the BAN Trader Pro technology and prepare for the big trends that we expect to continue throughout all of 2021 and into 2022 and beyond.I am teaching my BAN trading strategy in a 1-hour FREE webinar. The webinar is 100% educational and you will get everything you need to trade my powerful strategy on your own, with no proprietary trading tools or indicators, and with no strings attached. Learn this strategy now and join me in my webinar at https://joinnow.live/s/EPdGTI.Enjoy the rest of the weekend!Chris VermeulenChief Market Strategistwww.TheTechnicalTraders.com
After Your Recent High - Where to Now, Gold?

After Your Recent High - Where to Now, Gold?

Finance Press Release Finance Press Release 25.01.2021 17:39
Gold is suffering a hang-over after it’s early January highs, while the EUR/USD pair is buckling - so when gold declines, where will its bottom be?After injecting itself with Janet Yellen’s stimulus sentiment, gold came down from its highs on Friday (Jan. 22).And like the GDX ETF, it’s important to put gold’s recent run into context. For starters, gold is still trading below its August declining resistance line, it topped at its triangle-vertex-based reversal point (which I warned about previously ) and the yellow metal remains well-off its January highs.Figure 1Looking at the chart below, we can see gold approaching the upper trendline of its November consolidation channel.Figure 2I marked the November consolidation with a blue rectangle, and I copied it to the current situation, based on the end of the huge daily downswing. Gold moved briefly below it in recent days, after which it rallied back up, and right now it’s very close to the upper right corner of the rectangle.This means that the current situation remains very similar to what we saw back in November, right before another slide started – and this second slide was bigger than the first one. I wrote about this previously (Jan. 21), saying that there’s a good reason for gold to reverse any day (or hour) now.And what happened last Friday?Well, gold fell by 0.52% as the Yellen -led intoxication began to wear off. Gold also continues to decline in today’s pre-market trading, despite a small move lower in the USD Index.Also adding to the upswing, one of the most popular gold indicators – the stochastic oscillator (see below) dipped below 20 last week. Itching to move off oversold levels, the yellow metal responded in kind. However, if you analyze the green arrows below (at the bottom of the chart), you can see that the first green arrow has a red arrow directly above it (marking gold’s November top).Currently, the stochastic oscillator is right near that level, and with November acting as a prelude, the yellow metal could suffer a similar swoon in the coming days or weeks.Figure 3 – Gold Continuous Contract Overview and Slow Stochastic Oscillator Chart ComparisonBack in November, gold’s second decline (second half of the month) was a bit bigger than the initial (first half of the month) slide that was much sharper. The January performance is very similar so far, with the difference being that this month, the initial decline that we saw in the early part of the month was bigger.This means that if the shape of the price moves continues to be similar, the next short-term move lower could be bigger than what we saw so far in January and bigger than the decline that we saw in the second half of November. This is yet another factor that points to the proximity of $1,700 as the next downside target.Moving on to cross-asset implications, Yellen’s dollar-negative comments tipped over a string of dominoes across the currency market. Ushering the EUR /USD higher, the boost added wind to the yellow metal’s sails.Figure 4And because the EUR/USD accounts for nearly 58% of the movement in the USD Index, the currency pair is an extremely important piece of gold’s puzzle. However, beneath the surface, the euro is already starting to crack. After breaching critical support last week, Yellen’s comments basically saved the currency, as a rally in the EUR/USD was followed by a rally in the EUR/GBP.Figure 5However, with Eurozone fundamentals drastically underperforming the U.S. (and many other countries as well), a come-to-Jesus moment could be on the horizon.In summary, Friday’s detox – with the EUR/USD flat-lining and gold moving lower – could be a precursor to a rather messy withdrawal. Right now, the euro is hanging on for dear life, as technicals, fundamentals and cross-currency signals all point to a weaker euro. As a result, due to gold’s strong positive correlation with the EUR/USD, the yellow metal is unlikely to exit the battle unscathed.So, why is gold likely to bottom at roughly $1,700 (for the interim)?One of the reasons is the 61.8% Fibonacci retracement based on the recent 2020 rally, and the other is the 1.618 extension of the initial decline. However, there are also more long-term-oriented indications that gold is about to move to $1,700 and more likely, even lower.(…) gold recently failed to move above its previous long-term (2011) high. Since history tends to repeat itself, it’s only natural to expect gold to behave as it did during its previous attempt to break above its major long-term high.And the only similar case is from late 1978 when gold rallied above the previous 1974 high. Let’s take a look at the chart below for details (courtesy of chartsrus.com)Figure 6 - Gold rallying in 1978, past its 1974 highAs you can see above, in late 1978, gold declined severely right after it moved above the late-1974 high. This time, gold invalidated the breakout, which makes the subsequent decline more likely. And how far did gold decline back in 1978? It declined by about $50, which is about 20% of the starting price. If gold was to drop 20% from its 2020 high, it would slide from $2,089 to about $1,671 .This is in perfect tune with what we described previously as the downside target while describing gold’s long-term charts:Figure 7 - Relative Strength Index (RSI), GOLD, and Moving Average Convergence Divergence (MACD) ComparisonThe chart above shows exactly why the $1,700 level is even more likely to trigger a rebound in gold, at the very minimum.The $1,700 level is additionally confirmed by the 38.2% Fibonacci retracement based on the entire 2015 – 2020 rally.There’s also a good possibility that gold could decline to the $1,500 - $1,600 area or so ( 50% - 61.8% Fibonacci retracements and the price level to which gold declined initially in 2011). In fact, based on the most recent developments in gold and the USDX (how low the latter fell without a rally in the former), it seems that $1,500 is more likely to be the final bottom than $1,700. The $1,700 level is likely to be a bottom – yes – but an interim one only.Before looking at the chart below (which is very similar to the chart above, but indicates different RSI, volume, etc.), please note the – rather obvious – fact: gold failed to break above its 2011 highs. Invalidations of breakouts are sell signals, and it’s tough to imagine a more profound breakout that could have failed. Thus, the implications are extremely bearish for the next several weeks and/or months.Figure 8 - RSI, GOLD, and MACD ComparisonThe odd thing about the above chart is that I copied the most recent movement in gold and pasted it above gold’s 2011 – 2013 performance. But – admit it – at first glance, it was clear to you that both price moves were very similar.And that’s exactly my point. The history tends to rhyme and that’s one of the foundations of the technical analysis in general. Retracements, indicators, cycles, and other techniques are used based on this very foundation – they are just different ways to approach the recurring nature of events.However, every now and then, the history repeats itself to a much greater degree than is normally the case. In extremely rare cases, we get a direct 1:1 similarity, but in some (still rare, but not as extremely rare) cases we get a similarity where the price is moving proportionately to how it moved previously. That’s called a market’s self-similarity or the fractal nature of the markets. But after taking a brief look at the chart, you probably instinctively knew that since the price moves are so similar this time, then the follow-up action is also likely to be quite similar.In other words, if something looks like a duck, and quacks like a duck, it’s probably a duck. And it’s likely to do what ducks do.What did gold do back in 2013 at the end of the self-similar pattern? Saying that it declined is true, but it doesn’t give the full picture - just like saying that the U.S. public debt is not small. Back then, gold truly plunged. And before it plunged, it moved lower in a rather steady manner, with periodic corrections. That’s exactly what we see right now.Please note that the above chart (Figure 8) shows gold’s very long-term turning points (vertical lines) and we see that gold topped a bit after it (not much off given their long-term nature). Based on how gold performed after previous long-term turning points (marked with purple, dashed lines), it seems that a decline to even $1,600 would not be out of ordinary.Finally, please note the strong sell signal from the MACD indicator in the bottom part of the chart. The only other time when this indicator flashed a sell signal while being so overbought was at the 2011 top. The second most-similar case is the 2008 top.The above-mentioned self-similarity covers the analogy to the 2011 top, but what about the 2008 performance?If we take a look at how big the final 2008 decline was, we notice that if gold repeated it (percentage-wise), it would decline to about $1,450. Interestingly, this would mean that gold would move to the 61.8% Fibonacci retracement level based on the entire 2015 – 2020 rally. This is so interesting, because that’s the Fibonacci retracement level that (approximately) ended the 2013 decline.History tends to rhyme, so perhaps gold is going to decline even more than the simple analogy to the previous turning points indicates. For now, this is relatively unclear, and my target area for gold’s final bottom is quite broad.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
GBPUSD Edges Higher But Remains Range-Bound

GBPUSD Edges Higher But Remains Range-Bound

John Benjamin John Benjamin 27.01.2021 08:17
Dollar trades mixed ahead of FOMC meetingEuro Recoups Losses The euro currency pared losses from Monday as the US dollar weakened on Tuesday.Price action continues to remain to consolidate near the key resistance area of 1.2177 – 1.2144.Since Friday, the euro currency has been stuck in this resistance area. Meanwhile, the ascending triangle pattern continues to remain in play.For price to continue to push higher, a breakout above the 1.2177 level is needed.To the downside, a breakdown of the trend line could open the way for the euro to retest the 1.2050 level a bit more firmly.The British pound sterling followed suit with many of its peers by paring losses from Tuesday.Price action posted a strong rebound, which coincides with the medium-term trend line. This rebound saw prices breaking past the 1.3700 handle once again.Further gains are needed to confirm the continuation of the upside.For the moment, the Stochastics oscillator shows that there could be further room to the upside.However, if prices reverse, then watch for the trend line to break. This will open the way to the 1.3500 level for the GBPUSD.Crude Oil Maintains A Hold On The Sideways Range WTI crude oil prices continue to remain trading flat within the larger horizon. Price action gave back the short term gains made.For the moment, oil prices remain firmly entrenched within the 53.70 and 51.87 levels.With prices failing to push higher, we could see an eventual breakdown.A strong close below 51.87 will no doubt see the 49.00 level coming into play.But for the moment, the sideways range could continue, unless the breakout is driven by some strong fundamentals.Gold Prices Subdued On Stimulus Worries The precious metal was seen trading subdued albeit, trading flat. Price action managed to post intraday gains before giving them back.As a result, gold prices are back trading strongly near the 1850 handle. A close below this level could open the way toward the 1817.80 level of support once again.However, the direction is likely to be determined by some fundamental catalyst for the moment.To the upside, the 1911.50 level is within reach if gold prices can close out above the 1874.00 level.
Rosy February for S&P 500? Not So Fast

Rosy February for S&P 500? Not So Fast

Monica Kingsley Monica Kingsley 26.01.2021 09:20
With Biden in the White House, Trump's hallmark policies with the exception of 2017 tax cuts, are being undone. Would that be true also about the stock bull market that I called back in spring 2020? Still in autumn that year, I‘ve been saying that there isn‘t any stopping of the bulls (for now). The Fed‘s foot is back on the pedal, but inflation hasn‘t reared its ugly head yet – the path of least resistance for stocks remains higher. Unless the corona vaccination programs disappoint the markets, hurting cyclicals and the breadth of stock market advance, that is. Such a turn would take quite some activist economic policy steps to counter, as you can imagine. Can there be a better indicator than the dollar having rolled over to the downside, which I called in early summer to have happened? Ever since, the dollar has been largely on the defensive, and I projected that to last well into 2021. Here we are, with mammoth stimulus plans, reparations for slavery, minimum wage hikes, Green New Deal coming – you name it, we have it – and my prediction is naturally valid also today. Wait, there is one more clue, and that‘s interest rates. Slowly but steadily, they‘re rising, especially on the long end. With the decreasing foreign appetite (did you know that Russia‘s gold reserves already surpassed its dollar reserves in value terms?) for U.S. government bonds, the Fed will have to step forward increasingly more. Rising rates will be reinforcing inflation as the two go hand in hand. Rising rates thus can‘t be viewed exclusively as bullish spirits returning into the real economy, but as an inflationary surprise looming that will also be reflected in growing outperformance of international stocks vs. the U.S. stock indices. Hi, my name is Monica and I‘m finally back, with truly mine and free Stock Trading Signals, and own website to boot! Nothing is standing now in the way of my personal blog and active trading style. Yes, I am so happy to be making a return with my very own daily free analyses and intraday updates after being the author of Stock Trading Alerts since early 2020. What a great and rewarding experience I could have delivered to you, the truly grateful ones. Check out my fresh bio, drop me your questions anytime, and I‘ll answer to the benefit of all. Now that you know what‘s up, let‘s dive into the technicals (charts courtesy of www.stockcharts.com). S&P 500 Outlook 2021 is about stocks trading near the upper range of their Bollinger Bands volatility spectrum. The weekly indicators haven‘t flashed sell signals, yet volume isn‘t at its strongest. Still, it‘s representative of an ongoing bull market, where 2021 won‘t however be as good a year for the stock market as 2020 was. Still, it‘ll be a good year where S&P 500 would comfortably beat not only the 4,000, but 4,200 mark. We‘ll also experience significant corrections but the nearest one won‘t arrive in February in earnest. I see the coming month as a relatively weak one, muddle through if you will. The daily chart shows the upward sloping trend channel nicely, with the breakdown attempt at the turn of the year soundly defeated. The daily indicators seem to favor largely sideways to mildly higher trading action in the nearest days. That‘s one point of view, with the other being that prices haven‘t declined enough to lure in the buyers yet. Given the volume examination, I lean towards sideways trading coupled with an unsuccessful push lower as the most probable scenario over the coming 1-2 weeks. Then, higher prices. Credit Markets High yield corporate bonds (HYG ETF) aren‘t pushing higher as vigorously as they had been recently. A sell signal? Hardly. Sign of caution? Don‘t jump the gun. I count on the pattern of higher highs and higher lows to continue, supporting the stock market rally. The ratio of high yield corporate bonds to short-dated Treasuries (HYG:SHY) isn‘t flashing danger yet either. Visually, there is no relative overextension to S&P 500, and the recent moves favor muddling through with an upward bias over the coming weeks. Inspecting S&P 500 relative to the high yield corporate bonds to all bonds (PHB:$DJCB) ratio shows quite clear skies ahead. Risk appetite isn‘t really waning. Rising Treasury yields (i.e. falling Treasury prices) are synonymous with economic expansion but a bit more is at play in 2021. This year, I am turning towards the explanation of inflation slowly but surely making a return, which is nowhere better seen than with the food price indices. The Fed also says that food price inflation is the best predictor of forthcoming, broader inflation. That explains quite nicely the rising rates in the face of the real economy waiting for months for the stimulus to arrive. With the dollar stuck deep in its bear market as one more sign of the inflationary storm striking this year, who would want to take the other side of the trade? Emerging Markets, Smallcaps, and S&P 500 Market Breadth It‘s my view that we‘ve entered the era of emerging markets (EEM ETF) outperforming the U.S. indices. That doesn‘t mean the S&P 500 would crater, but it would lag behind in appreciation. The emerging markets support the stock upswing to go on still. The Russell 2000 (IWM ETF) keeps trading in sync with the S&P 500, helping in its rebound from the mid-Jan lows. Their strong performance shows that they expect smooth sailing for the announced $1.9T stimulus plan. New highs new lows are the only (temporary) fly in the bullish ointment here. Spelling solid potential for a bear raid, I look for the downside from this divergence in the making to prove rather temporary and shallow. Precious Metals and Bitcoin Let‘s talk real money, these safe haven assets. Yes, given the 2020 performance and cues from monetary policy taken, it‘s hard to argue that Bitcoin didn‘t behave as another fiat currency nemesis. Still, I‘ll focus on precious metals within this section, because I‘ll be introducing Gold Trading Signals in the near future, so stay tuned for yet another daily publication of mine. Another market call that proved correct – gold didn‘t really give up all its summer rally, and the prolonged base building is in its latter stages. Yes, it‘s my view that we‘re going to see gold fireworks enter this spring, and that these prices represent a favorable entry point for a medium-term oriented investor. As for the short-term one, I‘ll cater to their needs in my upcoming daily publication, and today, with my first 2021 analysis, aim to provide you with a big picture view over the financial landscape at large, kind of my gameplan for the first half of 2021 if not more. The gold miners to gold ratio is trading at favorable levels for the buyers, and I look for the miners to start performing better over the next few weeks. The healthy period of long base building is drawing to an end. Silver would also join in the party, and the gold chart is sending a signal that this is going to unfold before too long. Bitcoin, the greatest beneficiary of aggressive monetary policy in 2020, agrees. Its chart pattern would favor some more sideways trading as a healthy precondition of another upleg, but don‘t be surprised if the cryptocurrency correction doesn‘t flatten the 50-day moving average. Yes, I‘m looking for the bulk of the corrective move in terms of prices, to be over already. Summary Over the coming two weeks of earnings reports, stocks are in for some short-term volatility. Sizable correction? Not really. But we‘re trading at quite elevated levels, and the month of February is shaping up to be weaker than January. No doubt about it, but there won‘t be a correction to speak of this early in 2021. With the Fed stepping up its balance sheet expansion, the monetary policy hasn‘t yet lost its charm, and inflation isn‘t on the radar screen of most. Investor sentiment is at greed, but not extreme greed. The put to call ratio is rising, which points to a not so smooth sailing ahead. Still, the bull market has better days in its future, but given the momentary balance of forces and especially the risk-reward ratio, I‘m not jumping in with both feet. As this is my first analysis in 2021, I‘m actually waiting on the sidelines for now. Subscribers to Monica‘s Insider Club, which features the trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals, would know right away when I make any move.
When to adjust your stop loss

When to adjust your stop loss

Fawad Razaqzada Fawad Razaqzada 26.01.2021 09:35
When to adjust your stop loss   I have already written a lengthy report with plenty of examples on how to manage your risk when in a trade in THIS article. But I wanted to provide a template here to give you an idea of exactly when I normally adjust the stop loss.  Let's get straight to the point. The diagram below describes how I normally adjust the stop loss for a long trade and the opposite of this for a sell trade: Source: TradingCandles.com   To show you how I use the above template to manage the stop in some of my most recent trade signals for the private group, here are a couple of real world examples: Example 1: USD/CAD The USD/CAD was one of my recent trade signals. The idea was to sell the rallies into resistance in a downtrend. So, after a two- or three-day rebound into the bearish trend line, I thought it was the right time to issue a sell trade idea:  Source: TradingCandles.com and TradingView.com   In addition to the above chart, I posted the below hourly chart showing the specifics of the trade entry, as well a short rationale behind the idea: "USD/CAD daily sows price reaching a potential resistance area (trend line and 21-day eMA) after a counter trend rebound off the lows. The long-term trend is bearish. So we will look for a sell setup here." "USD/CAD short trade idea on H1 chart – the idea is based off the daily and the fact that on this timeframe rates have rallied to and stalled at the 61.8% Fibo. The invalidation level is above the most recent high on H1 and also the trend line above the daily. The main target is the liquidity below the recent low " Source: TradingCandles.com and TradingView.com     After providing the above trade signal, rates started to go down as we had envisaged, prompting me to provide the following update, as my focus now was on reducing the risk (as we always do after entering a trade): "USD/CAD update – lower the stop on this so we can lock in some profit as price has now created some structure below our entry range. It is important to continually monitor your positions, especially at times like now when the markets are all over the place. " Source: TradingCandles.com and TradingView.com    As can be seen from the above 4-hour chart, the reason why I moved the stop lower was because of the fact price had created a structure of interim lower highs and lower lows. I did not take into account the entry range and didn't just move the stop loss just for the sake of moving it to breakeven or better. But there was good reason for us to do so, and price action told us when it was the right time.  As it happened, the USD/CAD stalled just ahead of our intended target, which, together with the fact the US dollar was weakening against some other currencies, meant it was probably the best time to close it manually. So I provided the following rationale and chart for the subscribers behind my decision to close it ahead of the target: "USD/CAD closing it manually here for at least +125 pips profit. Oil prices have stalled and the US dollar has shown signs of life against some currencies already e.g. against euro and gold. So let's not take any chances and close this for a very good profit."  Source: TradingCandles.com and TradingView.com    Example 2: GBP/JPY Another of our trade ideas which required management of the stop was the long GBP/JPY setup, which was issued on 11th January 2021. This is what I wrote to the group: "GBP/JPY is looking quite bullish and think more gains are likely in my view as ongoing risk rally keeps the pressure on the safe haven yen and I think the pound will bounce back because no-deal Brexit has been avoided. The next key objective is the long-term bear trend and previous high around 142.71ish " Source: TradingCandles.com and TradingView.com    I then issued the specifics of the GBP/JPY long trade idea on the 4-hour chart as rates were testing the bullish trend line. The stop low below the most recent lows on 4H candles and thus the trend line: Source: TradingCandles.com and TradingView.com    The GBP/JPY hit our first target for at least +100 pips and by now I had tightened the stop on the small portion still left open as shown on the updated chart to lock in some profit in case price reversed: Source: TradingCandles.com and TradingView.com    As it turned out, this trade reversed and stopped us out of the second portion (for a small profit). But on reflection, perhaps I shouldn't have adjusted the the stop too tightly as price subsequently rebounded again after re-testing our entry area: Source: TradingCandles.com and TradingView.com    Final words It is impossible to know ahead of time whether adjusting the stop loss is better than not doing anything at all. The way I see it is that you should adjust the stop loss as price action evolves and the market makes new price structures. On occasions, you might regret adjusting the stop loss. But essentially, what you want to do is reduce risk and remain in control of the trade. A small win is, after all, a win, and certainly not a loss. I would rather make a small win than lose a full 1R on any given trade.   
How the Eurozone Affects Gold, and Why You Should Care

How the Eurozone Affects Gold, and Why You Should Care

Finance Press Release Finance Press Release 27.01.2021 16:14
In our globalized economy, currency pairs have a negative correlation with gold, so how does the current EUR/USD situation impact the yellow metal?It pays to pay attention to what is happening in Europe. As is well known, there are many currency pairs in the world, but the most traded one is the EUR/USD. How does that affect you as a gold investor? The equation goes something like this: if the economy of the Eurozone sinks and takes the EUR down with it, the USD rises – and vice-versa. Gold, which is usually inversely related to the dollar, will also either rise or decline based on the latter’s behavior.Before we get to Europe though, let’s take a look at what gold is currently doing.Once again, yesterday’s (Jan. 26) session was relatively uneventful on the technical front, but that doesn’t mean that the outlook is any more bullish.Conversely, it remains bearish because of multiple developments that happened before the current pause. For instance, the invalidation of gold’s breakout above its 2011 high. Even though it had help from a sliding USD Index, the yellow metal still failed to hold above this critical support level.It seems that the only thing that made gold rally in the recent past was the U.S. inauguration-based uncertainty. As it fades away, gold is losing its gleam. In fact, the previous relative weakness seems to have already returned.Figure 1 – USD Index futures (DX.F)Taking the previous two days into account (precisely: yesterday and today’s pre-market trading), we see that the USD Index declined. In such a situation, gold should have rallied or at least paused, but what did it do?Figure 2 - COMEX Gold Futures (GC.F)Gold declined. This means that gold’s weakness relative to the USDX is back.Looking at the above chart, I marked the November consolidation with a blue rectangle, and I copied it to the current situation, based on the end of the huge daily downswing. Gold moved briefly below it in recent days, after which it rallied back up, and right now it’s very close to the upper right corner of the rectangle.This means that the current situation remains very similar to what we saw back in November, right before another slide started – and this second slide was bigger than the first one. Consequently, there’s a good reason for gold to reverse any day (or hour) now.Let’s get back to the USD Index for a minute.I think that the USD Index is likely to rally in the following weeks, but as far as the next several days are concerned, the situation is relatively unclear.The USD Index finds itself after the breakout above the declining medium-term resistance line, but it’s also after a breakdown below the rising short-term support line. Consequently, it’s very short-term outlook is relatively unclear. In all cases, I don’t see it moving visibly below the previous 2021 low.And since the situation is unclear with regard to the short-term in case of the USDX, it would be natural for gold to hesitate. Since it’s already declining, it seems that even if the USDX tested its previous 2021 low, gold would not rally far.Figure 3 - COMEX Silver Futures (SI.F)Similarly to gold, silver is not doing much. The white metal is moving back and forth after the big January slide and it seems to be preparing for another move lower.Let’s keep in mind that silver has a triangle-vertex-based reversal in late February – close to Feb. 23. Based on what we’ve seen so far, it seems quite likely that it will be a major bottom (not likely the final one for this slide, though).Figure 4 - VanEck Vectors Gold Miners ETF (GDX)Miners didn’t do much yesterday either, so my previous comments on them remain up-to-date. To explain the pattern, I wrote on Jan. 11 :If you analyze the chart above, the area on the left (marked S) represents the first shoulder, while the area in the middle (H) represents the head and the area on the right (second S) represents the potential second shoulder.Right now, $33.7-$34 is the do-or-die area. If the GDX breaks below this (where the right shoulder forms) it could trigger a decline back to the $24 to $23 range (measured by the spread between the head and the neckline; marked with green).And after analyzing Thursday’s (Jan. 21) price action, I wrote the following (on Jan. 22):As far as the miners are concerned, mining stocks didn’t correct half of their 2021 decline. They didn’t invalidate the breakdown below the rising support line, either. In fact, the GDX ETF closed yesterday’s session below the 50-day moving average. Technically, nothing changed.Regarding the GDX ETF’s current consolidation pattern (November to present), it mirrors what we saw between April and June of last year (the shaded green rectangles above).I added:Both shoulders of the head-and-shoulder formation can be identical, but they don’t have to be , so it’s not that the current consolidation has to end at the right border of the current rectangle. However, the fact that the price is already close to this right border tells us that it would be very normal for the consolidation to end any day now – most likely before the end of January.If we see a rally to $37, or even $38, it won’t change much – the outlook will remain intact anyway, and the right shoulder of the potential head-and-shoulders formation will remain similar to the left shoulder.But with many paths to get there, is hitting $37 or $38 a prerequisite to the eventual decline? Absolutely not. The GDX ETF could reverse right away and catch many market participants flat-footed.Remember, it’s important to keep last week’s rally in context. Despite the Yellen-driven bounce, the GDX ETF is still down considerably from its January highs.Having said that, let’s take a look at the market from a more fundamental angle.The Widening Economic DivergenceFor weeks, I’ve been highlighting the economic malaise confronting the Eurozone. And like a fork in the road, the U.S. and Europe continue to head in opposite directions. More importantly though, the fundamental fate of the two regions, and the subsequent performance of the EUR/USD, will go a long way in determining the precious metals’ destiny.Figure 5If you analyze the chart above, you can see that gold and silver tend to track the performance of the EUR/USD. And while gold bucked the trend on Tuesday (Jan. 26), silver still remains a loyal follower. Thus, as the European economy sinks further into quicksand, its relative underperformance is likely to pressure the EUR/USD and usher the PMs lower.On Friday (Jan. 22), the IHS Markit Eurozone Composite PMI fell to 47.5 in January (down from 49.1 in December), with services falling to 45.0 (from 46.4) and manufacturing falling to 54.7 (from 55.2).Please see below:Figure 6To explain, PMI (Purchasing Managers’ Index) data is compiled through a monthly survey of executives at more than 400 companies. A PMI above 50 indicates business conditions are expanding, while a PMI below 50 indicates that business conditions are contracting (the scale on the left side of the chart).In contrast to the Eurozone, the U.S. Composite PMI rose to 58 in January (up from 55.3 in December), with services rising to 57.5 (up from 54.8) and manufacturing rising to 59.1 (up from 57.1).Figure 7In addition, after European Central Bank (ECB) President Christine Lagarde revealed (on Jan. 21) that the Eurozone economy likely shrank in the fourth-quarter (all but sealing a double-dip recession), Germany (the Eurozone’s largest economy) cut its 2021 GDP growth forecast from 4.4% to 3.0%.And not looking any better, the International Monetary Fund’s (IMF) World Economic Outlook Report – which covers IMF economists' analysis over the short and medium-term – has the U.S. economy expanding by 5.1% in 2021 versus only 4.2% for the Eurozone. More importantly though, the Eurozone economy is expected to contract by 7.2% in 2020 versus 3.4% for the U.S. As a result, Europe has to dig itself out of a much larger hole.Please see below:Figure 8Also noteworthy, the IMF downgraded its GDP growth forecast for Canada. And because the USD/CAD accounts for more than 9% of the movement in the USD Index (though still well below the nearly 58% derived from the EUR/USD) it’s an important variable to monitor.Continuing the theme of Eurozone underperformance, U.S. consumer confidence (released on Jan. 26) rose from 87.1 in December (revised) to 89.3 in January (the red box below).Figure 9 - Source: Bloomberg/ Daniel LacalleIn contrast, Eurozone consumer confidence (released on Jan. 21) retreated in January. And while both regions’ readings are still well below pre-pandemic levels, currencies trade on a relative basis. As a result, the relative underperformance of the Eurozone is bearish for the EUR/USD.Figure 10If that wasn’t enough, the ECB essentially admitted it wants a weaker euro. On Tuesday (Jan. 26), reports surfaced that the ECB will investigate the causes of the euro’s appreciation relative to the greenback. Translation? The central bank is studying ways to devalue the currency.Adding more fuel to the fire, the yield differential between the U.S. and Europe foretells a higher USD Index. Dating back to 2003, after the U.S. 10-Year Treasury yield troughed and began rising, the USD Index (except for 2008-2009) always followed suit.Please see below:Figure 11 - Source: Daniel LacalleIn contrast, if you analyze the area at the bottom, you can see that the U.S. 10-Year Treasury yield has bounced by 57 basis points from its August low. But moving in the opposite direction, the USD Index is lower now than it was it August.Furthermore, notice the large divergence that’s occurred since the beginning of December?Figure 12The abnormal behavior above highlights the power of sentiment. Because U.S. investors ‘want’ a lower USD Index, they’re willing to overlook technicals, fundamentals, historical precedent and essentially, reality. However, if the dynamic reverses, the USD Index is ripe for a resurgence.Circling back to the euro, the currency is already starting to crack. On Monday (Jan. 25), I wrote that Janet Yellen’s pledge to “act big” on the next coronavirus relief package ushered the EUR/GBP back above critical support.However, on Tuesday (Jan. 26), the key level broke again.Please see below:Figure 13More importantly though, a break in the EUR/GBP could be an early warning sign of a forthcoming break in the EUR/USD.Figure 14If you analyze the chart above, ~20 years of history shows that the EUR/GBP and the EUR/USD tend to follow in each other’s footsteps. As a result, if the EUR/GBP retests its April low (the next support level), the EUR/USD is likely to tag along for the ride (which implies a move back to ~1.08).Figure 15And like a falling string of dominoes, if the EUR/USD retests ~1.08, the PMs should come under significant pressure.Figure 16If you analyze the chart above, you can see that over the last ~20 years, gold and silver tend to live and die with the EUR/USD. Naturally, there are also other factors, but the point is that the performance of this currency pair shouldn’t be ignored. As a result, a euro collapse (or at least a significant decline in it) could deliver plenty of fireworks. Conversely, once order is restored and weak Eurozone fundamentals are accurately priced into the EUR/USD, the precious metals will present us with an attractive buying opportunity.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
GBPUSD Trades Mixed As It Fails To Post New Highs

GBPUSD Trades Mixed As It Fails To Post New Highs

John Benjamin John Benjamin 28.01.2021 08:15
Markets trade mixed on FOMC dayEuro Briefly Slips To 1.2050 Technical SupportThe euro currency, along with many of its peers was trading mixed on Wednesday. This comes as the dollar briefly strengthened into the run-up to the Fed meeting.Price action lost the support off the minor trend line and briefly fell close to the 1.2050 technical support.However, price action was quickly rejected just above the 1.2050 level. The euro managed to recover the losses rather quickly.The downside bias is likely to rise as the currency pair has failed to make any moves above the resistance area of 1.2177 – 1.2144 level.However, considering that the Stochastics oscillator is likely to trigger a bullish signal, we could see another attempt to the upside.The British pound sterling gave back some of the gains from Tuesday on an intraday basis on Wednesday.Price action once again attempted to post new highs but failed to build up the momentum.The consolidation near the 1.3700 level has resulted in a possible ascending wedge pattern.If price action breaks lower, we could see a retest back to the 1.3050 level in the near term.To the upside, GBPUSD will need to post strong gains to close firmly above the 1.3700 level of resistance.WTI Crude Oil Bounces Off Lower Support Of RangeOil prices remain flat for yet another day. Price action briefly fell to the floor near 51.87 from the sideways range.But prices quickly recovered off this level intraday. For the moment, the sideways range remains intact and oil prices could settle in this range for a while longer.The upside level near 53.77 remains untested yet in the recent few sessions.The Stochastics oscillator has also turned flat currently underlining the sideways movement in the oil markets.Gold Loses The 1850 Support LevelThe precious metal was trading below the 1850 level just ahead of the Fed meeting. However, the declines coincide with the Stochastics oscillator also moving close to the oversold levels.As a result, we could see price attempting to breakout above the 1850 level once again.Above this level, gold prices will challenge the 21 Jan highs near 1874.05.Only a strong close above this level could trigger further gains.To the downside, the support level near 1817.79 remains in play and could put a lid on further declines.
Stocks Pop as “Stonks" Controversial

Stocks Pop as “Stonks" Controversial

Finance Press Release Finance Press Release 29.01.2021 15:44
In two weeks, Tom Brady vs. Patrick Mahomes will battle in the Super Bowl as the old guard vs. the new era. What's happening in the market right now is no different.Think of Tom Brady as the hedge funds. As old Wall Street. As the suits. Think of Patrick Mahomes as the Reddit/Robinhood investor. The young renegade who could change the face of football or the stock market as we know it.What's happened so far in 2021 is more significant than "stonks." What's happened is deeper than GameStop (GME) and AMC (AMC) surging by an astounding 1914.55% and 890.05%, respectively, year-to-date, thanks to these small-time investors.We can make all the goofy stonk memes and laugh about how two has-been companies have suddenly become the new Bitcoin all we want.But what happened is the potential changing of the guard of who the market-makers are.I've been talking about a tug of war between good news and bad news and overvalued stocks (and "stonks") for weeks. But we have a new tug of war between the suits at Wall Street hedge funds and Reddit/Robinhood traders. The parallels between Brady vs. Mahomes are palpable.The suits, aka the Tom Bradys, have been controlling the market for decades, manipulating it at their will.But recently, a Reddit group called "WallStreetBets," i.e., the Patrick Mahomes traders, caught on to their game. This group made a joke about how poor GameStop's prospects were and how hilarious it was that hedge funds were shorting it en masse. So they banded together, bought enough shares of the stock to send it soaring, then forced the hedge funds to cover their shorts by buying it up some more!WallStreetBets succeeded so much that they ended up closing a hedge fund’s entire GameStop position !Mahomes beat Brady in a blowout.Granted, what happened on Thursday (Jan. 28) when Robinhood and other trading platforms halted all trading of GME, AMC, and other "stonks" of the like is disturbing. People are complaining about censorship on social media, and this is no different. It's a war against the little guy.But what does this show you? The power is in your hands now.The suits are officially quaking in their fancy shoes and had to resort to drastic moves like this. These multi-billion dollar hedge funds probably called Robinhood in tears saying to stop the trades. Hedge-fund manager Leon Cooperman said as much when he appeared on CNBC Thursday with a sob story. It's quite similar to someone prominent who demanded to "stop the count" and "stop the steal" a few months ago.Don't let this deter you from chasing your goals.Now would I buy these stocks? No. It's not my style and not my philosophy. I think it's detached from reality and a dot-com bust all over again.GameStop, AMC, Blackberry (BB), and Bed Bath and Beyond (BBBY) had predictable crashes on Thursday (Jan. 28) (partially thanks to the brokerages). Complacency is the most significant near-term risk to stocks by far, and I have been warning about this for weeks. But I tip my hat to all those who profited.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.With that said, I still think we are long overdue for a correction since we haven't seen one since last March. The manic moves of the past week excite me but concern me greatly.Corrections are healthy for markets and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what should be a great second half of the year.Therefore, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and Q1 2021 is possible. I don't think that a decline above ~20%, leading to a bear market will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions, and wish you the best of luck.We’re all in this together! The S&P 500 Recovered After a Needed Breather This Week Figure 1- S&P 500 Large Cap Index $SPXThe S&P briefly turned negative for 2021 after seeing its worst sell-off in nearly three months on Wednesday (Jan. 27). It saw a reliable recovery Thursday (Jan. 28) and is now up roughly 2.40% for the year.However, it’s down nearly 1.75% week-to-date. It’s a much needed cool-off period of the S&P, and I feel that there could be more dips to come. The S&P remains around the 3800-level and has not been moved by what has been a week full of quality earnings. Remember- when the market usually gets what it expects, it’s usually a reason to sell more than buy. While they are largely beating estimates, earnings are not beating them to the point of exciting investors.I also remain concerned about the S&P’s valuations. Although its RSI is not overbought and in hold territory, I’m still worried about the S&P’s forward P/E ratio, which is the highest it’s been since the dot-com bust.Ned Davis Research also noted that the trailing P/E ratio of the median U.S. stock has never been higher in history, and fewer than ⅓ of S&P 500 stocks are trading under the long-term average 15 P/E.What intrigues me about this index is that it seems to go on multiple day win streaks and lose streaks. After seeing a similar sell-off to what it saw on Wednesday (Jan. 27) three weeks ago, it went on a four-day win streak and broke past 3800. It went on a three-day losing streak this week before seeing its recovery Thursday (Jan. 28).I like this decline in the S&P, and if Friday’s (Jan. 29) futures hold-up, it could mean the S&P’s second losing week in three. I would like to see a more profound drop to around 3600 or below before making a BUY call for the long-term.There is a legitimate upside for the second half of 2021, but I would prefer to maximize it from a lower level. Discount shopping can be fun in the long-term.A short-term correction could inevitably occur by the end of Q1 2021, but for now, I am sticking with the S&P as a HOLD.For an ETF that attempts to directly correlate with the performance of the S&P, the SPDR S&P ETF (SPY) is a good option.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Late Yesterday, I Called the S&P 500 Ambush As Likely Over

Late Yesterday, I Called the S&P 500 Ambush As Likely Over

Monica Kingsley Monica Kingsley 28.01.2021 16:30
The downswing potential I warned about yesterday, came. Heavy selling continued as the Fed threw cold water in assessing the pace of the recovery, and didn‘t signal readiness to prop it up even more than it does currently. That‘s a disappointment even though nobody really discusses V-shaped recovery anymore. Its pace is uneven – one of the few things that were quite „equally distributed“ yesterday, were sectoral losses in the S&P 500. The investors jumped on the selling bandwagon, confirming my yesterday‘s reservations: (…) We have the Fed meeting later today, and while I am not looking for hawkish surprises or any outright optimism, the investors aren‘t taking chances. Sell now, ask questions later seem to be the mantra before the U.S. open. With volatility spiking to levels unseen since September and October 2020, the question on everyone‘s mind is whether this is the start of another corrective move, and how fast would stocks recover. Make no mistake about it, they will recover – the bull isn‘t over by a long shot, and as I‘ve written in my Monday‘s 2021 prognostications, this year will be still a good one for stocks. Let‘s assess the damage yesterday‘s selling has done, and look at the course ahead (charts courtesy of www.stockcharts.com). S&P 500 Outlook The selling wave in the S&P 500 didn‘t stop with yesterday‘s Fed, and picked up steam instead. While the daily indicators flashed their sell signals, this doesn‘t rule out stabilization next, which would disappoint those calling for a (10% or similar) correction. The bull market is intact, and one tough Fed assessment of the situation on the ground, won‘t end it. Credit Markets High yield corporate bonds to short-term Treasuries (HYG:SHY) held up much better than than stocks did, and investment grade corporate bonds to longer-dated Treasuries haven‘t broken below their recent lows either. Unless they do, that‘s a good sign for stocks to get their act together, regadless of the weak price recovery attempts thus far. The ratio of high yield corporate bonds against short-term Treasuries (HYG:SHY) with the S&P 500 overlaid (black line) shows how far the very short-term vulnerability in stocks that I highlighted yesterday, had reached. While I did strike an optimistic tone in the runup to Tuesday‘s regular session open, the bulls missed a good opportunity to act, and the resultant signals favored the bears to step in on Wednesday, which they did. Changing the tone, that‘s the essence of my trading style – assessment of momentary outlook, and drawing conclusions accordingly. So, what about follow through selling and the reflexive rebound – which of the two would win the day? More S&P 500 Clues The Force index in S&P 500 plunged deeply into negative territory. Short-term damage has been done while Bollinger Bands (a measure of volatility) barely budged, and both moving averages‘ slope remains intact. As I have called publicly and verifiably outside of my website at the onset of today‘s Asian session that we‘re likely to witness partial recovery in today‘s regular session, it appears well underway. And little wonder, if you look at volatility ($VIX) to get a feel for how extraordinary yesterday‘s move was. The spread between 3-month and 10-year Treasuries shows that the game hasn‘t really changed. That has also made me vocal about not getting scared out by yesterday‘s slide in stocks. Where is the rally in Treasuries (TLT ETF)? The intraday performance would have been expected to be much better thanks to the gloomy Fed views. Yet it wasn‘t. While Treasuries may pause at these levels or even rise next, they don‘t look to me to exert momentary pressure on stocks in any way. Long upper knot, selling into temporary strength, that‘s all there was to a dollar rally? That‘s another clue that stocks have overreacted. Summary The anticipated downswing brought a bloodbatch across the board, and it indeed enticed the buyers to act – just as the odds favored. Gold held relatively well, and none of the other indicators were in place to declare the move to be the start of a real correction. My open long position is in the black! Again, see today‘s action for proof that the bull market wasn‘t endagered in the least... Trading position (short-term; futures; my take): the already initiated long positions (100% position size) with stop-loss at 3525 and initial upside target at 3900 are justified from the risk-reward perspective. Below, you‘ll find my time-tested approach to money management per trade. If you’re using e-mini S&P 500 futures, 1-point move in the S&P 500 amounts to $50. Multiply that with the difference between the entry and stop-loss, and better don’t risk more than 6% or maximum 8% of your trading account on this trade alone. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and the upcoming Gold Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals www.monicakingsley.comk@monicakingsley.co * * * * * All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
Silver May Rally Above $39 On Range Breakout

Silver May Rally Above $39 On Range Breakout

Chris Vermeulen Chris Vermeulen 29.01.2021 21:21
Nearly 6+ months ago, our research team highlighted a unique price range that appears to be repeating itself in Silver.  This price range consists of a $5.40 bullish or bearish price phase.  Using our 100% measured move techniques, we've seen silver move higher and lower by this range over the past 10+ months and, quite interestingly, the current sideways price range in Silver is almost exactly a $5.40 range. After a bit of research related to the explosive upside price move in June 2020, where Silver rallied from $17.75 to levels over $28.75 – an $11 Candle Body Range (nearly 2x the $5.40 range), our researcher team believes the next breakout move in Silver may be another 2x or 3x rally – ranging from an $11+ rally to a $16.50+ rally.  This suggests a potential upside price target in Silver near $39 to $45 if our research is correct.Potential Silver Blastoff Once Price Clears $30This Daily Silver Futures chart highlights the continued $5.40 range that has “bound” silver over the past 4+ months.  The peak in price, near $30 represents the high price level that would have to be breached if any breakout attempt is confirmed.  Initially, we expect to see the $28 (upper channel) level breached, then we need to see the $30 breached as the breakout move continues/confirms.The news that the Reddit group is targeting Silver, as one of the most heavily shorted markets on the planet, suggests we may see a very explosive move higher in the near future if enough pressure is put on the shorts to present a real short-squeeze.  The other interesting facet of this setup is that Silver has already initiated a bullish price phase while the global markets appear to be in a Depreciation phase.  My team and I have written about this in a previous research article entitled Long Term Gold/US Dollar Cycles Show Big Trends For Metals – Part II.If our research is accurate and correct, the combination of the Reddit targeting, extreme short positions, longer-term Depreciation cycle phases and the current Bullish Silver price phase may prompt a very big and explosive breakout move once Silver prices clear $30.Reddit Focuses Attention On Silver – What Next?The interesting component to all of this is the renewed focus on extremely heavily shorted symbols because of the Reddit group.  Silver was trading near the middle of the $5.40 price range and price was stalling/declining price to the sudden shift by the Reddit group.  Maybe this renewed focus in the Silver short positions focused the broader market into the unique setup that has continued in Silver over the past 12+ months – a rallying market in a Depreciation phase with a very heavy short interest.  It has all the makings of a potentially very big upside break move.Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!Recently, if you've been following my research, I have been expecting a shorter-term downward price trend in Silver – with a longer-term outlook still Bullish.  After reaching the peak of the channel in late December 2020, I expected Silver to move a bit lower before building enough momentum to attempt a breakout move. Now that a renewed focus on Silver has taken over, there is a very real potential that a breakout above $28~$30 is in the works – possibly initiating a very explosive upside trend.The last explosive upside move in Silver, from June 2020 to August 2020, only about 90 days, prompted an $11.50 to $12.50 rally (about 2x the $5.40 range).  This next upside breakout trend may see a similar, or larger, scale of a price advance – targeting $39 to $45 (or higher).In short, any breakout above $28 to $30 may prompt a very big upside price advance.  Any failure of this breakout attempt will likely prompt a downside price move to levels near $24 to $25.50 (again).  This renewed attention into Silver, one of the most heavily shorted commodities on the planet, may prove to be an incredible opportunity for traders – possibly pushing miners and other precious metals much higher over time.As a reminder, this increased volatility and price range will create some opportunity for euphoric enthusiasm by many traders.  Please don't get caught up in all of the hype.  This may be a once in a blue-moon setup in precious metals because of the renewed focus on Silver.  It may also prompt a big pullback move after any rally attempt.  Play this smart – don't get caught up in the hype.2021 is going to be full of these types of trend rotations and new market setups.  Quite literally, hundreds of these setups and trades will be generated over the next 3 to 6 months using my BAN strategy.  You can learn how to find and trade the hottest sectors right now in my FREE one-hour BAN tutorial. You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.Don't miss the opportunities in the broad market sectors over the next 6+ months. For those who believe in the power of relative strength, cycles and momentum then the BAN Trader Pro newsletter service does all the work for you in determining what to buy, when to buy, and when to take profits. You will be kept fully informed of the market with my short pre-market report every morning along with the BAN Hotlist for those looking for more trades.Have a great weekend!
USD rises to a two-week high

USD rises to a two-week high

John Benjamin John Benjamin 02.02.2021 08:39
Euro Resumes Slide, After A Two-Day GainThe euro currency is trading weaker on Monday following two daily sessions of gains previously. Price action remains confined below the 1.2144 level of resistance.Given the current pace of declines, the EURUSD currency pair is likely to test the 1.2050 level of support more firmly.We expect the support level near 1.2050 to hold up for the moment. As a result, the EURUSD could maintain a sideways range within 1.2144 and 1.2050 levels.The stochastics oscillator is currently moving closer to the oversold levels. Therefore, we could expect to see prices rebounding off the 1.2050 handle.In the unlikely event that the EURUSD loses the 1.2050 support, we could expect to see a larger correction down to 1.1900.GBPUSD Testing The Lower Trend-LineThe British pound sterling is also on track to post declines following a period of consolidation since last week.Price action is currently testing the lower trendline of the ascending wedge pattern. A continuation to the downside could potentially open the way for the GBPUSD to test the 1.3500 level of support.However, for this to materialize, the GBPUSD will need to post a convincing breakdown lower.Given that price action closed rather flat on a weekly basis, a bearish close this week could potentially strengthen the downside bias.This could mean that the cable could be looking to post further declines in the medium-term outlook.Crude Oil Bounces Off Lower End Of The RangeWTI crude oil prices are posting modest gains rising over 1% on Monday. This comes as prices briefly slipped below the lower end of the range near 51.87.Despite the current pace of gains, oil prices remain stuck within the range between 53.77 and 51.87. Only a strong breakout from this level will potentially confirm further direction in the commodity.For the moment, the continuation to the upside could see the 53.77 level being tested.On a weekly basis, we see that oil prices are trading flat for three consecutive weeks so far.The stochastics oscillator is currently moving out from the oversold levels and gives support to the upside bounce.Gold Prices Struggle To Breakout Above 1874The precious metal continues to trade flat amid the US dollar strengthening. While prices have managed to stay afloat above the 1850 level of support, the upper resistance level near 1874 is proving hard to break.As a result, gold prices remain caught within the 1874 and 1850 levels for the moment. The stochastics oscillator also signals the rather choppy movement within the said levels.Price action on the higher chart timeframes also continues to remain mixed. As a result, we could expect to see gold prices staying below the 1874 level for becoming few sessions.The bias still remains to the downside, however, a swing low is being formed near the 1835 level.A close below this level will potentially open the way for gold prices to retest the lower support near 1817.79.
Correction in Stocks Almost Over While Gold Is Basing

Correction in Stocks Almost Over While Gold Is Basing

Monica Kingsley Monica Kingsley 02.02.2021 16:30
In line with expectations and probabilities, the stock bulls returned, and I closed Friday initiated long position for a solid 40-point gain in S&P 500! All right, but are the bulls as strong as might seem from looking at this week‘s price performance? Such were my yesterday‘s words: (…) is this the dreaded sizable correction start, or the general February weakness I warned about a week ago? I‘m still calling for the S&P 500 to be in a bullish uptrend this quarter and next, though I‘m not looking for as spectacular gains as in the 2020 rebound. That‘s still my call. Fears from the Fed talking taper contours, GameStop and silver squeeze are taking a back seat to the realities of leading economic indicators rising, stimulus coming, and the central bank more than willing to mop it up. Commodities are red hot, leading precious metals, and inflation will rear its ugly head this year for sure. The momentary dollar resilience which I called both preceding Mondays to happen, will give way to much lower values. Twin deficits are a curse. Such were my observations on gold – please read yesterday‘s extensive analysis. It‘s one of the most important ones written thus far on gold: (…) I don‘t see gold plunging to any dramatic number such as $1,700 but given that the dollar looks to have stabilized for now, and may even attempt a modest and brief rally from here, gold may get again under corresponding (and weak) pressure – should the silver squeeze be defeated. After the margin raise, it is certainly on the defensive now. Yet I see encouraging signs for the new precious metals upleg to emerge (charts courtesy of www.stockcharts.com). S&P 500 Outlook I laid out the case clearly on Friday as to why we‘re witnessing another downswing lacking internal balance. We didn‘t have to wait long for the recovery from options expiry plunge, yet the volume leaves a little to be desired. Wasn‘t weak really, just Monday‘s regular, lower volume. Lower volume days can get challenged. I would prefer to see follow through in price advance coupled with a volume reading I could interpret positively so as to be able to call this correction as fully over. Credit Markets & Risk Metrics Both leading credit market ratios – high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) – are trading at their local lows, neither rising nor breaking below – given the bullish price action in S&P 500, I treat their short-term underperformance as a watchout. Volatility is still elevated, yet calming down – slowly but surely.That‘s pointing out we‘re in the latter stages of the correction. The put/call ratio has retreated again, reflecting my yesterday‘s point that the fear in the markets is in a generally declining trend. Both moving averages are still falling, and the spike didn‘t reach the pre-elections and early September peaks either. Still no change in sentiment, and we‘re well on the preceding path marking further stock market gains. Shining Light on Gold The king of metals is still ill positioned to keep the silver short squeeze gains. Yes, I am not trusting the daily indicators one bit, and look instead at the lower volume and repeated inability to keep intraday gains. This is the sign of an approaching upleg in the precious metals – miners rebounding relative to gold after preceding breakdown. Should the mining companies keep their relative gains, that would be encouraging for the whole sector. What if the stock market though puts the carefully laid plans to rest? The above chart shows that there has been in recent months no clear relationship either way and interconnectedness of reaction between the two assets. Let‘s stay objective and don‘t succumb to the plunge in stocks fear mongering. The gold to silver ratio is similarly to the $HUI:$GOLD ratio showing that the tide in precious metals is turning, and the time for the bears is running up. I like the fact that love trade is starting to kick in as opposed to fear trade. Love trade, that means rising preference for gold because the economy is doing better, while fear trade is about hiding in the bunker. On one hand, gold is vulnerable to rising (long-term Treasury) yields, and it‘s also lagging behind the commodity complex. It‘s also trading with the negative correlation to the dollar, which is set to put up a some fight in the short run again – please see my yesterday‘s extensive gold market analysis bring proof for these assertions as these form the short-term watchouts for the gold bulls. From the Readers‘ Mailbag Q: Hi Monica, I wanted to say a big thank you for responding to my question last week which I did find reassuring. Little did we see what a week we would have to follow hey, especially in silver. I know that it has to cross the Rubicon at $30 and hold but I would like to get your observations. Can silver get going now (you thought Spring more likely) I also like platinum and wondered what you see there and finally can gold shuffle of its winter blues sooner rather than later. A: Always welcome – it‘s common knowledge that I love to engage in discussion with readers and everyone concerned. I called for gold to get going through spring, and now with WallStreetBets, silver has sprung to life. Platinum I see as notoriously lagging behind, and its catalyst demand in a challenged market is one of the fundamental culprits – jewellery demand won‘t save it. Palladium has much better prospects, not to discuss the wild swings in rhodium to get an idea what PGMs can deliver. Gold is still within its basing pattern, and unless it attracts the attention of internet crowd (see my yesterday‘s reply on how to play the silver squeeze), will take its time in breaking higher. Look at the gold-silver ratio – it‘s the white metal‘s turn to deliver stronger returns now, which is in line with the economic recovery underway (silver is an industrial metal, too). Summary The stock market recovered, and looks set to digest today‘s premarket gains on top of Monday‘s ones, signifying that the correction is in its latter stages. Credit market recovery is a missing piece of the puzzle. Gold though isn‘t out of the woods yet in the short run, but I see its medium-term bullish case getting stronger even as it remains rangebound for now. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals. * * * * * All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
Stocks Need to Consolidate Now, And Gold Will Anyway

Stocks Need to Consolidate Now, And Gold Will Anyway

Monica Kingsley Monica Kingsley 03.02.2021 16:00
After Monday‘s great rise, stocks continued without much of a pause yesterday too. Did they get ahead of themselves, or not really? And what about those correction calls, is the alarm over now? As said yesterday, the bulk of the correction in stocks, is over. Is it clear skies ahead now? In my very first 2021 analysis 10 days ago, I‘ve called for a not so rosy February ahead. Last Friday, options expired with stocks taking a plunge, so the current month will get an optical boost. I am looking for higher prices, and no correction around the corner. Gold is in a different situation, still basing and unable to keep intraday gains. Having predictably given up the silver short squeeze boost, the search for the local bottom in largely sideways price action continues. That‘s likely to be the case given that the dollar has stabilized and is peeking higher (before eventually moving to new lows, is still my call). Let‘s dive into the charts (all courtesy of www.stockcharts.com). S&P 500 Outlook The daily S&P 500 chart looks bullish at first glance – that‘s the V-shape rebound effect. The volume though isn‘t the greatest really. But what about yesterday‘s upper knot though? It looks to me we‘re in for a period of gains digestion. Right now, stocks look vulnerable to retracing part of the advance. Credit Markets High yield corporate bonds to short-term Treasuries (HYG:SHY) relative to the S&P 500 (black line) posture improved, and no dissonance to speak of remains. The 3-month Treasuries though haven‘t relented much, and remain well bid. There is not much willingness in the market place to push short-term yields higher, and that‘s a short-term sign of caution. S&P 500 Sectoral Peek Technology (XLK ETF) has recovered, and gapped higher on quite low volume. Approaching its Jan highs, it‘s not though optically in the strongest position, and would do best if it were able to maintain gained ground. Financials (XLF ETF) have rebounded in a sign of cyclicals‘ strength. It‘s very good for the health of the stock bull market to see them perform this well, spreading strength across other sectors. Broad based advance is the hallmark of health. Gold, Silver and Miners Gold has declined, yet Stochastics hasn‘t turned lower just yet, and the volume of the yesterday‘s trading doesn‘t tip the scales either way. In short, gold remains rangebound for now still, and its range isn‘t really a wide one. Silver did slide, as the margin adjustments also thake their toll. The post-December trend of higher highs and higher lows is intact though, and given my yesterday-presented views about the gold-silver ratio, the white metal has a great future ahead of it still. The economy is recovering, this is an industrial metal, and the mining surplus/deficit optics is favorable to silver outperforming gold in the next upleg of this precious metals bull market. The miners, seniors represented by GDX ETF, are still bobbing near the Dec and Jan lows, yet the pattern is thus far still a basing one. Would it bring another push lower as in late January? Looking at the subsequent demand, I don‘t think such an attempt would have an overly long shelf life. Let‘s overlay the GDX chart with GDXJ, which are the junior miners. The riskier, and generally thinly traded ones. Seeing their attempts to outperform since the late November low, is an tipping sign of the sector not really wanting to keep declining much longer. That‘s another reason why I;m calling for much higher precious metals price before spring is over. Just in time for inflation... From the Readers‘ Mailbag Q: Hey Monica…I had wondered where you'd disappeared to for a while there. Welcome back Regarding silver, the gap from monday's breakout filled nicely there, negating an island reversal. Yet, having been out since july, every time I look at the chart, the upside breakout gap of 21 july stares at me like a gaping crevasse on the everest of uptrend beginnings. I know we are going to the moon and back at some point in the next two or three years, but what do you think is the probability of a short term deflationary spike coming up? Maybe another black swan, which would fulfil the dual function of shakeout the nouveau buying masses, and put my mind at rest by filling the gap before takeoff? A: I am back, fully independent thankfully, and won‘t disappear. Well, as you‘ve seen this week, nothing goes to the moon for there are always willing parties to trim the wings… when it starts to hurt. I am also very bullish about precious metals prices as the conditions facilitating them are in place. But I have publicly called the March 2020 crash as the only deflationary spike we‘re going to see. That year, and this year won‘t bring a new crash either. See how well the financial system recovered from GameStop and silver? Margin debt is still rising, and the Fed won‘t contract any time soon. Inflation – not just food, but all commodities (copper, oil, lumber, base metals, agriculture) are broadly advancing, and a great measure of inflation to come and be felt more broadly. I am not really looking for a giant shakeout in precious metals this year really – and by the shape of things, neither in 2022 pr 2023. But remembering how the $1,050 gap in gold got filled in late 2015, I understand your concern, and say that we would get advance signs of such a potential outcome, which aren‘t present currently though. Summary The stock market recovered, and looks set to be digesting prior gains today. The correction indeed remains largely over in terms of prices. Gold is still bidding its time, which is both expected and desirable for the upcoming bull leg. Patience is the name of the game in precious metals currently still. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals.
Will Interest Rate Increase Cause Gold to Plunge in 2021?

Will Interest Rate Increase Cause Gold to Plunge in 2021?

Finance Press Release Finance Press Release 04.02.2021 17:50
The decline in the real interest rates is the most important downside risk for gold. Will it materialize, plunging the price of the yellow metal?The rise in inflation is the most significant upside risk for gold this year, but there are also a few important downside risks. The most disturbing for us is the possibility that the real interest rates will increase. Why? Please take a look at the chart below.As you can see, there is a strong negative correlation between the real yields and gold prices . When the interest rates go up, the yellow metal falls, and when the rates go down, gold rallies . Indeed, the real interest rates peaked in November 2018 at 1.17 percent, just one month before the last hike in the Fed’s last tightening cycle . Since then, they were falling, reaching their historical bottom below -1.0 percent in the summer of 2020. Not coincidentally, gold was experiencing a bull market during this period, reaching its record high of almost $2010, just when the rates bottomed. And, as the rates normalized somewhat, the price of gold corrected to the level below $1,900.Now, the obvious question is whether there is further room for real interest rates to go down . In 2019, they were falling amid the economic slowdown and the dovish Fed cutting the interest rates. Last year, they plunged even further (with a short spike because of the surge in the risk premium ), as a result of the COVID-19 related economic crisis and the U.S. central bank slashing the federal funds rate to practically zero.However, the Great Lockdown and resulting deep downturn are behind us. When we face the second wave of the pandemic and people become vaccinated, there will be an economic recovery. As well, the Fed has already brought the interest rates to zero – meaning that without the U.S. central bank implementing NIRP , the nominal policy rates reached their lower bound. So, assuming that the Fed will not cut interest rates further and that investors will not expect a further slowing down of the economy, the room for further declines in the real interest rate is limited.The only hope lies in the increase in inflation expectations, which is actually quite probable, as I explained in the previous part of this edition of the Gold Market Overview . Given the surge in the broad money supply , the pent-up demand, and some structural shifts, reflation in 2021 is more likely than it was in the aftermath of the great financial crisis .However, gold investors should also be prepared for a negative scenario of low inflation. After all, the Fed has repeatedly undershot its annual inflation target. In this case, the real interest rates may stay roughly the same or they could even rise.Let’s take a look at the chart below, which shows the gold prices and real interest rates after the Great Recession . In the very aftermath of the Lehman Brothers’ bankruptcy , they surged, but after the panic phases ended, they were falling until the end of 2012, just when, more less, the bear market in gold started.Now, somebody could say that the real interest rates were falling for four years until reaching bottom at the end of 2012, so we shouldn’t worry about the normalization of interest rates. However, the COVID-19 related economic crisis was very deep, but also very short. Everything is happening now at an accelerated speed, so we could already be reaching the local bottom in the interest rates (or be close to it).Of course, there are important differences between that period and today . First, as I’ve already emphasized, there is now a higher risk of an increase in inflation. Second, in 2013, there was a taper tantrum , while today, the Fed maintains an ultra-dovish stance and does not signal any interest rate hikes in the foreseeable future. Although the U.S. central bank didn’t expand its quantitative easing in December, showing that it feels comfortable with some increases in the bond yields , it’s not going to accept substantial rises in the interest rates. The dovish Fed’s bias is one of the main factors behind the downward trend in the real interest rates (even if they normalize somewhat, they reach further lower peaks and bottoms over time).Third, the U.S. dollar looks different. As the chart below shows, the greenback started to appreciate in 2011, pushing gold prices down. But today it is more likely that the U.S. dollar will weaken further due to a changing administration in the White House, the economic stabilization and cash outflows into developing countries, soaring public debts, a zero-interest rate policy, and the risk of an increase in inflation.If so, the normalization of the real interest rates (if it happens, which is far from being certain) doesn’t have to plunge the yellow metal . In other words, there are important downside risks to the bullish case for gold this year, but 2021 does not have to look like 2013 in the gold market.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
New POTUS, New Gold Bull Market?

New POTUS, New Gold Bull Market?

Finance Press Release Finance Press Release 05.02.2021 16:34
Joe Biden’s election as president and his first economic proposal proved negative for gold prices, but the presidency might yet turn positive.The 46 th presidency of the United States has officially begun. What does that mean for the U.S. economy, politics and the precious metals market?Let’s start by noting that this will not be an easy presidency. The epidemic in the U.S. is raging, the economy is in recession , and public debt is ballooning. Foreign relations are strained while the nation is strongly polarized, as the recent riots clearly showed. So, Biden will have to face many problems, with few assets .First, as he turned 78 in November, Biden has been the oldest person ever sworn in as U.S. president. Second, his political capital is rather weak, as the 2020 election is more about Trump’s loss than Biden’s victory. In other words, many of his voters supported Biden not because of his merits but only because they opposed Trump. Third, he will have the smallest congressional majorities in several years. Democrats have only ten more seats than Republicans in the House and the same number of seats in the Senate. And even with Kamala Harris as a tie-breaker, Biden could not lose a single Democrat senator’s vote to pass any legislation in Senate.On the one hand, Biden’s tough political position seems to be negative for gold prices, as it lowers the odds of implementing the most radical, leftist political agenda. On the other hand, Biden’s difficulties also lower the chances of sound economic reforms, which is good news for the yellow metal. A divided Congress and Democratic Party with an old president at the helm, who has a weak personal base could result in political conflicts and stalemates which would prove positive for gold.When it comes to economics, Biden has already presented his pandemic aid bill, worth of $1.9 trillion. The proposal includes direct payments of $1,400 to households, $400 per week in supplementary unemployment benefits through September, billions of dollars for struggling businesses, schools, and local governments, as well as funding that would accelerate vaccination and support other coronavirus containment efforts. Biden also wants to raise the minimum wage to $15 per hour, which will not appeal to Republicans. The big size of the package will also be disliked by the GOP.The fact that Democrats have won the Georgia Senate runoffs, taking control over the Senate, increases the chances that Biden will implement his economic stimulus. The equity markets welcomed the idea of another large aid package, in contrast to bond investors who sell Treasuries, causing the yields to go up. The increase in real interest rates pushed gold prices down , as the chart below shows.It seems that investors liked the idea of big stimulus, hoping for acceleration in economic growth. However, printing more money (I know, the Treasury technically doesn’t print money – but it issues bonds which are to a large extent bought by the Fed ) and sending checks to people doesn’t increase economic output. Another problem is that the U.S. can’t run massive fiscal deficits forever and ever , hoping that interest rates will always stay low.So, although Biden’s economic stimulus may add something to the GDP growth in the short-term, it will not fundamentally strengthen the economy. Quite the contrary, the massive increase in government spending and public debt (as well as in taxation) will probably hamper the long-term productivity growth and make the already fragile debt-based economic model even more fragile. What is really worrisome is that Biden doesn’t seem to care about U.S. indebtedness – he has already spoken strongly against deficit worries and hasn’t proposed any actions to reduce the debt – and plans to unveil the additional economic stimulus.Hence, although gold declined initially in a response to Biden’s economic stimulus proposal, the new president could ultimately turn out to be positive for the yellow metal. After all, gold declined in the aftermath of the Lehman Brothers’ collapse , but it shined under Barack Obama’s first presidency. And Biden is likely to be even more fiscally irresponsible than Obama (or Trump), while the Fed under Powell is likely to even more monetarily irresponsible than under Bernanke (or Yellen ). Indeed, according to The Economist , Biden’s proposal is worth about nine percent of pre-crisis GDP, nearly twice the size of Obama’s aid package in the aftermath of the Great Recession . And, in contrast to previous crises, the Fed has announced the desire to overshoot its inflation target. All these factors should support gold prices in the long run.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
More Than a Snapback Rally in Gold As Stocks Keep Marching

More Than a Snapback Rally in Gold As Stocks Keep Marching

Monica Kingsley Monica Kingsley 05.02.2021 16:30
Stock bulls aren‘t wavering, and the upswing continues without a pause. Is the move (still) in balance with the relevant markets as one catches up to the other, or is a digestion of prior sharp gains nearby? It didn‘t come earlier this week, and in today‘s article, I‘ll lay down the rising probabilities of seeing at least a short-term pause in the stellar pace of gains since Monday. Gold pause gave way to selling pressure yesterday, spurred to a degree by the post-Monday‘s trading action. As both metals declined by around 2.5%, this move probably appears overdone to more than a few. Me included, as I called it a kneejerk reaction before yesterday‘s close. In today‘s analysis, I‘ll demonstrate why precious metals investors shouldn‘t be afraid of a trend change – none is happening. Let‘s dive into the charts (all courtesy of www.stockcharts.com). S&P 500 Outlook Stocks continue higher without stopping, and the daily volume rose a little. The bulls are strong, and took prices almost to the upper Bollinger Bands border amid positive moves in CCI and Stochastics. The daily of daily increases looks set to slow down as minimum though – starting today. Credit Markets High yield corporate bonds (HYG ETF) are still pushing higher. While I ignored Tuesday‘s and Wednesday‘s upper knot, yesterday‘s one is arguably a more respectable one, and that‘s because of the drying volume. It wouldn‘t be unimaginable to experience HYG to pause shortly, which would support my prior assessment about SPX. High yield corporate bonds to short-term Treasuries (HYG:SHY) ratio with S&P 500 overlaid (black line) shows that the two are tracking each other tightly in recent days. Actually, stocks are reaching for the leadership position, which given their performance since the start of November is very short-term suspect (stocks have lagged a little relative to the credit markets, and now they‘re trying to lead). That‘s yet another reason why to be cautious about (at least today‘s) trading – and for all the coming days, you know now where to find my daily analyses. Russell 2000 and S&P 500 Smallcaps aren‘t weakening vs. the 500-strong index in the least, which means that the stock bull market continues unabated. It also disproves the recent significant correction ahead calls on the internet that aren‘t hard to come by. Here we are after Friday‘s bloodbath that I called as out of whack with the internals, here we are at new index highs, this soon. In yesterday‘s analysis, I presented the value to growth ratio‘s message of the rotation from tech into value as value having to try once again. Technology (XLK ETF) had a strong week, so let‘s inspect its performance vs. the smallcaps – see the above chart. It shows that the Russell 2000 (IWM ETF) has carved a nice, almost rounded bottom, and is primed for higher values ahead, which also supports the notion of no stock market top ahead. Gold in the Spotlight The yellow metal is attempting to stage a recovery – a modest one thus far as it has been rejected at $1810 earlier. How disappointing is that? We‘ll see at the closing bell (my assumption is that the bulls will prevail today comfortably), but the implications of the moves thus far doesn‘t change my thesis of a break higher from the 5-month long consolidation in the least. It‘s that the technical (not to mention fundamental) factors propelling it higher, are still in place. The caption says it all – we‘re in the closing stages of the prolonged consolidation, and prices will rebound next, as so many preceding sizable red candles had trouble attracting follow through selling, and yesterday‘s candle is in a technically even more difficult position to achieve that. The moving averages aren‘t seriously declining, and I look for the death cross (50-day moving average puncturing the 200-day one) to fail relatively shortly. The Force index in gold agrees that we aren‘t seeing a really serious push to the downside here. Look at the start of 2021, how deep it went back then – we‘ll carve out a nice bullish divergence as I look for gold to get serious about turning up. Yes, the Force index won‘t decline as low as in early January. Silver didn‘t yield all that much ground as the short squeeze got squeezed. The chart is still bullish, and I stand by the calls mentioned in the caption here – a great future ahead for the white metal in 1H 2021 and beyond. Ratios and Miners The gold to silver ratio also continues favoring the white metal, whose this week‘s retreat (post-Monday) didn‘t affect the downward trending values in the least. The miners to gold ratio continues supporting my call of breakdown invalidation leading to a new precious metals upleg. I made the calls along these lines both on Tuesday and prior Monday, when I featured my 2021 prognotications on stocks, gold, dollar and Bitcoin – please do check them if you hadn‘t done so already. Senior gold miners (GDX ETF) are taking a back seat to juniors (GDXJ ETF), andthat‘s a hallmark of bullish spirits returning – first below the surface, then very apparently. While we have to wait for the latter, its preconditions are here. Summary The stock market keeps powering higher, and despite the rather clear skies ahead, a bit of short-term caution given the speed of the recovery and its internals presented, is in place even as the stock bull run shows zero signs of having topped. It‘s time for the gold and silver bulls to reappear after yesterday‘s outsized setback. Crucially, it hasn‘t flipped the short- and medium-term outlook bearish as the factors powering the precious metals bull run, are in place. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals www.monicakingsley.comk@monicakingsley.co * * * * * All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
Gold About To Spring As Stocks Cool Off At Highs

Gold About To Spring As Stocks Cool Off At Highs

Monica Kingsley Monica Kingsley 08.02.2021 16:15
Stock bulls aren‘t yielding an inch of ground, and technically they have precious few reasons for doing so. It‘s still strong the stock market bull, and standing in its way isn‘t really advisable. With the S&P 500 at new highs, and the anticipated slowdown in gains over Friday, where is the momentary balance of forces? As the proverbial rubber bands gets pushed upwards still, what about those rising probabilities of seeing at least a short-term pause in the stellar pace of gains since last Monday? Gold did recover on Friday, and didn‘t disappoint after Thursday‘s slide. The weak non-farm employment data certainly helped, sending the dollar bulls packing. It‘s my view that we‘re on the way to making another dollar top, after which much lower greenback values would follow. Given the currently still prevailing negative correlation between the fiat currency and its shiny nemesis, that would also take the short-term pressure of the monetary metal(s). What would you expect given the $1.9T stimulus bill, infrastructure plans of similar price tag, and the 2020 debt to GDP oh so solidly over 108%? Inflation is roaring – red hot copper, base metals, corn, soybeans, lumber and oil, and Treasury holders are demanding higher yields especially on the long end (we‘re getting started here too). Apart from the key currency ingredient, I‘ll present today more than a few good reasons for the precious metals bull to come roaring back with vengeance before too long. Let‘s dive into the charts (all courtesy of www.stockcharts.com). S&P 500 Outlook and Its Internals Stocks keep pushing higher, and the bulls are strong regardless of the little contraction in the daily volume. The daily indicators attest to the strength of the uptrend, but the pace of daily increases looks set to slow down as minimum though. Imagine that all the constituent shares in the S&P 500 had equal weight (i.e. forget about $NYFANG) – this is the chart you get. RSP ETF is only now challenging its highs, which is however not a disappointment or a red light flashing divergence at all. The march to new highs in the S&P 500 still looks satisfactorily broad based. Market breadth confirms that very clearly. Both the advance-decline line and advance-decline volume aren‘t disappointing in the least, and new highs new lows have made a strong comeback from preceding setback. The intermediate picture is one of strength. Credit Markets and S&P 500 Sectoral Ratios High yield corporate bonds to short-term Treasuries (HYG:SHY) ratio with S&P 500 overlaid (black line) shows that the two are tracking each other tightly in recent days. Stocks haven‘t yet yielded in their attempt at taking leadership position, regardless of their performance since the start of November (which makes the attempt suspect in the very short-term, as stocks have lagged a little relative to the credit markets back then). Bearish prospects? No way, dips are still to be bought. The financials to utilities (XLF:XLU) ratio still broadly supports the stock market advance. Looking at the bond market dynamics, I expect utilities to remain under pressure while financials would gain faster. I‘m not worried by the current relatively depressed ratio‘s value, and don‘t consider it a warning sign for the S&P 500 in the least. Consumer discretionaries to consumer staples (XLY:XLP) is another leading ratio worth watching. It‘s currently at quite elevated levels, as I view the discretionaries as extended while the staples have undergone an appealing pullback. Even though that makes for short-term headwinds in the ratio, it‘s still primed to support the stock market bulls. Gold & Silver Friday‘s gold session still is cause enough for optimism among the gold bulls about an important low being made. The other option would be a brief dip below Thursday‘s lows, which I however due to more powerful $USD reversal on Friday (erasing all Thursday‘s gains on the heels of poor non-farm payrolls data), don‘t look at as the more likely scenario currently. For now, it still remains most probable that Thursday‘s bottom in gold won‘t be overcome by much, not going down to more than $1760 (though I am obviously not betting all in my trading plans on this strong support) – if at all. It‘s the „if at all“ part that I subscribe to most heavily. Silver‘s chart is the livelier one, less under pressure but given the recent squeeze-driven run, the white metal might need to cool down a bit here. The 1H real economy recovery outlook is though guaranteed to put a solid floor below any sub $26 dip should that – which is as questionable as in case of gold – happen at all. Base building at roughly current levels would be a healthy development for the bulls to rejoice. Precious Metals Ratios Checking out on the gold to all corporate bonds ($GOLD:$DJCB) ratio reveals relative strength in the yellow metal currently. It‘s trading much farther above its late Nov low than the metal itself. Similarly to the case junior miners to senior ones are making, this is a hidden sign of strength in the precious metals sector, whose next upleg is knocking on door. The miners to gold ($HUI:$GOLD) ratio‘s false breakdown announcing another upleg that I discussed on Feb 01 already, is still intact, and sending the very same signals of internal strength inside the precious metals complex. The 1H 2021 future is bright, and approaching fast. Summary The stock market keeps powering higher, and despite the rather clear skies ahead, a bit of short-term caution given the speed of the recovery and its internals presented, is in place. I wouldn‘t be surprised to see today or tomorrow a brief and weak whiff of lower prices – nothing to call home about if you were a bear, that is. The gold and silver bulls apprear to be staging a return, slowly but surely, which is consistent with the price damage repair pattern frequently experienced after sizable red candles that felt to at least part of the marketplace as out of the left field. The case for the next upleg remains as strong as it has ever been in my view. Thank you for having read today‘s free analysis, which is available in full here at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals.
Gold & the USDX: Correlations

PMs Charging Higher As Stocks Keep Pushing On a String

Monica Kingsley Monica Kingsley 09.02.2021 16:23
Stocks keep cooling off at their highs, and calling for a correction still seems to be many a fool‘s errand. Does it mean all is fine in the S&P 500 land? Largely, it still is.Such were my yesterday‘s words:(…) It‘s still strong the stock market bull, and standing in its way isn‘t really advisable. With the S&P 500 at new highs, and the anticipated slowdown in gains over Friday, where is the momentary balance of forces?Still favoring the bulls – that‘s the short answer before we get to a more detailed one shortly.The anticipaded gold rebound is underway, and my open long position is solidly profitable right now. In line with the case I‘ve been making since the end of January, the tide has turned in the precious metals, and we are in a new bull upleg, which will get quite obvious to and painful for the bears. Little noted and commented upon, don‘t forget though about my yesterday‘s dollar observations, as these are silently marking the turning point I called for, and we‘re witnessing in precious metals:(…) The weak non-farm employment data certainly helped, sending the dollar bulls packing. It‘s my view that we‘re on the way to making another dollar top, after which much lower greenback values would follow. Given the currently still prevailing negative correlation between the fiat currency and its shiny nemesis, that would also take the short-term pressure of the monetary metal(s). What would you expect given the $1.9T stimulus bill, infrastructure plans of similar price tag, and the 2020 debt to GDP oh so solidly over 108%? Inflation is roaring – red hot copper, base metals, corn, soybeans, lumber and oil, and Treasury holders are demanding higher yields especially on the long end (we‘re getting started here too). Apart from the key currency ingredient, I‘ll present today more than a few good reasons for the precious metals bull to come roaring back with vengeance before too long.Finally, I‘ll bring you an oil market analysis today as well. So, let‘s dive into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsA strong chart with strong gains, and the volume isn‘t attracting either much buying or selling interest. That smacks of continued accumulation, with little in terms of clearly warning signs ahead.The market breadth indicators are all very bullish, and pushing for new highs, as the caption points out precisely.The intermediate picture remains one of strength.Credit Markets and TechnologyHigh yield corporate bonds to short-term Treasuries (HYG:SHY) ratio is powering higher significantly stronger than the investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) one. The bullish spirits are clearly running high in the markets.Technology (XLK ETF) as the leading heavyweight S&P 500 sector, keeps charging higher vigorously after not so convincing post-Aug performance. Crucially, its current advance is well supported by the semiconductors (XSD ETF – black line), meaning that apart from the rotational theme I‘ve been been mentioning last Thursday, we have the key tech sector firing on all cylinders still.Gold & SilverLet‘s overlay the gold chart with silver (black line). The disconnect since the Nov low should be pretty obvious, and interpreted the silver bullish way I‘ve been hammering for weeks already. Please also note that the white metal has been outperforming well before any silver squeeze caught everyone‘s attention.Let‘s go on with gold and the miners (black line). See that end Jan dip I called as fake? Where are we now? Miners are no longer underperforming, and the stage is set for a powerful rise.Just check the gold miners to silver miners view to get an idea of how much the white metal‘s universe is leading everything gold. Another powerful testament to the nascent bull upleg in the precious metals.Continuing with gold and long-term Treasuries (black line), we see that the king of metals isn‘t giving in. Instead, it‘s rising in the face plunging Treasuries that are offering higher yields now. No, the yellow metal is decoupling here, as the new precious metals upleg is getting underway. The greenback is the culprit – and again in my yesterday‘s analysis, I called the headwinds it‘s running into. The world reserve currency will indeed get under serious pressure and break down to new lows as the important local top is being made.From the Readers‘ Mailbag - OilQ: "Hi Monica, I am glad I found you after you 'disappeared' from Sunshine Profits! As you had been back then already covering gold and oil at times, I wonder what's your take on black gold right now. A little great birdie told me oil will be the next Tesla for 2021 - what's your take?"A: I am also happy that you found me too! Thankfully, my „disappearance“ is now history. I‘ll gladly keep commenting, in total freedom, on any question dear readers ask me. Back in autumn 2020, seeing the beaten down XLE, I wrote that energy is ripe for an upside surprise. I was also featuring the fracking ETF (FRAK) back then. Both have risen tremendously, and it‘s my view that the oil sector (let‘s talk $WTIC) is set for strong gains this year, and naturally the next one too. Think $80 per barrel. Part of the answer is the approach to „dirty“ energy that strangles supply, and diverts resources away from exploitation and exploration. Not to mention pipelines. Did you know that the overwhelming majority of ‚clean‘ energy to charge electric cars, comes from coal? And that the only coal ETF (KOL) which I also used to feature back in autumn, closed shop? Oil is clearly the less problematic energy solution than coal.These are perfect ingredients for an energy storm to hit the States by mid decade. I offer the following chart to whoever might think that oil is overvalued here. It‘s not – it‘s just like all the other commodities, sensing inflation hitting increasingly more.SummaryThe stock market keeps powering higher, and despite the rather clear skies ahead, a bit of short-term caution given the speed of the recovery and its internals presented, is in place. Expect though any correction to be a relatively shallow one – and new highs would follow, for we‘re far away from a top.The gold and silver bulls are staging a return, as last week‘s price damage is being repaired. The signs of a precious metals bull, of a new upleg knocking on the door, abound – patience will be rewarded with stellar gains.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals.Thank you,Monica KingsleyStock Trading SignalsGold Trading Signalswww.monicakingsley.comk@monicakingsley.co* * * * *All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
Stocks Ripe for a Breather As Gold and Silver Remain Strong

Stocks Ripe for a Breather As Gold and Silver Remain Strong

Monica Kingsley Monica Kingsley 10.02.2021 15:44
Both the upside and downside in stocks appears limited as these keep cooling off not far away from recent highs. Yesterday‘s session sent us a telling signal that the bears might wake up from their stupor briefly. Largely though, all remains well in the S&P 500 land. The anticipated gold rebound is underway, and the significant upper knot of yesterday‘s session isn‘t concerning – gold is not rolling over to the downside here. Let alone silver. I view yesterday‘s trading as consistent with a daily pause within an unfolding uptrend. My open long position is growingly profitable, and I‘ve covered the bullish case in detail both on Monday and Tuesday. Today‘s analysis will strengthen the story even more. Given the dollar performance, I can‘t underline enough the importance of what we‘re witnessing – let‘s move to my Monday‘s dollar observations, which are silently marking the turning point I called for, directly relevant to precious metals: (…) The weak non-farm employment data certainly helped, sending the dollar bulls packing. It‘s my view that we‘re on the way to making another dollar top, after which much lower greenback values would follow. Given the currently still prevailing negative correlation between the fiat currency and its shiny nemesis, that would also take the short-term pressure of the monetary metal(s). What would you expect given the $1.9T stimulus bill, infrastructure plans of similar price tag, and the 2020 debt to GDP oh so solidly over 108%? Inflation is roaring – red hot copper, base metals, corn, soybeans, lumber and oil, and Treasury holders are demanding higher yields especially on the long end (we‘re getting started here too). Apart from the key currency ingredient, I‘ll present today more than a few good reasons for the precious metals bull to come roaring back with vengeance before too long. Finally, I‘ll bring you uranimum market analysis today as well. By popular demand, I‘ll dive into the commodity and its miners. You know already that my focus goes much further than the key topic of these analyses (stocks and precious metals). I am regularly covering oil, commodities and currencies too – just check out my trading story if you hadn‘t done so already. So, let‘s dive into the charts (all courtesy of www.stockcharts.com). S&P 500 Outlook and Its Internals A first day of hesitation into a very strong chart with non-stop gains recently, yet it‘s exactly these moments when the bears might try to raise their heads once again. Just to rock the boat, that‘s all. The Force index is warning that its solid upswing is due a reprieve here in what I perceive to be initial signs of selling into strength. Not too much, but distribution had an upper hand yesterday over accumulation. Credit Markets High yield corporate bonds (HYG ETF) didn‘t perform fine yesterday at all. On declining volume, the bulls couldn‘t close above Monday‘s opening prices, which given the post Jan 20 performance doesn‘t bode well for the short term. The steep uptrend simply appears in need of a rest. Smallcaps, Emerging Markets and Oil S&P 500 vs. the overlaid Russell 2000 (black line) isn‘t sending any warning signs of internal weakness when the two are compared. The rising tide is lifting all (stock) boats. Neither the emerging markets (black line) are diverging – the many stock bull markets around the world, they are all doing fine. The oil to gold ratio keeps leaning in favor of oil, just as it‘s expected during an economic recovery, coupled with inflation that‘s lighting fire across commodities. The stock bull isn‘t going down really. Gold & Silver Let‘s overlay the gold chart with silver (black line). My yesterday‘s words are a good fit also today – the disconnect since the Nov low should be pretty obvious, and interpreted the silver bullish way I‘ve been hammering for weeks already. Please also note that the white metal has been outperforming well before any silver squeeze caught everyone‘s attention. The gold to silver ratio sends a similarly clear message – the coming precious metals upleg will be characterized by silver outperforming gold for a variety of reasons beyond the industrial demand and versatility ones. Silver‘s above ground stockpile isn‘t being added to at the same pace as gold‘s is, and its recycling is less feasible practically speaking. Solar panels are but one of the ever hungry industrial applications, making heavy demands on silver reserves. Let‘s overlay the senior gold miners chart with both junior mining stocks (also gold) and silver mining stocks. See the late Nov turning point, where silver miners started outperforming both the gold juniors and gold seniors. That‘s another proof of the precious metals bull waking up. From the Readers‘ Mailbag - Uranium Q: Hi Monica, despite all the dire warnings of $1500 on gold, you seem to be spot on so far. Where do you think uranium might be headed. It looks risky but some say nowhere but up others nowhere but down! A: Thank you very much! That‘s honest analysis, free from fearmongering. I have been very vocal in writing here, on Twitter, and within comments everywhere that hypothetical technical targets divorced from reality (nonsensical) are dangerous to those who take them without a pinch of salt or two. Whenever I turn from a precious metals (or stock market) bull to a more cautious tone, you all my dear readers, will be the first ones to know. Just as now, the technical signs supporting the bullish (PMs) case are appearing increasingly forcefully (hello, dollar), the same way I‘ll present to you the weakening bullish factors whenever their time comes. We are far away from that in both markets, and in oil too (you‘ll hear me cover that one more often as well). Uranium was hit pretty hard with the Fukushima disaster of 2011 that brought about a long bear market. In 2016, a bottom was reached, and the commodity is slowly but surely on the mend. No spectacular gains, but modest positive returns that not even coronavirus managed to bring down. The same though couldn‘t be said about uranium miners as the below chart shows. Having taken a plunge, they‘ve recovered with the veracity of Bitcoin (called right in my first 2021 analysis), outperforming uranium as a commodity greatly. Still, these remain considerably below their 2011 highs (over $105), and given the energy mix and policies, I am clearly on the bullish side of the uranium opinion spectrum. Summary The stock market keeps holding gained ground, but regardless of the rather clear skies ahead, a bit of short-term caution is called for given the weakening credit markets, which may prove to be very temporary indeed. Expect any correction to be relatively shallow – and new highs to follow, for we‘re far away from a top. The gold and silver bulls are consolidating gains amid their return, and the bullish case for precious metals is growing stronger day by day. Crucially, it‘s not about the dollar here, but about the sectoral internals, and decoupling from rising Treasury yields. The new upleg is knocking on the door, and patience will be rewarded with stellar gains. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals.
Gold and Silver: Is Recent Rally Cause for Concern?

Gold and Silver: Is Recent Rally Cause for Concern?

Finance Press Release Finance Press Release 10.02.2021 16:54
Does gold’s most recent rally and the inflow of capital into silver change the fundamental outlook of the PMs? If so, what about equities?In short, yes, the U.S. dollar is down, thereby boosting gold. Yes, the recent massive interest in silver has everyone talking about getting in on the action. However, one must remember that markets don’t move in a straight line and countertrend rallies are expected along the way. Keep your eye on the ball. Now, let’s examine what exactly is happening.Gold moved higher once again yesterday (Feb. 9), but it reversed and declined before the closing bell. Miners declined as well. Does it mean that the next top is in or about to be in? That’s exactly what it means. Especially considering that gold’s reversal took place almost right at the triangle-vertex-based reversal and during USD’s breakout’s verification.Figure 1 - USD IndexI previously wrote that because assets don’t move in a straight line, it’s plausible that the USD Index retests its declining resistance line, while gold retests its rising support line. If this occurs, the USDX is likely to decline to the 90.6 range, while gold will receive a short-term boost . I emphasized that the outcome does not change their medium-term trends and the above confirmations signal that the USDX is heading north and gold is heading south.The part that I put in bold is exactly what is being realized right now. The USDX is correcting after the breakout, likely verifying the previous resistance as support.Unless the USDX breaks back below the declining medium-term support line in a meaningful way, the bullish implications for the following weeks will remain intact. At the moment of writing these words, the USD Index is practically right at the support line, which means that it’s quite likely to reverse shortly.Figure 2 - COMEX Gold FuturesGold formed a reversal yesterday, but it ended the session slightly higher. The latter might seem bullish, until one compares that to the size of the daily decline in the USD Index. The move lower in the latter was quite visible, so what we saw in gold should be viewed as USDX’s underperformance and thus a bearish sign.Let’s keep in mind that gold was just at its triangle-vertex-based reversal (based on the declining black resistance line and the rising red support line), which perfectly fits the shape of yesterday’s session – the shooting star reversal candlestick. The implications are bearish.Today, gold moved slightly higher, but the move was too small to change anything. Gold didn’t move above yesterday’s intraday high, which means that the short-term top might already be in.What about silver, did the white metal change anything?Figure 3 - COMEX Silver FuturesNot really. Just like gold, silver is taking a breather after the increased volatility. This is normal.Speaking of silver, please note how big the silver inflows were last week.Figure 4This might seem bullish at first sight – a lot of capital entering the silver market is bound to push the silver price higher, right?Wrong. This could simply be an indication of a temporary (yet massive) increase in the white metal’s potential (which no doubt will be realized, but not necessarily yet), which is something that we tend to see at market tops along with increased interest in terms like “ silver squeeze ” or “ silver manipulation ”.Please compare the first spike that you can see on the above chart with what silver did next (on the following chart).Figure 5Silver declined severely in the first half of 2013. Also please note that at that time, the silver market was already well after the massive monthly volume spike. We saw the same thing in mid-2020.The outlook for silver is very bullish for the next years, but the implications of the above factors are very bearish for the medium term.This is especially the case, since silver and mining stocks tend to decline particularly strongly if the stock market is declining as well. And while the exact timing of the market’s slide is not 100% clear, stocks’ day of reckoning is coming . And it might be very, very close.Eyes Wide ShutAs the NASDAQ Composite records yet another all-time high, investors are sleepwalking through one of the most dangerous equity markets ever.On Feb. 4, I warned that fund managers’ cash positions were frighteningly low.I wrote:Mutual fund managers are now holding less than 2% of their portfolios in cash – an all-time low.Figure 6 - Source: SentimenTraderMoreover, with fear of missing out (FOMO) taking a sledgehammer to valuation, pension funds are also following the bad behavior. If you analyze the chart below, you can see that pension fund cash positions have fallen to 2.6% – also an all-time low.Figure 7 - Source: SentimenTraderAnd with daydreams of riches continuing to transfix rationality, the upward inertia has left equity bears nearly extinct. As of Jan. 15 (the latest data available), S&P 500 short interest has hit its lowest level since the peak of the dot-com bubble.Please see below:Figure 8To explain the importance, fund managers’ cash positions and short sellers are akin to airbags in your car. In the event of a crash, airbags serve their purpose by cushioning the blow. Similarly, when the market crashes, short-sellers cover their positions (by purchasing the underlying asset), helping to alleviate the downward impact. Similarly, when fund managers’ cash positions are high, they have more ‘dry powder’ at their disposal to hit the bid and support prices. As a result, with both variables being excommunicated, nearly every investor is now driving with their pedal to the metal.Also encapsulating the speculative euphoria, last week, technology companies recorded their highest-ever weekly inflow.Please see below:Figure 9And not to be outdone, the Russell 2000 (a proxy for U.S. small caps) is also earning its fair share of speculative gold medals. On Feb. 4, I warned that money was pouring into companies that are on the brink of financial distress.I wrote:Figure 10The red line above represents companies with ‘weak balance sheets.’ Essentially, these are companies with high leverage ratios that rely on a strong economic backdrop to service their debt. At the end of 2019, these companies made up roughly 6% of the Russell 2000 index. Today, that figure has nearly doubled to an all-time high of more than 11%.Moreover, amid investors’ foray into the riskiest corners of the U.S. equity market, they’ve also bid the Russell 2000 (as of Feb. 8) to more than 39% above its 200-day moving average (also an all-time high).Please see below:Figure 11 - Source: thedailyshot.comIgnoring a sound diet, bond investors also continue to feast on junk food. On Feb. 8, the average yield on junk bonds (represented by Barclays U.S. Corporate High-Yield index) fell below 4% for the first-time ever.Please see below:Figure 12In addition, issuances of CCC-rated debt – the riskiest tier of junk – have been massively oversubscribed , as yield-hungry investors throw caution to the wind. More importantly though, the frenzy has lured even riskier companies to the market, with the group raising a record $52 billion in January alone.Even more indicative of the reckless behavior, the riskiest companies are also negotiating the riskiest loan terms. Peddling payment-in-kind (PIK) interest, junk bond issuers are now paying investors with IOUs. Unlike traditional bonds, where fixed cash flows are paid at pre-defined dates, PIK bonds are essentially loans on top of loans. Here, investors forego cash payments and add hypothetical interest payments to their bond’s principal balance. Then, at maturity, investors receive the entire proceeds.And what’s the problem?Well, as I’m sure you can tell, the IOUs are worthless if insolvency strikes first.Moving up the speculative ladder, in January, small traders bought call options at nearly 9x their 2019 pace. For context, ‘ s mall traders’ purchase 10 or less call option contracts and have exposure to 1,000 shares or less. As such, they’re usually the least sophisticated market participants.But because their Delta/Gamma splurge continues to impact dealers’ hedging activity, U.S. equity volume has gone completely parabolic. On Feb. 8, U.S. equities (trading at record prices) exchanged hands at nearly 4x their historical average.Please see below:Figure 13In addition, as more and more first-time buyers dip their toes into the equity pool, the ripple can be felt across Google Search trends. As of Feb. 8, online searches for “penny stocks” have exploded.Figure 14 - Source: thedailyshot.comEven more telling, retail interest in the stock market usually peaks during bouts of volatility. In a nutshell: when the stock market crashes and news outlets cover the story (that otherwise wouldn’t during normal times), it piques the interest of the general public. As a result, crashes tend to bring about investing tourists.Please see below:Figure 15 - Source: SentimenTraderTo explain the chart above, the blue line depicts the trend in “buy stocks” in Google searches over the last ~17 years. If you analyze the first two spikes in October 2008 and March 2020, they occurred alongside extreme market stress. However, if you look at the third spike on the right side of the chart (almost as high as March 2020), it’s occurred alongside U.S. equities current melt-up.The key takeaway?As the equity bubble grows larger, it’s sucking in more and more unsophisticated investors. However, as 2000 proved, overconfidence can give way to fear at the blink of an eye.As the final chart in today’s edition, investors’ belief in a utopian future has also come full circle.Please see below:Figure 16To explain, the white line above depicts the movement of Citigroup’s Global Risk Aversion Macro Index – which uses credit spreads, swap spreads and implied volatility to quantify investors’ perception of risk. As you can see, the index is now back to its pre-pandemic lows. More importantly though, the reading encapsulates all of the above and highlights the excessive complacency underwriting global equities.In conclusion, global stocks are living on a razor’s edge and their margin for error continues to dwindle. And due to gold and silver’s moderate-to-strong correlation with the S&P 500 (250-day correlations of 0.71 and 0.87 respectively), one false step could knock over the entire house of cards. As a result, it’s prudent to consider these cross-asset implications when assessing the future performance of the precious metals. However, once the events reach their precipice, the PMs will be able to resume their long-term uptrend.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
There is no “Wall of Money”

There is no “Wall of Money”

David Merkel David Merkel 05.02.2021 04:26
Photo Credit: Crypto360 aka Cryprocurrency360.com [sic] || When will this stupid concept die? Recently as I was reading Barron’s online, I ran across the following article: Small-Cap Stocks Could Keep on Rising. There’s a ‘Wall of Cash.’ I’ve subscribed to Barron’s for at least 20 years of my life. Really, I expect better of them. The meme that money flows in and out of the market is hard to kill. Stocks rise; money must have flowed in. Stocks fall; money must have flowed out. Some of this comes from the impulse that journalists must find a reason for the market action of each day, when really — there’s a lot of noise. I have a few simple ways to explain this. Imagine that market player A wants to buy 100 shares of XYZ Corp at $50/share, and market player B wants to sell 100 shares of XYZ Corp at $50/share. Bam! Shares flow from B to A, and money flows from A to B. Total shares are the same. Total money in brokerage accounts is the same. The total amount of money is unaffected by trading. Now, there are commissions. At least, intelligent people pay commissions. When I was a corporate bond manager, if my broker said, “I’ll just cross them to you to get the deal done,” I would say, “No, I will give you a plus. (1/64th of a dollar per $100 of principal) My broker must always be paid.” Why did I do this? It kept the relationships neat. When brokers don’t get paid, they look for hidden ways to earn their money. I much prefer my costs be explicit and fixed. (And, as a corporate bond manager, I valued loyalty. I had good relationships with my brokers.) But by and large, trading does not affect aggregate cash levels. What does affect aggregate cash levels? Increases Cash DividendsMergers and acquisitions where cash is paid, whether partly or in full.Stock buybacksDecreases Cash Primary and secondary public offerings of stock.Conversion of convertible securities.Rights offeringsAnd, there are probably more than what I have listed here, but the key condition for aggregate cash levels to change is that money must flow into or out of corporations, and shares must flow the opposite way. But none of these changes happen through trading. They happen as a result of corporate actions. Then Why Do Stock Prices Change? Stock prices change because of two reasons, one minor, one major. The minor one: as trading goes on, either buyers or sellers are more desperate to get the trade done. Whichever side is more desperate pushes the price. The major one: when markets are closed, people change their minds. Data builds up, and before any significant amount of trading happens, prices shift to reflect changed estimates of what the securities in question are worth. To prove this, I will tell you that intraday trading is noise, and little return happens there. But while the market is closed — that is when returns happen. The difference between the prior close and the next market open explain all of the returns of the market over the last 20+ years. The difference between the current days open and close are close to zero. Most of the reason why stock prices change is that people as a group change their minds as to the value of stocks. Trading has a modest impact on that. But most of the change in value happens while the market is closed. (Remember that corporations mostly break news while the market is closed.) If you understand this, you get the following benefits: You will ignore most media explanations of moves in the stock marketThe primary market will guide you — looking at M&A and IPOs.You will ignore the so-called “wall of money” which does not exist.Instead, you might notice how much of the total assets in aggregate portfolios are in stocks versus everything else.Prices matter. Buy low, sell high. But don’t attribute anything to the “wall of money.” It is a bogus concept, and should be ignored. The biggest changes in prices happen when the market is closed, and trading is limited.
Gold & the USDX: Correlations

Feeling the Growing Heat and Tensions in Stocks?

Monica Kingsley Monica Kingsley 11.02.2021 16:03
Yesterday was a prelude, a little preview of things to come. We better get used to brief and shallow corrections again, after being lulled by the many preceding sessions. It appears that we‘re now going to get the consolidation period even as the overall S&P 500 metrics remain in a healthy territory. This is the (print-and-spend-happy) world we live in, and we better not fixate on the premature bubble pop talk too closely. I have been stating repeatedly that things have to get really ridiculous first, and this doesn‘t qualify yet in my view. So, for all the tech bashers, we‘re going higher – like it or not. Let‘s get right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Its Internals A second day of hesitation, this time with a thrust to the downside. Comfortably repelled, but still. Is it just one of a kind, or more would follow over the coming sessions? I think this corrective span has a bit further to run in time really. Remember my yesterday‘s words though – the bears are just rocking the boat, that‘s all. The caption describes nicely the mixed momentary situation in market breadth. I am looking especially at new highs new lows right now for whether they would be able to keep the relative high ground, or not, and what would accompany that. Now, it‘s amber light. A supportive warning sign comes from the put/call ratio – we‘re getting a bit too complacent here again. Well worth watching. Credit Markets High yield corporate bonds (HYG ETF) wavered yesterday as well, yet bottom fishers appeared, pushing up the volume. The bond markets are clearly buying the dip here. High yield corporate bonds to short-term Treasuries (HYG:SHY) ratio is still lining up closely with the S&P 500 index. Pulling in tandem, these aren‘t showing any momentary divergence. When it comes to the high yield corporate bonds to all corporate bonds (PHB:$DJCB) ratio, the picture gets different, as the riskier end of the corporate bond spectrum isn‘t firing on all cylinders. That‘s part of the watchout story justification. Technology, Value and Growth Technology (XLK ETF) hadn‘t suffered a profound setback really yesterday. The volume wasn‘t there, and half of the intraday losses were recouped – the bears weren‘t serious, and as the caption says, be wary of tech bubble callers constantly warning about significant corrections with unclear timings. Both tech and S&P 500 are primed to go to much higher levels before things get really ridiculous. Also, remember that since September, the sector has been not at its strongest really. Here comes the rotation between value and growth – given the current status, tech has been underperforming. It‘s the other sectors that are now catching up since the start of Feb. All in all, the chart doesn‘t scream imbalance – the accompanying S&P 500 advance has been relatively orderly. Gold & Silver Today‘s precious metals section will be shorter than usually, because the many bullish factors discussed throughout the week, remain in place. Just check out the metals & miners ratios, or yet another timely call of the dollar top. Let‘s dive into the gold and silver price action that I tweeted about earlier today. My open long position remains profitable, and the very short-term question remains what‘s next. Regardless of the upper knots, I don‘t see the short-term uptrend as exhausted, and you all know pretty well my medium- and long-term bullish case (stronger for silver than for gold in 2021 really). Despite being quite hot in the short run, silver isn‘t willing to correct to any kind of reasonable target. I view the current indecision as part of an ongoing consolidation, and don‘t discount the bullish implications. The key takeaway however is, how much would have to happen to flip this (and gold‘s) chart bearish. I remain cautiously optimistic in the short run, and very optimistic as regards the medium- and long-term. Summary The stock market keeps holding gained ground, having defended yesterday‘s values largely. Given the signs of creeping deterioration, which is however not strong enough to break the bull‘s back, let alone jeopardize it, the short-term caution in the 3,900 vicinity is still warranted. The gold and silver bulls are consolidating gains, and the bullish case for precious metals remains strong. Crucially, it‘s not about the dollar here, but about the sectoral internals, decoupling from rising Treasury yields, and holding firm against corporate ones. The new upleg is knocking on the door, and patience will be richly rewarded. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals.
Will Tesla Charge Gold With Energy?

Will Tesla Charge Gold With Energy?

Finance Press Release Finance Press Release 11.02.2021 17:08
Tesla has supported the price of Bitcoin, but it can affect gold as well.The bull market in cryptocurrencies continues. As you can see in the chart below, the price of Bitcoin has recently increased to almost $47,000 (as of February 10). The parabolic rise seems to be disturbing, as such quick rallies often end abruptly.However, it’s worth noting that the price of Bitcoin has partially jumped because of the increased acceptance of cryptocurrencies as a legitimate form of currency by the established big companies. In particular, Elon Musk, the CEO of Tesla, has recently published a series of tweets that significantly affected the price of Bitcoin, Dogecoin, and other cryptocurrencies.Furthermore, Tesla updated its investment policy to include alternative assets as possible investments. In the last 10-k filing to the Securities and Exchange Commission in January 2021, Tesla stated:In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.Importantly, these assets also include gold :As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds, and other assets as specified in the future.This means that Tesla wants to diminish its position in the U.S. dollar and to diversify its cash holdings. In other words, the company lost some of its confidence in the greenback and started to look for alternatives. So, it seems that Musk and other investors are afraid of expansion in public debt , higher inflation , and the dollar’s debasement .And rightly so! The continued fiscal stimulus will expand the fiscal deficit even further, ballooning the federal debt. With the budget resolution passed last week, only a simple majority will be needed in the Senate to get Biden’s $1.9 trillion package approved, a majority that Democrats have.Remember also that the U.S. economy added only 49,000 jobs in January , while 227,000 jobs were lost in December (revised down by 87,000!). The poor non-farm payrolls will strengthen the odds of a larger fiscal stimulus and easier fiscal and monetary policies.Hence, combined with the ultra-dovish monetary policy and a Fed more tolerant to inflation, the upcoming fiscal support could ultimately be a headwind for the dollar. Initially, the prospect of fiscal support caused positive reactions on the financial markets, but as the euphoria passes, investors start to examine the long-term consequences of easy money and the large expansion of government spending. Importantly, the larger the debt, the deeper the debt trap , and the longer the zero interest rates policy will stay with us, as the Fed won’t try to upset the Treasury.Implications for GoldWhat does Tesla’s move imply for the precious metals market? Well, we are not observing the kind of rally in gold that we are currently witnessing in the cryptocurrencies sphere (see the chart below). And – given the size of the gold market – it’s unlikely that Musk & Co. could ignite a mania similar to the one seen in Dogecoin. The gold market is simply too big. Even the silver market could be too large for similar speculative plays – as the failure of the recent attempt of a short squeeze has shown.However, the update of Tesla’s investment policy is a confirmation of gold as a safe-haven asset and portfolio diversifier . If other big companies follow suit, and we see an actual reallocation of funds from the U.S. dollar towards gold, the price of the yellow metal will get an invigorating electric impulse .If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Gold & the USDX: Correlations

Jack Dorsey and Jay-Z Team Up to Offer Bitcoin Development Trust

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 12.02.2021 09:12
Twitter CEO and Bitcoin bull Jack Dorsey is creating a new Bitcoin development fund alongside rapper and entrepreneur Jay-Z. Dorsey initially announced the “₿trust” Bitcoin fund via a tweet on Feb. 12, 2021, which he describes as a “blind irrevocable trust.” The 500 BTC endowment will initially focus on Bitcoin development in Africa and India. Attached to the tweet, Dorsey added a short document where people can apply to join as a board member, of which they will be choosing three. JAY-Z/@S_C_ and I are giving 500 BTC to a new endowment named ₿trust to fund #Bitcoin development, initially focused on teams in Africa & India. It‘ll be set up as a blind irrevocable trust, taking zero direction from us. We need 3 board members to start: https://t.co/L4mRBryMJe— jack (@jack) February 12, 2021At current BTC prices of $47,650, this endowment equates to nearly $24 million, making ₿trust one of, if not the largest, fund of this nature in relative dollar terms. While Jay-Z may not have much experience in the realm of global Bitcoin development, Dorsey remains one of its top proponents. Dorsey is the CEO of the Square digital payments platform. Through Square, Dorsey offers a cryptocurrency grant program that gives funding to select Bitcoin development projects. While the tweet doesn’t explain why the fund will focus on Africa and India specifically, one can assume that the underdeveloped and restrictive financial sectors in parts of those regions are a major factor. Akon, another famous musician from the early-2000s, has also made massive efforts in cryptocurrency development in Africa. The rapper and songwriter is planning an entire smart city that he’s dubbed “Akon City” in his home country of Senegal. The city is slated to be built over the next decade and will have its own microeconomy based on a digital currency called “AKoin.” The post Jack Dorsey and Jay-Z Team Up to Offer Bitcoin Development Trust appeared first on BeInCrypto.
A Sleepy Week for the Indices?

A Sleepy Week for the Indices?

Finance Press Release Finance Press Release 12.02.2021 15:45
For once, we have a week in 2021 where the market really didn't move all that much.Except for weed stocks that whipsawed GameStock-like and Bitcoin and Dogecoin making waves thanks to Lord Elon, it's really been kind of a boring week for the major indices.The S&P and Nasdaq closed at another record high Thursday (Feb. 11), while the Dow barely retreated from its own record high. The red-hot Russell has lagged this week.However, it’s all relative. No index has moved upwards or downwards more than about 0.30% week-to-date.It’s about time we had a week of relative quiet in the market.The sentiment is indeed still rosy right now. The economic recovery appears to be gaining steam, and the Q1 GDP decline everyone predicted might not be as sharp as we anticipated. We could also be days away from trillions of dollars of much-needed stimulus getting pumped into the economy.Earnings continue to impress, too, and are on pace to rise by over 20% in 2021. Since 1980, only 12 years have earnings increased by 15% or more. Except for 2018, the market gained an average of 12% in all of those years.We could also days away from FDA approval of a one-dose vaccine from Johnson and Johnson (JNJ).The COVID numbers and vaccine trend could truly turn the tide of things. More people in the U.S. have now been vaccinated than total cases, and the week kicked off (Feb. 8) with vaccine doses outnumbering new cases 10-1. Dr. Fauci also claims that vaccines could be available to the general public by April.But we're not out of the woods yet. Sure this week has been calm.But it’s almost been “too calm.”I still worry about complacency, valuations, and the return of inflation.“You wouldn’t know it from the sedate action in the averages,” but Wall Street is on “a highway to the danger zone,” CNBC ’s Jim Cramer said.“In a frothy market, stocks will have enormous rallies that are totally disconnected from the underlying fundamentals.”He’s not wrong.Look at the Buffett Indicator as of February 4. Where I track this indicator usually updates once a week and shows the total U.S. stock market valuation to the GDP. If you take the US stock market cap of $48.7 trillion and the estimated GDP of $21.7 trillion, we're nearly 224% overvalued and 84% above the historical average. This ratio has not been at a level like this since the dotcom bubble.Worse? This chart was dated February 4. The market’s only risen since then.This is what I mean by don’t be fooled by the relative calm of this week.The S&P 500’s forward 12-month P/E ratio is also well above its 10-year average of 15.8. The Russell 2000 is also back at a historic high above its 200-day moving average. Tech stock valuations are again approaching dotcom bust levels.Still not sold? Look at Goldman’s non-profitable tech index. It’s approaching an absurd 250% year-over-year performance.Bank of America also believes that a market correction could be on the horizon due to signs of overheating.While I don’t foresee a crash like we saw last March, I still maintain that some correction before the end of Q1 could happen.Corrections are healthy and normal market behavior, and we are long overdue for one. They are also way more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what could be a great second half of the year.Bank of America also echoed this statement and said that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions.”The key word here- buyable.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don't think that a decline above ~20%, leading to a bear market will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. The Streaky S&P Is Back at a Record Figure 1- S&P 500 Large Cap Index $SPXThe S&P continues to trade as a streaky index. It seemingly rips off multiple-day winning streaks or losing streaks weekly.After the S&P 500 ripped off a streak of gains in 6 of 7 days, it promptly went on a 3-day losing streak, followed by another record close.I would hardly call that a 3-day losing streak, though. I’d even say it was a boring week for the S&P 500 with muted moves.The outlook is healthy, though, especially when you consider earnings. More than 80% of S&P stocks that have reported earnings thus far have beaten estimates.What could be on tap for next week? Who even knows anymore. But if earnings keep on outperforming, and the sentiment remains stable, it could be another strong week.The S&P’s RSI is ticking up towards overbought. However, because it’s still below 70, and because of the streaky manner in which the index has traded, it remains a HOLD.A short-term correction could inevitably occur by the end of Q1 2021, but for now, I am sticking with the S&P as a HOLD.For an ETF that attempts to directly correlate with the performance of the S&P, the SPDR S&P ETF (SPY) is a good option.For more of my thoughts on the market, such as red-hot small-caps and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
S&P 500 Correction Looming, Just as in Gold – Or Not?

S&P 500 Correction Looming, Just as in Gold – Or Not?

Monica Kingsley Monica Kingsley 12.02.2021 16:50
Stocks are clinging to the 3,900 level, and the bulls aren‘t yielding. Without much fanfare, both the sentiment readings and put/call ratio are at the greed and compacent end of the spectrum again. How long can it last, and what shape the upcoming correction would have? Right now, the warning signs are mounting, yet the bears shouldn‘t put all their eggs into the correction basket really, for it shapes to be a shallow one – one in time, rather than in price.Gold‘s hardship is another cup of tea, standing in stark comparison to how well silver and platinum are doing. At the same time, the dollar hasn‘t really moved to the upside – there is no dollar breakout. If the greenback were to break to the upside, that would mean a dollar bull market, which I don't view as a proposition fittingly describing the reality – I called the topping dollar earlier this week. The world reserve currency will remain on the defensive this year, and we saw not a retest, but a local top.This has powerful implications for the precious metals, where the only question is whether we get a weak corrective move to the downside still, or whether we can base in a narrow range, followed by another upleg (think spring). February isn't the strongest month for precious metals seasonally, true, but it isn't a disaster either. As has been the case throughout the week, I‘ll update and present the evidence of internal sectoral strength also today.One more note concerning the markets – in our print-and-spend-happy world, where the give or take $1.9T stimulus will sooner or later come in one way or another, we better prepare on repricing downside risk in the precious metals, and also better not to fixate on the premature bubble pop talk too closely. I have been stating repeatedly that things have to get really ridiculous first, and this just doesn‘t qualify yet in my view. All those serious correction calls have to wait – in tech and elsewhere, for we‘re going higher overall – like it or not.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsThird day of hesitation, this time again with a thrust to the downside. Marginally increasing volume, which speaks of not too much conviction by either side yet. As the very short-term situation remains tense, my yesterday‘s words still apply today:(…) I think this corrective span has a bit further to run in time really. (…) the bears are just rocking the boat, that‘s all.The market breadth indicators are deteriorating, without stock prices actually following them down. Thus far, the correction is indeed shaping to be one in time and characterized by mostly sideways trading. Unless you look at the following chart.Volatility has died down recently, yet a brief spike (not reaching anywhere high, just beating the 24 level) wouldn‘t be unimaginable to visit us by the nearest Wednesday. In all likelihood, it would be accompanied by lower stock prices. Well worth watching.Credit Markets and TechThere is a growing discrepancy between high yield corporate bonds (HYG ETF) and its investment grade counterpart (LQD ETF). Both leading credit market ratios have been diverging not only since the end of Jan, but practically throughout 2021. The theme of rising yields is exerting pressure on the higher end of the debt market as the stock investment fever goes on – that‘s my take.No, this is not a bubble – not a parabolic one. The tech sector is gradually assuming leadership in the S&P 500 advance, accompanied by microrotations as value goes into favor and falls out of it, relatively speaking. Higher highs are coming, earnings are doing great, and valuations aren‘t an issue still.Gold, Silver and RatiosUnder pressure right as we speak ($1,815), the yellow metal‘s technical outlook hasn‘t flipped bearish. Should we get to last Thursday‘s lows, it would happen on daily indicators ready to flash a bullish divergence once prices stabilize. But for all the intense bearish talk, we haven‘t broken below the late Nov lows.For those inclined so, I am raising the arbitrage trade possibility. Long silver, short gold would be consistent with my prior assessment of the gold-silver ratio going down. Similarly to bullish gold bets, that‘s a longer-term trade, which however wouldn‘t likely take much patience to unfold and stick.A bullish chart showing that gold isn‘t following the rising yields all that closely these days. Decoupling from the Treasury yields is a positive sign for the sector, and exactly what you would expect given the (commodity) inflation and twin deficits biting.Silver continues to trade in its bullish consolidation, and unlike in gold, its short-term bullish flag formation remains intact. The path of least resistance for the white metal remains higher.Gold juniors (black line) keep their relative strength vs. the senior gold miners, and the mining sector keeps sending bullish signals, especialy when silver miners enter the picture.SummaryThe stock market tremors aren‘t over, and the signs of deterioration keep creeping in. The bull run isn‘t however in jeopardy, and there are no signals thus far pointing to an onset of a deeper correction right now.The gold bulls find it harder to defend their gains, unlike the silver ones. That‘s the short-term objective situation, regardless of expansive monetary and fiscal policies, real economy recovery, returning inflation and declining U.S. dollar. The new upleg keeps knocking on the door, and patience will be richly rewarded.
5 reasons why people prefer to trade options over stocks

5 reasons why people prefer to trade options over stocks

Chris Vermeulen Chris Vermeulen 13.02.2021 21:13
As technical traders, we know the importance of following the price charts using proven trading strategies and implementing risk and position management. Here at TheTechnicalTraders.com we are stepping things up a notch by adding options to our trading.By using options, a trader can leverage, hedge positions, and generate income via selling premiums. There are basic options, strategies, and complex, and everything in between. Because of that, I have brought options trading specialist Neil Szczepanski to join our team.I will let Neil introduce himself.Hi everyone!  Neil Szczepanski here.  In case you are wondering it is pronounced “Sus’ pan ski".  Yes, I have roots in eastern European ancestry and I’m first generation.  I love options and have been trading them for many, many years. I like options because you have more ways to be profitable in your trading.  I hate putting on a position and then waiting for the market to go your way.  I want to be in control of my trades and options allows for that.  Also, trading can equal freedom. Think about this: imagine having a job that you can do from anywhere on the planet, work as much as you want, and make as much money as you want?  Imagine having that same job that has no boss breathing down your neck and you call the shots. Well, that is what options trading can be like if you have the skills or access to someone who tells you what and when to buy and sell options contracts.You control your own destiny and I have seen traders start with as little as $500.  Options are especially attractive because they can cater to the small guy with smaller accounts via leverage, allowing them to take on big positions with little capital. On the flip side, the more wealthy sophisticated traders use options to protect and hedge positions and can do more complex strategies that provide even more consistent and lucrative returns with lower risk.No matter what category of options trading you fall into, they work incredibly well, and I will teach you while providing professional trades to execute. Over my next few posts, I am going to explain some more about why trading options can be consistently profitable without having to take on huge risks. Today I am going to talk about why I love swing-trading options and the power of leverage that options provide us traders.MAKE BIG MONEY WITH SMALL ACCOUNTSAs I alluded to above, options give the average trader ways to break into the trading world because of leverage. A little capital can go a long way, and if options trading is done properly you can have significantly less risk than buying the stock outright. You can start small, make smart bets that generate returns, and continue building your account through sound risk management techniques like position sizing, etc.For example, when an underlying stock is super expensive, like Telsa for example, it can be prohibitive for the average person just starting out trading to own that stock… let alone 100 shares! Options give you the ability to control those shares for a specific period of time at a fraction of the price. Each individual options contract lets you control 100 shares of Tesla without having to buy the stock.Sign up now to receive information on the launch of the Technical Traders' options trading courses and newsletter!Let us take a look at a simple example where you want to buy TELSA with an expectation that it will go up at least 5% in value in the next month. If you wanted to buy and hold 100 shares of TESLA, then you would need to spend $80,482 to own those shares. Since all we want to do is to be able to sell the shares and lock in the profit when they go up by 5% or more.   We don’t need to own them but rather just have the right to control them within the options contract timeframe. When we hit our targets, we can sell the option contract and take profit (or take possession/delivery of the underlying shares on contract expiry).  This is called option assignment.Below is a sample of a Tesla options chain, where we can see that the price of the stock is $804.82.  Let’s say you could allocate $2,000 to this trade - you would be able to buy almost 2.5 shares of TSLA. But with $2,000, you could buy an option contract at the money that would let you have the right to buy 100 TSLA shares anytime in the next 30 days at a price of $800/share. With options, you have the ability to take your $2,000 trade and have the same controlling interest in an underlying stock as the person that just spent over $80,000 to buy the stock.So to continue with the TSLA example, let’s say on March 12th TSLA was trading for $844 (the 5% gain you were expecting).  If you bought and sold the stock, you would have made a 5% return of $4,000. If you had bought the option, and then take on the assignment (let it expire) you would have the right to buy 100 TSLA shares at $800 and then turn around and sell them for $844.  Your profit would be $4,400 (less the cost of the option contract), a little more profit than had you bought the shares outright. However, if you look at your return it is more than 225% using options!!! Options enable the small players to trade stocks that would normally be outside of their price range, and this is one of the reasons we have seen an increase in options trading popularity over the last year. In fact, options trading volume has more than doubled since the start of the pandemic.Of course, the above trade is a dream, but the reality can be quite scary. If you took the options trade and TSLA dropped below $800, then your liability starts mounting, however, the loss with owning the stock could be over $80,000 while the total loss with buying the options would be the price you paid for the option which is $1,950.  A big reversal of the stock would be catastrophic in both cases but can be much worse for the stock owner.  So it is important to make sure you trade with proper risk management and protections in place. While the adage “with great power there comes great responsibility” was popularized within a different context, I feel it applies to trading options.I know at this point you are probably thinking what the heck is he talking about and options are WAY too complicated for me.  Don’t worry, I’m going to teach and show you in a very simple and easy way how to trade options.  I am also going to provide trades that limit the max loss per trade, and reduce risk so get ready for some excitement!SWING TRADING OPTIONS IS THE PERFECT SIDE-HUSTLEI love teaching, technology, and trading. I knew early on that these were the things that would drive my career path. At the same time, I had kids to feed so I needed to supplement my income to support my growing family. I was able to achieve this through swing trading options. This allowed me to focus on my career and family while making modest yet consistent income, without having to be glued to my screen every day since swing trades last a few days or weeks.We have all seen the traders with 10 monitors looking at charts all day, making trades, and watching and waiting on every single turn in the market.  I can tell you this is NOT my idea of trading.  I prefer swing trading, where I can set up trades to enter and exit every couple of days or even weeks.  Swing trades are meant to be short duration, and they are not intra-day, so you can set up your trades and manage them when you have time to yourself.I once got advice from a great old friend that sometimes it is wise to look at the animal kingdom to learn how we can improve and live our lives.  There is a lot we can learn from the animal kingdom.  Some of the necessities we need as a human being is food shelter, social acceptance, and security.  As such, we should always have back up plans. Going back to the animal kingdom, if we look at say prairie dogs, for example, we know that they always have two holes.  One is for the main entry and exit and the other is for emergency exits.  Side hustles are just that and swing trading can be a really useful back-up/extra income plan.  It is your second hole!Swing trading is also a great way to gain entry into the world of trading.  It is like dipping your toe in the water to test it before you jump in head first.  With swing trading, you can learn all about options and other financial instruments like futures, CFD, and currencies. The best part about swing trading is it can eventually turn into a full-time job, replacing your regular job.  Now, instead of trading during your free time, you can trade when you don’t have to be at work, leaving you with even more time to enjoy life and family. This is the ultimate freedom.  That is what I have done using several strategies that generate consistent, low-risk gains for 20+ years. One of my favorite strategies that I have developed is called the C-LEAP strategy.  In this strategy, you enter and exit positions once every two weeks.  It is one of the least risky strategies I have ever developed, and I use a simple checklist to follow it. I have had past students generate tens of thousands of dollars every month using this strategy, and I have found it to be easy to learn and very consistent.As you may or may not know, I am preparing some options courses where I will teach basic options trading as well as more advanced strategies. Anyone can learn how options work but the most important thing is what strategy you use.  You also need to know how and when to use the right strategy.  I love teaching people how to trade options and live by two principles when doing so: “Trading can be simple but it is not easy” and "I want EVERYONE to win not just me and in fact, I have no desire to win if everyone else loses.". I am really excited to get to know some of you soon when I launch my LIVE options courses and get you on the path to winning trades!I will also be running The Technical Traders' new service – Options Trading Signals – where I will share my knowledge, model portfolio, a weekly trade, and opportunities report, and trade alerts with subscribers. Look for the launch of my newsletter and courses at the end of February! Make sure you sign up now to keep informed of the launch of my newsletter and courses. You can sign up at www.thetechnicaltraders.com/options-trading.In the next article Neil will keep giving you reasons to love trading options, including how you can trade options with less risk than stocks, how you can better react to volatility with options compared to stocks, and how you can attain consistent profits with lower drawdowns by trading options. So come along with me for the ride and change your life with a new skill trading options!All my best,
Bitcoin Breaks $49,000: Is $50k Far Away?

Bitcoin Breaks $49,000: Is $50k Far Away?

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 14.02.2021 08:17
Bitcoin saw a 2% jump over the last two hours as institutional news filtered through the crypto community. BTC briefly touched $49,000. Bitcoin surged 2% starting shortly after 5AM London time on Feb 14. The initial indication is that news from corporations may be having an effect. This ranges from North America’s first Bitcoin Exchange Traded Fund launching in Canada on Feb. 11 to a Bloomberg report claiming that Morgan Stanley’s $150 billion arm Counterpoint Global is considering an entry into Bitcoin. Serious News The Bitcoin news flow for the past several days has been serious – in a good way. On Feb. 8, the news broke that in January, Grayscale added Bitcoin to its Grayscale Bitcoin Trust an amount totaling 150% of the BTC mined during the month. On Feb. 11, Grayscale tweeted a table showing its holdings. GBTC now holds over $30 billion in BTC under management. According to Bybt, Grayscale owns 653,830 BTC. 02/11/21 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.Total AUM: $36.8 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $ZEC pic.twitter.com/d7I2sPMwZ4— Grayscale (@Grayscale) February 11, 2021The Holy Grail – in Canada Grayscale rose to prominence by offering a way for institutional investors to gain indirect exposure to BTC. Because GBTC and Grayscale’s altcoin offerings are not traded on a market, they are regulated differently from those that are.  However, American institutional investors interested in Bitcoin have been clamoring for an Exchange Traded Fund (ETF). A filing by Gemini Trust in 2017 was denied by the Securities and Exchange Commission because of the immaturity of the Bitcoin market. Unfortunately for professional traders, this was the first of many such denials by the SEC. On Feb. 11, Purpose Bitcoin Fund launched in Canada. This fund is the first Bitcoin ETF in North America, and it trades on the Toronto exchange. Furthermore, Gemini Trust is the sub-trustee responsible for holdings outside of Canada. Purpose Investments is the first, but the likelihood of the SEC continuing to deny ETFs in the US is unlikely. Valkyrie Fund filed for an ETF in January, 2021, and the pressure on the SEC to approve the fund is now greater. Such an OK would enable even more institutional investors to gain exposure to BTC. Morgan Stanley – in Bitcoin Bloomberg broke a story on Feb. 13 that, according to its sources, Morgan Stanley was considering an entry into the BTC market. The investing giant’s $150 billion dollar Counterpoint Global would take on the investment. However, the move requires both regulatory approval and an OK from its corporate parent. If Morgan Stanley puts its seal of approval on a Counterpoint Global entry, a $50,000 BTC is only the beginning. The significance of a Morgan Stanley entry led Gemini Trust co-owner Cameron Winklevoss to tweet: More and more institutions are getting ready to go big into #Bitcoin https://t.co/PyQKtBiPM9— Cameron Winklevoss (@cameron) February 14, 2021The post Bitcoin Breaks $49,000: Is $50k Far Away? appeared first on BeInCrypto.
S&P 500 Correction Delayed Again While Silver Runs

S&P 500 Correction Delayed Again While Silver Runs

Monica Kingsley Monica Kingsley 15.02.2021 14:15
The window of opportunity for the stock bears is slowly but surely closing down as Friday‘s gentle intraday peek higher turned into a buying spree before the closing bell. The sentiment readings and put/call ratio are at the greed, euphoric and compacent end of the spectrum again. I asked on Friday:(…) How long can it last, and what shape the upcoming correction would have? Right now, the warning signs are mounting, yet the bears shouldn‘t put all their eggs into the correction basket really, for it shapes to be a shallow one – one in time, rather than in price.Today, I‘ll say that waiting for a correction is like waiting for Godot. Trust me, I have come to experience quite some absurd and Kafkaesque drama not too long ago. What an understatement.One week ago, I called the dollar as making a local top, and look where we are in the process. Coupled with the steepening pace of rising long-dated Treasury yields, that‘s a great environment for financials (XLF ETF) as they benefit from the widening yield curve.Gold remains a drag on the precious metals performance, with silver and platinum flying. The miners‘ outlook and internal dynamics between various mining indices, provides a much needed proof to those short on patience. Little wonder, after 5+ months of downside correction whose target I called on Aug 07 in the article S&P 500 Bulls Meet Non-Farm Payrolls. Little wonder given the monstrous pace of new money creation beating quite a few prior interventions combined.Yet, the precious metals complex is coming back to life as the economic recovery goes on, and will get new stimulus fuel. Commodity prices are rising steeply across the board, yet inflation as measured by CPI, will have to wait for the job market to start feeling the heat, which it obviously doesn‘t in the current pace of job creation and low participation rate. Until labor gets more powerful in the price discovery mechanism (through market-based dynamics!), the raging inflationary fire will be under control, manifesting only in (financial) asset price inflation. That‘s precisely what you would expect when new money is no longer sitting on banks‘ balance sheets, but flowing into the economy. Again quoting my Friday‘s words:(…) One more note concerning the markets – in our print-and-spend-happy world, where the give or take $1.9T stimulus will sooner or later come in one way or another, we better prepare on repricing downside risk in the precious metals, and also better not to fixate on the premature bubble pop talk too closely. I have been stating repeatedly that things have to get really ridiculous first, and this just doesn‘t qualify yet in my view. All those serious correction calls have to wait – in tech and elsewhere, for we‘re going higher overall – like it or not.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsThe weekly S&P 500 chart is still one of strength, without a top in sight. And the lower volume, I don‘t view as concerning at all.After a three day sideways consolidation, stock bulls forced a close higher on Friday. Low volume, but still higher prices. The bears missed an opportunity to act, having hesitated for quite a few days. Not that the (big picture) path of least resistance weren‘t higher before that, though.The market breadth indicators got a boost on Friday, but it‘s especially the new highs new lows that have a way to go. One would expect a bigger uptick given Friday‘s price advance, but the overall message is still one of cautious but well grounded optimism.Credit Markets, Treasuries and DollarThe high yield corporate bonds to short-term Treasuries (HYG:SHY) ratio performance is lining up nicely with the S&P 500 one, and definitely isn‘t flashing a warning sign for the days to come.Long-term Treasuries are declining at a faster pace than has been the case in late 2020, which is (not immediately right now, but give it time and it‘ll turn out to be) concerning. Thus far though, the money flows are positive for the stock (and other risk on) markets as the liquidity tide keeps hitting the tape.Who suffers? The dollar. No, it‘s not breaking higher (retracing breakout before a run higher – no) above the 50-day moving average or any way you draw a declining resistance line on higher time frames. The greenback is getting ready for another powerful downleg.Gold and SilverGold bulls have repelled another selling wave, which was however not the strongest one. The fact there was one in the first place even, is more (short-term) concerning for the gold bulls. But please remember that it was first gold that got it right in jumping higher on the unprecedented money printing spree as we entered spring 2020, followed by copper, base metals, agricultural commodities, and also oil now (remember my recent bullish calls for over $80 per barrel in less than 2 years). Gold keeps catching breath, frustrating the bulls who „know“ it can only go higher, but its spark isn‘t there at the moment. A perfect example is Monday‘s session thus far – spot gold 0.25% down, spot silver 1.25% up. It‘s been only on Friday when I touted the gold-silver spread trade idea as not having exhausted its potential yet, not by a long shot:(…) For those inclined so, I am raising the arbitrage trade possibility. Long silver, short gold would be consistent with my prior assessment of the gold-silver ratio going down. Similarly to bullish gold bets, that‘s a longer-term trade, which however wouldn‘t likely take much patience to unfold and stick.Silver keeps acting in a bullish way, tracking commodities ($CRB) performance much better than gold does at the moment. While both are a bullish play with the many factors arrayed behind their upcoming rise, it‘s silver that will reap the greatest rewards – today and in the days and weeks ahead. Gold and Silver MinersBack to the beaten down and underperforming gold. See that the yellow metal still isn‘t following the rising yields all that closely these days. Decoupling from the Treasury yields bodes well for precious metals universally, and it‘s precisely what you would expect given the (commodity) inflation, twin deficits biting, and the dollar balancing on the brink.The miners examination also proves no change in the underlying bullish dynamic that is largely playing out below the surface. We‘re seeing the continued outperformance of junior gold miners vs. the seniors, and also the great burst of life in the silver miners – these are outperforming ever more visibly the rest of the mining companies.This is a long awaited chart to flip bullish. Thus far, we have had one recent bullish divergence only (the GDX refusal to break to new lows when gold broke below its Jan lows) – once gold miners start leading the yellow metal, the sentiment in the precious metals community would get different compared to today really.SummaryThe deterioration in stock market got postponed with the latter half of Friday bringing in fresh buying pressure. Would the bears appear, at least to rock the boat a little? They had a good chance all the prior week, but didn‘t jump at the opportunity. Their window is closing, slowly but surely. The stock bull run is on, and there are no signals thus far pointing to an onset of a deeper correction soon.The gold bulls continue lagging behind their silver counterparts, predictably. That‘s the objective assessment regardless of unprecendented monetary and fiscal policies, unfolding real economy recovery, inflation cascading through the system, and the dollar struggling to keep its head above water. The new upleg keeps knocking on the door, and patience will be richly rewarded (unless you took me up on the gold-silver arbitrage trade, and are popping the champagne already).
USD Trades Weaker Amid Bank Holiday

USD Trades Weaker Amid Bank Holiday

John Benjamin John Benjamin 16.02.2021 08:31
EURUSD Subdued Amid Thin TradingThe euro was trading subdued, with price action once again attempting to retest the resistance level near 1.2144.Price action in the EURUSD is somewhat flat with the US markets closed on account of the president’s day holiday today.The short term trend appears to be flat for the moment unless the common currency is able to break out above the resistance area between 1.2144 and 1.2177.Meanwhile, the stochastics oscillator is posting a lower high. This could suggest a short-term correction to the downside.The support level near 1.2050 is likely to remain the downside target for the moment.GBPUSD Surges Past 1.3900The British pound Sterling continues to surge ahead with price action rising above 1.3900.So far, GBPUSD has been posting gains for nearly five consecutive weeks.A continuation to the upside could see price action rising towards the 1.4400 level. This would mark the highest level since mid-2016.But the current pace of gains has seen no meaningful pullback just as yet. Therefore, the lack of any support to the downside is likely to open the downside risk.The recent swing high near 1.3867 is likely to act as support. But if the GBPUSD loses this handle, we expect a correction down to 1.3759 next.Oil Prices Rally On Cold WeatherOil prices opened on a bullish note in the Asian trading session rising to a new 13 month high.The gains came as the cold winter has fueled demand for the fossil fuel.Price rallied to a new high of 60.75 before giving back some of the intraday gains. However, towards the late European trading session, oil prices were seen giving back some of these gains.If oil prices continue to pull back, then we might get to see prices covering the gap from Monday’s open. To the upside, the next main resistance level is near 61.35.The current rally in the oil prices also comes as the US dollar has been trading weaker over the past few weeks.Gold Price Confined To Friday’s RangeThe precious metal is trading subdued with price action firmly stuck within Friday’s range.With both the Asian and US markets closed, trading in the precious metal is slow. Price action is back near the support level of 1817 region.For the moment, the support level seems to be holding up which could provide a short-term boost to the upside. The resistance level near 1850.00 will likely once again act as resistance keeping a lid on any further gains.However, watch the stochastics oscillator which is likely to signal a shift in the momentum.In the event that gold prices lose the 1817 support, we could expect price action toward the 4th February lows at 1784.79.
Still No S&P 500 Correction, Still No Real Change in the Metals

Still No S&P 500 Correction, Still No Real Change in the Metals

Monica Kingsley Monica Kingsley 16.02.2021 16:11
Yesterday‘s thin volume session didn‘t bring any material changes as the window of opportunity for the stock bears to act, is slowly but surely closing down. Friday‘s intraday move brought increasingly higher prices, and Monday‘s trading extended gains even more. Euphoric, complacent greed as evidenced by the sentiment readings and put/call ratios, is on.I asked on Friday:(…) How long can it last, and what shape the upcoming correction would have? Right now, the warning signs are mounting, yet the bears shouldn‘t put all their eggs into the correction basket really, for it shapes to be a shallow one – one in time, rather than in price.Both on Monday and today, I‘ll say that waiting for a correction is like waiting for Godot. Right from the horse‘s mouth as my personal experience with quite some absurd and Kafkaesque drama got richer recently.The dollar keeps topping out, which I called it to do a week ago – and its losses have been mounting since. Long-dated Treasury yields are rising in tandem, which is a great environment for financials (XLF ETF) and emerging markets (EEM ETF). The former benefit from the widening yield curve, the latter from plain devaluation.Gold performance is still short-term disappointing, and silver and platinum are leading. But it‘s the miners and the moves between various mining indices, that work to soothe the bulls‘ impatience. Understandable as we are in 5+ months of downside correction whose target I called on Aug 07 in the article S&P 500 Bulls Meet Non-Farm Payrolls, witnessing record pace of new money creation.The ongoing economic recovery will get new stimulus support, and that will work to broaden the precious metals advance. Commodity prices are universally rising, and over time, inflation as measured by CPI, will do so too. But not until the current pace of job creation picks up and participation rate turns – we‘re far from that moment. Until then, inflation will be apparent only in (financial) asset prices, which is in line with new money no longer sitting on banks‘ balance sheets, but flowing into the real economy. Again quoting my Friday‘s words:(…) One more note concerning the markets – in our print-and-spend-happy world, where the give or take $1.9T stimulus will sooner or later come in one way or another, we better prepare on repricing downside risk in the precious metals, and also better not to fixate on the premature bubble pop talk too closely. I have been stating repeatedly that things have to get really ridiculous first, and this just doesn‘t qualify yet in my view. All those serious correction calls have to wait – in tech and elsewhere, for we‘re going higher overall – like it or not.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsThe bulls had an opportunity to act for quite a few days in a row, yet missed it. Their inaction confirms that the path of least resistance for stocks is to still rise.The market breadth indicators have improved on Friday, but especially the new highs new lows has a way to go. It could have ticked upwards more given Friday‘s price advance, but didn‘t. The put/call ratio has moved upwards (see chart below), but the overall message is still one of cautious yet reasonable optimism – not enough to trigger the sizable correction quite some participants are constantly awaiting.Credit Markets, Treasuries and DollarThe high yield corporate bonds to short-term Treasuries (HYG:SHY) ratio performance isn‘t out of whack with the S&P 500, but the investment grade corporate bonds to longer dated Treasuries (LQD:IEI) are not confirming exactly. Before the corona crash, the high yield ones were leading the investment grade ones for countless quarters. From the Mar 2020 bottom, the investment grade ones were in the pool position. And since the end of Dec 2020, the high yield ones are leading again, but investment grade ones aren't going up anymore, but down the way long-term Treasuries do. One more sign of the euphoric stage in stocks we're in.Long-term Treasuries are the chart to watch for the market to throw a fit – or not. They‘re declining at a faster pace than has been the case in late 2020, which can bring about trouble - not immediately right away, but over time it can turn out so. The dynamic of money moving into the stock market is thus far still positive as the many risk on assets are gaining on the fast pace of new money creation. The worry about a sudden, sharp reversal is misplaced for now.The dollar is on the receiving end – there is no breakout verification before a run higher in progress – no. Neither above the 50-day moving average, nor any way you draw a declining resistance line on higher time frames. The greenback is about to test and break below its 2021 lows. Solidly below.Gold and SilverGold bulls stood their ground on Friday, yet their yesterday‘s and today‘s performance is rather weak. Not disastrously so, but still indicative of the headwinds gold bulls face. Gold‘s spark isn‘t there at the moment. Putting it into context, please remember that it was first gold that jumped in the unrivalled money printing era arrival in spring 2020, followed by copper, base metals, agricultural commodities, and also oil now (remember my recent bullish calls for over $80 per barrel in less than 2 years). Silver price action is the bullish one, in line with commodities ($CRB) performance being much stronger now. Silver is definitely better positioned to benefit from the upcoming precious metals rise – today and in the days and weeks ahead. Gold and Silver MinersThe heat gold is taking from rising Treasury yields, is also progressively weaker. The decoupling from rising nominal (real) yields bodes well for precious metals universally, and it‘s precisely what you would expect given the (commodity) inflation, twin deficits, and the dollar on the brink.Gold to all corporate bonds chart reflects the current dillydallying nicely. Gold isn‘t breaking down into a bearish downtrend. The miners examination also proves no change in the underlying bullish dynamic playing out below the surface. Junior gold miners are oputperforming. the seniors, and there is also the great burst of life in the silver miners – these are outperforming ever more visibly the rest of the crowd.Once this chart flips bullish, we have the new upleg clearly visible. Thus far, we have had one recent bullish divergence only (the GDX refusal to break to new lows when gold broke below its Jan lows) – once gold miners start leading the yellow metal, the sentiment in the precious metals community would get different compared to today really.SummaryThe deterioration in stocks got postponed as both Friday and Monday brought new buyers into the market. Would the bears appear, at least to rock the boat a little? I stand by my call that they had a good chance all the prior week, but didn‘t jump at the opportunity – their window is closing, slowly but surely. The stock bull run is on, and there are no signals thus far pointing to an onset of a deeper correction soon.The gold bulls continue lagging behind their silver counterparts, predictably, with both under pressure in Tuesday‘s premarket. Coupled with the miners‘ signals, and unprecendented monetary and fiscal stimulus, unfolding real economy recovery, inflation making its way through the system, and the dollar struggling to keep its head above water, the new PMs upleg is a question of time.
Is That the S&P 500 And Gold Correction Finally?

Is That the S&P 500 And Gold Correction Finally?

Monica Kingsley Monica Kingsley 17.02.2021 16:21
The stock bears finally showed they aren‘t an extinct species – merely a seriously endangered one. Yesterday‘s close though gives them a chance to try again today, but they should be tame in expectations. While there is some chart deterioration, it‘s not nearly enough to help fuel a full on bearish onslaught in the S&P 500. There is no serious correction starting now, nothing to really take down stocks seriously for the time being.The Fed remains active, and monetary policy hasn‘t lost its charm (effect) just yet. Commodities and asset price inflation has been in high gear for quite some time, yet it‘s not a raging problem for the Main Street as evidenced by the CPI. Food price inflation, substitution and hedonistic adjustments in its calculation, are a different cup of tea, but CPI isn‘t biting yet.Meanwhile, the real economy recovery goes on (just check yesterday‘s Empire State Manufacturing figures for proof), even without the $1.9T stimulus and infrastructure plans. Once we see signs of strain in the job market (higher participation rate, hourly earnings and hours worked), then the real, palpable inflation story can unfold. But we‘re talking 2022, or even 2023 to get there – and the Fed will just let it overshoot to compensate for the current and prior era.Meanwhile, the wave of new money creation (we‘re almost at double the early 2020 Fed‘s balance sheet value - $4T give or take then vs. almost $7.5T now – and that‘s before the multiplier in commercial banks loan creation kicks in) keeps hitting the markets, going into the real economy, predictably lifting many boats. It‘s my view that we have to (and will) experience a stock market bubble accompanied by the precious metals and commodities one – to a degree, simultaneously, for the stock market is likely to get under pressure first. Again, I am talking the big picture here – not the coming weeks.Meanwhile, the intense talk of S&P 500 correction any-day-week-now is on, just as outrageous gold, silver and miners‘ drop projections. Let‘s examine the bear market is gold – some say that the late 2015 marked bottom, I‘m of the view that the 2016 steep rally was a first proof of turning tide. But the Fed got serious about tightening (raising rates, shrinking its balance sheet), and gold reached the final bottom in Aug 2018. Seeing through the hawks vs. dove fights at the Fed in the latter half of 2018 (December was a notable moment when Powell refused to the markets‘ bidding, remained hawkish in the face of heavy, indiscriminate selling across the board – before relenting).Since then, gold was slowly but surely gathering steam, and speculation in stocks was on. The repo crisis of autumn 2019 didn‘t have a dampening effect either – the Fed was solidly back to accomodative back then. These have all happened well before corona hit – and it wasn‘t able to push gold down really much. The recovery from the forced selling, this deflationary episode (which I had notably declared back in summer 2020 to be a one-off, not to be repeated event), was swift. Commodities have clearly joined, and the picture of various asset classes taking the baton as inflation is cascading through the system, is very clear.Quoting from my yesterday‘s analysis:(…) The dollar keeps topping out, which I called it to do a week ago – and its losses have been mounting since. Long-dated Treasury yields are rising in tandem, which is a great environment for financials (XLF ETF) and emerging markets (EEM ETF). The former benefit from the widening yield curve, the latter from plain devaluation.Gold performance is still short-term disappointing, and silver and platinum are leading. But it‘s the miners and the moves between various mining indices, that work to soothe the bulls‘ impatience. Understandable as we are in 5+ months of downside correction whose target I called on Aug 07 in the article S&P 500 Bulls Meet Non-Farm Payrolls, witnessing record pace of new money creation.The ongoing economic recovery will get new stimulus support, and that will work to broaden the precious metals advance. Again quoting my Friday‘s words:(…) in our print-and-spend-happy world, where the give or take $1.9T stimulus will sooner or later come in one way or another, we better prepare on repricing downside risk in the precious metals, and also better not to fixate on the premature bubble pop talk too closely. I have been stating repeatedly that things have to get really ridiculous first, and this just doesn‘t qualify yet in my view. All those serious correction calls have to wait – in tech and elsewhere, for we‘re going higher overall – like it or not.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookFinally, there is a whiff of bearish activity. Will it last or turn out a one day event as thus far in Feb? The chances for a sideways correction to last at least a little longer, are still on, however the short- and medium-term outlook remains bullish.Credit Markets and TreasuriesHigh yield corporate bonds (HYG ETF) wavered yesterday, trading in a sideways pattern during recent days. Encouragingly, yesterday‘s session attracted increasing volume, which I read as willingness to buy the dip. One dip and done?Long-term Treasuries (TLT ETF) are the key chart on my radar screen right now. The rise in yields is accelerating, and if progressing unmitigated, would throw a spanner into many an asset‘s works. Even though it‘s not apparent right now, there is a chance that we‘ll see a slowdown, even a temporary stabilization, over the coming sessions. The larger trend in rates is higher though, and in the dollar to the downside.Gold, Silver and CommoditiesThe heat gold is taking from rising Treasury yields, has gotten weaker recently, with the decoupling from rising nominal (real) yields being a good omen for precious metals universally. The dynamics of commodity price inflation, dollar hardly balancing under the weight of unprecedented economic policy and twin deficits, attests to the gold upleg arriving sooner rather than later.Let‘s step back, and compare the performance of gold, silver, copper and oil. The weekly chart captures the key turns in monetary policy, the plunge into the corona deflationary bottom, and crucially the timing and pace of each asset‘s recovery. Gold and silver were the first to sensitively respond to activist policies, followed by copper, and finally oil. Is their current breather really such a surprise and reversal of fortunes? Absolutely not.SummaryThe bearish push in stocks has a good chance of finally materializing today. How strong will its internals be, will it entice the bulls to step in – or not yet? The stock bull run is firmly on, and there are no signals thus far pointing to an onset of a deeper correction with today‘s price action.The gold bulls continue lagging behind their silver counterparts, predictably, with both under continued pressure. The yields are rising a bit too fast, taking the metals along – temporarily, until they decouple to a greater degree. Combined with the miners‘ signals, and unprecendented monetary and fiscal stimulus, unfolding real economy recovery, inflation making its way through the system, and the dollar struggling to keep its head above water, the new PMs upleg is a question of time.
S&P 500 Correction – No Need to Hold Onto Your Hat

S&P 500 Correction – No Need to Hold Onto Your Hat

Monica Kingsley Monica Kingsley 18.02.2021 16:09
Yesterday‘s bearish price action in stocks was the kind of shallow, largely sideways correction I was looking for. Not too enthusiastic follow through – just rocking the boat while the S&P 500 bull run goes on. Stocks are likely to run quite higher before meeting a serious correction. As I argued in yesterday‘s detailed analysis of the Fed policies, their current stance won‘t bring stocks down. But it‘s taking down long-term Treasuries, exerting pressure on the dollar (top in the making called previous Monday), and fuelling commodities – albeit at very differnt pace. The divergencies I have described yesterday, center on weak gold performance – not gaining traction through the monetary inflation, instead trading way closer in sympathy with Treasury prices. Gold has frontrunned the other commodities through the corona deflationary shock, and appears waiting for more signs of inflation. It didn‘t make a final top in Aug 2020, and a new bear market didn‘t start. It‘s my opinion that thanks to the jittery Treasury markets, we‘re seeing these dislocations, and that once the Fed focuses on the long end of the curve in earnest, that would remove the albatross from gold‘s back.I can‘t understate how important the rising yields are to the economy (and to the largest borrower, the government). Since 1981, we‘ve been in one long bond bull market, and are now approaching the stage of it getting questioned before too long. The rates are rising without the real economy growing really strongly, far from its potential output, and characterized by a weak labor market. Not exactly signs of overheating, but we‘ll get there later this year still probably.It‘s like with generating inflation – the Fed policies for all their intent, can‘t command it into happening. The Treasury market is throwing a fit, knowing how much spending (debt monetization) is coming its way, and the Fed‘s focus is surely shifting to yields at the long end. Bringing it under control would work to dampen the rampant speculation in stocks, and also lift gold while not hurting commodities or real economy recovery much. Sounds like a reasonable move (yield curve control), and I believe they‘re considering it as strongly as I am talking about it.Let‘s quote yesterday‘s special report on gold, inflation, and commodities:(…) the wave of new money creation (we‘re almost at double the early 2020 Fed‘s balance sheet value - $4T give or take then vs. almost $7.5T now – and that‘s before the multiplier in commercial banks loan creation kicks in) keeps hitting the markets, going into the real economy, predictably lifting many boats. It‘s my view that we have to (and will) experience a stock market bubble accompanied by the precious metals and commodities one – to a degree, simultaneously, for the stock market is likely to get under pressure first. Again, I am talking the big picture here – not the coming weeks.Let‘s examine the bear market is gold – some say that the late 2015 marked bottom, I‘m of the view that the 2016 steep rally was a first proof of turning tide. But the Fed got serious about tightening (raising rates, shrinking its balance sheet), and gold reached the final bottom in Aug 2018. Seeing through the hawks vs. dove fights at the Fed in the latter half of 2018 (December was a notable moment when Powell refused to the markets‘ bidding, remained hawkish in the face of heavy, indiscriminate selling across the board – before relenting).Since then, gold was slowly but surely gathering steam, and speculation in stocks was on. The repo crisis of autumn 2019 didn‘t have a dampening effect either – the Fed was solidly back to accomodative back then. These have all happened well before corona hit – and it wasn‘t able to push gold down really much. The recovery from the forced selling, this deflationary episode (which I had notably declared back in summer 2020 to be a one-off, not to be repeated event), was swift. Commodities have clearly joined, and the picture of various asset classes taking the baton as inflation is cascading through the system, is very clear.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsFinally, a daily downswing – not meaningful, but it‘s as good as it gets. The slightly lower volume though shows that there is not a raging conviction yet that this sideways move is over.The market breadth indicators aren‘t at their strongest. Both the advance-decline line and advance-decline volume dipped negative, which isn‘t worrying unless you look at new highs new lows as well. While still positive, $NYHL is showing a divergence by moving below the mid-Feb lows. Seeing its decline to carve a rounded bottom a la end Jan would be a welcome sight to the stock bulls. Before then, nothing stands in the way of muddling through in a shallow, corrective fashion.Credit Markets and TreasuriesThe divergence in both leading credit market ratios – high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) – show the bond market strains. HYG:SHY clearly supports the S&P 500 rally, while LQD:IEI isn‘t declining in tandem with long-term Treasuries. Instead, it‘s carving out a bullish divergence as it‘s trading well above the Sep and Oct lows – unlike the TLT.Speaking of which, such were my words yesterday, calling for a Treasury reprieve to happen soon:(…) Long-term Treasuries (TLT ETF) are the key chart on my radar screen right now. The rise in yields is accelerating, and if progressing unmitigated, would throw a spanner into many an asset‘s works. Even though it‘s not apparent right now, there is a chance that we‘ll see a slowdown, even a temporary stabilization, over the coming sessions. The larger trend in rates is higher though, and in the dollar to the downside.The dollar is still topping out, and a new daily upswing doesn‘t change that – I look for it to be reversed, and for the new downleg reasserting itself.Gold, Silver and CommoditiesThe encouraging, budding short-term resilience of gold to rising Treasury yields, got a harsh reality check yesterday. While the latter ticked higher, gold declined regardless. Closing at the late Nov lows, it‘s still relatively higher given the steep rise in long-term Treasury yields since. A bullish divergence, but a more clear sign of (directional) decoupling (negating this week‘s poor performance) is needed.Let‘s look again at gold, silver, and commodities in the medium run. Silver decoupled from gold since the late Nov bottom in both, while commodities haven‘t really looked back since early Nov. Till the end of 2020, gold wasn‘t as markedly weak as it has become since, and actually tracked the silver recovery from the late Nov bottom. And the reason it stopped, are the long-term Treasury yields, which quickened their rise in 2021. It looks like an orderly decline in TLT is what gold would appreciate – not a rush to the Treasury exit door.SummaryThe bearish push in stocks has a good chance of finally materializing also today. How strong will its internals be, will it entice the bulls to step in again? Signs are for this correction to run a bit longer in time – but the stock bull run is firmly on, and there are no signals thus far pointing to an onset of a deeper correction right away.The gold bulls recovered a little of the lost ground, but that doesn‘t flip the short-term picture their way in the least. While the yellow metal is leading silver today, its overall performance in the short run remains disappointing, and the silver-gold spread trade I introduced you to a week ago, a much stronger proposition. Still, given the miners‘ signals, unprecendented monetary and fiscal stimulus, unfolding real economy recovery, inflation making its way through the system, and the dollar struggling to keep its head above water, the new PMs upleg is a question of time.
Gold’s Downtrend: Is This Just the Beginning?

Gold’s Downtrend: Is This Just the Beginning?

Finance Press Release Finance Press Release 18.02.2021 16:43
With the yellow metal just posting its lowest close since June and a bearish pattern forming, how vulnerable is gold to a further decline?Gold and mining stocks just broke to new yearly lows – as I warned you in my previous analyses. And that’s only the beginning.Let’s jump right into the charts, starting with gold.Figure 1 - COMEX Gold FuturesIn early February, gold broke below the rising red support line and it then verified it by rallying back to it and then declining once again. It topped almost exactly right at its triangle-vertex-based reversal, which was yet another time when this technique proved to be very useful.Gold has just closed not only at new yearly lows, but also below the late-November lows (in terms of the closing prices, there was no breakdown in intraday terms). This means that yesterday’s (Feb. 17) closing price was the lowest daily close since late June 2020. At the moment of writing these words, gold is also trading below the April 2020 intraday high.Gold was likely to slide based on myriads of technical and cyclical factors, while the fundamental factors remain very positive – especially considering that we are about to enter the Kondratiev winter, or we are already there. As a reminder, Kondratiev cycles are one of the longest cycles and the stages of the cycle take names after seasons. “Winter” tends to start with a stock market top that is caused by excessive credit. In this stage gold is likely to perform exceptionally well… But not right at its start. Even the aftermath of the 1929 top (“Winter” started then as well), gold stocks declined for about 3 months before soaring. In the first part of the cycle, cash is likely to be king. And it seems that the performance of the USD Index is already telling investors to buckle up.And speaking of stocks, what about mining stocks? As you might already well know, just as with gold, the miners moved below the November lows in terms of both the intraday prices and daily closing prices. What does that mean? If you’d like to explore mining stocks in detail and are curious to know more about their prices and possible exit levels, then our full version of the analyses contains exactly what you need to know.Getting back to gold…Figure 2If the fact that gold invalidated its breakout above its 2011 high, despite the ridiculously positive fundamental situation, doesn’t convince you that gold does not really “want” to move higher before declining profoundly first, then the above chart might.As I wrote above, gold is currently more or less when it was trading at the April 2020 top. Where was the USD Index trading back then? It was moving back and forth around the 100 level.100!The USD Index closed a little below 91, and gold is at the same price level! That’s a massive 9 index-point decline in the USDX that gold shrugged off just like that.There’s no way that gold could “ignore” this kind of movement and be “strong” at the same time. No. It’s been very weak in the previous months, which is a strong sign (not a fundamental one, but a critical one nonetheless) that gold is going to move much lower once the USD Index finally rallies back up.Right now, waiting for gold to rally is like waiting for the light to turn green, arguing that eventually it has to turn green, while not realizing that the light is broken (gold just didn’t rally despite the huge decline in the USDX). Yes, someone will fix it and eventually it will turn green, but it doesn’t mean that it makes much sense to wait for that to happen, instead of looking around and crossing the street if it’s safe to do so.Yes, gold is likely to rally to new highs in the coming years. And silver is likely to skyrocket. But in light of just two of the above-mentioned factors (gold’s extreme underperformance relative to the USD Index and the invalidation of a critical breakdown) doesn’t it make sense not to purchase gold right now (except for the insurance capital that is) in order to buy it after several weeks / few months when it’s likely to be trading at much lower levels?We live in very specific times. Getting a “like” on a post or picture becomes a necessary daily activity and means of self-validation. Not “liking” something that others posted or that is massively “liked” may be frowned upon or even viewed as being disrespectful. Plus, it seems that no matter what you do, everyone gets offended very easily. When did honesty, independence and common-sense stop being virtues?When it comes to gold investment analysis, it’s surprisingly similar. You either like gold and think that it’s going higher right away or you’re “one of them”. “Them” can be anyone who tries to manipulate gold or silver prices, “banksters”, or some kind of unknown enemy. “ Analysts' ” goal is often no longer to be as objective as possible and to provide as good and as unbiased an analysis as possible, but to simply be cheering for gold and provide as many bullish signals as possible regardless of what one really thinks about them. The above may seem pleasant to readers, but it’s not really in their best interest. In order to make the most of any upswing, it’s best to enter the market as low as possible and to exit relatively close to the top. What happens before a price is as low as possible? It declines. Why would something like that (along with those describing it) be hated by gold investors? It makes no sense, but yet, it’s often the case.Top of FormBottom of FormThe discussion – above and below – can be viewed as something positive or negative for any investor, but while reading it, please keep in mind that our goal is the same as yours – we want to help investors make the most of their precious metals investments. Call us old-fashioned, but regardless of how unpleasant it may seem, we’ll continue to adhere to honesty, independence and common-sense in all our analysesOk, but why on Earth would the USD Index rally back up? The Fed is printing so much dollars – why would they be worth more?!Because the currencies are valued with relation to each other and whether or not the USD Index moves higher or lower doesn’t depend only on what the Fed is doing.Figure 3What other monetary authorities do matters as well and right now the ECB is outprinting the Fed (that’s what the decline in the green line above means), which means that the euro is likely to fall more than the U.S. dollar. Therefore, the EUR/USD currency exchange rate would be likely to decline and since this exchange rate is the biggest (over 50%) component of the USD Index, it makes perfect sense – from the fundamental point of view – to expect the USD Index to move higher.Can gold rally despite higher USD Index values? Absolutely. However, it would first have to start to behave “normally” relative to the USD Index, and before that happens it would have to stop being extremely weak relative to it. And the fact that gold is at the same price level despite a 9-index-point decline in the USDX is extreme weakness.To make the technical discussion easier, I’m attaching the previous chart once again.Figure 4On Monday (Feb. 15), I wrote the following about the above chart:The size and shape of the 2017-2018 analogue continues to mirror the current price action . However, today, it’s taken 118 less days for the USD Index to move from peak to trough.Also, it took 82 days for the USDX to bottom in 2017-2018 (the number of days between the initial bottom and the final bottom) and the number amounts to 21.19% of the overall duration. If we apply a similar timeframe to today’s move, it implies that a final bottom may have formed on Feb. 12. As a result, the USDX’s long-term upswing could begin as soon as this week.Also noteworthy, as the USDX approached its final bottom in 2017-2018, gold traded sideways. Today, however, gold is already in a downtrend. From a medium-term perspective, the yellow metal’s behavior is actually more bearish than it was in 2017-2018.Also supporting the historical analogue, the USD Index’s current breakout above its 50-day moving average is exactly what added gasoline to the USDX’s 2018 fire. Case in point? After the 2018 breakout, the USDX surged back to its previous high. Today, that level is roughly 94.5.Based on this week’s rally it seems that the final bottom formed on Tuesday (Feb. 16) – just 2 trading days away from the analogy-based target, and in perfect tune with what I wrote back then. The breakout above both: the declining blue line, and the 50-day moving average was verified, and the short-term outlook here is clearly bullish.But isn’t the current situation similar to what happened in mid-2020? The correction that was followed by another decline?In a way, it is. In both cases, the USD Index moved higher after a big decline, but that’s about it as far as important similarities are concerned.What is different is the entire context. Even a single look at the above chart provides an instant answer. The mid-2020 correction was like the mid-2017 correction, and what we see right now is the post-bottom breakout, just as we saw in the first half of 2018.There are multiple details on the above chart that confirm it, including the sizes of the medium-term declines, the position of the price relative to the declining support/resistance lines, as well as relative to the 50-day moving average, and even the green arrows in the RSI indicator show how similar the preceding action was in case of this indicator. The vertical dashed line shows “where we are right now” in case of the analogy.Also, the fact that the general stock market has not yet declined in any substantial way only makes the short-term outlook worse (particularly for silver and miners). When stocks do slide, they would be likely to impact the prices of miners and silver particularly strongly.And please remember, we’re looking for the bottom in the precious metals sector not because we’re the enemy of gold or the precious metals investor . On the contrary, we’re that true friend that tells you if something’s not right, even if it may be unpleasant to hear. We want to buy more and at better prices close to the bottom, and we’ll continue to strive to assist you with that as well.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Large Silver cycles

Large Silver cycles

Korbinian Koller Korbinian Koller 19.02.2021 11:13
It´not a secret anymore that Silver is in a boom.The investor is digesting pandemic news for nearly a year now. And the newly termed phrase at the World Economic Forum: “In 2030, you will own nothing and be happy” makes one think twice.The chartist finds himself for almost a year in a bullish trend in Silver. This after Silver trading in a range for seven years. He/She sees Gold on the top of the list of ‘Top assets by market cap’ with Silver ranking 6th and Bitcoin ranking 9th.The market participant focused on fundamentals and market cycles is wondering how long the dollar will hold up as a fiat currency. Typically (over the last 600 years), a fiat currency hyperinflates after 93 years.Nevertheless, the question of “How much” is one to be answered, and it could be much larger time cycles that provide guidance there.The world viewed from a different angle might give clues:Toddlers have anxiety symptoms which can manifest in not eating properly, quickly getting angry or irritable, and being out of control during outbursts as well as constantly worrying or having negative thoughts and feeling tense and fidgety.Social Media addiction among  teens and young adults has exploded leading to an inability to stop or curb this addictive behavior despite suffering losses in friendship, decreased physical social engagement, and a negative impact at school.Worldwide obesity has nearly tripled since 1975. In 2016, more than 1.9 billion adults, 18 years and older, were overweight. Of these over 650 million were obese.The elderly are unwanted in a production-oriented society that measures human value by productivity rate.Yet, pet clothing stores and fresh pet food sections in grocery chain stores are becoming the norm.Any endeavors, including the arts, are measured against the benchmark of profitability. Resulting in the worship of money over beauty, ethics, and principles.The list goes on and could point as far back as to decadent times before the fall of Rome.Daily Chart of Silver, Range Trading:Silver in US Dollar, dailly chart as of February 18th, 2021.One part that has changed over time is the integrity of the markets. Free markets and their principle benefits are endangered. And then typically lies have short legs, and truth prevails.While Silver prices are still held in a range by artificial shorts, the cost of physical Silver much more accurately describes its value increase.  Weekly Chart of Silver, One deep breath and go:Silver in US Dollar, weekly chart as of February 18th, 2021.Once desperate bears have to give way to Silver’s real value and demand, we most likely see price-advances much more significant than generally assumed.S&P 500 Index in US Dollar, Monthly Chart, Large Silver cycles:S&P 500 Index in US Dollar, monthly chart as of February 18th, 2021.A view at the S&P500 chart above from a professional chartist’s perspective would qualify the hypothetical crash scenario, not as an abnormality but rather a typical scenario after advances this extended in time.In Rome, the leading coin used was The Denarius. With a 90% silver content (4.5 grams per coin), it was equal to a day’s work wages. Rome’s prosperity came from barter, and a finite amount of Silver came into the empire. Within 75 years, the Silver content per coin was diluted down to only 5%. Various emperors did this to finance wars and extravaganza. It was mainly hyperinflation that broke the empire. Sounds familiar?Large Silver cyclesOur intent is not to judge the world and the state it finds itself in, but markets reflect in cycles, and any view larger than one’s lifetime is hard to gauge. We might be in the midst of a market phase where next time around, we get a severe market correction; it might get ugly in a hurry. The result might be more dramatic than the corrections we have seen in the last 20 years. In this case, a look as far back as the Romans could be useful to determine how aggressively we hedge our bets, how much we buy into physical Silver. It looks like a few extra ounces couldn’t hurt.Feel free to join us in our free Telegram channel for daily real time data and a great community.If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.By Korbinian Koller|February 19th, 2021|Tags: low risk, Silver, silver bull, Silver Chartbook, technical analysis, time frame, trading principles|0 CommentsAbout the Author: Korbinian KollerOutstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Gold & the USDX: Correlations

Will Biden Overheat the Economy and Gold?

Finance Press Release Finance Press Release 19.02.2021 13:14
Under the Biden administration the economy could overheat, thereby increasing inflation and the price of gold.In January, Biden unveiled his plan for stimulating the economy, which is struggling as the epidemic in the U.S. continues to unfold. Pundits welcomed the bold proposal of spending almost $2 trillion. Some expenditures, especially on vaccines and healthcare, sound pretty reasonable. However, $1.9 trillion is a lot of money! And a lot of federal debt , as the stimulus would be debt-funded!So, there is a risk that Biden’s package would overheat the economy and increase inflation . Surprisingly, even some mainstream economists who support the deficit spending, notice this possibility. For instance, former Treasury Secretary Larry Summers, said that Biden’s stimulus could lead the economy to overheat, and that the conventional wisdom is underestimating the risks of hitting capacity. Although he doesn’t oppose the idea of another stimulus, Summers noted that “if we get Covid behind us, we will have an economy that is on fire”.Indeed, this is a real possibility for good reasons. First, the proposed package would not only be large in absolute terms (the nominal amount), but also relative to the GDP . According to The Economist , Biden’s proposal is worth about nine percent of pre-crisis GDP, nearly twice the size of Obama’s aid package in the aftermath of the Great Recession .And the stimulus is also large relative to the likely shortfall in the aggregate demand. I’m referring here to the fact that the winter wave of the coronavirus would be less harmful for the economy – and that there have already been big economic stimuli added last year, including a $900 billion package passed no earlier than in December.Oh yes, politicians were really spendthrift in 2020, and – without counting the aid passed in December – they injected into the economy almost $3 trillion, or about 14 percent of pre-crisis GDP, much more than the decline in the aggregate demand. In other words, the policymakers added to the economy more money that was destroyed by the pandemic .But the tricky part is that Americans simply piled up most of this cash in bank accounts, or they used it for trading, for instance. Given the social-distancing measures and limited possibilities to spend money, this outcome shouldn’t actually be surprising. However, the hoarding of stimulus shows that it has not yet started to affect the economy – but that can change when the economy fully reopens and people unleash the hoarded money. If all this cash finally reaches the markets, prices should go up.You see, the current economic downturn is unusual. It doesn’t result from the fact that Americans don’t have enough income and cannot finance their expenditures. The problem is rather that people cannot spend it even if they wanted to. Indeed, economic disruption and subdued consumer spending are concentrated in certain sectors that are most sensitive to social distancing – such as the leisure, transport and hospitality industries – rather than spread widely throughout the whole economy. So, when people will finally be able to spend, they will probably do so, possibly accelerating inflation .As well, normally the Fed would tighten its monetary policy to prevent the rise in prices. But now the U.S. central bank wants to overshoot its inflation target, so it would not hike interest rates only because inflation raises to two percent or even moderately above it.Another potential inflationary driver is dollar depreciation, which seems likely, given the zero-interest rates policy and the expansion in the U.S. twin deficit .Hence, without the central bank neutralizing the fiscal exuberance, it’s possible that Biden’s plan would overheat the economy, at least temporarily. Of course, that’s not certain and given the small Democrats’ majority in Congress, the final stimulus could be lower than the proposed $1.9 trillion. But it would remain large and on top of previous aid packages and pent-up demand, which makes the overheating scenario quite likely.Actually, investors have already started to expect higher inflation in the future – as the chart below shows, the inflationary expectations have already surpassed pre-pandemic levels.From the fundamental perspective, this is good news for the gold market. After all, gold is bought by some investors as an inflation hedge . Moreover, the acceleration of inflation would lower real interest rates , keeping them deeply in negative territory, which would also be positive for the yellow metal.So, although the expectations of higher fiscal stimulus plunged gold prices in January, more government spending – and expansion in budget deficits and public debt – could ultimately turn out to be supportive factors for gold. Especially if easy fiscal policy will be accompanied by the accommodative monetary policy – in particular quantitative easing and a rising Fed’s balance sheet – and inflation.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Why the Sky Is Not Falling in Precious Metals

Why the Sky Is Not Falling in Precious Metals

Monica Kingsley Monica Kingsley 19.02.2021 16:03
Stocks are predictably staging a continued recovery from the mostly sideways correction – a shallow one not strong enough to break the bulls‘ back. Credit markets are largely behaving – with the exception of long-term Treasuries, which I see as highly likely to draw the Fed‘s attention – just as I discussed in detail yesterday. The S&P 500 keeps doing fine, and so does my open position there – in the black again. On one hand, volatility remains low regardless of intraday attempts to rise, on the other hand, the put/call ratio has risen quite high yesterday – it‘s as if the traders are expecting a shoe to drop, similarly to the end of Jan. Will it, is there any on the horizon?Treasuries at the long-end are falling like a stone, and those on the short end (3-months) are seeing higher prices in 2021. The bond market is clearly under pressure, and exerting influence primarily upon precious metals (and commodities such as oil, which are experiencing a down day today, after quite a string of foreseeable gains). The bearish sentiment in gold and miners is running rampant, and it‘s been only yesterday when I answered a question on ominous head and shoulders patterns in the making, at my own site. This clearly illustrates the razor edge we‘re at in precious metals:(…) This is more often than not the case with H&S patterns – they are not the most reliable ones, highly judgemental at times, and their targets are more often than not far away, which makes them a not fully reliable trading proposition when a long enough time (trade) series is taken. I rather look at what is driving individual moves – which asset classes influence it the most at a given time? Where to look for so as to get most precise information? With gold and gold miners (they still trade quite tightly together), it's the Treasury yields on the long end.As I wrote in today's (Feb 18) precious metals report, despite the new 2021 lows in TLT, gold isn't amplifying the pressure – it's trading well above the $1,770 level, and enjoys a stronger session today than silver. Look at the gold – TLT evolving relationship, as that's the key determinant right now. The post-Nov dynamic speaks in gold's favor – under the surface. Don't underestimate the Fed either.Plenty to talk and cover in the precious metals really – just as usual at such crossroads. Let‘s briefly recap all the ducks lining up in stocks first.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 and VolatilityRepeated lower knots mark a refusal to decline as the daily dips keep being bought. Given the constructive developments in high yield corporate bonds and its key ratio (HYG and HYG:SHY), I fully expect the uptrend to keep reasserting itself once again. The talk about a top, imminent correction or stretched valuations, is still premature.The best known volatility measure is still refusing to rise on a lasting basis, indicating that the environment remains favorable to higher stock prices.Dollar and TreasuriesThe world reserve currency is on the doorstep of another powerful decline, and not initiating a bull market run. The caption says it all – this is the time for antidollar plays to thrive in our era of ample credit, unprecedented money creation that‘s triggering a Roaring Twenties style of speculative environment, not a Kondratieff winter with a deflationary shock as you might hear some argue.Look around, check food, energy, or housing prices, and you‘ll see how connected to reality are the calls of those writing that inflation isn‘t a problem (monetary inflation lifting many asset classes). Check that against Fed President Daly stating that the inflationary pressures now point downwards… and make your own conclusions about the new money wave hitting the real economy.Gold, Silver and MinersJust as gold is challenging (resting on) the late Nov lows, so is the miners to gold ratio. That‘s a key one – I mentioned at the very end of Jan that I would like to see it start to lead higher. Seeing the latest two-day losing streak, it‘s not happening, and the late Jan breakdown which might have turned out to be false, may not materialize in the short run. Let‘s get a proper perspective by displaying this chart in weekly format.Is this the dreadful breakdown threating doom and gloom in the precious metals? Zooming out definitely provides a very different take – a more objective one than letting (fear) emotions run high and tickitis to take over.We‘re still consolidating, and not making lower lows – regardless of this week‘s increased gold sensitivity to rising yields as seen in the plunging TLT values. Inflation is making its way through the system as surely as Titanic‘s watertight compartments were filled with water. I‘ve discussed on Wednesday at length inflation, past Fed action and asset appreciation, and yesterday explained why the central bank will be tied into a war on two fronts as it gets to seek control over the yield curve at the long end too.Another short-term worrying chart as silver miners are caught in last days‘ selling whirlwind. Even the juniors lost their short-term edge over the seniors, making me think that a potential washout event before a more universal sectoral rebound, might be at hand.Pretty worrying for those who are all in gold – unless they took me up on last Friday‘s repeated idea that silver is going to outperform gold in the next precious metals upleg, which I formulated that day into a spread (arbitrage) trade long silver, short gold. Check out the following chart how that would have worked out for you.The dynamics favoring silver are unquestionable – starting from varied and growing industrial applications, strengthening manufacturing and economy recovery, poor outlook in silver above ground stockpile and recycling, to the white metal being also a monetary metal. Silver is bound to score better gains than gold, marred by the Bitcoin allure, would. SummaryThe bearish push in stocks didn‘t indeed take the sellers far – just as I wrote yesterday, there was no reason to hold on to your hat. The stock bull run is firmly entrenched, and there are no signals thus far pointing to an onset of a deeper correction right away as all we‘re going through, is a shallow correction (in time especially).Bearish dollar, $1.9T or similar stimulus not priced in, and yet gold isn‘t taking a dive. Amid very positive fundamentals, it‘s the technicals that are short-term challenging for gold – we‘re in truly unchartered territory given the economic policies pursued. I stand by my call to watch the TLT chart very closely – it looks like an orderly TLT decline is what gold needs, not a selling stampede. Despite the current disclocation with gold being the weakest of the weak (I am looking at commodities for cues), I still stand by the call that a new PMs upleg is only a question of time – a shortening one, at that.
GBPUSD Steadies Over A Three-And-Half-Year High

GBPUSD Steadies Over A Three-And-Half-Year High

John Benjamin John Benjamin 22.02.2021 07:47
Risk on sentiment pushes dollar lowerEuro Closes The Week Almost FlatThe euro currency managed to pull back after hitting a two-week low during the week. Price action remains steady within the 1.2050 and 1.2144 levels for the moment.The overall trend remains flat with the key price level established. Only a strong break out from either of these levels will indicate further direction in the trend.The Stochastics oscillator on the daily chart could likely signal a move to the upside.However, for this to happen, the euro currency will need to break out above 1.2177 – 1.2144 levels.To the downside, support is firmly established at 1.2050 which has held up on the previous retest.The British pound sterling has closed with gains for six consecutive weekly sessions so far.The gains put the GBPUSD over a three and half year high, closing on Friday at 1.4018. This puts the currency pair near a multi-year support/resistance level.A continuation to the upside could see further gains coming.In the short term, price action is able to make consistent higher lows in maintaining the bullish trend. Therefore, further gains are likely as long as the current moment holds.The daily Stochastics oscillator is in the overbought levels since 9th February. This could, however, change if the momentum shifts to the downside.For the moment, the initial level near 1.3851 will be key ahead of any short term corrections.Oil Prices Pullback From A 13-Month HighOn Friday, WTI Crude oil prices closed with back to back losses. This led to the weekly price action closing in the red after prices briefly rose above 61.35 earlier in the week.The declines come after oil prices have been moving in a sharp and steady trend.On the 4-hour charts, we see the trendline breached. This has led to a modest pullback with prices rejected ahead of moving lower.If oil prices continue to move lower, then we could see the 57.35 level of support being tested. Establishing support here could potentially boost the upside.The Stochastics oscillator is currently near the oversold levels and could see some recovery in prices.To the upside, the price level of 60.87 needs to be breached in order for oil prices continue pushing higher.Gold Pulls Back From A Seven-Month LowThe precious metal fell to a seven-month low over the week before managing to recovery with bullish gains on Friday.Price action closed with gains after Thursday’s doji pattern. This also comes near the support level of 1764.With the Stochastics oscillator also turning higher, the current rebound could see gold prices likely to test the 1817.79 level of to establish resistance once again.Overall, price action could remain trading within these levels for the near term. Further downside is likely if gold loses the support near 1764.For the moment, there is a possibility that the precious metal could move to the upside.This is especially true with the Stochastics oscillator on the daily chart moving deeper into the oversold levels.
Kiss of Life for Gold

Kiss of Life for Gold

Monica Kingsley Monica Kingsley 22.02.2021 16:24
The narrow trading range in stocks continues, and the shallow sideways correction will eventually resolve itself with another upleg. The signs are countless, and the riskier part of the credit market spectrum agrees. As money flows from the Tresury markets, and sizable cash balances are sitting on many a balance sheet, there is plenty of fuel to power the S&P 500 advance.With volatility in the tame low 20s and the put/call ratio again moving down, the bears‘ prospects are bleak. As I wrote last week, their time is running out, and a new stock market upleg approaches. It‘s the bond market that‘s under pressure, with both investment grade corporate bonds and long-dated Treasuries suffering in the accelerated decline.Gold is the most affected, as the sensitivity of its reaction to the rising long-tern yields, has picked up very noticeably. How long before these draw both the Fed‘s attention and action – what will we learn from Powell‘s testimony on Tue and Wed? And when will the much awaited stimulus finally arrive, and force repricing beyond the metals markets?Before that, gold remains on razor‘s edge, while silver leads and platinum flies for all the green hydrogen promise. The dollar has given back on Thu and Fri what it gained two days before, and remains in its bear market. Not even rising yields were able to generate much demand for the world reserve currency. Its lower prices stand to help gold thanks to the historically prevailing negative correlation, counterbalancing the Treasury yields pressure.Plenty of action that‘s bound to decide the coming weeks‘ shape in the precious metals. And not only there as oil experienced 2 days of lossess in a row – practically unheard of in 2021 so far. On Saturday, I‘ve added a new section to my site, Latest Highlight, for easier orientation in the milestone calls and timeless pieces beyond the S&P 500 and gold. Enjoy!Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe weekly indicators suggest that a reversal is still not likely. There is no conviction behind the weekly decline, and signs are still pointing to a sideways consolidation underway.The daily chart reflects the relatively uneventful trading – we‘re in a phase of bullish base building before powering off to new highs. See how little the daily indicators have retreated from their extended readings, and the barely noticeable price decline associated.S&P 500 InternalsAll the three market breadth indicators show improved readings, and my eyes are on new highs new lows throwing their weight behind the prior two indicators‘ advance. The overall impression is one of balance.The value to growth (VTV:QQQ) ratio shows that tech (XLK ETF) has fallen a bit out out of step recently – we‘re undergoing another microrotation into value stocks. The stock market leadership is thus broadening, confirming the findings from the advance-decline line (and advance-decline volume) examination.Credit MarketsOne chart to illustrate the bond market pressures – high yield corporate bonds are holding gained ground while investment grade corporate bonds and long-dated Treasuries are plunging like there is no tomorrow. With each of their rebound attempt sold, the dislocations are increasing – a great testament to the euphoric stage of the stock market advance. Gold and TreasuriesGold price action isn‘t as bearish as it might seem based on last week‘s moves. Yes, the readiness to decline in sympathy with rising yields, is diconcerting, but the yellow metal stopped practically at the late Nov lows, and refused to decline further. Low prices attracted buying interest, and due to the overwhelmingly negative sentiment for the week ahead, the yellow metal may surprise on the upside. Time for the bulls to prove themselves as the tone of coming weeks‘ trading in gold is in the balance.The daily chart‘s correlation coefficient has moved into strongly positive territory in 2021, illustrating the headwinds gold faces. Despite the prevailing wisdom, such strongly positive correlation isn‘t the rule over extended periods of time. That‘s the message of the daily chart – but let‘s step back and see the bigger picture similarly to the way I did on Friday witht the $HUI:$GOLD ratio.Not an encouraging sight at the moment. The tightness of mutual relationship is there, and given the decreased focus on timing (one candle representing one week) coupled with the correlation coefficient being calculated again over a 20 period sample, the week just over shows that regardless of the post-Nov resilience, gold is clearly getting under more pressure.Gold and DollarLet‘s do the same what I did about long-term Treasuries and gold, also about the dollar and gold. Their historically negative correlation is receding at the moment as the two face their own challenges. The key question is when and from what level would the fiat currency and its nemesis return to trading in the opposite directions. Such a time is highly likely to be conducive to higher gold prices.On the weekly chart, the negative correlation periods are winning out in length and frequency. Certainly given the less sensitive timining component through weekly candlesticks and 20-period calculation, the current strength and level of positive correlation is rather an exception and not a rule. Combining this chart‘s positive correlation between the two with the daily chart‘s negative yet rising readings, highlights in my view a potential for seeing an upset in the momentary relationship.In other words, the gold decline over the past now almost 7 months going hand in hand with mostly sliding dollar, would turn into higher gold prices accompanied by lower dollar values. How much higher gold prices, that depends on the long-term Treasuries market – that‘s the one playing the decisive role, not the dollar at the moment.Gold, Silver and MinersSilver is doing fine, platinum very well, while gold struggles and needs to prove itself. That‘s the essence of the long silver short gold trade idea – the silver to gold ratio attests to that.Quoting from Friday‘s analysis:(…) The dynamics favoring silver are unquestionable – starting from varied and growing industrial applications, strengthening manufacturing and economy recovery, poor outlook in silver above ground stockpile and recycling, to the white metal being also a monetary metal. Silver is bound to score better gains than gold, marred by the Bitcoin allure, would. Final chart of today‘s extensive analysis is about the two miners to gold ratios, and the divergencies they show. The ETF-based one (GDX:GLD) is sitting at support marked by both the late Nov and late Jan lows, while $HUI:$GOLD is probing to break below its late Jan lows, and these were already lower than the respective late Nov lows.Both ratios are sending a mixed picture, in line with the theme of my latest reports – gold is on razor‘s edge, and the technical picture is mixed given its latest weakness. That‘s the short run – I expect that once the Fed‘s hand is twisted enough in TLT and TLH, and speculation on yield curve control initiation rises, the focus in the precious metals would shift to inflation and its dynamics I‘ve described both on Wed and Fri. SummaryThe sellers in stocks aren‘t getting far these days, and signals remain aligned behind the S&P 500 advance to reassert itself. Neither the Russell 2000, nor emerging markets are flashing divergencies, and the path of least resistance in stocks remains higher.Gold‘s short-term conundrum continues - positive fundamentals that are going to turn even more so in the near future, yet the key charts show the king of metals under pressure, with long-term Treasury yields arguably holding the key to gold‘s short-term future. The decoupling events seen earlier this month, got a harsh reality check in the week just over. Yet, that‘s not a knock-out blow – the medium- and long-term outlook remains bright, and too many market players have rushed to the short side in the short run too.
It‘s Only Tech That‘s Sold – Not S&P 500, Gold Or Silver

It‘s Only Tech That‘s Sold – Not S&P 500, Gold Or Silver

Monica Kingsley Monica Kingsley 23.02.2021 15:52
S&P 500 is getting under modest pressure, and technology is to blame. Is the correction about to turn nasty from sideways? Still no signs of that, even as the investment grade corporate bonds are being sold of as hard as long-term Treasuries. Yet, these corporate instruments have only now broken below their late Oct lows – unlike long-dated Treasuries, whose price action resembles free fall.These government debt instruments are arguably the key asset class for every precious metals investor to watch. What used to be gentle decoupling signs over the latest weeks and months, got thoroughly tested the prior week. Yet, I stood firm in not calling gold down and out. The support zone at late Nov lows generated a rebound that was oh so likely to materialize.Silver naturally outperformed, both copper and oil had a strong day, and agrifoods are making new highs. The inflation dynamics described in Friday‘s article aptly called Why the Sky Is Not Falling in Precious Metals, continues unabated, and the pressure keeps building inside the metals and commodities. Not even the dollar managed to benefit from the rising yields – the resumption of its bear market I called on Feb 08, is one of the 2021 themes. Money keeps flowing from the Treasuries market, and there is plenty sitting on the sidelines (corporate or private) to still deploy and power stocks and precious metals higher. Also those ready to withstand Bitcoin volatility (hello, the weekend Elon Musk tweet follow through), stand to benefit – cryptos are behaving like a store of value, a hedge against currency debasement. I wrote in my very first 2021 analysis that the Bitcoin correction wouldn‘t get far.Powell‘s testimony is about to bring volatility, but does it have the power to change underlying trends? Not really – while his latest high profile assessments brought about a downswing, stocks recovered in spite of the GameStop (contagion?) drama too. Should we see a replay of the above, new highs are coming – and they are, in both stocks and precious metals. We‘re in a commodities supercycle on top!Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe daily chart shows yesterday‘s turn of events clearly. The volume increased, indicating that the bulls will need to grapple with more downside.Both the advance-decline line and advance-decline volume have curled noticeably, yet new highs new lows continues higher. That‘s a confirmation of the broad based nature of the stock market advance, further illustrated with the following chart.What if all the constituent shares in the S&P 500 had equal weight (i.e. there is no $NYFANG)? The above chart is the reflection – and it‘s challenging the latest highs. The rotation theme I‘m discussing so often, means in this case taking the baton from tech, and seeing it pass to value stocks. Such broad advance is a healthy characteristic of bull runs far from making a top.TechnologyHere is the culprit behind yesterday‘s decline – on increasing volume, technology (XLK ETF) has plunged. Yet it‘s the semiconductors (XSD ETF) that I am looking at for clues as to how reasonable has the decline been. And given how the tech is holding up, it‘s a bit accentuated.Credit MarketsHigh yield corporate bonds to short-term Treasuries (HYG:SHY) ratio is still behaving reasonably – the overlaid S&P 500 prices (black line) aren‘t accelerating to the downside. Thus far, everything keeps pointing to stocks behaving a bit more sensitively than throughout 2021 mostly, yet far from crashing or showing their readiness to. The real correction has to wait still – this is not the real deal.Gold, Silver and TreasuriesGold price action indeed proved not to be as bearish. Finally, we‘re seeing a clear refusal to move down even as Treasury yields continue to plunge. How long will this new dynamics stick, where would it take the yellow metal? I treat it as a valuable first swallow.The scissors between gold and silver keep widening, and the white metal again outperformed yesterday. That‘s exactly the dynamics of the new precious metals upleg that I‘m expecting.Both depicted miners to gold ratios show a clear pattern of post Nov resilience. GDX:GLD is not breaking to new lows, while $HUI:$GOLD rejected them. Bobbing around, searching for a local bottom before launching higher? That‘s my leading scenario.SummaryThe unfolding correction got a new twist with yesterday‘s downswing in stocks, and unless tech gets its act together, appears set to run further. Emerging markets fell harder than the Russell 2000 yesterday, which is another proof that the correction isn‘t yet over.Gold and silver price action remain encouraging, and the same can be said about oil and many other commodities. Once the stimulus bill is passed, the positive fundamentals that are going to turn even more so, given the Fed‘s accomodative policies. Will these work to stave off the rising Treasury yields as well? If so, then gold‘s fundamentals got a crucial boost, which would soon be seen in the technicals too. As I wrote yesterday, the metals didn‘t get a knock-out blow – the medium- and long-term outlook remains bright, and too many market players on the short side in the short run, means a high likelihood of a reversal – which is precisely what we saw.
Tech Holds the Key to S&P 500

Tech Holds the Key to S&P 500

Monica Kingsley Monica Kingsley 24.02.2021 15:38
The Powell inspired, coinciding (have your pick) S&P 500 stop run is almost history now, with the futures trading over 3,880 again as we speak. No surprise here, but since the long-term Treasuries plunge went on largely unabated, that‘s concerning.Even if not now as in right away, TLT and TLH have to power to trouble the stock bulls seriously. And the financials benefiting from the greater spread, won‘t save the day, as the key chart to watch now is technology and also healthcare. Healthcare especially because biotech didn‘t get its act together yesterday really, while semiconductors did better. With consumer discretionaries hurt, utilities and consumer staples can‘t be relied on in a rising rates environment, and communications can‘t save the day either. The sectoral outlook remains mixed, even as value continues greatly outperforming growth this month. The stock bulls simply need tech clearly stabilized and turning here so as to think about new S&P 500 highs again. Long-term Treasuries are starting to hold greater sway over the stock market fate now, too. The dollar‘s woes thus far continue playing out largely in the background.Did gold shake off the TLT shackles? Still early to say, but the clear, directionally opposite move gives the bulls benefit of the doubt thus far. Yesterday‘s gold session didn‘t convince me, so I am not trumpeting the end of yellow metal‘s downside yet. Still, cautious optimism remains – even in the short run, let alone for the medium- to long-term: there, the (bullish) picture is simply clearer.Let‘s remember my yesterday‘s words about trends and flashes in the pan:(…) Powell‘s testimony is about to bring volatility, but does it have the power to change underlying trends? Not really – while his latest high profile assessments brought about a downswing, stocks recovered in spite of the GameStop (contagion?) drama too. Should we see a replay of the above, new highs are coming – and they are, in both stocks and precious metals. We‘re in a commodities supercycle on top!Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookYesterday‘s intraday reversal reached just a little above Monday‘s closing prices, highlighting that more needs to be done for the index to regain upside momentum. The Powell testimony reversal was a good start, and stock bulls need to do more once this event gets in the rear view mirror later today. Given the premarket action reaching 3,890, the case is not lost.Credit MarketsHigh yield corporate bonds (HYG ETF) recovered, and crucially did better than stocks. The volume comparison is also a tad more positive. Should this credit market outperformance in the short run hold, then the S&P 500 is more likley to advance than not, too.High yield corporate bonds to short-term Treasuries (HYG:SHY) ratio is still behaving reasonably – the overlaid S&P 500 prices (black line) aren‘t accelerating to the downside. The cue to move higher in stocks is apparent.TechnologyIt‘s the tech (XLK ETF) again – its yesterday‘s reversal is not nearly enough for the S&P 500 to think about taking on new highs. Semiconductors (XSD ETF) subtly outperformed, but they don‘t give outrageously bullish signs either. The tech jury is still out, and this heavyweight sector remains vulnerable, with consequences to the S&P 500 if it doesn‘t keep on the muddle through recovery path at the very least.Treasuries and DollarNo spike in TLT volume shows there isn‘t real willingness to buy the dip the way it were in mid Feb – back then, I could call for a moderation in the decline‘s pace for at least a day, now I can‘t do that. This chart presents the greatest challenge for the markets – going well beyond stocks, precious metals and commodities. Dollar bulls are predictably on the run. Truly bearish chart targeting much lower lows, in line with the theme I‘ve been banging throughout 2020‘s latter half – the dollar has gotten on the defensive, and would remain there throughout 2021. The technical rebound is over, and not even higher yields can help the greenback much.Gold, Silver and PlatinumTrue, gold‘s yesterday‘s candle leaves much to be desired for the bulls, but once again, we‘re seeing a clear refusal to move down even as Treasury yields continue to plunge. It‘s still a valuable first swallow, and more has to follow. Gold isn‘t getting anywhere in today‘s premarket while silver, copper, oil and soybeans are all up mildly. Agrifoods reached a new 2021 high yesterday – commodities clearly like and anticipate the inflationary Fed speak message they get.One look at the precious metals group – gold the laggard, silver leading, and platinum even more so – check out on the caption when the latter decoupled – 2 weeks before silver did. The anatomy of the unfolding precious metals upleg goes on in this predictable fashion, where platinum has the power to keep running more along the lines of commodities such as copper. That means powerfully.Yesterday‘s watchout though are the miners, which dragged down both the $HUI:$GOLD and GDX:GLD ratios – not below their lows, but still. A great illustration of the yellow metal‘s woes, and low credibility of its yesterday‘s candle with a sizable lower knot.SummaryStock bulls are far out of the woods yet, and technology stabilization must kick in first. Little proof thus far it‘s there, and I view the rising rates as starting to bite the stock market too.Gold and silver also got under the Powell pressure yesterday, and haven‘t escaped the confines of Treasury yields pressure thus far. The markets are clearly wary of the testimony‘s part II still.
How Bond Yields Are Affecting Gold

How Bond Yields Are Affecting Gold

Finance Press Release Finance Press Release 24.02.2021 17:54
As U.S. Treasury yields rise, gold, which is seen as an inflation hedge, is hurting. Despite the obvious warning signs, investors remain bullish.After Monday’s (Feb. 22) supposedly “groundbreaking” rally, the situation in gold developed in tune with what I wrote yesterday . The rally stopped, and miners’ decline indicated that it was a counter-trend move.Figure 1Despite Monday’s (quite sharp for a daily move) upswing, the breakdown below the neck level of the broad head-and-shoulders remains intact. It wasn’t invalidated. In fact, based on Monday’s rally and yesterday’s (Feb. 23) decline, it was verified. One of the trading guidelines is to wait for the verification of the breakdown below the H&S pattern before entering a position.What about gold stocks ratio with other stocks?Figure 2It’s exactly the same thing. The breakdown below the rising long-term support line remains intact. The recent upswing was just a quick comeback to the broken line that didn’t take it above it. Conversely, the HUI to S&P 500 ratio declined once again.Consequently, bearish implications of the breakdowns remain up-to-date . Having said that, let’s consider the more fundamental side of things.Swimming Against the CurrentAfter trading lower for six consecutive days, gold managed to muster a three-day winning streak. However, with the waves chopping and the ripple gaining steam, every swim higher requires more energy and yield’s decelerating results.For weeks , I’ve been warning that a declining copper/U.S. 10-Year Treasury yield ratio signaled a further downside for gold. And with the ratio declining by 2.88% last week, gold suffered a 2.51% drawdown.Please see below:Figure 3Over the long-term, the ratio is a reliable predictor of the yellow metal’s future direction. And even though the weekly reading (3.04) hit its lowest level since May 2020, it still has plenty of room to move lower.Figure 4For context, I wrote previously:To explain the chart above, the red line depicts the price of gold over the last ~21 years, while the green line depicts the copper/U.S. 10-Year Treasury yield ratio. As you can see, the two have a tight relationship: when the copper/U.S. 10-Year Treasury yield ratio is rising (meaning that copper prices are rising at a faster pace than the U.S. 10-Year Treasury yield), it usually results in higher gold prices. Conversely, when the copper/U.S. 10-Year Treasury yield ratio is falling (meaning that the U.S. 10-Year Treasury yield is rising at a faster pace than copper prices), it usually results in lower gold prices.As the star of the ratio’s show, the U.S. 10-Year Treasury yield has risen by more than 47% year-to-date (YTD) and the benchmark has surged by more than 163% since its August trough.Please see below:Figure 5On Jan. 15 , I warned that the U.S. Federal Reserve (FED) had painted itself into a corner. With inflation running hot and Chairman Jerome Powell ignoring the obvious, I wrote that Powell’s own polices (and their impact on real and financial assets) actually eliminate his ability to determine when interest rates rise.As a result, the central bank had two options:If they let yields rise, the cost of borrowing rises, the cost of equity rises and the U.S. dollar is supported (all leading to shifts in the bond and stock markets and destroying the halcyon environment they worked so hard to create).To stop yields from rising, the U.S. Federal Reserve (FED) has to increase its asset purchases (and buy more bonds in the open market). However, the added liquidity should have the same net-effect because it increases inflation expectations (which I mentioned yesterday, is a precursor to higher interest rates). Opening door #2, Powell’s deny-and-suppress strategy is now playing out in real time. On Feb. 23 – testifying before the U.S. Senate Banking Committee – the FED Chairman told lawmakers that inflation isn’t an issue.“We’ve been living in a world for a quarter of a century where the pressures were disinflationary,” he said.... “The economy is a long way from our employment and inflation goals.”And whether he’s unaware or simply ill-informed, commodity prices are surging. Since the New Year, oil and lumber prices have risen by more than 24%, while corn and copper prices are up by more than 14%.Please see below:Figure 6In addition, relative to finished goods, the entire basket of inputs is sounding the alarm.Figure 7To explain the chart above, the blue line is an index of the price businesses receive for their finished goods. Similarly, the green line is an index of the price businesses pay for raw materials. As you can see, the cost of doing business is rising at a torrent pace.More importantly though, Powell’s assertion that inflation is an urban legend has been met with eye rolls from the bond market . To repeat what I wrote above: Powell’s own policies (and their impact on real and financial assets) actually eliminate his ability to determine when interest rates rise.Case in point: the U.S. 10-year to 2-year government bond spread is now at its highest level since January 2017.Please see below:Figure 8To explain the significance, the figure is calculated by subtracting the U.S. 2-Year Treasury yield from the U.S. 10-Year Treasury yield. When the green line is rising, it means that the U.S. 10-Year Treasury yield is increasing at a faster pace than the U.S. 2-Year Treasury yield. Conversely, when the green line is falling, it means that the U.S. 2-Year Treasury yield is increasing at a faster pace than the U.S. 10-Year Treasury yield.And why does all of this matter?Because the above visual is evidence that Powell has lost control of the bond market.At the front-end of the curve, Powell can control the 2-year yield by decreasing the FED’s overnight lending rate (which was cut to zero at the outset of the coronavirus crisis). However, far from being monolithic, the 5-, 10-, and 30-year yields have the ability to chart their own paths.And their current message to the Chairman? “We aren’t buying what you’re selling.” As such, the yield curve is likely to continue its steepening stampede.Circling back to gold, all of the above supports a continued decline of the copper/U.S. 10-Year Treasury yield ratio. With yields essentially released from captivity, even copper’s 8.02% weekly surge wasn’t enough to buck the trend.As a result, gold’s recent strength is likely a mirage. The yellow metal continues to bounce in fits and starts, thus, it’s only a matter of time before the downtrend continues. Furthermore, with the USD Index still sitting on the sidelines, a resurgent greenback would add even more concrete to gold’s wall of worry.And speaking of gold’s wall of worry, the sentiment surrounding it is far from being negative.Figure 9 - Source: Investing.comThe above chart shows the sentiment of Investing.com’s members. 64% of them are bullish on gold. As you can see above, there are also other popular markets listed: the S&P 500, Dow Jones, DAX, EUR/USD, GBP/USD, USD Index, and Crude oil. The sentiment for gold is the most bullish of all of them. Yes, the general stock market is climbing to new all-time highs every day now, and yet, people are even more bullish on gold than they are on stocks.When gold slides, the sentiment is likely to get more bearish and particularly high “bearish” readings – say, over 80% would likely indicate a good buying opportunity. Naturally, this is not the only factor that one should be paying attention to.The bottom line? As it stands today, being long the precious metals offers a poor risk-reward proposition. However, in time (perhaps over the next several months), the dynamic will reverse, and the precious metals market will shine once again.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Why Tech Is Giving Me Jeepers – Watch Out, Gold

Why Tech Is Giving Me Jeepers – Watch Out, Gold

Monica Kingsley Monica Kingsley 25.02.2021 16:08
Powell testimony is over, with markets rejoicing the promise of still accomodative Fed. Value keeps surging over growth, and regardless of yesterday‘s great performance, tech has a vulnerable feel to it – semiconductors lead higher, fine, but communications didn‘t confirm, and the healthcare-biotech dynamic isn‘t painting an outperformance picture either. Real estate isn‘t taking as strong a cue while consumer discretionaries recovery could also be stronger. Thus far though, no need to think about taking losses to optimize your gains elsewhere.Just as I wrote yesterday:(…) the financials benefiting from the greater spread, won‘t save the day, as the key chart to watch now is technology and also healthcare. … The sectoral outlook remains mixed, even as value continues greatly outperforming growth this month. … Long-term Treasuries are starting to hold greater sway over the stock market fate now, too. The dollar‘s woes thus far continue playing out largely in the background.Did gold shake off the TLT shackles? I‘m getting increasing doubts that only a strong move to the upside would dispel. As long-term Treasuries were staging an intraday reversal, gold took an intraday plunge before recovering. Not a good sign of internal intraday strength. Could it be a bullish flag? Still possible, but again, gold would have to rally from here. Doing so would result in a bullish divergence in its daily indicators.The precious metals sectoral dynamics remains positive though – silver and platinum are bullishly consolidating, and as I‘ll show you in today‘s final chart, the many mining indices are doing fine as well. The overly strong reflationary (I would call a spade a spade, and say inflationary) efforts are driving commodities higher in a supercycle just starting out.Not to get complacent, GameStop (GME) squeeze has made a comeback yesterday. Will it coincide with broader stock market woes on par with late Jan? Way too early to say – let‘s jump right into the charts for an objective momentary view instead.Here they are, all courtesy of www.stockcharts.com.S&P 500 and Its InternalsStrong S&P 500, everything looks fine on the surface – just as should be, befitting buy the dip mentality. Strong volume, no meaningful intraday setback, so far so good.The equal weight S&P 500 chart is looking better and better day by day. New highs, strong uptrend, broadening leadership. It‘s a mirror reflection of the big names‘ woes, and a testament to value outperforming growth. This bull run is far from making a top.Credit MarketsHigh yield corporate bonds (HYG ETF) had a good day yesterday, and so did the high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio. Yet it‘s the daily stock market outperformance that is noticeable here – optimistic sign of an all clear signal. I‘m not taking it totally at face value given tech performance – in a short few days, I can easily become more convinced though.TechnologyStrong daily tech (XLK ETF) upswing, yet only half the prior downside erased so far, and the volume could be higher compared to the preceding downswing. Semiconductors (XSD ETF) are leading again, fine. Yet it‘s the heavyweight names that matter the most to me right now – check out yesterday‘s observations:(…) The tech jury is still out, and this heavyweight sector remains vulnerable, with consequences to the S&P 500 if it doesn‘t keep on the muddle through recovery path at the very least.DollarLook how little the Powell tremors achieved – the dollar bulls are still on the run. Upswings are being sold as the greenback remains on the defensive, targeting much lower lows this year. The technical rebound is over, and not even higher yields can help the greenback much.Gold, Silver and MinersFor a second day in a row, gold‘s performance isn‘t convincing – the willingness to clearly and directionally decouple from rising yields, is being questioned. On the other hand, e.g. the 10-year UST yield is approaching the summer 2019 lows – it‘s at 1.38% now. I‘m looking for the rising rates to slow down and possibly even pull back a little from here over the coming weeks. Or would the market just like to slice through that resistance? Inflation isn‘t universally that strong right now yet I think – just look at the velocity of money.Everything silver related is doing fine, silver miners (SIL ETF) rebounded strongly, First Majestic Silver Corp (AG) and Hecla (HL) are in clearly bullish patterns. The white metal‘s every dip is being bought, the silver-to-gold ratio keeps improving, and even gold juniors (GDXJ) started once again outperforming the seniors (GDX). The bullish signals under the surface keep increadingly more coming to the fore, and the miners to gold ratio‘s ($HUI:$GOLD and GDX:GLD) is the final ingredient missing.SummaryStock bulls did great yesterday, but everything isn‘t fine yet in the tech realm. Due to its sheer weight in the S&P 500 index, pulling the cart a bit more enthusiastically is what the 500-strong index needs to take on new highs, because value stocks can‘t do it all.Gold and silver fared mostly well during the Powell testimony part II, yet gold didn‘t convince me really again. I look for the yellow metal bulls to get tested soon. The wildcard is reaction to the rising Treasury yields as they‘re in a key resistance zone of summer 2019 lows overall (10-year approaching it, and as regards 30-year, it‘s been overcome already). Plunging dollar and short-term gold-dollar correlation moving to positive figures, isn‘t a pleasant sight for coming days.
GBPUSD Holds Steady Above 1.41

GBPUSD Holds Steady Above 1.41

John Benjamin John Benjamin 26.02.2021 09:21
USD gives back gains as risk currencies riseEuro Rises To A Three-Month High The euro currency finally broke past the resistance area of 1.2177 – 1.2144. The breakout pushed the common currency to a three-month high on an intraday basis.The gains come as the US dollar failed to maintain its reversal on Wednesday.If the current momentum continues then we might get to see the Euro once again attempting to test the 6 January highs of 1.2349.However, ahead of these gains, a pullback to establish support near 1.2177 would be ideal.For the moment, the EURUSD is still not out of the woods unless we see a higher low forming above the resistance area.The British pound sterling is giving back the gains from Wednesday. The declines come as the cable rose to a new three and half year high earlier this week.The current declines come as investors head into the weekend with the drop likely coming as a result of profit-taking.The GBP currency has enjoyed a strong rally and got an additional boost as the UK is already preparing plans for re-opening its economy.For the moment the pullback is likely to be met with skepticism. A continuation below Wednesday’s low of 1.4080 could, however, see the currency pair making a short-term correction.The downside could be supported near the round number 1.4000 level.Crude Oil Holds Steady At A 13-Month High Oil prices are steady after rising to a new 13-month high. The gains come as the latest report shows a drop in US Crude oil output.The weaker dollar is also helping the commodity to maintain its hold. For the moment, prices are supported near the trendline.Still, even a close below the trendline could keep the upside bias intact.The support area near 60.87 will hold the prices from posting further declines.But a close below 60.87 could potentially open the way for oil prices to fall further. This could see the 57.35 level coming under scrutiny next.Gold Prices Slip As Treasury Yields Rise The precious metal continues to trade weak with price action extending declines for a third consecutive day.The declines come as Treasury yields are rising higher. Investors are betting that the global economy will re-open quicker than anticipated with appetite for further stimulus falling.Gold prices have been trading within the 1817 and 1764 levels since the middle of February.We expect this sideways range to continue.To the downside, gold prices will likely retest the previously formed support at 1764.22.
Dead Cat Bounce? Bears Aren‘t Taking Prisoners Now

Dead Cat Bounce? Bears Aren‘t Taking Prisoners Now

Monica Kingsley Monica Kingsley 26.02.2021 15:30
Right from the open, stocks have been losing altitude yesterday, and value couldn‘t indeed overpower the tech slide. Long-dated Treasuries had a climactic day of incomplete reversal on outrageous volume. Regardless of the evidence of asset price inflation, there is almost universal short-term vulnerability, and yesterday‘s broad based selling spanning precious metals and commodities, confirms that. The dollar has been missing from the party though, only having reversed prior losses to close little changed on the day.Are we seeing a trend change, or a time-limited yet powerful push lower? That depends upon the asset – in stocks, I look for the tech big names and healthcare to do worse than value (the VTV:QQQ ratio jumped up greatly through the week, portending the tech issues). Both silver and gold would be under pressure, and I look for the white metal to be mostly doing better overall. Oil and copper would take a breather while remaining in bull markets.That roughly matches my very short-term idea for where the markets would trade, echoing the expressed, tweeted need to watch oil and copper turn the corner still yesterday (copper didn‘t, not confirming any intraday turnaround notions as valid) – the below being written 7hrs before the U.S. open:(…) As yesterday's session moved to a close, the dollar erased opening losses, and went neutral. TLT's massive volume shows that yields are likely to stabilize here for now, and even decline a bit – HYG absolutely didn't convince me. The oil-copper tandem didn't kick in yesterday. Right now, we're in a weak constellation with both silver, oil, and stocks down. Copper's modest uptick doesn't cut it. So, the outlook for the European session on Fri is more bearish than bullish for stocks really, and gold rather sideways in the coming hours. Would we get a bounce during the U.S. session? It‘s possible to the point of likely. The damage done yesterday though looks to have more than a few brief sessions to run to repair. If you were to be hiding in the not too greatly performing S&P 500 sectors before the uptrend reasserts itself, you would be rather fine. The same for commodities and metals which were solidly trending higher before – oil, platinum, copper. E.g. look at yesterday‘s low platinum volume, or at the modest Freeport McMoRan decline – these charts are not broken while I see silver relegated to sideways trading (with a need to defend against the bears sternly) and silver miners taking their time.Just as I wrote yesterday, technology is the most precarious spot as long-term rates are turning and the dollar hasn‘t moved yet. Should it start coming to life (it did yesterday as the 10-year yield retreated from 1.60% back below 1.50%), overcoming the 91 – 91.5 resistance zone, that would help put into perspective the concerted selling we saw yesterday, especially if it continues in future days in similar fashion.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Its InternalsThe Force Index shows that the bears have the upper edge now, and volume coupled with price action, shows no accumulation yet. The chart is worrying for it could reach the Jan lows fast if the sellers get more determined.Credit MarketsHigh yield corporate bonds (HYG ETF) reveal the damage suffered, underlined by the strong volume. High yields in TLT and LQD are starting to have an effect on stocks.Another stressed bond market chart – long-term Treasuries show a budding reversal to the upside. Given yesterday‘s happenings in the 10-year bond auction with the subsequent retreat from high yields since, and the dollar moving over 90.50 as we speak, the signs are in place for the TLT retracing part of the steep slide as well.TechnologyThe momentum in tech (XLK ETF) is with the bears as the 50-day moving average got easily pierced yesterday again. It‘s still the heavyweights that matter (roughly similar to the healthcare situation here), and the sector remains very vulnerable to further downside.VolatilityThe volatility index rose, but is far below the two serious autumn 2020 and the late Jan 2021 corrections. It even retreated on the day, regardless of the heavy S&P 500 selling. Neither the options traders are taking yesterday‘s move as a true game changer, even though it was (for the bond markets). Would the anticipated stock indices rebound today bring it down really substantially, spilling over into commodities too, and show that this indeed wasn‘t a turning point? Gold, Silver and MinersGold didn‘t rise in spite of the falling long-term Treasuries for too long, as Tue and Wed hesitation (which I view with suspicion on both days) was resolved with a strong decline. This time, I am not calling for the yellow metal to rise the way I did a week ago. It‘s that the many precious metals market signals have become less constructive too. Silver is being taken down a notch or two, and the miners are already reflecting that in yesterday‘s close. Silver miners steeply declining, the bullish outperformance of gold juniors vs. gold seniors was lost yesterday. Given the red ink on Thursday already in copper, and its arrival into oil today, the bears are having the short-term (more than several sessions) upper hand. The miners to gold ratio ($HUI:$GOLD and GDX:GLD) as the final ingredient missing, can keep on waiting.SummaryStock bulls got a harsh reality check, and everything isn‘t very fine yet in the tech arena. By the shape of things thus far, today‘s rebound is more likely than not to turn out a dead cat bounce, and more short-term downside remains likely since Monday, regardless of all the value stocks performance.Gold and silver didn‘t escape the bloodbath either, and aren‘t out of the woods – neither gold, nor silver. Treasury yields are taking a good look around, having a chance to stabilize and retreat to a degree, but gold appears unfazed thus far, and the commodities‘ dynamics doesn‘t bode well. On the other hand, the dollar looks getting ready to move higher over the coming days, and thanks to the short-term correlation between the two turning positive, that would help the embattled yellow metal down the road.
Does Gold Have a Green Light to $1700?

Does Gold Have a Green Light to $1700?

Finance Press Release Finance Press Release 26.02.2021 16:21
Gold just doesn’t seem to care and is stubbornly ignoring its inverse relationship with the USDX. What accounts for gold’s current downward trend?It’s really hard to get a more bearish combination of factors for gold than what we just saw.A good way to start the discussion would be to reply to a question that I received about the USD Index recently.Hi, I have been reading your articles about the USD bottoming and moving in a similar pattern to 2018. I am seeing a possible head and shoulder pattern on Jan 18th (left shoulder), Feb 5 th (the head), and Feb 17th (right shoulder). For all its problems, the euro seems to be going higher and higher. Just wondering what your thoughts are.Figure 1Indeed, the head-and-shoulders pattern formed as you described it (I added a dotted neckline to the formation on the above chart), but since it wasn’t as significant as the breakout above the declining medium-term resistance line, the implications of the latter overwhelmed the bearish implications of the H&S formation. The USD index invalidated the breakdown below the neck level of the formation, so what was previously a sell signal, has now turned into a buy signal. Consequently, we have yet another reason to expect higher values of the USD Index in the following weeks and months.Figure 2Based on the obvious similarity to early 2018, the verification of the breakdown is likely the final step before a major rally in the USDX. This will likely translate into lower precious metals and mining stock prices, especially if the general stock market declines as well.Let’s use another question that I received to segue to the following part of the analysis.What happens to gold if the dollar crashes, instead of going up?That’s just what happened early during the day, yesterday (Feb. 25). Well, it was just intraday action rather than a big medium-term crash, however, it shows what could happen. Simply put, gold declined anyway. Why did it do so? Because it wanted to do so based on technical/emotional factors. Maybe that was just a temporary reversion in direction? No – when the USD Index came back up, gold declined even more, and we see the continuation of this pattern today as well.What if the USD Index declines much more? The last time when gold was trading at these levels in 2020, the USD Index was trading at about 100. The latter declined about 10 index points and gold is at the same level. So, gold has already proven its ability to ignore the USD’s declines. There will be a time, when gold soars in response to even mild declines in the USDX, but this is likely to happen only after gold declines significantly – and it “wants” to rally.Figure 3In previous analyses , I commented on the above chart in the following way:The move higher in gold was notable, but nothing game changing. The last time gold moved above the declining short-term resistance line, was when it actually topped. The invalidation of the breakdown marked the start of another very short-term decline. The small decline in today’s overnight trading might be the very beginning of this invalidation that leads to another slide.That’s exactly what happened. The failed breakout led to another slide and gold is currently right after its breakdown to new 2021 lows. The road to ~$1,700 gold is now fully open. That’s when gold would be likely to take some sort of breather and gather strength (well, weakness, but “gathering weakness” just doesn’t sound right) for another wave down – likely to $1,500 or so.Please note that gold didn’t close at new yearly lows yesterday. This observation is important in comparison with the fact that…Figure 4Mining stocks did.Miners closed at new 2021 lows yesterday, even though gold didn’t, which once again proves their weakness and once again confirms the bearish outlook.I previously wrote that gold’s ~$1,700 target is likely to be aligned with the GDX’s ~$31 target and this remains up-to-date. After that, I expect some kind of corrective upswing – perhaps to $33 or so, and then another – big – move lower. Please note that the corrective upswing would be yet another (and final) verification of the head and shoulders pattern, and its very bearish implications would take place only after this verification. That’s why I expect the decline to be particularly significant. You can read more about this broad H&S pattern over here.Silver just went through a triangle-vertex-based reversal , and it seems to have indeed triggered a reversal.Figure 5Silver moved a bit higher on Wednesday (Feb. 24) and in yesterday’s early trading, but it didn’t exceed the recent high. This means that my previous comments on the above chart remain up-to-date:The move lower is not yet super significant, but given the reversal point, it could just be the beginning. Remember the triangle-vertex-based reversal at the beginning of the year? Back then, practically nobody wanted to believe that silver and the precious metals market was topping at that time. It was the truth, though. Gold and mining stocks were never higher since that time and the same thing would have most likely happened to silver if it wasn’t the #silversqueeze popularity that gave it its most recent boost.Now, there’s also another triangle-vertex-based-reversal in a few days , and since these reversals tend to work on a near-to basis, silver might top any day now, even if it hasn’t topped earlier today.Based on what’s happening in the markets right now, it seems just as possible that silver and the rest of the precious metals market will form a temporary bottom within the next few days.Figure 6Moreover, please note that it’s the last delivery day for silver futures, and instead of a supply-crunch-based rally, we see a decline. Naturally, this is bearish.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stocks, Gold – Rebound or Dead Cat Bounce?

Stocks, Gold – Rebound or Dead Cat Bounce?

Monica Kingsley Monica Kingsley 01.03.2021 15:10
None of Friday‘s intraday attempts to recapture 3,850 stuck, and the last hour‘s selling pressure is an ill omen. Especially since it was accompanied by high yield corporate bondsh weakening. It‘s as if the markets only now noticed the surging long-end Treasury yields, declining steeply on Thursday as the 10y Treasury yield made it through 1.50% before retreating. And on Friday, stocks didn‘t trust the intraday reversal higher in 20+ year Treasuries either.Instead, the options traders took the put/call ratio to levels unseen since early Nov. The VIX however doesn‘t reflect the nervousness, having remained near Thursday‘s closing values. Its long lower knot looks encouraging, and the coming few days would decide the shape of this correction which I have not called shallow since Wed‘s suspicious tech upswing. Here we are, the tech has pulled the 500-strong index down, and remains perched in a precarious position. Could have rebounded, didn‘t – instead showing that its risk-on (high beta) segments such as semiconductors, are ready to do well regardless.That‘s the same about any high beta sector or stock such as financials – these tend to do well in rising rates environments. Regardless of any coming stabilization / retreat in long-term Treasury yields, it‘s my view that we‘re going to have to get used to rising spreads such as 2y over 10y as the long end still steepens. The markets and especially commodities aren‘t buying Fed‘s nonchalant attitude towards inflation. Stocks have felt the tremors, and will keep rising regardless, as it has been historically much higher rates that have caused serious issues (think 4% in 10y Treasuries).In such an environment, the defensives with low volatility and good earnings are getting left behind, as it‘s the top earners in growth, and very risk-on cyclicals that do best. They would be taking the baton from each other, as (micro)rotations mark the stock market bull health – and once tech big names join again, new highs would arrive. Then, the $1.9T stimulus has made it past the House, involves nice stimulus checks, and speculation about an upcoming infrastructure bill remains. Coupled with the avalanche of new Fed money, this is going into the real economy, not sitting on banks‘ balance sheets – and now, the banks will have more incentive to lend out. Margin debt isn‘t contracting, but global liquidity hasn‘t gone pretty much anywhere in February. Coupled with the short-term dollar moves, this is hurting emerging markets more than the U.S. - and based on the global liquidity metrics alone, the S&P 500 is oversold right now – that‘s without the stimulus package. It‘s my view that we‘re experiencing a correction whose shape is soon to be decided, and not a reversal of fortunes.Just like I wrote at the onset of Friday:(…) Would we get a bounce during the U.S. session? It‘s possible to the point of likely. The damage done yesterday though looks to have more than a few brief sessions to run to repair. True, some stocks such as Tesla are at a concerning crossroads, and in general illustrate the vulnerability of non-top tech earners within the industry. Entering Mon‘s regular session, the signs are mixed as there hasn‘t been a clear reversal any way I look at it. Still, this remains one of the dips to be bought in my view – and the signs of it turning around, would be marked by strengthening commodities, and for all these are worth, copper, silver and oil especially.As for gold, it should recover given the retreating long-term yields, but Fri didn‘t bring any signs of strength in the precious metals sector, to put it mildly. Look for TLT for directions, even as real rates, the true determinant, remain little changed and at -1%, which means very favorable fundamentals for the yellow metal. And remember that when the rate of inflation accelerates, rising rates start to bite the yellow metal less.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Its InternalsFriday‘s session doesn‘t have the many hallmarks of a reversal. Slightly higher volume, yet none of the intraday upswings held. The Force index reveals that the bears just paused for a day, that there wasn‘t a true reversal yet. The accumulation is a very weak one thus far, and the sellers can easily show more determination still.Credit MarketsHigh yield corporate bonds (HYG ETF) are plain and simple worrying here. The decent intraday upswing evaporated as the closing bell approached. A weak session not indicative of a turnaround.The high yield corporate bonds to short-dated Treasuries (HYG:SHY) performance was weaker than the stock market performance, which isn‘t a pleasant development. Should the bond markets keep trading with a more pessimistic bias than stocks, it could become quite fast concerning. As said already, the shape of the correction is being decided these days.Stocks, Smallcaps and Emerging MarketsAfter having moved hand in hand, emerging markets (EEM ETF) have weakened considerably more over the prior week than both the S&P 500 and the Russell 2000 (IWM ETF). EEM is almost at its late Jan lows – given Fri‘s spike, watching the dollar is key, and not just here.TechnologyTechnology (XLK ETF) didn‘t reverse with clarity on Friday, regardless of positive semiconductors (XSD ETF) performance. At least the volume comparison here is positive, and indicates accumulation. Just as I was highlighting the danger for S&P 500 and gold early Thursday, it‘s the tech sector that holds the key to the 500-strong index stabilization.Gold and SilverReal rates are deeply negative, long-dated Treasuries indeed turned higher on Friday, yet gold plunged right to its strong volume profile support zone before recovering a little. Its very short-term performance is disappointing, It was already its Tue performance that I called unconvincing – let alone Wed‘s one. I maintain that it‘s long-dated Treasury yields and the dollar that are holding the greatest sway. Rates should retreat a little from here, and the gold-dollar correlation is only slightly positive now, which translates into a weak positive effect on gold prices.But it‘s silver that I am looking to for earliest signs of reversal – the white metal and its miners have the task clear cut. Weeks ago, I‘ve been noting the low $26 values as sufficient to retrace a reasonable part of prior advance, and we‘ve made it there only this late. Thu and Fri‘s weakness has much to do with the commodities complex, where I wanted still on Thu to see copper reversing intraday (to call it a risk-on reversal), which it didn‘t – and silver suffered the consequences as well. Likewise now, I‘m looking to the red metal, and will explain in today‘s final chart why.Precious Metals RatiosThere is no better illustration of gold‘s weakness than in both miners to gold ratios that are bobbing around their local lows, rebounding soundly, and then breaking them more or less convincingly again. The gold sector doesn‘t yet appear ready to run.Let‘s get the big picture through the copper to oil ratio. Its current 8 months long consolidation has been punctured in the middle with oil turning higher, outperforming the red metal – and that brought the yellow one under pressure increasingly more. Yet is the uptick in buying interest in gold a sign of upcoming stabilization and higher prices in gold that Fri‘s beaten down values indicate? Notably, the copper to oil ratio didn‘t break to new lows – and remains as valuable tool to watch as real, nominal interest rates, and various derivatives such as copper to Treasury yields or this very ratio.SummaryStock bulls are almost inviting selling pressure today with the weak finish to Fri‘s session. While the sectoral comparisons aren‘t disastrous, the credit markets indicate stress ahead just as much as emerging markets do. Still, this isn‘t the end of the bull run, very far from it – new highs are closer than quite a few might think.Gold and silver took an even greater beating on Fri than the day before. Naturally, silver is much better positioned to recapture the higher $27 levels than gold is regarding the $1,800 one. With the long-dated Treasuries stabilization indeed having resulted in a short-term dollar upswing, the greenback chart (and its effects upon the metals) is becoming key to watch these days. Restating the obvious, gold is far from out of the woods, and lacking positive signs of buying power emerging.
What Correction in Stocks? And Gold?

What Correction in Stocks? And Gold?

Monica Kingsley Monica Kingsley 02.03.2021 16:30
Stocks thoroughly rebounded yesterday, and corporate credit markets did even better. These are optimistic signs as the shape of the correction has been decided – again, as shallow, less than 5% one. Long-termTreasuries are no longer in a free fall, volalility has retreated back to the low 20s, and the put/call ratio swung back towards the bottom of its recent range.Technology has rebounded as well, and the microrotations in the stock market keep being the haollmark of stock bull‘s health, and the risk-on (high beta) sectors and segments such as financials, semiconductors, or capex (capital expenditure such as construction and engineering) - and airlines are catching breath too.Such was the sectoral themes likely to do well that I mentioned yesterday:(…) That‘s the same about any high beta sector or stock such as financials – these tend to do well in rising rates environments. Regardless of any coming stabilization / retreat in long-term Treasury yields, it‘s my view that we‘re going to have to get used to rising spreads such as 2y over 10y as the long end still steepens. The markets and especially commodities aren‘t buying Fed‘s nonchalant attitude towards inflation. Stocks have felt the tremors, and will keep rising regardless, as it has been historically much higher rates that have caused serious issues (think 4% in 10y Treasuries).In such an environment, the defensives with low volatility and good earnings are getting left behind, as it‘s the top earners in growth, and very risk-on cyclicals that do best. They would be taking the baton from each other, as (micro)rotations mark the stock market bull health – and once tech big names join again, new highs would arrive. Then, the $1.9T stimulus has made it past the House, involves nice stimulus checks, and speculation about an upcoming infrastructure bill remains. Coupled with the avalanche of new Fed money, this is going into the real economy, not sitting on banks‘ balance sheets – and now, the banks will have more incentive to lend out. Margin debt isn‘t contracting, but global liquidity hasn‘t gone pretty much anywhere in February. Coupled with the short-term dollar moves, this is hurting emerging markets more than the U.S. - and based on the global liquidity metrics alone, the S&P 500 is oversold right now – that‘s without the stimulus package. It‘s my view that we‘re experiencing ... not a reversal of fortunes. … this remains one of the dips to be bought in my view.All right, we‘re seeing a rebound in progress, on the way to new highs – but what about the embattled gold? Its seasonality component was „slated“ to help the bulls in Feb, and the king of metals instead succumbed to nominal yields pressure. Would the Mar historically negative slant be likewise invalidated – and again precisely for the reason called long-dated Treasuries?Regardless of the immensely positive fundamentals behind the precious metals (including real rates, the true determinant, little changed and at -1%), it has thus far been commodities and Bitcoin who rose and held on to their gains since the 2H 2020. Please remember the big picture chart about commodities and precious metals taking turns in rising that I presented on Feb 17. The bullish case for gold (let alone silver) isn‘t lost – merely thoroughly questioned these weeks of sordid $HUI:$GOLD underperformance.Are we seeing signs of decreasing financial asset price inflation – or an accelerating one? It‘s the inflation and inflation expectations that are weighed against the nominal rates trajectory. As the rate of inflation accelerates, rising nominal rates would bite the yellow metal less – and there is no denying that the risk of inflation is running as high as can be.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookSo far, so (very) good in stocks – volume is lagging but the Force index still flipped positive, indication that at worst, we‘re likely to muddle through in a sideways to higher trading pattern over the nearest days.Credit MarketsAfter a worrying move on Friday, high yield corporate bonds (HYG ETF) are once again assuming leadership, and I see this chart as the one with more bullish implications for the coming days than the S&P 500 alone. That‘s the dynamic I am looking for in a good run.Both leading credit market ratios – high yield corporate bonds to short-dated Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated ones (LQD:IEI) – are looking to get back in closer sync than has been the case in 2021 thus far. It would take time, but would prove that the stock market can still keep on rising when faced with even higher nominal rates than we saw thus far.TechnologyTechnology (XLK ETF) clearly reversed, and while the volume isn‘t convincing on a standalone basis, coupled with semiconductors (XSD ETF) and other value stocks performance, it‘s encouraging enough to treat any significant correction calls heard elsewhere, as again plain wrong and premature, for the full picture view didn‘t support such calls in the first place, and you know what is being said about every broken clock being right twice a day…Having said so, let‘s turn to precious metals, which offered more than a few bullish signs way earlier in Feb. Based on the evolving charts and gold‘s failure to gain credible traction, I was at least able to time most of the downside before it happened – such as last week. Still, there has been little bullish that could be said about the PMs complex, as encouraging signs emerged only to be gone shortly. So, where do we stand at the moment?Gold and Copper to Oil RatioRising TLT rates are turning a corner, but the yellow metal is staying at the strong volume profile support zone that marks the April-May consolidation zone. Earlier today, gold cut all the way to its lower end (that‘s low $1,700s) before rebounding. The danger zone hasn‘t been cleared in the least yet, but the signs of silver reversing once again from a double test of $26, is as encouraging as copper rising again, and oil not tanking.The copper to oil ratio whose long-term perspective I featured yesterday, is making a clear turn on the daily chart. Coupled with the TLT stabilization, and the dollar trading with relatively little correlation to gold these days, the table is set for a short-term rebound in the metals. How far would these take the sector? The numerous bears would have you believe that not too far & that another downleg to ridiculously low values is at hand, but I am not convinced and prefer reading the tape instead. Yes, even in the mostly bearish PMs chart setups where nothing bullish has stuck for longer than several day over the past weeks. I repeat that the $1.9T stimulus bill (and infrastructure bill, even slavery reparations if we get that far really) hasn‘t been truly factored in by the markets – and yesterday‘s S&P 500 action proves that.Silver and MinersSilver keeps consolidating in a bullish pattern well above $26 still (not that it would be the line in the sand though), and when the silver miners (SIL ETF) start leading again, a new silver upleg would be born. For now, these are still mirroring the weak gold miners‘ performance, which is free from bullish signals for the yellow metal still. The gold sector isn‘t yet ready to run, plain and simple.SummaryStock bulls are on a solid recovery path, and new all time highs are again closer in sight. Crucially, the corporate credit markets and S&P 500 sectoral performance confirm, and once emerging markets join (the dollar weakens again), more fuel to the rally would be available.Gold remains precariously perched, yet isn‘t breaking down – the bull run off last spring‘s consolidation remains intact – regardless of the short-term gloom and doom. I see the metals as likely to recover next as the Treasury yields stop biting. Restating the obvious, gold is far from out of the woods.
Weak Jobs Data, Stocks and Gold

Weak Jobs Data, Stocks and Gold

Monica Kingsley Monica Kingsley 03.03.2021 16:19
Stocks gave up some of Monday‘s strong gains, but I find it little concerning in the sub-3,900 pre-breakout meandering. It‘s about time, and a play on the tech sector to participate meaningfully in the coming rally (or at least not to stand in the way again). Talking obstacles, what about today‘s non-farm employment change, before the really key Fri‘s release? A bad number makes it less likely for market participants to bet on the Fed raising rates soon – but frankly, I don‘t understand where this hawkish sentiment is coming from, now when we‘re not at even talking taper. Raising rates in the current shape of the recovery, where we have commodities and financial asset prices rising, and that‘s about it? No, the current economic recovery isn‘t strong enough to entertain that thought. The need for stimulus asap is obvious. Thus, prior trends in the commodities and currency arenas are likely to continue, and not even the current long-term Treasuries stabilization can prevent the greenback from falling more than temporarily.Just as I wrote yesterday about stocks:(…) All right, we‘re seeing a rebound in progress, on the way to new highs.Gold scored modest gains yesterday, but these aren‘t enough to flip its short-term outlook bullish. Yes, it‘s sitting within the strong support zone (with another one over $40 further lower), and it isn‘t breaking down. It could actually stage a rebound precisely off this support zone next, as sharp rallies are born during the opposite sentiment clearly prevailing, which is what we have in gold now.Silver remains relatively solid, and commodities aren‘t breaking down. We have a month historically strong for copper, and I talked both yesterday and Monday what that means for the copper to oil ratio – and its relationship to gold, given the very accomodative monetary policy without real end in sight. This is then checked against nominal rates matching up against inflation, inflation expectations.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsYesterday‘s downswing didn‘t attract much volume, making it a short-term hesitation That‘s the meandering, the search for direction just below the 3,900 mark that I had been tweeting about yesterday. If you look at the equal weighted S&P 500 chart (RSP ETF), it‘s clear that new highs are still a little off given the sectoral balance of power.The market breadth indicators reflect the daily indecisiveness fittingly. While not worrying in themselves, they‘re showing that Monday‘s session wasn‘t the beginning of an endless bullish streak. Rather, it‘s just a part of the bullish turn that would over time prevail more convincingly.Credit MarketsThe key leading credit market ratio – high yield corporate bonds to short-dated Treasuries (HYG:SHY) – is slightly leaning bullish here. And that‘s good given the talk of bubble bursting, significant correction just ahead (started) – that‘s what I am looking for in uncertain times. Ideally though, such a bond market leadership should last a bit longer than one day, to lend it more credibility.TechnologyTechnology (XLK ETF) once again reversed to the downside, or so the chart says. While high, the volume isn‘t trustworthy – it doesn‘t stand comparison to the visually similar early Sep pattern, which was followed by a break to new lows in the latter half of the month. Then, as the overlaid S&P 500 (black line) shows, high beta pockets and value sectors have assumed leadership, powering the S&P 500 advance.DollarThe USD index is keeping close to the 91 mark, and yesterday‘s candle reveals that the potential upside isn‘t probably all that great. This is consistent with the dollar being in a bear market, sliding to new lows in 2021 with likelihood bordering on certainty. Plain and simple, it‘ll be on the defensive regardless of where long-term rates go.Gold and SilverGold had a good chance to rebound higher throughout this week, but didn‘t – given its Monday‘s performance, I had some reservations even as the support zone held, and upswing could easily follow – especially given the positive copper to oil ratio‘s move, or TLT not putting fresh pressure. But that‘s not happening in today‘s pre-market session, as the support‘s lower border is being tested again.Silver keeps holding the $26 level, and still trades at the 50-day moving average. While it‘s lagging behind both platinum and copper, its chart is (unlike gold‘s) bullish. Remember, the most bullish thing prices can do, is to rise. Not to rebound and fizzle out, only to rebound and fizzle out again, the way we see in gold as it keeps offering both bearish and bullish signs.OilOil keeps trading in a bullish fashion, and the 3-day long correction hasn‘t broken even Feb local lows yet. While we‘re for increased volatility in here, the uptrend remains strong, and volume currently doesn‘t support a deep correction theory. Just look how little have the retreating daily indicators achieved when it comes to the underlying price move? That‘s a reflection of a strong uptrend, which would be however best advised to resume sooner rather than later so as not to lose the technical advantage.SummaryStock bulls are on a recovery path, and new all time highs are basically a question of when the tech would step up to the plate again. Despite today‘s premarket weakness reaching well below the 3,870 level, the S&P 500 internals and credit markets performance (including foreign bonds) doesn‘t indicate that much downside potential currently. This correction‘s shape is largely in, and I mean the price downside – patience though will be needed before seeing new highs.Gold remains stuck in its support zone, unable to rally, not breaking down. The copper advantage of yesterday is lost for today, but seeing it and silver recover would be the most likely outcome once the immediate threat of rising Treasury yields retreats more noticeably. Gold is far from out of the woods, and flirting with the support level without a convincing rebound, is dangerous to the bulls.
EURAUD capped by falling channel

EURAUD capped by falling channel

John Benjamin John Benjamin 04.03.2021 11:00
Intraday Market Analysis – Channel TradeDespite Australia’s soft retail sales number, the euro remains under technical pressure. The pair has been sliding within a bearish channel since last October and the eurozone’s retail reading today is unlikely to change the course.As the pair rebounds after the RSI dipped into the oversold territory, the euro may encounter stiff selling pressure in the 1.5530-1.5600 supply zone.On the downside, 1.5250 is the next target should the sell-off accelerate.USDCHF reaches 5-month highToday’s jobless claims may stir up the volatility in the US dollar. A low number would heighten the reflation fear as the labour market may have recovered faster than expected.The pair is hovering right under last October’s high around 0.9200. The recent drop of the RSI from the overbought area would suggest some leeway to the upside.A bullish breakout could trigger an extended rally as shorts cover their positions. On the downside, 0.9130 is the intraday support to monitor.XAGUSD tests 12-month long trendlinePrecious metals have taken a toll as the greenback made a comeback. Silver is trying to hold on to its near-year-long rising trendline, and a successful bounce could resume the uptrend.The double dip on the line (25.80) is a serious test of the buyers’ commitment. However, an RSI divergence showing a loss in the bearish momentum may give the buy-side an edge.A rebound will need to lift offers around 27.00 to gain traction. Failing that, the price could start to reverse.
Are S&P 500 and Precious Metals Bears Just Getting Started?

Are S&P 500 and Precious Metals Bears Just Getting Started?

Monica Kingsley Monica Kingsley 04.03.2021 16:19
Scary selling yesterday? See how little the downswing has achieved technically, check out the other characteristics, and you‘ll probably reach the same conclusion I did. It‘s still about the tech getting its act together while much of the rest of the market is doing quite fine.The credit market confirm, as is obvious from the HYG:SHY ratio chart I‘m showing you. True, long-term Treasuries are under pressure, but I wrote on Monday that not even considerably higher rates would break the bulls‘ back. The dollar isn‘t getting far, and given tomorrow‘s non-farm payrolls, which are expected to be rather bad… Check instead another chart I am featuring today, and that‘s volatility – this correction appears in its latter stages as the crash callers „now, this quarter, whenever because it‘s allegedly overdue“, will be again surprised and backtracking in tone once the market gets what it wants: more liquidity.That was stocks, what about gold? No shortage of gloomy charts there, accompanied by various calls for a local bottom. The most bullish one (me included, talks about a possible bottom being made here, with the $1,700 to $1,690 zone able to stop the downside. I am though also raising the lower border of the Apr-May 2020 consolidation, which is around $1,670, as an even stronger support (over $40 lower than the above one) than the volume profile based one we‘re still at currently – and based on different tools, I am far from alone. The doomsayers‘ scary clickbaitish targets of $1,500 or $1,350 are in the minority, and about as helpful as calls for $100 silver before years‘ end. As I always say, let‘s be realistic, honest, and act with real integrity. People deserve better than to be played around through fear or greed.Silver remains in a solid uptrend, and so does platinum. Regardless of today‘s premarket downswing taking copper over 4% down as we speak, commodities are happily running higher in the face of „no inflation here, move along“ calls. How far is the Fed announcing yield curve control, or at least a twist program? Markets crave more intervention, and those calling for rate hikes to materialize soon, are landing with egg on their faces – mark my words, the Fed is going to stay accommodative longer than generally anticipated – have we learned nothing from the Yellen Fed?Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsYesterday‘s downswing didn‘t attract outstanding volume, and didn‘t overcome Fri‘s one. Regardless of the visit to the lower border of recent trading range, the bears would have to become more active to flip this chart bearish really.Credit MarketsThe key leading credit market ratio – high yield corporate bonds to short-dated Treasuries (HYG:SHY) – hasn‘t really broken down yesterday. Just a consolidation that has an inverse head and shoulders shape on top. Of course, until the neckline is broken, there are no bullish implications, but I am looking for higher HYG:SHY values regardless.VolatilityYesterday‘s volatility – and put/call readings too – are very tame, and that detracts from the credibility of a significant downswing starting here considerably.TechnologyTechnology (XLK ETF) compared to the value stocks (VTV ETF) shows clearly once again the performance difference – tech still taking time and basing, while value sectors and high-beta segments keep doing largely fine. This view isn‘t one that‘s associated with the onset of real corrections – but with waiting for the tech to start behaving for new highs to be attainable once again.Gold and SilverGold still has a good chance to rebound higher, even though it missed yesterday‘s opportunity that would have resulted in a nice hammer candlestick. Nevermind, we have to live with what we have – and the support is still unbroken, not ruling out an upswing in the least. Yes, regardless of the deeply negative Force index which really wasted each prior opportunity to turn positive this winter. The metals would do well to get used to living with higher nominal rates really, when the real rates are little changed. Silver keeps doing much better, which is little surprising given the economic recovery, leading indicators not weakening, manufacturing activity doing fine – it‘s a versatile metal, both industrial and monetary after all. Compare how little has its Force index declined vs. gold – this is rather a bullish chart, unlike gold still searching for direction (i.e. without an established uptrend).CopperLet‘s compare the red metal (perched high, digesting steep Feb gains) to platinum and silver. I‘m featuring copper as the key determinant for precious metals, also given the positive Mar seasonality. The above chart fittingly illustrates the bull market‘s strength – and the waiting on gold to join.SummaryStock bulls have to once again take the trip to the 3,900 mark, and when that happens, depends on the tech the most. The S&P 500 internals and credit market performance remains sound, and new highs are a question of time (and stimulus).Gold remains stuck in its support zone, unable to rally, not breaking down. While copper is retreating today, the technical odds favor a rebound off this support. Once that happens, it would be though still too early to call for the new gold bull upleg to resume – much more would need to happen, such as the miners doing really well, and so on. But we‘ll get there.
Gold & the USDX: Correlations

Gold Approaches $1,700 on Rising Economic Confidence

Finance Press Release Finance Press Release 04.03.2021 16:39
Gold remains in a bearish trend as economic confidence has improved, however, inflation can change all that around.The chart presenting gold prices in 2021 doesn’t look too encouraging. The yellow metal continued its bearish trend at the turn of February and March. So, as one can see, the price of gold has declined from $1,943 on January 4 to $1,711 on Wednesday (Mar. 3) This means a drop of 232 bucks, or 12 percent since the beginning of the year.What is happening in the gold market? I would like to blame the jittering bond market and increasing bond yields , but the uncomfortable truth is that the yellow metal has slid in the past few days despite the downward correction in the bond yields. If you don’t believe, take a look at the chart below. This is an important bearish signal, given how closely gold is usually linked to the real interest rates .So, it seems that there are more factors at work than just the bond yields. One of them is the recent modest strengthening of the greenback , probably amid rising U.S. interest rates and ECB officials’ remarks about possible expansion of the ECB’s accommodative stance if the selloff in the bond market continues.Another piece of bearish news for the gold market is that President Joe Biden struck a last-minute stimulus deal with Democratic Senators that narrows the income eligibility for the next round of $1,400 stimulus checks. It means that the upcoming fiscal stimulus will be lower than previously expected, negatively affecting inflation expectations and, thus, the demand for gold as an inflation hedge .Lastly, I have to mention the high level of confidence in the economy. Indeed, the recent rise in the bond yields may just be a sign of more optimism about the economic recovery from the pandemic recession . Hence, despite all the economic problems the U.S. will have to face – mainly the huge indebtedness or actually the debt-trap – investors have decided to not pay too much attention to the elephants in the room. As the chart below shows, the credit spread (ICE BofA US High Yield Index Option-Adjusted Spread), which is a useful measure of economic confidence, has returned to the pre-pandemic level, indicating a strong belief in the state of the economy. This is, of course, bad for safe-haven assets such as gold.Implications for GoldWhat does this all mean for gold prices? Well, from the long-term perspective, the recent slide to almost $1,700 could just be noise in the marketplace. But gold’s disappointing performance is really disturbing given the seemingly perfect environment for the precious metals . After all, we live in a world of negative interest rates , a weak U.S. dollar, rising fiscal deficits and public debt , soaring money supply and unprecedented dovish monetary and fiscal policies . So, the bearish trend may be more lasting, as market sentiment is still negative. Investors usually turn to gold, a great portfolio diversifier and a safe haven , when other investment are falling. But the worst is already behind us, the economy has already bottomed out, so confidence in the economy is now high, and equities are rising.Having said that, the recent jump in the bond yields also means rising inflation expectations . Indeed, as the chart below shows, they have already surpassed the levels seen before the outbreak of the pandemic .Actually, the 5-year breakeven inflation rate has reached 2.45 percent, the highest level since the midst of the Great Recession . So, in some part, investors are selling bonds, as they are preparing for an reflation environment marked by higher inflation . At some point, if the fear of inflation strengthens, then economic confidence will waver, and investors could again turn toward gold.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Silver, don’t be fooled

Silver, don’t be fooled

Korbinian Koller Korbinian Koller 05.03.2021 12:25
Here are the facts why there is a higher likelihood for Silver prices to advance:A lot of news items attract buyers. Silver is in the limelight.Physical Silver prices trade up to 30% over the spot price.We had a bullish twelve-month period for Silver prices. Consequently, describing the first leg of a trend. With a high probability of two more legs to be following.We see money inflow into the precious metal sector as a whole. These are safe haven seeking investments due to the threat of hyperinflation caused by unprecedented fiscal and monetary stimulus.Possible highest ever physical delivery months within this year for Silver futures traded on the COMEX exchange.Daily Chart of Silver in US-Dollar, Good support:Silver in US Dollar, daily chart as of March 5th, 2021.Looking at this sideways range, we find ample support of prices within the range right now as a healthy spot to acquire physical Silver. We pointed out that last time around prices touched the simple 200 moving average, Silver prices exploded. We expect a similar scenario now. There is a likelihood that prices might already take off in the upcoming week here from the secondary volume analysis support point (POC=point of control). These stacked up edges of support provide for tighter stops and great risk-reward ratios.  Gold in US-Dollar, Monthly Chart, Stacking Odds:Gold in US Dollar, monthly chart as of March 5th, 2021.A great way timing your Silver entry is also looking at inter-market relationships. Once Gold, the sector leader, will find its support, Silver will follow. This technique might help distinguish if Silver will be bouncing from primary or secondary POC in the upcoming week (as indicated in the first chart of this article).The monthly chart above shows that Gold has entered a prime buy zone between US$1,650 and US$1,700. Both the Fibonacci retracement and the fractal volume analysis demand zone substantiate that fact.Gold in US-Dollar, Monthly Chart, Silver, don’t be fooled:Gold in US Dollar, monthly chart as of March 5th, 2021.Another view at Gold reveals that it bounced strongly last time it touched its simple 20 months moving average. It is a confirmation that we might be able to temporarily bottom here and support a possible Silver up move. In such a case Silver might be temporarily topping by mid-August to mid-September this year. At that time, Silver will be ripe for partial profit taking to reduce long-term risk by using our quad exit strategy.Our thinking is all programmed for a hundred years to benchmark against dollars. I am sure you have noticed your groceries to be more expensive now or better said, everything being more expensive. Maybe thinking the dollar is worth less is a more somber way of perceiving the change. Benchmarking against Silver or Gold or even Bitcoin might be a more accurate measure of value perception. Average monthly wages in Venezuela representing a value of US$6 are an excellent example of what hyperinflation can look like.If you are holding your wealth in US-Dollars only, you are at extreme risk. We are not too specific on Silver or Gold or mining companies or Bitcoin or land, but we are risk averse. We urge you to look critically at fiat currency holdings. The risk/reward-ratio of Silver at this time is excellent. Usable as a hedge against this risk!Silver, don’t be fooled:When you hear from many various sources that Silver “is the thing to buy,” it feels like “too good to be true.” Sound fundamental analysis shows that holding physical Silver is, in fact, a prudent course of action. Silver prices are manipulated. They do not reflect true value. Physical prices trading much higher than the spot price. Once truth can’t be suppressed anymore, we see a fair likelihood for Silver prices to advance rapidly. Our conservative targets for the Silver market point at annual highs near Labor Day. At that point we aim to take partial profits.Feel free to join us in our free Telegram channel for daily real time data and a great community.If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.By Korbinian Koller|March 5th, 2021|Tags: Gold, low risk, Silver, silver bull, Silver Chartbook, technical analysis, time frame, trading principles|0 CommentsAbout the Author: Korbinian KollerOutstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Great ADP Figures But Things Can Still Turn Nasty

Great ADP Figures But Things Can Still Turn Nasty

Monica Kingsley Monica Kingsley 05.03.2021 15:48
Powell gave a wait-and-see answer to my yesterday‘s rhetorical question about the bears just starting out, indeed. The S&P 500 plunged, breaking far outside the Bollinger Bands confines, illustrating the extraordinary nature of the move. Rebound would be perfectly natural here (and we‘re getting one as we speak) – but will it be more than a dead cat bounce?Stocks partially recovered from last Friday‘s intraday plunge, and good news about the stimulus clearing House followed after the market close – stock bulls took the opportunity, and Monday‘s session gave signs that the worst is over. Tuesday‘s move partially negated that, but even after Wednesday, the short-term case was undecided (even as tech kept acting relatively weak).Yesterday‘s session though gives the short-term advantage to the bears, and that‘s because of the weak performance I see in other stock market indices and bonds. The Russell 2000 got under pressure, negating what by yesterday still looked like a shallow correction there. So did the emerging markets and their bonds. More downside can materialize either suddenly or slowly over the coming say 1-2 weeks. It depends on the tech and its heavyweight names, where these find support. Corporate credit markets aren‘t weakening as dramatically though – as you‘ll see illustrated later on, both high yield corporate bonds and the HYG:SHY ratio are holding up much better than stocks. While that‘s bullish, the S&P 500 apparently hasn‘t yet learned to live with higher rates – let alone considerably higher ones.The key element playing the markets now, is the Fed‘s approach to inflation, rising long-term Treasuries in the face of central bank inaction and inflation denialism, which translates into the dollar taking the turn higher courtesy of the stresses induced across many asset classes. I asked yesterday:(...) How far is the Fed announcing yield curve control, or at least a twist program? Markets crave more intervention, and those calling for rate hikes to materialize soon, are landing with egg on their faces – mark my words, the Fed is going to stay accommodative longer than generally anticipated – have we learned nothing from the Yellen Fed?The ostrich pose on inflation isn‘t helping – it‘s sending Treasuries down, turning much of the rest red. Does the Fed want to see the market forcing some kind of answer / action the way it did in Dec 2018? The Fed is risking such a development now, this time through inaction, and not thanks to monetary tightening as back then.While some argue that inflation just brings a Fed rate hike closer, I really doubt that this option is treated seriously inside the Eccles building. It would be the right choice if you were serious about fighting inflation before it takes root – but in whose interest is that? Just look at the transitory statements, Fed official beliefs that to see it hit even 3% would be extraordinary, and you understand that their models understating it considerably in the first place, aren‘t even sending them the correct, magnitudinal signals.I see it as more probable that they would just try to suppress its symptoms, and succumb to the markets even more vocally demanding some action, by going the twist route. In effect, they would be then fighting the war on two fronts, as I explained in the middle of Feb already.Food inflation running hot, commodities on fire, and gold is going nowhere still. The bears are vocal, and I‘ve laid down a realistic game plan yesterday, discussing the gold support levels and perspectives. If you‘re disappointed that gold isn‘t doing as well as commodities, consider the mid-Feb described cascading inflation process as it devours more and more of the financial landscape – we still have a weak job market that doesn‘t contribute to the inflationary pressures, relegating the true, undeniable inflation to the 2022-3 timeframe.Let‘s keep the big picture – gold is in a secular bull market that started in 2018 (if not in late 2015), and what we‘re seeing since the Aug 2020 top, is the soft patch I called. The name of the game now, is where the downside stops – I am not capitulating to (hundreds dollars) lower numbers below $1,650 on a sustainable basis. The new precious metals upleg is a question of time even though the waiting is getting longer than comfortable for many, including myself. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsReasonably heavy volume with most of yesterday‘s candle, pushing vigorously to start a new downtrend. Given yesterday‘s move, some kind of retracement is likely today as a minimum, but the bears have the upper hand now.Credit MarketsHigh yield corporate bonds (HYG ETF) haven‘t declined below last week‘s lows, and are still at bullish divergence readings. Will they keep above these? Doing so is essential for the still unfolding S&P 500 correction.High yield corporate bonds to short-dated Treasuries (HYG:SHY) aren‘t as panicky as stocks here, which is more than mildly optimistic.Put/Call Ratio and VolatilityThe put/call ratio is well below the Feb or Jan highs, while the volatility index is much higher relatively to these. While that‘s an opportunity for even more panic, volatily would quickly die down if today‘s S&P 500 upswing sticks. Then, it would be time to evaluate the changes in posture. Either way, this correction appears to have longer to run still.TechnologyTechnology (XLK ETF) compared to the value stocks (VTV ETF) shows where the engine of decline is – and it‘s starting to have an effect on value, high beta plays. Not until tech stabilizes, can the correction be called as really close to over – just check how the equal weighted S&P 500 (RSP ETF) suffers right now.Gold, Silver and MinersAnother bite into the volume profile support zone, and the gold upswing isn‘t here still. Another missed daily opportunity to rebound. The yellow metal is still in a precarious position until it shakes off the rising (nominal, not real) rates albatross.Silver is in a technically stronger position, but signs of deterioration are creeping here too. It‘s painfully obvious when the miners are examined – the silver ones are leading to the downside, and the gold ones, well seniors outperforming juniors isn‘t a sign of strength really. The sky isn‘t definitely clear here.SummaryStock bulls have to once again try to repair the damage, and their success depends on the tech the most. The S&P 500 internals are slightly deteriorating, but the credit market performance remains more solid. New highs remain a question of time (and the stimulus carrot).Gold remains acting weak around the lower border of its support zone, and silver is joining in the deterioration, not to mention the mining indices. The yellow metal is though short-term holding up rather well, when the TLT and USDX pressures are considered.
No More Rocking the Boat in Stocks But Gold?

No More Rocking the Boat in Stocks But Gold?

Monica Kingsley Monica Kingsley 08.03.2021 15:23
Stocks sharply reversed intraday, and closed just where they opened the prior Friday. That indicates quite some pressures, quite some searching for direction in this correction that isn‘t over just yet. Stocks have had a great run over the past 4 months, getting a bit ahead of themselves in some aspects such as valuations. Then, grappling with the rising long-term rates did strike.So did inflation fears, especially when looking at commodities. Inflation expectations are rising, but not galloping yet. What to make of the rising rates then? They‘re up for all the good reasons – the economy is growing strongly after the Q4 corona restrictions (I actually expect not the conservative 5% Q1 GDP growth, but over 8% at least) while inflation expectations are lagging behind. In other words, the reflation (of economic growth) is working and hasn‘t turned into inflation (rising or roughly stable inflation expectations while the economy‘s growth is slowing down). We‘re more than a few quarters from that – I fully expect really biting inflation (supported by overheating in the job market) to be an 2022-3 affair. As regards S&P 500 sectors, would you really expect financials and energy do as greatly as they do if the prospects were darkening?So, I am looking for stocks to do rather well as they are absorbing the rising nominal rates. It‘s also about the pace of such move, which has been extraordinary, and left long-term Treasuries trading historically very extended compared to their 50-day moving averages. Thus, they‘re prone to a quick snapback rally over the next 1-2 weeks, which would help the S&P 500 regain even stronger footing. And even plain temporary stabilization of theirs would do the trick.This is taking me directly to gold. We have good odds of long-term rates not pressuring the yellow metal as much as recently, and inflation expectations are also rising (not as well anchored to 2% as the Fed thinks / says). As I‘ll show you in the charts, the signs of decoupling have been already visible for some time, and now became more apparent. And that‘s far from the only suggestion of an upcoming gold upswing that I‘ll bring you today.Just as I was calling out gold as overheated in Aug 2020 and prone to a real soft patch, some signs of internal strength in the precious metals sector were present this Feb already. And now as we have been testing for quite a few days the first support in my game plan, we‘re getting once again close to a bullish formation that I called precisely to a day, and had been banging the bearish gold drum for the following two days, anticipating the downside that followed. Now, that‘s what I call welcome flexibility, extending to accentuated, numerous portfolio calls.And the permabears keep (losing capital through many bullish years in a row in some cases) calling for hundreds bucks more downside after a respite now, not even entertaining the thought that gold bottom might very well not be quarters ahead. It‘s easier to try falsely project own perma stickers onto others. Beware of wolves in ill-fitting sheep clothing. Look at full, proven track records, compare varying perspectives of yesteryear too, and wave off cheap halo effects.It‘s the above dynamic between nominal rates taking a breather, dollar getting back under pressure, commodities continuing their rise and stocks gradually resuming theirs – see the ebbing and flowing that I‘m laying down in the daily analyses on the revamped homepage, and you‘ll get a knack for my timings of local tops or bottoms just the way I did in the early Sep buying climax or in the corona crash.True mastery is in integrating and arguing opposing views with experience and adaptability daily. People are thankfully able to recognize these characteristics on their own – and they have memory too. Who needs to be told what to read and consider by those embracing expertise only to turn against it when the fruits were no longer theirs? Sour grapes. Narrow thinking is one of the dangers of our era replete with empty and shallow shortcuts. Curiosity, ingenuity and diligence are a gift to power mankind – and what you get from financial analysts – forward in a virtuous circle.If gold prices rise from here, they have bounced off support. Simple as that, especially given the accompanying signs presented. There is time to run with the herd, and against the herd – in both bull and bear trends, constantly reevaluating the rationale for a position, unafraid to turn on a dime when justified.Whatever else bullish or bearish I see technically and fundamentally in rates, inflation and dollar among much else, I‘ll be duly reporting and commenting on as always. It‘s the markets‘ discounting mechanism of the future that counts – just as gold cleared the deflationary corona crash in psring 2020, just as it disregarded the tough Fed tone of 2H 2018, just as it sprang vigorously higher in early 2016 stunning bears in all three cases with sharp losses over many months, or just as stocks stopped declining well before economic news got better in April 2020 or March 2009. Make no mistake, the markets consider transitioning to a higher inflation environment already now (the Fed timidly says that reopening will spike it, well, temporarily they say), when inflation expectations are still relatively low, yet peeking higher based on the Fed‘s own data. Such were my Friday‘s words:(…) Let‘s keep the big picture – gold is in a secular bull market that started in 2018 (if not in late 2015), and what we‘re seeing since the Aug 2020 top, is the soft patch I called. The name of the game now, is where the downside stops – I am not capitulating to (hundreds dollars) lower numbers below $1,650 on a sustainable basis. The new precious metals upleg is a question of time even though the waiting is getting longer than comfortable for many, including myself. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsStrong rebound after more downside was rejected, creating a tweezers bottom formation, with long lower knots. This is suggestive of most of the downside being already in. The Feb 25 upswing had a bearish flavor to it, while the Mar 1 one looked more constructive – and Friday‘s one is from the latter category. That doesn‘t mean though this correction won‘t be in the 5% range. The 3,900 zone is critical for the bulls to pass so as to clear the current precarious almost no man‘s land.The market breadth indicators are actually quite resilient given how far this correction has reached. New highs new lows are holding up still very well, yet they too indicate that this correction has further to go in time. While the bullish percent index still remains in the bullish territory, it indicates how far the correction has progressed technically, and that we can‘t declare the bullish spirits as having returned just yet.Credit MarketsHigh yield corporate bonds (HYG ETF) ilustrate this fragility for they haven‘t rebounded as strongly as stocks. This correction doesn‘t appear to be as really over just yet, also given the sectoral picture that I am showing you next.S&P 500 Sectoral LookTech reversed, but higher volume would be welcome to lend the move more credibility. This sector is still the weakest link in the whole S&P 500 rebound, and not until I see the $NYFANG carve out a sustainable bottom (this needn‘t happen at the 200-day moving average really), I can declare this correction as getting close to over. The bullish take on the volume is that the value sector has undergone strong accumulation, as can be readily seen in the equal weight S&P 500 index (RSP ETF). The above chart shows that cyclicals are performing strongly – with industrials (XLI ETF) and energy (XLE ETF) leading the charge as the tech and defensives are trying to stabilize, and the same is true about consumer discretionaries (XLY ETF).Gold‘s Big Picture ViewGold‘s weekly chart shows two different stages in the reaction to rising long-term rates. The first half was characterized by the two tracking each other rather closely, yet since late Dec, the nominal rates pressure has been abating in strength within the mutual relationship. While TLT plunged, gold didn‘t move down as strongly. Real rates are negative, nominal rates rose fast, and inflation expectations have been trending higher painfully slowly, not reflecting the jump in commodities or the key inflation precursor (food price inflation) just yet – these are the factors pressuring gold as the Fed‘s brinkmanship on inflation goes on. Once the Fed moves to bring long-term rates under control through intervention – hello yield curve control or at least twist – then real rates would would be pressured to drop, which would be a lifeline for gold – the real questions now are how far gold is willing to drop before that, and when that Fed move would happen. Needless to add as a side note regarding the still very good economic growth (the expansion is still young), staglation is what gold would really love.Copper and Silver Big Picture ViewThe red metal keeps rising without end in sight, reflecting both the economic recovery and monetary intervention. This is a very bullish chart with strong implications for other commodities and silver too. That‘s the essence of my favorite play in the precious metals – long silver short gold spread, clearly spelled out as more promising than waiting for gold upswing to arrive while the yellow metals‘ bullish signs have been appearing through Feb only to disappear, reappear, and so on.As you can see, silver performance approximates commodity performance better than gold one. And as the economic recovery goes on, it‘s indeed safer to be a silver bull than a gold bull – another of my early Feb utterances.Miners to Gold Big Picture ViewThis gold sectoral ratio made an encouraging rebound last week, but isn‘t internally as strong as it might appear, because the juniors (GDXJ ETF) aren‘t yet outperforming the seniors (GDX ETF), which had been the case in early 2021 and late in Feb as well – right till I sounded the alarm bells on Feb 23-24. This is precisely why I was not bullish in tone at all in the past week, as gold hadn‘t been acting as strongly now as it had been right before the Feb 22 upswing that I called. And I am missing this ingredient at the moment still.SummaryStock bulls stepped in and repaired much of Thursday‘s damage, flipping the balance of power as more even at the moment. While the medium-term factors favor the bulls, this correction is slated to go on still for longer, as all eyes are on tech (big names) as the deciding sector.Gold still remains acting weak around the lower border of its support zone, silver is refusing to decline more, and signs overall favoring a rebound, are appearing. It‘s still a mixed bag though, with especially gold being far from out of the woods yet.
Intraday Market Analysis: US Dollar In Bullish Continuation

Intraday Market Analysis: US Dollar In Bullish Continuation

John Benjamin John Benjamin 09.03.2021 11:17
EURUSD tumbles in falling channelThe US dollar continues to push forward as prospects of a strong US recovery take root.After conceding the intermediate support of 1.1950, the euro came under renewed pressure and is now sliding towards the daily support level of 1.1750.A bullish RSI divergence and the price testing the lower band of the bearish channel suggest that a rebound is overdue. A better-than-expected GDP data from the eurozone might just give the single currency the relief it needs. Though the upper band (1.1970) will be a tough nut to crack.AUDUSD remains under bearish trendlineThe Aussie might not be out of the woods yet as market fever over the greenback is still in full swing. The pair is heading towards the daily support level of 0.7580, a critical level where a failure to bounce could signal an upcoming reversal.A fairly neutral RSI says there is still room for a retracement in the next few hours.The price action is then likely to go sideways between the support and the bearish trendline (0.7720) before a breakout would lead to a new direction.SPX 500 rallies back from daily supportThe S&P 500 climbed back after the US Senate passed the $1.9 trillion COVID-19 relief package. The demand zone around 3700 from the daily timeframe has seen strong bids.On the hourly chart, a bullish MA cross and a rally above 3845 have prompted the short side to cover. 3900 is the immediate resistance and its breach could resume the upward movement.An overbought RSI might signal a potential pullback but as long as the index stays above 3730, the bias remains bullish.
STIMULUS AND CONSUMERS ARE THE KEYS TO FURTHER US/GLOBAL ECONOMIC RECOVERY – PART II

STIMULUS AND CONSUMERS ARE THE KEYS TO FURTHER US/GLOBAL ECONOMIC RECOVERY – PART II

Chris Vermeulen Chris Vermeulen 09.03.2021 13:46
This is a continuation of our extended technical review of what my research team and I believe will be required for the US/Global markets to enter a stronger post-COVID-19 recovery phase. If you missed Part I of this research series then you can find it here: www.thetechnicaltraders.com/stimulus-and-consumers-are-the-keys-to-further-us-global-economic-recovery-part-i/. In this Part II, we will look at how potential currency shifts will prompt new trending in various economic sectors.   The past 20+ years have really changed how the markets operate from a standpoint of capital deployment and capital function.  We certainly live in interesting times from a trader and investor perspective. There is more capital floating around the globe right now than ever before... and that changes certain things.The Components Of A Frenzied Global MarketThe first and most notable change is to create volatility at levels we have really never seen before.  The average daily price range on the QQQ or SPY charts is more than 3x historical price range levels.  This simple fact shows that a 1% price range, which used to be considered a moderately large price range for the price to move, is now considered a below normal range.  This new level of volatility has applied to many of the largest SPY and NASDAQ-related stock symbols over the past few years as capital was deployed into various sectors with increasing speed and volition.We profit from volatility by using non-directional options trading strategies.Watch our webinar on How To Become An Options Strategy Master now!The US and global central banks have continued to deploy easy money policies since the 2008-09 Housing/Credit crisis which has perpetuated a Roaring-20s type of mentality throughout the world.  Even though we could point out certain nations that are underperforming economically, generally the world has seen an unprecedented rise in credit, debt, and associated spending capabilities over the past 10+ years.  This level of unusual economic expansion comes with certain consequences, similar to the expansion that led up to the 2008-09 Housing/Credit crisis.It also has to be noted that COVID-19 has really altered the way consumers are engaging in the economy right now.  Online, stay-at-home, avoid outside risks type of activities have really become the new normal. Many sociologists continue to suggest consumers may be slower to move back into old economic habits (pre-COVID-19 spending habits).  This change in how people perceive risks and adopt new economic processes will likely lead to a rise in digital productivity, the adoption of technology solutions, and a change of spending habits, which could prompt a much bigger transition for certain market sectors that have been overlooked recently.Watch Chris and Neil Present at The Mad Hedge Traders and Investors Summit - Click to Register for FREE!One thing that has certainly benefited from COVID-19 is the number of new investors/traders plying their skills (and hard-earned cash) in the markets.  We've never seen anything like this explosive growth in retail market participation over the past 20+ years.  The closest we've come to this level of retail trader participation in the equities and financial markets was in 1998~99 during the height of the DOT COM bubble.  This incredible consumer participation in the global equities trends/trading has helped propel many US major indexes/sectors to incredible heights – and it may not end any time soon.The following Monthly ratio chart, comparing the growth in the QQQ, SPY, and GOLD since January 1, 2009 (the anchor price) highlights how the frenzy of investing really started to accelerate after 2012 and began to move into a parabolic trend in 2016.  If you follow the MAGENTA QQQ ratio after the vertical dateline on this chart, you will see how early 2017 started a dramatic acceleration in volatility and trending as the QQQ accelerated higher by more than +186%.  Meanwhile, the SPY, which was somewhat overlooked throughout this rally phase, moved higher by only +85%.Where is the Consumer?  Has The Consumer Really Retreated Because Of COVID-19?One prime example of this frenzy is this recent Yahoo! Finance story about burned Banksy Art which sold for over $390,000 as a Non-Fungible Token. The idea that anyone would buy a burned piece of art for this price shows that money has turned into a game for some people.  The gamification of wealth has likely transitioned into global social thinking in ways that we have not even considered yet.Even though we've highlighted how the global equity/financial markets have rallied considerably over the past 5+ years, we still need to see the consumer reenter the economy in a more traditional sense. This M1 Velocity of Money chart shows that after the 2009 peak, the velocity of money, the rate at which money is exchanged within an economy, has collapsed to levels we have not seen in 60+ years, and quite possibly below levels relative to the Great Depression (1930s).So, what's happening in the world right now to present these types of charts/data?  How can the world be flush with capital/cash and the data show that the consumer is still actively engaged in purchasing various items, which include very active engagement in the global equity markets and speculative trading positions, while the M1 Velocity of Money data shows an incredible collapse after COVID-19 hit?The answer is simple.  The US Federal Reserve has pushed more cash into the global economy over the past 10+ years than at any time in history (more than $16 Trillion since 2009).  Prior to that date the total amount of capital/debt the US Fed only pushed a total of $10.6 Trillion into the economy over a 40-year time span.  There is nearly 3x the total number of US dollars floating around the globe right now than at any time since prior to the 1950s.Eventually, we are certain that, this extended cash will translate into GDP growth – which will strengthen the Velocity of Money ratio over time.  What it will take is for the economy and the consumer to transition into a new form of expansion related to the post-COVID-19/post Technology euphoria that is currently taking place.Over the next 20 to 30+ years, we are going to see some very big trends in various sectors and commodities.  The global central banks have pushed so much capital out into the world that, once it finds its true economic purpose, we believe the function of this capital will be deployed into various economic components in ways we have not even considered yet.  New industry, new forms of consumer products, and consumer participation will likely evolve where capital can be put to use to improve the GDP levels.  Cryptos may be the start, a stepping stone, toward a much more dynamic solution for how capital is used and deployed within the global marketplace.Don’t miss the opportunities to profit from the broad market sector rotations we expect this year, which will be an incredible year for traders of my Best Asset Now (BAN) strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. Staying ahead of sector trends is going to be key to success in volatile markets.For those who believe in the power of trading sectors that show relative strength and momentum but don’t have the time to do the research every day, let my BAN Trader Pro newsletter service do all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my BAN Trader Pro subscribers.In Part III of this research article, my team and I will continue to explore the future possibilities and make some suggestions as to how you can prepare for these big trends right now.  Remember, this is a longer-term outlook of opportunities for traders/investors.  The real gains related to this research will come 5 to 10+ years out into the future if you are able to identify how and where capital is being deployed for gains. Have a great day!
Stocks Shaking Off Weak Tech As Gold Bottoms?

Stocks Shaking Off Weak Tech As Gold Bottoms?

Monica Kingsley Monica Kingsley 09.03.2021 15:28
Stocks spiked higher, but not before going sideways to down prior on the day. And the close to the session hasn‘t been convincing either – does it count as a reversal? In my view, we haven‘t seen one yesterday really, regardless of this correction not being over just yet. There are still some cracks I tweeted yesterday about in need closing first, such as the worrying corporate bonds performance, manifest in the HYG:SHY ratio, or the tech searching for the bottom (it‘s $NYFANG precisely). Quoting from yesterday‘s extensive analysis spanning beyond stocks, metals and the Fed:(…) Stocks have had a great run over the past 4 months, getting a bit ahead of themselves in some aspects such as valuations. Then, grappling with the rising long-term rates did strike.So did inflation fears, especially when looking at commodities. Inflation expectations are rising, but not galloping yet. What to make of the rising rates then? They‘re up for all the good reasons – the economy is growing strongly after the Q4 corona restrictions (I actually expect not the conservative 5% Q1 GDP growth, but over 8% at least) while inflation expectations are lagging behind. In other words, the reflation (of economic growth) is working and hasn‘t turned into inflation (rising or roughly stable inflation expectations while the economy‘s growth is slowing down). We‘re more than a few quarters from that – I fully expect really biting inflation (supported by overheating in the job market) to be an 2022-3 affair. As regards S&P 500 sectors, would you really expect financials and energy do as greatly as they do if the prospects were darkening?Stocks are well positioned to keep absorbing the rising nominal rates. What has been the issue, was the extraordinarily steep pace of such move, leaving long-term Treasuries trading historically very extended compared to their 50-day moving averages. While they can snap back over the next 1-2 weeks, the 10y Treasury bond yield again breaking 1.50% is a testament to the Fed not willing to do anything at the moment. Little does the central bank care about commodities moves, when it didn‘t consider any market moves thus far as unruly.Gold market offered proof of being finally ready for a rebound, and it‘s visible in the closing prices of the yellow metal and its miners. Being more than a one day occurence, supported by yesterday presented big picture signals, the market confirmed my yesterday‘s suggestion of an upcoming gold. It appears we‘ll get more than a few days to assess the legs this rally is made of, facilitating nimble charting of the waters ahead my usual way:(…) Just as I was calling out gold as overheated in Aug 2020 and prone to a real soft patch, some signs of internal strength in the precious metals sector were present this Feb already. And now as we have been testing for quite a few days the first support in my game plan, we‘re getting once again close to a bullish formation that I called precisely to a day, and had been banging the bearish gold drum for the following two days, anticipating the downside that followed. Flexibility and broad horizons result in accentuated, numerous other portfolio calls – such as long Bitcoin at $32,275 or long oil at $58 practically since the great return with my very own site. We‘re now on the doorstep of visible, positive price outperformance in the gold miners (GDX ETF) as gold prices didn‘t break the higher bullish trend by declining through both the Mar 4 presented supports of my game plan. As I wrote yesterday, if prices move higher from here, they have simply bounced off support, especially given the accompanying signs presented, not the least of which is the dollar getting back under pressure. Make no mistake, the greenback isn‘t in a bull market – it‘s merely consolidation before plunging to new 2021 lows. I have not been presenting any USDX declining resistance lines and breakout arguments, because prices can be both above such a line, and lower than at the moment of „breakout“ at the same time – ultimately, rising and declining supports and resistances are a play on the speed of the move, where pure inertia / deceleration / reprieve doesn‘t break the prior, higher trend. And as I called in summer 2020 the dollar to roll over and keep plunging, that‘s still what‘s unfolding.How does it tie in to commodities and stocks? We‘re not at extreme moves in either, and I see copper, iron, oil, agrifoods as benefiting from the reflationary efforts greatly. Similarly and in spite of the $NYFANG travails, it would be ill-advised to search for stock market tops now (have you seen how well the Dow Industrials is doing?) – no, we‘re not approaching a top that I would need to call the way I did in the early Sep buying climax. This is still the time to be running with the herd, and not against it – you can ignore the noise to the contrary for both the S&P 500 and commodities have a good year ahead. As for precious metals, we might have seen the bottom already – and in any case by the current shape of things, I don‘t see it occuring quarters ahead and hundreds buck lower.Bringing up the constant reevaluation of position‘s rationale, market reactions and narratives:(…) It‘s the markets‘ discounting mechanism of the future that counts – just as gold cleared the deflationary corona crash in psring 2020, just as it disregarded the tough Fed tone of 2H 2018, just as it sprang vigorously higher in early 2016 stunning bears in all three cases with sharp losses over many months, or just as stocks stopped declining well before economic news got better in April 2020 or March 2009. Make no mistake, the markets consider transitioning to a higher inflation environment already now (the Fed timidly says that reopening will spike it, well, temporarily they say), when inflation expectations are still relatively low, yet peeking higher based on the Fed‘s own data. Gold is in a secular bull market that started in 2018 (if not in late 2015), and what we‘re seeing since the Aug 2020 top, is the soft patch I called. The name of the game now, is where the downside stops – and it‘s one of the scenarios that it has just happened, especially if gold convincingly closed back above $1,720 without undue delay.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookWe have seen two intraday reversals to the downside yesterday, yet I think the effects would prove a temporary obstacle to the bulls only. Such candlestick patterns usually slow down the advance, but don‘t end it – and that‘s consistent with my yesterday‘s words of most of the downside being already in. Once the 3,900 zone is confidently passed, the bears would have missed the chance to reach below Thursday‘s lows.Credit MarketsHigh yield corporate bonds (HYG ETF) still ilustrate ongoing fragility for they have plunged below their Feb lows. This correction doesn‘t appear to be as totally over just yet, also given the sectoral picture that I am showing you next.Put/Call Ratio and VolatilityOption players clearly aren‘t concerned by yesterday‘s S&P 500 price action, and the VIX is painting a similarly neutral picture – just as the sentiment overall. Very good, we‘re primed to go higher next, from a starting position far away from the extreme greed levels.Technology and ValueThe sectoral divergence continues, and tech is still the weakest link in the whole S&P 500 rebound. The big $NYFANG names, the Teslas of this world, are the biggest drag, and not until these carve out a sustainable bottom (this needn‘t happen at the 200-day moving average really), I can declare this correction as getting close to over. It‘s the cyclicals, it‘s value stocks that is pulling the 500-strong index ahead, with financials (XLF ETF), industrials (XLI ETF) and energy (XLE ETF) leading the charge.Treasuries and DollarNominal, long-term Treasury rates have at least slowed their quickening Feb pace, even in the face of no action plan on the table by the Fed – the dollar moved higher on the realization next, and it‘s my view that once new Fed intervention is raised, it would have tremendous implications for the dollar, and last but not least – the precious metals.Gold and SilverFinally, this is the much awaited sign, enabling me to sound some bullish tone in gold again – the miners are outperforming the yellow metal with more than a daily credibility, which I view as key given the lackluster gold price action before yesterday (absence of intraday rebounds coupled with more downside attempts). It would turn stronger once the gold juniors start outperforming the seniors, which is not the case yet.Coupled with the 4-chart big picture view from yesterday, it‘s my view that the gold market is laying the groundwork for its turning:(…) Real rates are negative, nominal rates rose fast, and inflation expectations have been trending higher painfully slowly, not reflecting the jump in commodities or the key inflation precursor (food price inflation) just yet – these are the factors pressuring gold as the Fed‘s brinkmanship on inflation goes on. Once the Fed moves to bring long-term rates under control through intervention – hello yield curve control or at least twist – then real rates would would be pressured to drop, which would be a lifeline for gold – the real questions now are how far gold is willing to drop before that, and when that Fed move would happen. Needless to add as a side note regarding the still very good economic growth (the expansion is still young), stagflation is what gold would really love.Silver is carving out a bottom while both copper and platinum are turning higher already – these are That‘s the essence of one of my many profitable plays presented thus far – long silver short gold spread – clearly spelled out as more promising than waiting for gold upswing to arrive while the yellow metals‘ bullish signs have been appearing through Feb only to disappear, reappear, and so on.SummaryStocks haven‘t seen a real reversal yesterday, but more backing and filling till the tech finds bottom, appears due. The medium-term factors favor the bulls, but this correction isn‘t over yet, definitely not in time.Now, gold can show some strength – and silver naturally even more. The signs overall favoring a rebound, are appearing with increasing clarity for the short term, and the nearest weeks will show whether we have made a sustainable bottom already, or whether the $1,670 zone will get tested thoroughly. The bulls have the upper hand now.
Intraday Market Analysis – DAX Shrugs Off Correction

Intraday Market Analysis – DAX Shrugs Off Correction

John Benjamin John Benjamin 10.03.2021 08:14
DAX 30 surges to new highThe German index rallied to a new high as investors priced in the benefits of economic normalization.The ascent above 14180 was the result of short-covering and momentum trading when that critical resistance broke away. The latest correction might have ended right there with the bullish bias intact on the daily timeframe.Short-term traders’ profit-taking might cause a retracement towards the demand zone between 14180 and 14310. However, the buying interest is likely to stay strong as trend followers jump in.USDCHF drops on profit-takingRetreating US yields have led to profit-taking on the US dollar.An RSI divergence in the overbought area was a sign of a loss in the bullish momentum. Then a 100-pip drop below the 20 and 30-hour moving averages and a bearish MA cross confirmed the overextension.The pair is now testing its first key support at 0.9250. An oversold RSI indication could attract some bargain hunters. Though a failure to hold on to that level may trigger a deeper correction towards 0.9180.USDCAD tests major resistanceAs the US dollar is grinding along a falling trendline, there is a chance of a breakout if the Bank of Canada convinces markets of its resolve to keep interest rates at a record low.Price action has been building up support above 1.2570 in a rectangle-shaped consolidation. The narrowing range between the support and the resistance is typical of the market’s indecision ahead of a catalyst.A close above 1.2700 on the daily trendline could prompt sellers to rush to cover their positions, fuelling a breakout rally.
Stocks Love Rising CPI, and Gold Should Too

Stocks Love Rising CPI, and Gold Should Too

Monica Kingsley Monica Kingsley 10.03.2021 16:09
Monday‘s reversal I didn‘t trust, gave way to another upswing – still within this getting long in the tooth correction. It‘s not over, and corporate bonds aren‘t yet confirming – it has lately become a reasonable expectation that when the higher quality debt instruments (think LQD, TLT) have a good day, junk corporate bonds get under pressure, but seeing their (HYG) performance more aligned with the S&P 500 is what I am looking for in a rally on solid footing.Which is what we‘re not having yet. Just compare the tech performance to the rest of the market, especially when viewed from the decling new highs new lows (yes, these closed higher on Monday). It‘s apparent that yesterday‘s S&P 500 upswing was the result of reallocation to tech to the detriment (mild, but still) of much of the rest, in light of the key development of the day – falling Treasury yields.The stock market simply keeps dealing with the rising nominal rates, which would be easier when these move less fast and steeply than till now. Consolidation of their recent move appears underway, in fits and starts, as long-term Treasuries are:(…) trading historically very extended compared to their 50-day moving averages. While they can snap back over the next 1-2 weeks, the 10y Treasury bond yield again breaking 1.50% is a testament to the Fed not willing to do anything at the moment. On one hand, the central bank is fine with commodities on the move, which aren‘t yet really showing in CPI, (today‘s 0.4% reading is a baby step in this direction) and which the Fed claims would be only transitory. On the other hand, the bond market is buying into this assertion to a degree, because otherwise the long-term bonds decline would continue rather unabated. As we are in the reflationary stage when economic growth is rising faster than both inflation and inflation expectations, this laissez faire approach to inflation isn‘t likely to bite the Fed now as much as to truly wake up the bond vigilantes. It‘s that the „high rates“ we‘re experiencing currently, do not compare to the early 1980s, which underscores the fragility of the current monetary order. The Fed knows that, and it has been evident in the long preparatory period and baby steps in the prior rate raising and balance sheet shrinking cycle. The market will see through this, and the central bank would be forced to move to bring long-term rates down through yield curve control or a twist program, which would break the dollar, drive emerging markets, and not exactly control inflation – real rates would drop like a stone in such a scenario, turning around gold profoundly. But we‘re not yet there, as inflation is still too low and economic growth too high to force this scenario to play out. Market players are though already hedging against the rising (commodity prices thus far chiefly) inflation – and gold is still mostly on the defensive even as TIPS are starting to turn. What we‘re seeing in the miners to gold ratio, are green shoots in obvious need of follow through to turn the yellow metal sustainably around.Bottom line, if I had to pick only two markets to watch right now, it would be long-term Treasuries and the dollar.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookDaily rebound with a long upper knot, indicating consolidation ahead just as much as the low credibility Monday reversal. Force index is turning positive, but I am not looking at it to absolutely spike just yet. Overall though, the balance of forces is slowly but surely shifting towards the buyers, which would become more evident once we clear the key 3,900+ zone – perhaps even later today.Credit MarketsHigh yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio is the key non-confirmation, which can be partially explained by the bond market strains and reallocations into the long end of the curve instruments. Stocks are as a result relatively extended, yet without accompanying warning signs in the put/call ratio or the VIX. So far so good.Technology, Value and UtilitiesWhat a difference a day (of higher TLT prices makes)! Technology, which has been trading almost like utilities (lower black line) lately (yeah, reopening), rebounded ($NYFANG likewise strongly), and the value stocks endured a modest daily setback. Part and parcel of the microrotations as the stock market is getting used to higher nominal rates within the stock bull run as evidenced by the rebounding bullish percent index. Yes, this S&P 500 correction is in its latter innings.Treasuries and DollarNominal, long-term Treasury rates retreated on the day, and so did the dollar. Emerging markets liked that more than their bonds, which means that the current reprieve in yields is more likely temporary than not.Gold in the SpotlightMiners‘ outperformance of the yellow metal goes on, today illustrated with the stronger $HUI. Given the CPI readings just in, the gold bulls have a good reason to run with the assumption that even Fed‘s own real inflation underestimating models, are starting to reveal its slow appearance in the basket of consumer prices.It was on Monday when I showed you this chart first, and we‘re within a gold rebound highlighting some relative strength in the yellow metal vis-a-vis the rising rates – in the latter half of the 7-month long correction. The key narrative shift would be one of focus on inflation, inflation expectations, which would be also manifest in the Treasury inflation-protected securities (TIPS) chart. Thus far, the presented big picture view is a reason for modest, guarded optimism (in need of constant monitoring).Silver and Its MinersSilver has turned higher yesterday, and so did platinum – it‘s however the silver miners (SIL ETF), which is making the upswing a little suspect, as in need to prove itself stronger.SummaryStocks are likely to take yesterday‘s setback in their stride, and this long, drawn out correction increasingly appears to be approaching its inevitable end. The medium-term factors favor the bulls, and new highs are a question of broad based advance across the sectors, adjusted for the reopening trades favoring high beta stocks.The belated and thus far rather meek gold rebound can proceed, and should the mining stocks keep their outperformance (ideally accompanied by silver miners doing the same with respect to the white metal), that would be a hallmark of the unfolding rebound carrying on. For now, guarded optimism is still the name of the game in the precious metals arena.
Gold & the USDX: Correlations

Stocks Bulls Can Take a Rest – But Gold Ones Can‘t

Monica Kingsley Monica Kingsley 11.03.2021 15:40
The daily banging on the 3,900 threshold shows in yesterday‘s upper knot, and this milestone has very good chances of being conquered today. More important than the exact timing though, are the internals marking the setup – we‘ve indeed progressed very far into this correction. While not historically among the longest ones, it‘s still getting long in the tooth – just as I was writing throughout the week.And it is getting stale, even if I look at the star non-cofirnation, the high yield corporate bonds. Relatively modest daily upswing, outshined by investment grade corporate bonds. Yes, the credit markets are calming down, and the tiny daily long-term Treasuries upswing doesn‘t reflect that fully just yet. Besides giving breathing room to defensives such as utilities and consumer staples, it‘s also very conducive to the precious metals sector.Copper, oil or agrifoods aren‘t flashing warning signs either – this is a healthy consolidation of steep prior gains as the dollar is getting again under pressure on retreating yields. Just as stocks are undergoing the larger rotation in favor of high beta value plays (financials and manufacturing ones are doing great, airlines jumped), the leaders out of the corona deflationary crash are leading no longer (technology). The picture of the unfolding reflationary recovery is a healthy one as rates are rising on account of improving economic environment, and inflation doesn‘t really bite yet.Ideal environment for the stock market to do well (hello my profitable open position), and for commodities to do really well. While the Fed is prepping the markets for (temporary, they say) higher inflation readings, gold didn‘t react too bullishly to yesterday‘s mildly positive CPI data – just wait for PPI data which would reflect the surging commodity prices more adequately. At the moment, evaluating the strength and internals of precious metals rebound, is the way to go as we might very well have seen the gold bottom, with the timid $1,670 zone test being all the bears could muster. Time and my dutiful reporting will tell.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsVolume isn‘t sharply contracting, and coupled with the price action, the rebound above 3,900 has good chance of succeeding. The path most ahead to entertain your imagination as well, looks as a little congested series of daily candles followed by a longer white one. We‘re in a stock bull market after all, and still not in danger of a significant (10%+) correction as I have been writing throughout 2021.Market breadth indicators have turned the corner really, underscoring accumulation within a returning bull market advance – just as the bullish percent index shows. A brief sideways to higher consolidation of this week‘s advance would only help to solidify it before the next run higher.Credit MarketsHigh yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio‘s degree of non-confirmation has decreased, at least if you take direction into view. Finally, high yield corporate bonds are turning higher, and once they catch breath even more, the all time highs already in sight would be conquered as smoothly as the 3,900 zone I delineated earlier.Gold Sector ExaminedVery mild upswing in both the gold miners and gold – along the lines of a daily consolidation with bullish undertones. This early in the precious metals upswing, miners are in the pool position, and their relative and gradually increasing strength has been visible since the early Mar days. So far so good here.Silver, Platinum and the RestSilver isn‘t yet outshining the rest of the crowd, and that‘s good, for it often tends to do so in the later stages of the precious metals sector advance. Within the coming precious metals advance, I continue to view silver outperformance as expected. Part monetary metal, part commodity, it‘s uniquely position to benefit. Its yesterday‘s setback is nothing to be concerned about as the gold, gold miners and platinum rebound keeps doing largely well.Comparing the gold miners to gold ($HUI:$GOLD) ratio to the silver miners to silver (SIL:$SILVER) ratio is returning a bullish snapshot of the current advance too. The beaten down gold sector is leading the charge, and the silver one will play catch-up in time.SummaryHaving reached the 3,900 zone, the S&P 500 is likely to consolidate the gains next. Due to the improving key markets (corporate bonds and tech), I am not looking for any this week‘s potential setback to turn the tide in this aging correction really.The gold upswing is proceeding, helped by the weakening dollar and ever so slightly retreating Treasury yields. After clearing the volume profile defined support at $1,720 and stretching a little below, the bulls next objective is the roughly $1,775 figure marking the Feb lows. Should that one be conquered, the odds of having seen gold bottom this Monday, would have dramatically increased.
Intraday Market Analysis – Dow Jones Reaches New Highs

Intraday Market Analysis – Dow Jones Reaches New Highs

John Benjamin John Benjamin 12.03.2021 08:29
US 30 surges from daily supportUS Congress’s green light on the $1.9 trillion relief package seems to have put stock markets back on track. This came in as half-expected on the technical side as the index bounced off the year-long bullish trendline on the daily chart.From the hourly perspective, the breakout above the previous high (32050) has triggered a broader rally fuelled by short-coverings.As the RSI shows signs of overheating, a limited pullback might attract more buyers. 32300 near the short-term trendline would be the support to watch for.XAGUSD recovers from key supportLower treasury yields have made the non-yielding metal more attractive, right when buyers bid up the price from its daily support level (24.80).Following the previously mentioned RSI divergence, an indication of a potential reversal, silver saw a limited drop then rallied above the first resistance of 26.20.After a brief consolidation, the price could rise towards the next target around 27.00 as long as it stays above 25.60.To the downside, 24.80 is critical in keeping the bullish sentiment intact.NZDUSD looks for a bullish breakoutThe New Zealand dollar is having its fair share of markets’ renewed affection for risk assets. A rebound from the psychological level of 0.7100, a two-month low has brought the pair to its first hurdle: 0.7270 where strong selling pressure could cap the rally.The kiwi is gathering momentum near the rising trendline as the RSI falls back into the neutral zone. If buyers can overcome this resistance, an extended rally may push the price towards 0.7400.A drop below 0.7160 though could lead to a retest of the daily support.
Resting Stock Bulls and Gold Question Marks

Resting Stock Bulls and Gold Question Marks

Monica Kingsley Monica Kingsley 12.03.2021 16:12
Stock bulls went right for all time highs yesterday, clearing the 3,900 threshold in this correction – one that is in its very late innings indeed. But the preceding upswing has been sharp, and not all the internals support such a swift recovery, which is why I am still looking for consolidation to strike at any moment.We might be actually experiencing such a daily one right now, as today‘s premarket session has sent S&P 500 futures a few dozen points down. The big picture is though one of of the stock market getting used to rising rates, which are rising in reflection of the economic growth. But what about the snapback short-term rally in long-term Treasuries? It‘s not materializing as the instrument went down again yesterday – unconvincingly bobbing above recent lows. The defensive sectors such as consumer staples and utilities, reversed yesterday (at a time when technology rose), sending a warning that we‘re about to see higher rates again. Probably not happening as fast as through Feb, but still. Let‘s bring up my recent perspective on high rates, what they are exactly:(…) the „high rates“ we‘re experiencing currently, do not compare to the early 1980s, which underscores the fragility of the current monetary order. The Fed knows that, and it has been evident in the long preparatory period and baby steps in the prior rate raising and balance sheet shrinking cycle. The market will see through this, and the central bank would be forced to move to bring long-term rates down through yield curve control or a twist program, which would break the dollar, drive emerging markets, and not exactly control inflation – real rates would drop like a stone in such a scenario, turning around gold profoundly. But the market knows the Fed isn‘t getting ready to really do anything more than it does right now. Gold rebounded on Tuesday, and the rally took it above $1,730 but the daily reversal is concerning. As I wrote yesterday in the title, the gold bulls can‘t rest – but they are resting, and prices are back at the lower end of the $1,720 volume profile.Assessing the damage in the early stages of today‘s session will clarify whether the rally‘s dynamics are still intact, or not – regardless of today‘s headwinds. Silver isn‘t exactly at its strongest today, and we‘re likely to get soon into the session an idea about where miners‘ strength is. And it‘s more likely that it won‘t be anything to write home about.Let‘s recall my yesterday‘s words, and pick what‘s relevant to the metals:(…) While the Fed is prepping the markets for (temporary, they say) higher inflation readings, gold didn‘t react too bullishly to yesterday‘s mildly positive CPI data – just wait for PPI data which would reflect the surging commodity prices more adequately. At the moment, evaluating the strength and internals of precious metals rebound, is the way to go as we might very well have seen the gold bottom, with the timid $1,670 zone test being all the bears could muster. Time and my dutiful reporting will tell.Commodities are likely to do well in this reflationary phase, and the same goes for its turn to inflation. With precious metals, much depends upon their discounting mechanism‘s timing – when would they start doubting the transitory inflation utterances.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe S&P 500 upswing continues in pretty much a straight line, and the frequency of upper knots raises the probability of a short-term reprieve. Yes, it‘s risk-on, but a little pause would be healthy. Credit MarketsHigh yield corporate bonds have moved higher yesterday, mirroring the S&P 500 advance. That‘s encouraging even though the high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio is still visibly lagging behind stocks. The non-confirmation‘s seriousness has though decreased markedly over the two last sessions, pointing to improving internals of the upcoming stock market upleg.Technology and ValueTechnology has been rallying on decreasing volume, also demonstrating a prominent upper knot. If there is one sector where the coming S&P 500 consolidation would originate, it would be here. Value stocks held their own yesterday, in a nod to the high beta reopening trades. I am not looking for VTV to weaken distinctly here.Gold and YieldsThe gold upswing reversed intraday while long-term Treasuries (TLT ETF) hadn‘t really moved in their tight daily range. Erasing much of the overnight selling today, would be probably the most the bulls would be able to achieve today. But even that isn‘t the deciding factor to determine the fate of the recovery off the $1,670 area.Upswing in the BalanceGold miners are still painting a positive picture. They are outperforming gold while silver isn‘t spiking – the white metal is under even more pressure today than gold itself. So, the signs from miners and silver balance each other out to a degree. The whole sectors keeps hanging in the balance after yesterday‘s session. Each day or even hour the bulls don‘t utilize to reverse today‘s setback, is questioning the upswing continuation. Not much to add here as the daily momentum apprears shifting to the bears again.SummaryHaving conquered the 3,900 zone, the S&P 500 is likely to consolidate the gains next. The put/call ratio and volatility are at relatively lower readings, and the next setback for stocks would come from tech again. Not overly dramatic, but a brief challenge still.The gold upswing stalled, and its fate is being decided. Having fallen through the volume profile defined support at $1,720, the bulls objective is to recapture this zone. Tall order..
Gold and Stock Bulls Are Getting Ready

Gold and Stock Bulls Are Getting Ready

Monica Kingsley Monica Kingsley 15.03.2021 15:34
Now that stocks closed at new all time highs, the correction is officially over. And what little rest stock bulls could claim last week, arrived on Friday. Yet, the bull is strong enough to defend the 3,900 zone, and charge higher the same day.Who could be surprised, given the modern monetary theory ruling the economic landscape? The Fed amply accomodative, one $1.9T stimulus bill just in, and a $2T infrastructure one in the making. That‘s after the prior Trump stimulus, and who would have forgotten how it all started in April 2020? The old congressional saying „a billion here, a billion there, and pretty soon you‘re talking real money“, needs updating.Stocks are readying another upswing as the volatility index is approaching 20 again, and the put/call ratio shows complacent readings. The sectoral examination supports higher highs as tech has reversed intraday losses, closing half of the opening bearish gap. Value stocks naturally powered to new highs, with industrials, energy and financial performing best. Real estate keeps showing remarkable momentum, and has been among the best performers off correction‘s lows.These all have happened while long-term Treasury yields have broken to new highs. Are they stopping to be the boogeyman?As I‘ll show you, inflation expectations are rising – and the bond market is reflecting that. The market‘s discounting mechanism is at work, mirroring the future virtually ascertained CPI rise, if you look carefully into the PPI entrails. This inflation won‘t be as temporary as the Fed proclaims it would – but it still hasn‘t arrived in full force. We‘re merely at the stage of financial assets rising, because that‘s where the newly minted money is chiefly going.As regards gold, let‘s recall my Thursday‘s words:(…) At the moment, evaluating the strength and internals of precious metals rebound, is the way to go as we might very well have seen the gold bottom, with the timid $1,670 zone test being all the bears could muster. Time and my dutiful reporting will tell.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe S&P 500 upswing took a little breath, and at the same time continued unchallenged. The path of least resistance simply remains higher. Credit MarketsHigh yield corporate bonds (HYG ETF) have declined, but don‘t give the impression of readying a breakdown. I understand it as a daily weakness, because the whole bond market was under pressure on Friday, with investment grade corporate bonds (LQD ETF) taking it on the chin as well. Russell 2000 and Emerging MarketsRussell 2000 keeps doing better than the 500-strong index, which is natural and expected given the prevailing investment themes doing well, value stocks rising, and euphoric speculation running rampant. Emerging market weakness needs to be viewed through the strains stronger dollar and rising rates cause abroad. That‘s why I am not viewing EEM underperformance as a warning sign for U.S. equity markets.Inflation Expectations and YieldsQuite a relentless rise in my favorite metric of forward looking inflation, isn‘t it? Treasury inflation protected securities to long-dated Treasuries (TIP:TLT) have been relentlessly rising off the corona crash lows, and their accent in 2021 has accelerated just as steeply as the nominal rates reflect (see below).Gold Upswing AnatomyGold refused the premarket losses, and has rebounded to close almost unchanged on the day. Is that sign of strength or weakness?The miners to gold ratio provides a clear answer, and it‘s a bullish one to open the week. Finally, the gold market is showing signs of life on a prolonged basis, which I started talking on Tuesday. Regardless of Friday‘s weakness in the yellow metal, it‘s so far so good as the miners keep leading the charge.Silver weakness in the course of the upswing isn‘t a too worrying sign – silver miners outperforming as well, is a more important signal. Smacks of broadening leadership in the unfolding precious metals upswing. SummaryThe consolidation of S&P 500 gains was and remains bound to be a short-term affair as the bulls take on new highs and surge well past them in the days and weeks ahead. The top is very far off as this still nascent recovery gets so much stimulus fuel that overheating becomes a very real possibility this year already.Gold has turned an important corner on Friday, and so have the miners – be they gold or silver ones. The precious metals upswing is unfolding, and decreased sensitivity to rising yields is a pleasant sight for the bulls. Well, that‘s exactly what I had been writing about transitioning to a higher inflation environment exactly one week ago.
History Rhymes: Does USDX’s Uprising Mean Gold’s Climax?

History Rhymes: Does USDX’s Uprising Mean Gold’s Climax?

Finance Press Release Finance Press Release 15.03.2021 16:48
The yellow metal’s behavior looks more bearish now than it did in 2017-2018. The USDX has a lot of bullets in its chamber, and gold can be riddled with them.Plenty of warning signs on the near-term horizon: The USDX is after a long-tern breakout, traders are reducing net-short positions, and the slightest shift in U.S. dollar sentiment can lead the rest of the herd to follow. If a USDX resurgence is combined with an equity shock, then the precious metals are in for trouble.Last Friday (Mar. 12), we focused quite a bit on the moves in the gold miners and how their related ETFs (GDX and GDXJ) are faring and which will suffer most during the next phase of the decline. We also touched on this subject last Wednesday as well. It was important to shed light on the miners because they’ve been leading the charge in the corrective upswing. I also wanted to explain the Eurozone’s impact on the precious metals and how crucial it is to examine the bigger picture and how the pieces are all connected. Today, let’s shift our attention over to the currency perspective, namely the USDX.The price shape and time analogies are truly remarkable right now. It’s quite often the case that history rhymes, but it’s rare for it to rhyme so closely and clearly to what we now see in the case of the USD Index. And the implications for precious metals investors are profound.On Mar. 8 , I warned that with the USD Index confronting its mid-2020 lows (resistance), a short-term dip could occur in the coming days. But after declining by 0.34% last week, the negativity could be short lived.Case in point: the 2017-2018 analogue is already in full swing, and while short-term dips were part of the historical journey, the USDX could be about to exit its consolidation phase.Please see below:You can also see the similarity between two periods and the technical patterns that they included in the chart below:Even while looking at the price moves for just a second, the size and shape of the 2017-2018 analogue clearly mirrors the 2020-current price action . Although this time, it took less than 118 days for the USD Index to move from peak to trough.In 2017-2018, it also took 82 days for the USDX to form a final bottom (the number of days between the initial bottom and the final bottom) and the duration amounts to 21.19% of the overall timeframe. If we applied a similar timeframe to today’s move, then the USD Index should have bottomed on Feb. 12. It actually bottomed (finally) on Feb. 25, which was just 8 trading days away from the former date. Taking into account the sizes of the moves that preceded the previous declines (they took approximately one year to complete), this is extremely close and an excellent confirmation that the self-similar pattern remains intact.In addition, as the USDX approached its final bottom in 2017-2018, gold traded sideways. Today, however, gold has been in a downward spiral. From a medium-term perspective, the yellow metal’s behavior is actually more bearish than it was in 2017-2018.Finally, the USD Index’s breakout above its 50-day moving average (which it still holds today) is exactly what added gasoline to the USDX’s 2018 fire. Case in point: after the 2018 breakout, the USDX surged back to its previous high. Today, that level is roughly 94.5.Moreover, gold’s trepidation alongside the USD Index strength on Mar. 12 adds even more validity to the 2017-2018 analogy.I wrote on Mar. 10:It’s not true that there were no pullbacks during the 2018 rally. There were, but they were simply too small to be visible from the long-term point of view.The first notable pullback took place in early May 2018, and it contributed to a corrective upswing in the precious metals market. To be precise, the USD Index declined after rallying for 56 trading days, but gold rallied earlier – 51 trading days after the USD Index’s final bottom. The USDX’s immediate-top formed 16 trading days after its final bottom, and gold’s bottom formed 10 trading days after the USD’s final bottom.Comparing this to the size of the previous decline in terms of the trading days, it was:51 – 56 trading days / 283 trading days = 18.02% - 19.79%10 – 16 trading days / 283 trading days = 3.53% - 5.65%More importantly though, when the USD Index turned a short-term decline into consolidation in mid-2018, gold’s hesitant reaction highlighted the yellow metal’s anxiety. And what followed? Well, gold’s next move was significantly lower, while the USD Index’s next move was significantly higher. This means that it was likely a good idea that we took profits from our long positions recently when the GDX moved to $32.96 (opening at $30.80 - $31).Please see below:In addition, if we analyze the pairs’ very recent price action, it’s a splitting image.On Friday (Mar. 12), the USD Index rallied by 0.28%, while gold was (roughly) directionless despite the intraday volatility. And just like in 2017-2018, the yellow metal’s behavior signals a forthcoming climax . As a result, gold and the USD Index are behaving exactly as they did before going their separate ways in 2017-2018. And this means a bearish gold price prediction for the following weeks (not necessarily hours, though).Please see below:To explain, I wrote on Mar. 10:Let’s examine the current situation: the preceding decline lasted for 200 trading days and there were 41 – 42 trading days between the final USDX bottom and the short-term reversals in gold and USDX. Comparing this to the final USDX bottom, we get 7 – 8 trading days.Applying the previous percentages to the length of the most recent medium-term decline in the USD Index provides us with the following:18.02% - 19.79% x 200 trading days = ~36 - ~40 trading days3.53% - 5.65% x 200 trading days = ~7 - ~11 trading daysThe above estimation of about 36 – 40 trading days almost perfectly fits the current 41 – 42-day delay, and the estimation of about 7 – 11 trading days almost perfectly fits the current delay of 7 – 8 trading days.In other words, the analogy to the 2018 performance does not only remain intact – it actually perfectly confirms the validity of the current corrective upswing. Once again, it’s very likely just a pullback, not a big trend reversal.The bottom line?Given the size of the 2018 upswing, 94.5 on the USD Index is likely the first, of many, potential upside targets.Adding to the list of upside catalysts, the USD Index still has plenty of other bullets in its chamber. For instance, we’re also in the early innings of a shift in U.S. dollar sentiment. With short interest hitting an all-time high in late-2020, it was a complete fire sale. Today, however, short interest may have peaked.Please see the below chart based on the CoT report :Please consider how big rallies followed the moments when the net speculative position as % of total open interest started to rally back up after being oversold for months. The situation here is still more extreme than it was in early 2018 and 2014, suggesting that the upcoming rally might be bigger than the ones that we saw then.As further evidence, speculative futures traders ( non-commercial ) actually reduced their net-short positions by 1,216 contracts last week (the net of the two values in the red box below). As a result, the slightest shift in sentiment could lead the rest of the herd to follow.Finally, let’s not forget that the USD Index is after a long-term, more-than-confirmed breakout. This means that the long-term trend for the U.S. dollar is up.In conclusion, the USD Index is likely shifting from consolidation to ascension. With the size, scope and duration of the recent price action mirroring 2017-2018, it’s only a matter of time before the USD Index’s medium-term breakout gives way to a material breakthrough. What’s more, the USD Index is finally reacting to the rise in U.S. Treasury yields . Initially ignoring the late-2020 surge, a bottom, and subsequent rally in the U.S. 10-Year Treasury yield has lifted the USD Index 80% of the time since 2003. And with the relationship seemingly restored in 2021, the combination is profoundly bearish for the PMs, especially given today’s triangle-vertex-based reversal in gold.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Intraday Market Analysis – US Dollar Starts Consolidation

Intraday Market Analysis – US Dollar Starts Consolidation

John Benjamin John Benjamin 16.03.2021 08:22
USDCHF stays in rangeAfter its meteoric rise, the US dollar is likely to go sideways as traders await a new catalyst from this week’s FOMC.The break below 0.9260 along with a bearish MA cross was a sign that the price action has gone into a consolidation if not a reversal. A brief rally is not excluded but the recent high of 0.9375 may cap any advance in the short-term.The lower band of the trading range is 0.9180, a resistance-turned-support which also lies around the 20-day moving average on a larger time frame.EURGBP finds support above the bearish trendlineProfit-taking seems to be the theme at the beginning of the week, and in the case of the sterling, buyers have reduced their bets in anticipation of the BoE meeting.The euro took a chance to bounce from the key short-term support area around 0.8550 after a week-long consolidation. The rise above the bearish trendline coupled with the previously mentioned RSI divergence would confirm the bullish bias.Clearing the psychological level of 0.8600 would open the path towards the next target 0.8650.GER 30 looks for support after the new highThe DAX is looking to consolidate its gains on the high ground after global markets regained optimism.A declining RSI indicator from a previously overbought situation is good news for traders looking to join the rally. As the bull market has seemingly resumed, a momentary pullback could see strong buying interest in bidding up the index.14390 is the immediate support but a failure to bounce would suggest a protracted retracement towards the rising trendline (14250).
Stock Bulls Run – Will Gold Ones Too?

Stock Bulls Run – Will Gold Ones Too?

Monica Kingsley Monica Kingsley 16.03.2021 15:37
Resting on Friday, surging on Monday. Feeble downswing attempt defeated right after the open, and then just bullish price action. Retail data today, and another FOMC meeting tomorrow – I view the former as not too likely to spoil today‘s market action. About the latter, remembering the latest reactions to Powell pronouncements, I look for the markets to be affected to a much greater degree.Don‘t look for material surprises, or be spooked by bets on the Fed tightening through dot plot adjustment or other forward guidance tools.I expect no change from what I wrote yesterday:(…) Who could be surprised, given the modern monetary theory ruling the economic landscape? The Fed amply accomodative, one $1.9T stimulus bill just in, and a $2T infrastructure one in the making. That‘s after the prior Trump stimulus, and who would have forgotten how it all started in April 2020? The old congressional saying „a billion here, a billion there, and pretty soon you‘re talking real money“, needs updating.Global liquidity isn‘t retreating exactly, emerging markets are building a solid base regardless of the dollar going higher two days in a row, and emerging market bonds are fighting to recover just as much as long-dated Treasuries. Coupled with the sectoral analysis, this is conducive for the unfolding stock market upswing and for commodities as well. We‘re still in a constructive environment for both, and I look within the latter at especially copper, nickel and iron to do well. Meanwhile, the precious metals upswing is going fine, and the miners keep outperforming – both gold and silver ones. The time for the bulls isn‘t running out, and the real battles will come once the gold bulls conquer the volume profile thin zone around $1,760. Will the bulls reach it on tomorrow‘s Fed underplaying the threat of inflation and showing tolerance to its overshoot? That‘s certainly one of the possibilities.The best course of action is to keep a pretty close eye on the metals – no bullish / bearish change from Thursday‘s words:(…) At the moment, evaluating the strength and internals of precious metals rebound, is the way to go as we might very well have seen the gold bottom, with the timid $1,670 zone test being all the bears could muster. Time and my dutiful reporting will tell.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe S&P 500 upswing is ready to proceed further now, and slight volume hint tells me to look for higher prices today. Credit MarketsHigh yield corporate bonds (HYG ETF) continue trading in a weak pattern, which however hasn‘t been able to force the stock market down. And not that I looked at it to have a chance to. I continue to view the junk corporate bond market as under pressure in sympathy with investment grade corporate bonds and long-dated Treasuries, which scored modest gains yesterday too. It‘s a euphoric rush into stocks simply. VolatilityThe volatility index shows no signs of panic returning, and the put/call ratio is getting very complacent again. Doesn‘t look like the boat will capsize today really.Value Stocks and TechValue stocks (VTV ETF) repelled a daily downswing attempt, which is positive considering that technology (XLK ETF) rose more strongly. The leadership in the stock market advance is broadening, and that‘s good news for the bulls.Gold Upswing AnatomyGold added modestly to its recent gains, and would do well to clear the $1,730 area some more really. The low volume is a sign that current prices aren‘t attracting enough interest to step in, and either buy or sell. Given the below chart though, the initiative is still within the bulls.It‘s that the miners keep outperforming gold without really slowing down, and that‘s still what I like to see well before the upswing makes an intermediate top. The daily indicators remain far from extended. Will the bulls take advantage accordingly?Silver, Copper and OilSilver is consolidating and by no means outperforming, as it so often does at the very late stage of precious metals upswings. The deductive conclusion is that the days of the upswing aren‘t likely over just yet.Both copper and oil are consolidating within their bullish patterns, and today‘s downswing taking both down around 1.5% from yesterday‘s prices shown above, is taking them nearer to where I would increase weighting. Yes, I‘m bullish stocks and commodities still, and look for precious metals to be gradually joining in some more.SummaryAfter the brief consolidation of S&P 500 gains, we‘re again in the full upswing mode, and the credit markets aren‘t a show stopper. The stock market bull is alive and well, and deeper correction has been yet again delegated to the dustbin. The top is very far off as this still nascent recovery gets so much stimulus fuel that overheating becomes a very real possibility this year already.Gold keeps turning an important corner on, but the bulls could get more comfortable only with an upswing that clears the $1,730 zone now, given the strong performance mining indices are showing. Adding to that even more decreased sensitivity to rising yields would compound the pleasant sight for the bulls. The runup to tomorrow‘s Fed will be telling.
ECB Accelerates Its Asset Purchases. Gold Needs Fed to Follow Suit

ECB Accelerates Its Asset Purchases. Gold Needs Fed to Follow Suit

Finance Press Release Finance Press Release 16.03.2021 16:16
The ECB accelerated its asset purchases, but unless the Fed follows suit, gold may continue its bearish trend.On Thursday (Mar. 11), the European Central Bank decided to accelerate its asset buying under the Pandemic Emergency Purchase Program :Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year.The decision came after a rise in the European bond yields that has mirrored a similar move in the U.S. Treasuries (see the chart below). Christine Lagarde , the ECB President, was afraid that increasing borrowing costs could hamper the economic recovery, so she decided to talk down the bond yields.Indeed, the growth forecasts for the EU have deteriorated recently amid the persistence of the pandemic and painfully slow rollout of the vaccines. According to the ECB, the real GDP of the bloc is likely to contract again in the first quarter of the year. So, the increase in the market interest rates could additionally drag down the already fragile economic recovery:Market interest rates have increased since the start of the year, which poses a risk to wider financing conditions. Banks use risk-free interest rates and sovereign bond yields as key references for determining credit conditions. If sizeable and persistent, increases in these market interest rates, when left unchecked, could translate into a premature tightening of financing conditions for all sectors of the economy. This is undesirable at a time when preserving favourable financing conditions still remains necessary to reduce uncertainty and bolster confidence, thereby underpinning economic activity and safeguarding medium-term price stability.Implications for GoldWhat does this all mean for gold prices? Well, the ECB’s move should prove rather negative for the price of gold , at least initially. This is because the loosening of the European monetary policy could weaken both the euro and gold against the U.S. dollar. Indeed, as the chart below shows, although the price of gold increased on Thursday, it declined one day later.Moreover, the acceleration in the ECB’s quantitative easing could further widen the divergence in the interest rates (that started rising in the third quarter of 2020, as one can see in the chart below) between the U.S. and the EU, which should also support the greenback at the expense of the yellow metal.On the other hand, the fact that the ECB has intervened in the markets – announcing acceleration in the pace of its asset buying program, after a certain rebound in the bond yields – could turn out to be positive for gold prices, at least in the long-run. This is because it shows how fragile the modern economies are and how dependent they have become on cheap borrowing guaranteed by the central banks.As I noticed earlier in the past, we are in the debt trap – and the central banks will not allow for the true normalization of the interest rates. The latest ECB’s action is the best confirmation that suppression of the real interest rates will continue, thus supporting gold prices. After all, the ECB has effectively put a cap on bond yields, introducing an informal yield curve control.So far, only the ECB has intervened in the markets, but other central banks could follow suit. This week, the Fed will announce its decision on the monetary policy. And we cannot exclude that the American central bank will also signal a more dovish stance to calm the turmoil in the bond markets and prevent further increases in the interest rates. One thing is certain: gold needs some fresh dovish hints from the Fed to go up. Unless the Fed further eases its stance, I’m afraid that gold will continue its bearish trend .If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Intraday Market Analysis – Gold Consolidates Gains

Intraday Market Analysis – Gold Consolidates Gains

John Benjamin John Benjamin 17.03.2021 08:27
XAUUSD builds support for a comebackA weaker US dollar has offered gold the opportunity to make a comeback just ahead of the Fed meeting later today.After having established a base at the round number 1700 the precious metal is struggling to clear the resistance at 1740, which coincides with the 20-day moving average. A neutral RSI suggests there is still room on the upside and a bullish breakout could add an extra $20 to the ounce (1760).However, in the case of a retreat below 1700, the price action is likely to go sideways and test the previous support at 1675.USDCAD capped by the falling trendlineThe Canadian dollar rises further as improvements in the domestic economy may lead the central bank to cut back on its QE.The bearish trendline from March 2020 has so far contained the US dollar’s multiple rebounds. The break below 1.2470 has confirmed that sellers are still in control.As the RSI dipped into the oversold area, short-term traders may take profit and cause a brief bounce. The zone between the psychological level of 1.2600 and the trendline is where strong selling interests would be.EURJPY tumbles to the trendlineThe euro took a hit after the suspension of the AstraZeneca shots caused a hiatus in the vaccine campaign across the continent.A diverging RSI in the overbought zone suggests an overextension and a loss in the bullish momentum. The pair is testing the rising trendline as the RSI goes into oversold. A failure to bounce back could send the price to the 20-day moving average (128.85).On the upside, 130.40 may keep a lid on the price action for the next few days.
Squaring the Bets Prior to the Fed

Squaring the Bets Prior to the Fed

Monica Kingsley Monica Kingsley 17.03.2021 15:14
Barely visible, but still a red candle – does yesterday mark a turning point? Even the volatility index refused to decline further on the day, and the option traders increased their put allocations. Is this a real reason to be cautious, or it represents mere window dressing before the Fed?When it comes to the sectoral view, not much has really changed in the S&P 500. Technology rose yesterday but gave up all intraday gains. Value stocks appear ready for a breather, and financials, energy and industrials all declined. That doesn‘t bode extraordinarily well for today‘s session, but this is not the place to look at when it comes to trading today‘s markets.It‘s the long-term Treasuries that I am focused on the most. Still as extended as lately ever relative to their 50-day moving average, they‘re weighing heavily on the markets. Stocks have gotten used to their message of rising inflation and economic recovery as we‘re still in the reflation phase, and not in the inflation one – but it‘s the precious metals that are suffering here, showing best in the copper to 10y Treasury yield ratio.I am not looking for the Fed to act today by adjusting its forward guidance stance or language, or taking a U-turn on inflation. No, they‘ll maintain the transitory stance even though markets are transitioning to a higher inflation environment already. The Fed won‘t do much this time.My prior Monday‘s words ring true also today:(…) Inflation expectations are rising, but not galloping yet. What to make of the rising rates then? They‘re up for all the good reasons – the economy is growing strongly after the Q4 corona restrictions (I actually expect not the conservative 5% Q1 GDP growth, but over 8% at least) while inflation expectations are lagging behind. In other words, the reflation (of economic growth) is working and hasn‘t turned into inflation (rising or roughly stable inflation expectations while the economy‘s growth is slowing down). We‘re more than a few quarters from that – I fully expect really biting inflation (supported by overheating in the job market) to be an 2022-3 affair. As regards S&P 500 sectors, would you really expect financials and energy do as greatly as they do if the prospects were darkening?So, I am looking for stocks to do rather well as they are absorbing the rising nominal rates. And this still translates into yesterday‘s throughts:(…) Global liquidity isn‘t retreating exactly, emerging markets are building a solid base regardless of the dollar going higher two days in a row, and emerging market bonds are fighting to recover just as much as long-dated Treasuries. Coupled with the sectoral analysis, this is conducive for the unfolding stock market upswing and for commodities as well. We‘re still in a constructive environment for both, and I look within the latter at especially copper, nickel and iron to do well. For gold, the key question remains whether copper upswings will outpace any yield increases on the long end, which have moderated their increases in Mar compared to Feb. That‘s good but not nearly enough given that even gold afficionados have come to expect lower prices lately quite en masse. Sign of capitulation off which the upswing was born? Yes, and the key questions now are whether we‘re seeing a pause, or a top in the upswing, and whether the next selling pressure would break below the $1,670 zone or not – see my early March game plan. The volume profile thin zone around $1,760 appears out of reach for now, without a Fed catalyst. I don‘t look for the central bank to invite any speculation on when the next rate hike might come (forget Brazil‘s example). They might not even talk about bringing down rates at the long end through a twist program. I certainly don‘t look for clues as to increasing the $120bn monthly pace of monetary injections. Unless the market perceives the Fed as underplaying the threat of inflation and showing tolerance to its palpable overshoot, the overall mix of positions and conference statements might bring gold under renewed pressure as it meanders a little below $1,730 as we speak.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe S&P 500 upswing took another daily breather yesterday in the end, and the volume doesn‘t send clear signals either way. Consolidation followed by new highs appears though the most likely scenario.Credit MarketsAfter quite some time, stocks are trading at very elevated levels relative to the high yield corporate bonds to short-term Treasuries (HYG:SHY) ratio. Now, it‘s three days in a row that the latter doesn‘t confirm the stock market upswing. The bulls better be cautious here over at least a few sessions as the latest historical evidence shows that Fed pronouncements haven‘t been accompanied by fully risk-on moves exactly.Let‘s not forget the big picture, and that‘s of the stock market rising at the expense of debt instruments. Please note how little has the early Mar correction achieved in denting the S&P 500 appeal. The stock market bull is alive and well, very well actually.Gold in the StraitsGold still remains resilient to rising yields, but its inability to rally convincingly is worrying for the bulls. After all, this $1,730 zone shouldn‘t have been any real obstacle after three days of the rally, yet the yellow metal had to rise from the dead on Friday to fight another day. And given that it hasn‘t progressed since, it makes me think the bulls are hanging around for a remotely possible Fed surprise only.It‘s only the miners that are kind of still positive here. Yet, even their upswing was challenged yesterday, but that was on low volume. And that‘s constructive for the bulls when it comes to interpreting yesterday‘s events.The lack of silver outperformance before the sellers take over, is another sign why the upswing might not be over just yet. Still, these are just secondary clues, for nothing is more bullish than rising prices, which is what we obviously haven‘t seen in the metals much really.Key Ratio SpeaksWhile not tracking each other as closely as lately, the copper to 10y Treasury yield is sending an ominous signal still. The key question is whether long-dated Treasuries rise, or gold falls – I am not looking for copper to deviate from the current steeply rising trajectory much.SummaryS&P 500 is again entering daily consolidation mode, justifying my decision to take some of the prior profits off the table earlier today. While the Fed won‘t likely deliver real surprises later today, the credit markets are flashing warning signs more noticeably than yesterday. Still, the stock market bull is very far from making a top.Gold is being increasingly more challenged and stuck in the $1,730 zone, instead of clearing it.The yellow metal awaits today‘s Fed pronouncements, and barring a dovish(ly perceived) surprise, it looks ready to give up a portion of recent gains. All eyes on long-term Treasuries remains the battle cry.
Reversing the Fed Moves?

Reversing the Fed Moves?

Monica Kingsley Monica Kingsley 18.03.2021 15:22
Fed messaging was rightfully interpreted as dovish – full employment is in effect its single mandate now. Yes, the central bank will tolerate higher inflation, and has prepped the markets for its advent (as if these didn‘t know already). Powell managed to walk the fine line between economic optimism, pushback on the idea of raising rates or taper, and yet implicitly acknowledged the growing liquidity concerns with one little, gentle prod. Markets naturally liked the tone, overlooking no mention of action on rising yields, and stocks, metals and commodities turned positive on the day – quite strongly so. The dollar declined visibly as long-term Treasuries recovered intraday losses on high volume. Highly charged finish to the day, but today‘s analysis will show that little has actually changed in its internals. Rates are rising for the good reason of improving economy and its outlook, reflation (economic growth rising faster than inflation and inflation expectations) hasn‘t given way to all out inflation, and stocks with commodities remain in a secular bull market. We‘re in the decade of real assets outperforming paper ones, but that will become apparent only much later into the 2020s.So, the central bank confirmed my yesterday‘s assessment of its tone and Treasuries take:(…) I am not looking for the Fed to act today by adjusting its forward guidance stance or language, or taking a U-turn on inflation. No, they‘ll maintain the transitory stance even though markets are transitioning to a higher inflation environment already. The Fed won‘t do much this time.They might not even talk about bringing down rates at the long end through a twist program. I certainly don‘t look for clues as to increasing the $120bn monthly pace of monetary injections. Unless the market perceives the Fed as underplaying the threat of inflation and showing tolerance to its palpable overshoot, the overall mix of positions and conference statements might bring gold under renewed pressure as it meanders a little below $1,730 as we speak.Long-term Treasuries … are weighing heavily on the markets. Stocks have gotten used to their message of rising inflation and economic recovery... – but it‘s the precious metals that are suffering here, showing best in the copper to 10y Treasury yield ratio.For gold, the key question remains whether copper upswings will outpace any yield increases on the long end, which have moderated their increases in Mar compared to Feb. That‘s good but not nearly enough given that even gold afficionados have come to expect lower prices lately quite en masse. Sign of capitulation off which the upswing was born? Yes, and the key questions now are whether we‘re seeing a pause, or a top in the upswing, and whether the next selling pressure would break below the $1,670 zone or not – see my early March game plan. The volume profile thin zone around $1,760 appears out of reach for now, without a Fed catalyst.And while we got a good confidence building one yesterday, I don‘t see it as strong enough to power precious metals higher immediately. It‘s nice that gold is decoupling from the rising yields but I view its upswing as demanding on current and future patience. Gold miners are still showing the way, and will be a key barometer in telling whether today‘s premarket downswing in antidollar, risk-on plays is a meaningful turn or not. For now, the renewed long-term Treasury yield increases (and tech selloff to a degree) point to reemergence of lingering Fed doubts.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe upper knot in the S&P 500 upswing spells short-term caution. The chart posture would be stronger without it, but at the same time, the volume and candle itself aren‘t ones of reversal. The most likely outcome of upcoming sessions still appears as resumption of the prior grind higher, which is in line with my yesterday‘s message of consolidation followed by new highs as the most likely scenario.Credit MarketsThe long upper knot in the high yield corporate bonds to short-term Treasuries (HYG:SHY) ratio shows that the bond market isn‘t on board with the Fed – at a time when stocks aren‘t panicking in the least. Given the big picture in the economy and the combo of monetary and fiscal policy initiatives, I look for this to be a storm in the tea cup when it comes to (higher future) stock prices, and I am keenly on the lookout for possible deterioration in the corporate bond markets as relates to the S&P 500.Technology and ValueThe tech upswing wasn‘t really convincing, but it‘s been value stocks‘ turn to drive higher S&P 500 prices. No change in dynamic here. It‘s however the relation to not as strong Russell 2000 or emerging markets yesterday that hints at headwinds in stocks for today. A play on patience, again.Inflation ExpectationsYesterday‘s Fed message gave no reason for these to decline, and prior uptrend continues unabated. Bond yields haven‘t though frontrunned them yesterday, which I however look to see changed today.Precious MetalsThe gold ETF formed a bullish candle, tracking the rising miners well. But likewise to the HYG:SHY ratio‘s upper knot message, this one is concerning as well. The key question is about the staying power of GDX outperformance – the key argument for the gold market character having changed with the Mar 08 bottom, which might very well be THE bottom, and not a local one. The decoupling of the yellow metal from rising yields is even more visible now than when I first showed you the weekly $GOLD - TLT overlay chart two weeks ago.Platinum goes down while the copper engine runs (and silver did join in yesterday). This chart sends a message of short-term indecision extending to other commodities, including oil. SummaryS&P 500 is in my view merely testing the buyers‘ resolve, and doesn‘t want to turn the consolidation on declining VIX into a rush to the exit door. Despite the surprisingly early turn against the Fed day move, this doesn‘t represent a trend change or arrival of the dreaded steep correction. The stock market bull is very far from making a top.Gold is again under pressure today, back in the $1,730 zone instead of having cleared it. Understandable given the dollar and Treasuries reversal of yesterday‘s Fed moves, but not rushing to the downside head over heels.
Intraday Market Analysis – Sterling Tests Key Resistance

Intraday Market Analysis – Sterling Tests Key Resistance

John Benjamin John Benjamin 19.03.2021 08:18
GBPUSD builds bullish momentumThe Bank of England followed the US Fed’s dovish footstep on Thursday in an attempt to rein in inflation expectations. This has led the pound to hit a wall once again at the psychological level of 1.4000.Those who believe in the third time’s a charm may find support at 1.3850 after the pair made a series of higher lows.A bullish breakout could push the price towards 1.4150 or even end the three-week-long consolidation. A drop below 1.3800, however, may dent the upward bias from a medium-term perspective.USDJPY in rectangle consolidationRally in risk assets come at the expense of a safer Japanese yen. Though the BoJ would sit on its hands and find no issue in a weaker currency as global trade makes a comeback.The US dollar has so far found support above the previous lows around 108.30. The RSI has dropped back into neutral territory from an overbought situation, which may prompt more buyers to get in the game.A breakout above the horizontal range (109.30) could extend the rally to last June’s high at 109.80.XAGUSD bounces off ascending trendlineA softer US dollar is exactly what commodity traders have been waiting for. Silver is looking to safeguard its gains after the latest pop above the resistance at 26.40.An over-extended RSI was followed up by profit-taking in the supply area. However, a nascent rising trendline hints at buyers’ strong interest in bidding up the price.A reversal is in the making if the price action succeeds in staying above 25.80.A bullish breakout above 26.90 could trigger a broader rally into the 28s.
Breaking the Spell of Rising Yields

Breaking the Spell of Rising Yields

Monica Kingsley Monica Kingsley 19.03.2021 15:00
Markets didn‘t buy into the Fed messaging, and quite a few moves were reversed. Stocks declined, commodities got under pressure, and oil took it on the chin. Long-dated Treasuries plunged again as the dollar reversed Wednesday‘s losses. Overall picture is one of nervousness as the Fed‘s statements and their consistency are getting a second look. Plus, triple witching can exaggerate today‘s trade swings, getting reversed in subsequent sessions too.The greatest adjustment is arguably in the inflation projections – what and when is the Fed going to do before inflation raises its ugly head in earnest. There is still time, but the market is transitioning to a higher inflation environment already nonetheless. In moments of uncertainty that hasn‘t yet turned into sell first, ask questions later, let‘s remember the big picture. Plenty of fiscal support is hitting the economy, the Fed is very accomodative, and all the modern monetary theory inspired actions risk overheating the economy later this year. As I wrote yesterday:(…) Rates are rising for the good reason of improving economy and its outlook, reflation (economic growth rising faster than inflation and inflation expectations) hasn‘t given way to all out inflation, and stocks with commodities remain in a secular bull market. We‘re in the decade of real assets outperforming paper ones, but that will become apparent only much later into the 2020s.The largely undisturbed rise in commodities got checked yesterday just as stocks did, but the higher timeframe trends (technical and fundamental drivers) hadn‘t changed, which will be apparent once the dust settles. As I‘ll lay out in today‘s analysis, the gold market is springing back to life, and the precious metals upswing rationale is still very much on the table, and the decoupling from rising nominal yields goes on – I view yesterday‘s selloff in the miners as partially equity markets driven.Bottom line, I made good decisions to subscribers‘ benefit by closing profitable stock market positions before the downswing hit, and not writing off gold.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookOrderly downswing yesterday that wouldn‘t stand out on the chart in a few weeks really. The only stunning thing about it is how soon after Wednesday‘s FOMC it came. Yet, this chart isn‘t sending signals of a key reversal just in.Credit MarketsThe non-confirmation in the high yield corporate bonds to short-term Treasuries (HYG:SHY) ratio caught up with the 500-strong index yesterday. Is a new downtrend starting here? While high yield corporate bonds for the all the Treasuries market turmoil haven‘t arguably bottomed yet, the degree to which they can pull stocks down still, is an open question. Conversely, once HYG swings higher again, stocks would get on a firmer footing.Technology and ValueThe tech sold off again, and the interest-rate sensitive defensives (utilities, consumer staples and REITs) suffered yesterday. Yes, even the sharply recovering real estate sector did. Coupled with value stocks giving up intraday gains, the stock market internals have (not insurmountedly, but temporarily) deteriorated.Gold and SilverGold not following the declining TLT path is the most important green shoot within the market. The yellow metal held up very well in yesterday‘s selling pressure across the board, and not even gold miners (viewed through a $HUI overlay or $HUI:$GOLD ratio) gave up on the upswing – more downside price action in the latter would have to come today to cast real doubts.Weekly chart examination of essentially equivalent metrics (enriched with the key copper ingredient) shows clearly the PMs decoupling stage – silver cast off the shackles still in 2020 while gold is doing so now. It‘s still early on in the process, but invalidating excessively bearish targets – gold has the benefit of my doubt, until I call that one off. I don‘t think that would happen today.Crude OilThe one-way trip starting in Nov met its largest downswing yesterday, signifying we better get used to oil no longer moving in one direction only. Amid the reports of excess stockpiles and European lockdowns denting the demand, OPEC+ is keeping up with the production cuts, undermined largely by Iranian exports only. But look how little has the oil index ($XOI) declined – it‘s relative position shows the excessive nature of yesterday‘s move. In my view, oil would be rangebound once it bottoms, before breaking higher again. The world economy is improving, leading indicators are rising, and the only fly in the ointment are yields, and a stronger dollar pressuring emerging markets. The forces of reflation, liquidity and demand growth will outweigh this unfolding, temporary setback. SummaryS&P 500 is once again experiencing downswing, yet the VIX hasn‘t truly spiked – and neither has the put/call ratio. While there is no stampede to the exit door, the market internals have deteriorated, and may take more than a few sessions to get repaired. For one, tech is again in the driving seat.Gold has been quite resilient lately, and yesterday‘s developments also outside of the bonds arena are boding well for the $1,670 bottom hypothesis. Especially given the hints presented above, and that stock market weakness coupled with safe haven play attraction, might help here further.
Intraday Market Analysis – Finding Support

Intraday Market Analysis – Finding Support

John Benjamin John Benjamin 22.03.2021 07:50
AUDUSD tests key supportIn Australia’s worse-than-expected retail sales, traders saw not a reason to dump, but rather an opportunity to get in for cheap.After the RSI shot into the overbought territory post-FOMC, the indicator cooled off as the price came down to test the support at 0.7700.The subsequent rebound above 0.7770 was a sign that buyers are still in the business. 0.7850 is the intermediate resistance and its clearance could propel the Aussie above 0.79.On the downside, 0.7620 is the major daily support buyers should be aware of.GBPJPY tumbles after over-extensionThe BOJ’s tweak to widen the long-term rates cap to 0.25% from the previous 0.2% came off as a rate hike in disguise, sending the yen higher across the board.Technically speaking, the RSI’s bearish divergence was a warning on an overstretched rally. Zooming out on the daily chart an overbought RSI suggests a pullback towards the 20 or 30-day moving average (149.00).On the hourly chart, successive breaks below 151.30 then 150.80 have confirmed the turnaround. 151.80 is the resistance after the first round of sell-off.USDCAD breaks bearish momentumDespite an improvement in retail data, the Canadian dollar came under pressure as the price of oil tanked.The RSI divergence from last week indicated a loss of momentum in the sell-off. Then a breakout above the resistance at 1.2490 and a bullish MA cross have heightened the odds of a reversal.1.2570 is the next hurdle and a close above that level could trigger a new round of rally. In the case of a retracement, the demand zone between 1.2360 and 1.2460 may see strong buying interest.
Tide Is Turning in Stocks and Gold

Tide Is Turning in Stocks and Gold

Monica Kingsley Monica Kingsley 22.03.2021 13:51
Friday‘s session ended in a tie, but it‘s the bears who missed an opportunity to win. Markets however dialed back their doubting of the Fed, which has been apparent in the long-term Treasuries the most. One daily move doesn‘t make a trend change likely though, especially since the Mar pace of TLT decline is on par with Feb‘s and higher than in Jan. While Treasuries paused in early Mar, they‘re now once again as extended vs. their 50-day moving average as before.And that poses a challenge for interest rate sensitive stocks and to some degree also for tech - while I expect value to continue to lead over growth, technology would recover some of the lost ground on rates stabilization. And it‘s true that the $UST10Y move has been a very sharp one, more than tripling from the Aug 2020 lows.Inflation expectations are rising, and so is inflation – PPI under the hood thus far only. Financial assets are rising, perfectly reflected in (this month consolidating) commodity prices. Cost-driven inflation is in our immediate future, not one joined at the hip with job market pressures – that‘s waiting for 2022-3. The story of coming weeks and months is the stimulus avalanche hitting while the Fed still merrily ignores the bond market pressures.And stocks are going to like that – with tech participating, or at least not standing too much in the way, S&P 500 is primed to go to new highs rather shortly. Given the leadership baton being firmly in the hands of value, smallcaps are likely to outperform the 500-strong index over the coming weeks and months. The volatility index is confirming with its general downtrend, commodities, including oil, will be the 2021+ place to be in – just see how fast is Thursday‘s steep correction being reversed. I‘ll be covering black gold more often based on popular demand, so keep your questions and requests coming!The precious metals upswing goes on, and landed the yellow metal comfortably above $1,740. Not too spectacular, but the miners are still painting a bullish picture. I view the increasing appeal of the yellow metal (alongside the bullish sentiment hitting both Wall and Main Street) as part of the inflation trades, as decoupling from rising yields which increased really fast. As gold is arguably the first asset to move in advance of a key policy move, it might be sensing the Fed being forced (i.e. the markets betting against the Fed) to moderate its accomodative policy. Twist, taper – there are many ways short of raising the Fed funds rate that would help put pressure off the sliding long-dated Treasuries, not that these wouldn‘t be susceptible to move higher from oversold levels. And just like the yellow metal frontrunned the Fed before the repo crisis of autumn 2019, we might be seeing the same dynamic today as well.For the cynical and clairvoyant ones, we might sit here in 3-6 months over my notes on „the decoupling that wasn‘t“ - all because rates might snap back from the current almost 1.8% on the 10-year bond.For now, my Friday‘s words remain valid also today:(…) The greatest adjustment is arguably in the inflation projections – what and when is the Fed going to do before inflation raises its ugly head in earnest. There is still time, but the market is transitioning to a higher inflation environment already nonetheless. In moments of uncertainty that hasn‘t yet turned into sell first, ask questions later, let‘s remember the big picture. Plenty of fiscal support is hitting the economy, the Fed is very accomodative, and all the modern monetary theory inspired actions risk overheating the economy later this year. Rates are rising for the good reason of improving economy and its outlook, reflation (economic growth rising faster than inflation and inflation expectations) hasn‘t given way to all out inflation, and stocks with commodities remain in a secular bull market. We‘re in the decade of real assets outperforming paper ones, but that will become apparent only much later into the 2020s.The largely undisturbed rise in commodities got checked yesterday just as stocks did, but the higher timeframe trends (technical and fundamental drivers) hadn‘t changed, which will be apparent once the dust settles.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and InternalsFriday‘s session on understandably high volume and with some intraday volatility, closed with prices little changed. While the daily indicators are weakening, I see that as a temporary move that would be followed by higher highs in the index.Market breadth indicators are largely constructive, attesting to the broad base of the current S&P 500 advance. Even on little changed days such as Friday, both the advance-decline line and advance-decline volume have risen. I wouldn‘t be concerned with the weak new highs new lows here much as the sectoral structure remains positive – both technology (XLK ETF) and value stocks (VTV ETF) have rejected further intraday declines.Credit MarketsHigh yield corporate bonds have turned higher, and so did their ratio to short-dated Treasuries (HYG:SHY). This is a positive factor for further gains in stock prices.Smallcaps and Emerging MarketsThe Russell 2000 (IWM ETF) isn‘t flashing any warning signs, and continues performing as robustly as the 500-strong index. Given the stage of the bull market we‘re at, smallcaps can be expected to start outperforming at some point in the future, just the same way their underperformance was over since early Nov. As regards emerging markets, their base building accompanied with Friday‘s upswing when faced with rising yields and solid dollar, is encouraging.Gold and SilverThe gold upswing is progressing along, and the daily consolidation in the miners (GDX ETF) isn‘t an issue when compared to a stronger gold performance. Friday was also characterized by a bigger upswing in the junior miners (GDXJ ETF) than in the seniors (GDX ETF), which is positive. The overall impression is of GDX readying a breakout above late Jan and early Feb lows, which bodes well for the precious metals sector as such next – especially given that this decoupling is happening while nominal yields aren‘t truly retreating.Both silver and platinum continue their base building while copper, the key ingredient within the copper to Treasury yields ratio, keeps bullishly consolidating. Silver miners aren‘t sending signals of underperformance, which means that the precious metals upswing dynamics remain still healthy on a closing basis. As regards premarket silver weakness, putting it into context with other markets is key – thus far, it‘s the odd weak one, so I am not jumping to conclusions yet.SummaryS&P 500 trading was undecided on Friday, yet didn‘t bring any clues invalidating the bullish outlook. Volatility remains low, but the put/call ratio has risen, even without a corresponding downswing (or danger of seeing one). The Fed doubting induced pullback appears more than likely in its closing stages.Gold had another resilient week, and the precious metals upswing examination bodes well for the move higher to still continue. Miners are leading, and the yellow metal keeps breaking the spell of higher Treasury yields, supported by copper not yielding ground either.
Will Trump-Biden Twin Deficit Support Gold?

Will Trump-Biden Twin Deficit Support Gold?

Finance Press Release Finance Press Release 22.03.2021 17:48
Twin deficits could negatively affect the U.S. economy, thereby supporting the yellow metal.Twins. Many parents will tell you that they double the blessing. But economists would disagree, claiming that twins – i.e., twin deficits – could be negative for the economy. The recent deterioration in the U.S. current account and fiscal balance has sparked renewed debate over the twin deficit and its impact on the exchange rate – and the price of gold.A twin deficit occurs when large fiscal deficits coexist with big trade deficits . The former happens when the government spends more money than it raises with taxes, while the latter is the result of imports exceeding exports. A historical example of the U.S. twin deficit occurred in the 1980s, when a significant expansion in the federal budget deficit accompanied a sharp deterioration in the nation’s current account balance. According to the Institute for International Economics’ report , “from 1980 to 1986, the federal budget deficit increased from 2.7 percent of GDP to 5 percent of GDP ($220 billion) and the current account deficit increased from 0 to 3.5 percent of GDP ($153 billion).”Another example might be the 2000s. According to the New York Fed’s research paper , from 2001 to 2005, the U.S. current account and fiscal balances plunged by 3 and 4 percent of GDP , respectively. So, there is some correlation between these two. And some economists even believe that there is a causal relationship, i.e., that increases in budget deficits cause an increase in current account deficits. The link is believed to work as follows: higher deficits increase consumption, so imports expand and the trade deficit widens. However, both deficits actually have a common root: the increase in the money supply . When the Fed creates money ex nihilo to monetize the federal debt , it enables America to both borrow and consume more goods from abroad.Regardless, in absolute terms, these old twin deficits were miniscule compared to the current one. As the chart below shows, the U.S. current account deficit (green line) has expanded significantly under Trump (despite all the trade wars !) and is approaching the historical record of $800 billion seen in 2006.But what happened to the U.S. trade deficit is nothing compared to the fiscal deficit! As you can see in the chart above, it ballooned from $984 billion in fiscal year of 2019 to $3.1 trillion in 2020!So, if we simply add these two deficits together, we will see that that the U.S. twin deficits have reached a record level . As the chart below shows, it has expended from $850 billion in 2014 to $3.8 trillion in 2020!Now, the question is how the twin deficits could affect the price of gold. Well, from looking at the chart above, it’s hard to tell. Gold rallied in the 1970s, when the twin deficit was miniscule, while it entered a bear phase when the twin deficit started to increase. However, the yellow metal skyrocketed both in the 2000s and in the 2020s, when the twin deficit ballooned.The key issue is what distinguishes the 1980s from the 2000s (and 2020)? I’ll tell you. In the former period, expansionary fiscal policy coincided with tight monetary policy . In consequence, the real interest rates increased, which encouraged capital inflows and strengthened the U.S. dollar. So, gold was melting.Luckily for the yellow metal, this time, the easy fiscal policy is accompanied by the accommodative monetary policy . The Fed has already slashed the federal funds rate and it’s conducting quantitative easing to suppress the bond yields . Actually, some analysts believe that the U.S. central bank will implement the yield curve control to prevent any significant increases in the interest rates .Hence, the combination of American monetary drunkenness and fiscal irresponsibility that largely contributed to the great expansion in the twin deficits should result in the weakening of the greenback . This, at least, is what we observed in the 2000s, as the chart below shows.And this depreciation of the U.S. dollar should ultimately support gold prices , especially if we see reflation and the next commodity boom. It’s true that since its peak in August 2020, gold has been positively correlated with the greenback, but the inverse relationship can be restored one day. Investors shouldn’t forget that the dollar is not the only driver of gold prices – other factors also play a role. In the second half of the past year, both the real yields and the risk appetite increased, which outweighed the impact of the weakening dollar. Luckily, the Fed is ready to prevent any significant upward pressure on the Treasury yields coming from the twin deficits. That’s good for gold.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Gold & the USDX: Correlations

Intraday Market Analysis – Awaiting A Breakout

John Benjamin John Benjamin 23.03.2021 07:47
EURUSD consolidates near the support area The US dollar stayed subdued as Treasury yields retreated on Monday, relieving pressure on its European counterpart. The pair has fallen back from the double top at 1.1990 after it went into an overbought situation. The euro is looking for support while hovering above the major demand area around 1.1830. The current consolidation is an opportunity to build up momentum. The resistance at 1.1990 is a tough nut to crack but a bullish breakout could send the price towards 1.2050. GER 30 retreats after being overbought Equity markets are treading water at the start of the week as investors remain cautious about the inflation outlook. The DAX 30 has pulled back from the all-time high at 14810 after the RSI continuously ventured into the overbought area. Instead of chasing the momentum buyers may likely wait for a discount before jumping on the trend. The previous low at 14400 coincides with the rising trendline and could be a key zone of congestion where trend-followers would bid up the index. USOIL recovers from daily support The oil price has recouped some losses from concerns about vaccine rollouts and new lockdowns in parts of Europe. The RSI has recovered into the neutral zone as the price found support in the demand area around 58.50 on the daily chart. WTI is now at a crossroad as a deeper retracement could trigger a reversal. Otherwise, what is happening could be a mere three-wave correction. As for now, the 38.2% Fibonacci level (62.00) is the next resistance. The uptrend may only resume if buyers can push through 64.80 once again.
Intraday Market Analysis – Bearish Breakout

Intraday Market Analysis – Bearish Breakout

John Benjamin John Benjamin 24.03.2021 07:31
GBPUSD cuts through major supportThe pound saw fresh sell-off despite a fall in the UK’s unemployment rate as average earnings, an indication of inflation remained subpar.Two failed attempts to breach the psychological level of 1.4000 have put the short side back in control. The bearish breakout below 1.3800 has intensified the selling pressure by triggering stop-losses and would call 1.3650 as the next target.In the meantime, as the RSI dipped into the oversold area, a brief pullback to around 1.3850 might fill more sell orders.XAUUSD breaks out of consolidation rangeGold came under pressure as the US dollar claws back losses from previous sessions.On the daily chart, the price is entangled between the 20 and 30-day moving averages which act as resistance after the February sell-off.Zooming into the hourly chart, the precious metal has been struggling near the supply area 1750-55.The narrowing trading range between the resistance and the rising trendline is a prelude to a breakout, and a close below 1728 would resume the downtrend with 1700 as the target.SPX 500 slides on profit-takingAs a reminiscence of the trade war, brewing international tensions with China could derail investor sentiment once again. After a two-week-long rally, the S&P 500 has retreated from its peak at 3989 in search of stronger support.Divergence between the price action and the RSI was a sign of exhaustion. Then successive breakouts below 3936 and 3911 prompted short-term traders to take profit.The latest rally could be a dead cat bounce unless it achieves a new high. To the downside, 3860 would be the next stop.
Intraday Market Analysis – Double Top Breakout

Intraday Market Analysis – Double Top Breakout

John Benjamin John Benjamin 26.03.2021 07:03
USDCHF rallies above double top The US dollar continues its advance against the Swiss franc after solid GDP growth last month. The buck’s previous bounce from the 20-day moving average (0.9220) and then a close above 0.9300 have put the uptrend back on track. The bullish breakout above the double top at 0.9375 would trigger a new round of rally. An overbought RSI may lead to a brief pullback where the pair would be looking to gain momentum. If that happens the former resistance area around 0.9350 would be the support to monitor. USDNOK rises along the trendline Sliding oil prices have forced the crude-dependent Norwegian krone to take a backseat. The dollar has been grinding up along a week-long rising trendline. Lifting offers around the previous top at 8.6700 has confirmed that buyers are still in control. An RSI in the neutrality area suggests there is still room on the upside and a bullish breakout above 8.6800 could lead to a broader rally. In the case of a pullback, the demand zone between 8.5400 and 8.5800 could see strong bids from trend followers. EURJPY bounces off major support Tensions around the EU’s vaccine supply have put a strain on the euro as traders rush into a safer Japanese yen. The pair has broken below the 30-day moving average, a bearish movement that could trigger an extended consolidation if not an outright reversal. On the hourly chart, after being oversold, price action is making an attempt to rebound from 128.20. 129.20 is a key area of congestion as it coincides with the falling trendline. Needless to say, traders would try to sell into strength as the pair recovers.
Is Silver the New Gold?

Is Silver the New Gold?

Finance Press Release Finance Press Release 26.03.2021 14:30
Many analysts expect silver to outperform gold this year. It’s possible, but investors shouldn’t count on improving economic conditions and industrial demand.Silver has recently become a hot investment theme. For months, if not years, some analysts claimed that silver is undervalued relative to gold. Then, at the beginning of 2021, Reddit revolutionaries tried to trigger a short squeeze in silver. Although that attempt failed, silver has, so far, clearly been outperforming gold this year , as the chart below shows. So, is silver now a better investment than gold?Well, why would it be? After all, many investors buy silver for the same reasons that they purchase gold – it’s a rare, monetary metal which may be used as an inflation hedge , a safe-haven asset against tail risks , or a portfolio diversifier . It’s just cheaper than gold – and this is why it’s often called the poor man’s gold.Indeed, silver has a very high positive correlation with gold . Just take a look at the chart below, which illustrates the movement of gold and silver prices since April 1968. The shapes of the lines are very similar and the correlation coefficient is as high as 0.90!On the other hand, silver may indeed outperform gold. After all, silver has a dual nature. It is not only a monetary asset – like gold – but also an industrial commodity. This implies that silver is more business cycle -sensitive than gold. Therefore, given that the global economy is recovering from the deep recession caused by the coronavirus pandemic and the Great Lockdown , silver may outperform gold. In other words, although both gold and silver could benefit from reflation during the recovery, improving economic conditions could support the latter metal more .Another argument for silver shining brighter than gold in 2021 is the historical pattern according to which silver prices tend to follow gold prices with some lag, just to catch up with them later – often overreacting compared with gold’s behavior.So much for theory. Let’s move on to the data now and analyze the previous economic crisis , i.e., the Great Recession , and the following recovery. As the chart below shows, both metals moved generally in tandem, however, silver was more volatile than gold .For example, from its local bottom in mid-2007 to its local peak in early 2008, silver rose 79 percent, while gold “only” 57 percent. Then, in the first phase of the global financial crisis , silver plunged 58 percent (from $20.92 to $8.88), while gold slid 30 percent (from $1011.25 to $712.5). Subsequently, silver skyrocketed 448 percent, reaching a peak of $48.7 in April 2011. Meanwhile, the price of gold reached its peak of $1875 a little bit later, in September 2011, gaining 166 percent. Finally, silver plunged 46 percent by the end of 2011, while gold dropped only 19 percent. This shows that the economic recovery and industrial revival that followed the Great Recession didn’t help silver to shine. Actually, the bluish metal underperformed gold .Similarly, silver plunged more than gold (25 versus 17 percent) in the run-up to the burst of the dot-com bubble , as one can see in the chart below. It also gained less than gold in the aftermath of the 2001 recession (25.4 versus 27.5 percent), and then it plunged in the third quarter of 2002, significantly underperforming gold.Therefore, the recent history doesn’t confirm the view that silver should be outperforming gold in the early stages of a recovery, because it’s an industrial commodity that benefits from improving economic conditions. Silver was never in a bullish mode when gold was in a bear market, and it rather tends to rally rapidly in the late stage of the commodity cycle, like in the 2000s.Actually, one can argue that silver has the best period behind itself. After all, it soared 141 percent from late March to September 2020, while gold rallied “only” 40 percent. So, it might be the case that the catch-up period, in which silver outperforms gold, is already behind us. Indeed, as the chart below shows, the gold-to-silver ratio has recently declined to a more traditional range of 60-70.This, of course, doesn’t mean that silver cannot rise further. However, it seems that the metal has already caught up somewhat with its more precious cousin . So, it’s possible that silver can outperform gold in 2021, as Biden’s focus on renewable energy may help silver – as a major part of the metal used in industry is now linked to solar panels and electronics, but history teaches us that investors shouldn’t count on industrial demand . Silver didn’t outperform gold during recoveries from the previous recessions. Although silver has a dual nature, its price is highly correlated with gold prices. Therefore, macroeconomic factors, such as the U.S. dollar , real interest rates , risk appetite, inflation , public debt , monetary policy , fiscal policy , etc., should have a stronger impact on silver than industrial demand . As always, those entering the silver market should remember that silver price movements are more violent than in the gold market.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Why It‘s Reasonable to Be Bullish Stocks and Gold

Why It‘s Reasonable to Be Bullish Stocks and Gold

Monica Kingsley Monica Kingsley 26.03.2021 15:02
Another day, another reversal – and a positive one for stocks. Universal sectoral weakness gave way to a unison rebound amid constructive outside markets. After weeks of on and off fits over rising Treasury yields, S&P 500 ran into headwinds on their retreat, and recaptured its luster yesterday as long-dated Treasuries (TLT ETF) rolled over to the downside. I guess nothing boosts confidence as much a troubled 7-year Treasury auction.While it‘s far from full steam ahead, it‘s a welcome sight that the reflation trade dynamic has returned, and that technology isn‘t standing in the way. I think we‘re on the doorstep of another upswing establishing itself, which would be apparent latest Monday. Credit markets support such a conclusion, and so does the premarket turn higher in commodities – yes, I am referring also to yesterday‘s renewed uptick in inflation expectation.Neither running out of control, nor declaring the inflation scare (as some might term it but not me, for I view the markets as transitioning to a higher inflation environment) as over, inflation isn‘t yet strong enough to break the bull run, where both stocks and commodities benefit. It isn‘t yet forcing the Fed‘s hand enough, but look for it to change – we got a slight preview in the recent emergency support withdrawal and taper entertainment talking points, however distant from today‘s situation.Now, look for the fresh money avalanche, activist fiscal and moterary policy to hit the markets as a tidal wave. Modern monetary theorists‘ dream come true. Unlike during the Great Recession, the newly minted money isn‘t going to go towards repairing banks‘ balance sheets – it‘s going into the financial markets, lifting up asset prices, and over to the real economy. So far, it‘s only PPI that‘s showing signs of inflation in the pipeline – soon to be manifest according to the CPI methodology as well.Any deflation scare in such an environment stands low prospects of success. That concerns precious metals – neither rising, nor falling, regardless of the miners‘ message. After the upswing off the Mar 08 lows faltered, the bears had quite a few chances to ambush this week, yet made no progress. And the longer such inaction draws on, the more it is indicative of the opposite outcome.Yes, that‘s true regardless of the dollar continuing down for almost a month since my early Feb call before turning higher. When I was asked recently over Twitter my opionion on the greenback, I replied that its short-term outlook is bullish now – while I think the world reserve currency would get on the defensive and reach new lows this year still, it could take more than a few weeks for it to form a local top. Once AUD/USD turns higher, that could be among its first signs.Regarding gold, yesterday‘s words are true also today:(…) Gold is again a few bucks above its volume profile $1,720 support zone, and miners aren‘t painting a bullish picture. Resilient when faced with the commodities selloff, but weak when it comes to retreating nominal yields. The king of metals looks mixed, but the risks to the downside seem greater than those of catching a solid bid.That doesn‘t mean a steep selloff in a short amount of time just ahead – rather continuation of choppy trading with bursts of selling here and there. What could change my mind? Decoupling from rising TLT yields returning – in the form of gold convincingly rising when yields move down. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookYesterday‘s reversal was overall credible – more so in its internals than as regards the daily volume. On a positive and contrarian note, the put to call ratio reached higher highs yesterday, leaving ample room to power a swift upswing should it come to that. And it could as quite many investors are positioned for a downswing in stocks.Credit MarketsThe high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio gave up all of yesterday‘s gains, but isn‘t leaving stocks as extended here. Much depends upon whether squaring the risk-on bets would continue, or not. Both stocks and the ratio appear consolidating here, and not rolling over to the downside.Value and TechnologyValue stocks (VTV ETF) finally showed clear leadership yesterday, the volume didn‘t disappoint, and technology (XLK ETF) recovered from prior downside on top. Closing about unchanged, it‘s key to the S&P 500 upswing continuation with force as opposed to muddling through.Gold in the SpotlightThe troubled miners got a little less problematic yesterday. The GDX ETF recovered from intraday losses while gold didn‘t exactly plunge. Its opening strength was a pleasant sight as more often than not, miners‘ weakness while gold goes nowhere, is a signal for going short the metal. But as this sign didn‘t result in a gold slide, my viewpoint is turning bullish again because we might be seeing fake miners weakness that would be resolved over the coming week with an upswing. Now that the Wall and Main Street expectation for the coming week aren‘t probably as bullish as for the week almost over, an upswing would be easier to pull off (should it come to that).Big picture view remains (positively) mixed – the selling pressure is retreating but gold isn‘t yet reacting to declining yields. Once it clearly does, the waiting for a precious metals upswing would be over.Silver and MinersSilver staged an intraday reversal, which copper couldn‘t pull off. Not that it attempted to, but still the commodities selloff appears a bit overdone, given that nothing has fundamentally changed. Both gold and silver miners stabilized on the day, meaning that the sector is in a wait and see mode, unwilling to turn bearish just yet.SummaryThe odds of an S&P 500 upswing have gone up, and volatility made a powerful retreat below 20 once again. Value stocks have turned upwards, and the stock bulls appear readying another run.Miners closed at least undecided yesterday, but gold and silver miners showing outperformance again is missing. Both metals still remain vulnerable to short-term downside. Once gold strengthens on declining yields, that would be another missing ingredient in the precious metals bull market.
Intraday Market Analysis – Bullish Case

Intraday Market Analysis – Bullish Case

John Benjamin John Benjamin 29.03.2021 08:00
USDJPY accelerates rallyThe US dollar climbs as the US economy is gaining steam while other parts of the world face new Covid restrictions.The pair has shot up to last June’s high at 109.85 after it broke out of the consolidation range under 109. The bias remains strongly bullish, though an overbought RSI would suggest a temporary pullback as traders take profit.In that case, the rising trendline and 20 and 30-hour moving averages would become the demand zone. A deeper retracement may find support from the former resistance at 109.20.XAUUSD awaits breakout catalystA firm US dollar is weighing on gold as Treasury yields hold ground. The recovery stalled after the price broke below the rising trendline, denting the optimism for a swift rebound.The precious metal is likely to stay range-bound until a catalyst, be it fundamental or technical, triggers a breakout.1718 is a key support and a bearish breakout could deepen the correction towards 1700.To the upside, bulls will need to remove 1745 to bring back confidence. After that, an extended rally may carry the price to 1780.GER 30 surges to new highEquity markets recovered swiftly after lower-than-expected US personal consumption expenditure quelled the fear of reflation.The DAX has bounced off the key short-term support at 14430 to challenge the all-time high at 14800.Solid momentum above a bullish MA cross confirms that buyers are still in control of the price action. A close above 14800 may convince more trend followers to join in and push the index higher.To the downside, 14590 would be the immediate support for the RSI to cool off.
What Could Slay the Stock & Gold Bulls

What Could Slay the Stock & Gold Bulls

Monica Kingsley Monica Kingsley 29.03.2021 15:31
Put/call ratio didn‘t lie, and the anticipated S&P 500 upswing came on Friday – fireworks till the closing bell. Starting on Thursday, with the rising yields dynamic sending value stocks higher – and this time technology didn‘t stand in the way. What an understatement given the strong Friday sectoral showing, acocmpanied by the defensives swinging higher as well. And that‘s the characterization of the stock market rise – it‘s led by the defensive sectors with value stocks coming in close second now.Still last week, the market confirmed my early Friday‘s take:(…) While it‘s far from full steam ahead, it‘s a welcome sight that the reflation trade dynamic has returned, and that technology isn‘t standing in the way. I think we‘re on the doorstep of another upswing establishing itself, which would be apparent latest Monday. Credit markets support such a conclusion, and so does the premarket turn higher in commodities – yes, I am referring also to yesterday‘s renewed uptick in inflation expectation.Neither running out of control, nor declaring the inflation scare (as some might term it but not me, for I view the markets as transitioning to a higher inflation environment) as over, inflation isn‘t yet strong enough to break the bull run, where both stocks and commodities benefit. It isn‘t yet forcing the Fed‘s hand enough, but look for it to change – we got a slight preview in the recent emergency support withdrawal and taper entertainment talking points, however distant from today‘s situation.Commodities have indeed turned again higher on Friday, as seen in both copper and oil – and so did inflation expectations. While some central banks (hello, Canada) might be ahead in attempting to roll back the emergency support, the Fed isn‘t yet forced by the bond market to act – which I however view as likely to change over the coming months.With 10-year Treasury yields at 1.67%, last week‘s decline didn‘t reach far before turning higher. Remembering stock market woes the first breach of 1.50% caused, stocks have coped well with the subsequent run up – while in the old days of retirees actually being able to live off interest rate income, a level of 4% would bring about trouble for S&P 500, now the level is probably just above 2%. Yes, that‘s how far our financialized economy has progressed – and I look for volatility to rise, and stocks to waver and likely enter a correction at such a bond market juncture. As always, I‘ll be keeping a close eye on the signs, emerging or not, as we approach that yield level.Again quoting my Friday‘s words, what else to expect as the bond markets takes notice:(…) Now, look for the fresh money avalanche, activist fiscal and moterary policy to hit the markets as a tidal wave. Modern monetary theorists‘ dream come true. Unlike during the Great Recession, the newly minted money isn‘t going to go towards repairing banks‘ balance sheets – it‘s going into the financial markets, lifting up asset prices, and over to the real economy. So far, it‘s only PPI that‘s showing signs of inflation in the pipeline – soon to be manifest according to the CPI methodology as well.Any deflation scare in such an environment stands low prospects of success. For deflation to succeed, a stock market crash followed by a depression has to come first. And as inflation is firing on just one cylinder now (asset price inflation not accompanied by labor market pressures), it isn‘t yet strong enough to derail the stock bull run. The true inflation is a 2022-3 story, which is when we would be likely in a full blown financial repression and bond yields capped well above 2% while inflation rate could run at double that figure. Then, the Fed wouldn‘t be engaged in a twist operation, but in yield curve control, which the precious metals would love, for they love low nominal and negative real rates.Gold might be already sensing that upcoming pressure on the Fed to act – remember their run for so many months before the repo crisis of autumn 2019 broke out:(…) After the upswing off the Mar 08 lows faltered, the bears had quite a few chances to ambush this week, yet made no progress. And the longer such inaction draws on, the more it is indicative of the opposite outcome.Not only that gold miners outperformed the yellow metal on Friday, with their position relative to silver, the king of metals is sending a signal that it would be the one to take leadership in the approaching precious metals upswing. And the dollar wouldn‘t be standing in the way – let‘s continue with my Friday‘s thoughts:(…) When I was asked recently over Twitter my opionion on the greenback, I replied that its short-term outlook is bullish now – while I think the world reserve currency would get on the defensive and reach new lows this year still, it could take more than a few weeks for it to form a local top. Once AUD/USD turns higher, that could be among its first signs.Once higher rates challenge the stock market bull, the dollar would do well in whiff of deflationary environment (remember the corona runup of spring 2020), but it would be the devaluation that would break it – and it‘s my view that devaluation would not happen against other fiat currencies, but against gold (and by extension silver). With devaluation (it‘s still far away in the future), a true inflation would arrive and stay, which forms a more drastic scenario to the more orderly one I discussed earlier in today‘s article.Another challenge for the stock market bull comes from taxes, as the current and upcoming infrastructure stimuli (wait, there is the $2T one to move the U.S. to a carbon-neutral future on top) would result in higher tax rates next year, which would further hamper productive capital allocation as people and institutions would seek to negate their effect. Needless to say, gold, miners and real assets would do very well in such an environment.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookStrong S&P 500 upswing on Friday, on a not too shabby volume. The key question is whether the bulls can keep the momentum on Monday, and ideally extend the gains at least a little. Signs are they would be able to achieve that.Credit MarketsHigh yield corporate bonds (HYG ETF) reached the mid-Mar highs, and need to confirm Friday‘s upswing – odds are they would continue higher on Monday as well, because the volume comparison is positive and daily indicators don‘t appear yet ready to turn down.Inflation ExpectationsInflation expectation as measured by Treasury inflation protected securities to long-dated Treasuries (TIP:TLT) ratio, keep making higher highs and higher lows – the market is recalibrating towards a higher inflation environment, but not yet running ahead of the Fed as the 10-year Treasury yield (black line) shows. It‘s so far still orderly.Smallcaps and Emerging MarketsThe Russell 2000 (IWM ETF, upper black line) is underperforming the S&P 500, and so are the emerging markets (EEM ETF) – both signals of the defensive nature of the stock market upswing. The animal spirits aren‘t there to the full extent (don‘t be fooled by the strong VTV showing), but have been making a return since Thursday.Gold, Silver and MinersA new turn is taking shape within the Tuesday-challenged precious metals upswing – the miners appear yet again assuming leadership. The call I made on Thursday, hinting at a change, appears materializing to the bulls‘ benefit.Comparing gold and silver at the moment, results in the conclusion of the yellow metal leading higher after all – and the positive turn in copper (which is also reflected in the copper to 10-year Treasury yield ratio) confirms that.Crude OilBlack gold keeps defending the 50-day moving average, showing the reflation trade in both commodities and stocks isn‘t over yet. The oil index ($XOI) is once again pointing higher, and so is the energy ETF (XLE). While Friday‘s volume was relatively modest, oil has good prospects to keep recovering this week.SummaryThe odds of an S&P 500 upswing were confirmed by the Friday‘s upswing, in line with the put/call ratio indications. Credit markets concur, and while the sectoral constellation isn‘t totally bullish, it can still carry the index to new highs.Miners made an important turn higher relative to gold, and the sector can enter today‘s trading on a stronger footing than was the case on Friday. The green shoots in the precious metals sector appear likely to take a turn for the better this week and next. As always, keeping a close eye on the gold‘s relationship to nominal yields, is essential – be it decoupling from rising ones, or a strong upswing on retreating ones.
The Three Pillars for Stocks

The Three Pillars for Stocks

Finance Press Release Finance Press Release 29.03.2021 16:42
We’re officially almost through with the first quarter of 2021. While a broad correction did not happen by now, as I thought, the Nasdaq dipped into correction territory twice.There might also be as much uncertainty for tech stocks today as there was at March’s start.However, let’s look at the big picture almost a week after we hit the 1-year anniversary of the market’s bottom. Three pillars remain in motion as a strong backdrop for stocks:VaccinesDovish monetary policy full of stimulusFinancial aidWhile the major indices are still positive for 2021, every month this year has been marked by hot starts, marred by mid-month uncertainty and downturns. We’re dealing with rising bond yields, inflation scares, volatile Reddit trades, and an improving yet slowing labor market recovery.Plus, although earnings came in strong this past quarter, stock valuations are still at an overly inflated point not seen in years. In fact, Ray Dalio , founder of the world’s largest hedge fund, Bridgewater Associates, says there’s a bubble that’s ‘halfway’ to the magnitude of 1929 or 2000.We could see some more volatility on tap this week as the market continues to figure itself out.Suez Canal- There’s been a gigantic tanker blocking arguably one of the most crucial waterways for global trade for the last 6 days. There are indications that the tanker may be on the way to being freed. But the sooner this happens, the better. The Suez Cana controls about 10% of global trade, so you can only imagine the hundreds of billions of dollars bleeding per day the more this drags on.Economic Data- Consumer Confidence, the March job’s report, the unemployment rate, and the PMI Manufacturing index will be released this week.Earnings- Chewy (CHWY) will report Tuesday (Mar. 30) after market close, and Walgreens Boots Alliance (WBA), Dave & Busters (PLAY), Micron (MU) will all report after market close Wednesday (Mar. 31).My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:Over a year after we bottomed, there is optimism but signs of concern.The market has to figure itself out. More volatility is likely, and we could experience more muted gains than what we’ve known over the last year. Inflation and interest-rate worries should be the primary tailwind. However, a decline above ~20%, leading to a bear market, appears unlikely to happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Time to Pounce?Figure 1- iShares Russell 2000 ETF (IWM)I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February. I wasn’t going to make that mistake again.After the iShares Russell 2000 ETF (IWM) went on its latest rally to start March, I checked out the chart. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25, dropped below its 50-day, and I switched the call to a BUY.Now, as we start the final week in March, we may be looking at the 6th reversal after dipping below its 50-day. The IWM has been up about 4.25% since March 24.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.Based on the RSI and where we are in relation to the 50-day moving average, I still feel that this is a BUY.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
A Climbing USDX Means Gold Investors Should Care

A Climbing USDX Means Gold Investors Should Care

Finance Press Release Finance Press Release 29.03.2021 17:17
Positions in the USDX are shifting from shorts to longs, so gold investors should look closely. Why? Because it’s an inverse relationship.We’ve discussed the negative correlation between the dollar and the precious metals many times before, but it can never be discussed enough, particularly as the situation develops and the outlook for the USD Index becomes more positive.Once the USD Index lands some knockout punches, the precious metals will be hurting, as they tend to do when the dollar rises. Gold, silver and the miners will eventually rise, but for the medium-term, they are still in bearish territory.Counted out, counted down and rarely counted on, investors threw in the USD Index’s towel long before the fight even began. However, after shaking the cobwebs and landing a few haymakers, the greenback’s Rocky-like comeback is proof that ‘it ain’t over till it’s over.’Let’s look at the factors influencing rise of the USD Index as well as some of the historical patterns:1. Repositioning from Short to LongNow, with thousands of screaming fans chanting “USD, USD,” the eye of the tiger could be eying another move higher. As evidence, if you analyze the chart below, you can see that non-commercial (speculative) traders have quietly repositioned from net-short to net-long.To explain, notice how oversold periods in 2014 and 2018 – where net-speculative short interest as a percentage of total open interest was extremely high – preceded sharp rallies in the USD Index? Thus, with 2021 the most extreme on record, the forthcoming rally should be significant.How significant? Well, let’s take a look at how things developed in the past – after all, history tends to rhyme.Let’s focus on what happened when the net speculative positions were significantly (!) negative and then they became significantly (!) positive, so without paying attention to tiny moves (like the one that we saw last summer), let’s focus on the more meaningful ones (like the one that we see right now – the net positions just became visibly positive – over 16%, after being very negative for quite some time.In short, that’s how the following profound rallies started:The big 2008 rally (over 16 index points)The big 2009 – 2010 rally (over 14 index points)The 2011 – 2012 rally (over 11 index points)The 2013 rally (“only” over 5 index points)The big 2014 – 2015 rally (over 20 index points)The 2018 rally (over 15 index points)The current rally started at about 89, so if the “normal” (the above shows what is the normal course of action) happens, the USD Index is likely to rally to at least 94, but since the 5-index point rally seems to be the data outlier, it might be better to base the target on the remaining 5 cases. Consequently, one could expect the USD Index to rally by at least 11 – 20 index points, based on the net speculative positions alone. This means the upside target area of about 105 – 114.Consequently, a comeback to the 2020 highs is not only very likely, but also the conservative scenario.2. The 10-Year Treasury YieldAdding to the momentum, in 2020, the USD Index sat out the U.S. 10-Year Treasury yield’s ferocious upswing. Defying historical precedent, a bottom and subsequent move higher in the U.S. 10-Year Treasury yield has coincided with a rise in the USD Index 80% of the time since 2003 . But now in sync, 2021 has been a much different story. If you analyze the chart below, you can see that the USD Index has been moving in lockstep with the U.S. 10-Year Treasury yield since the New Year.3. Reclaiming 200-Day Moving AverageIn addition, not only has the USD Index broke above its previous highs, but the basket just reclaimed its 200-day moving average (which is often indicative of a long-term uptrend). As a result, the greenback continues to float like a butterfly and sting like a bee .For historical context, after recapturing its 200-day MA in 2018, the USD Index only suffered mild pullbacks before surging above 95. As such, with the mid-2020 highs the USD Index’s next opponent, 94.5 is unlikely to put up much of a fight.Keep in mind though: in the very-short term, the USD Index could move lower and retest its prior 2021 highs. However, the damage should be minimal, and it wouldn’t invalidate the USD Index’s medium-term breakout. Because of this, the outlook remains profoundly bearish for the gold, silver , and mining stocks over the medium term. If you analyze the table below, you can see that the precious metals tend to move inversely to the U.S. dollar.4. The History Really Rhymes: The 2017-2018 UpswingBut saving the best for last, the 2017-2018 analogue could be the USD Index’s knockout punch. With this version likely to be titled “The Resurgence: Part 2,” while history often rhymes, it’s rare for it to rhyme with this level of specificity .Please see below:Even more revealing, while it took less than 118 days for the USD Index to move from peak to trough in 2020-2021, the uprising could occur at a much faster pace. In 2018, the USD Index’s breakout above its 50-day moving average is exactly what added gasoline to the USDX’s 2018 fire. And after the 2018 breakout, the USDX surged back to its previous high. Today, that level is 94.5 .Furthermore, in 2017-2018, it also took 82 days for the USDX to form a final bottom (the number of days between the initial bottom and the final bottom) and the duration amounts to 21.19% of the overall timeframe. If we applied a similar timeframe to today’s move, then the USD Index should have bottomed on Feb. 12. It actually bottomed (finally) on Feb. 25, which was just 8 trading days away from the former date. Taking into account the sizes of the moves that preceded the previous declines (they took approximately one year to complete), this is extremely close and an excellent confirmation that the self-similar pattern remains intact.Also noteworthy, as the USDX approached its final bottom in 2017-2018, gold traded sideways. Today, however, gold has been in a downward spiral and it doesn’t seem that the decline is over. From a medium-term perspective, the yellow metal’s behavior is actually more bearish than it was in 2017-2018.And while the self-similar pattern is already playing out as predicted, please read below for further explanation as to why the USD Index’s current and historical price action remains a spitting image:It’s not true that there were no pullbacks during the 2018 rally. There were, but they were simply too small to be visible from the long-term point of view.The first notable pullback took place in early May 2018, and it contributed to a corrective upswing in the precious metals market. To be precise, the USD Index declined after rallying for 56 trading days, but gold rallied earlier – 51 trading days after the USD Index’s final bottom. The USDX’s immediate-top formed 16 trading days after its final bottom, and gold’s bottom formed 10 trading days after the USD’s final bottom.Comparing this to the size of the previous decline in terms of the trading days, it was:51 – 56 trading days / 283 trading days = 18.02% - 19.79%10 – 16 trading days / 283 trading days = 3.53% - 5.65%Also indicating a messy divorce, when the USD Index turned a short-term decline into consolidation in mid-2018, can you guess what happened next? Well, the USD Index moved significantly higher, while gold moved significantly lower.Please see below:Moreover, when comparing the pairs’ behavior in mid-2018 to today, it’s ominously similar.Please see below:For additional context, I also wrote on Mar. 10:Let’s examine the current situation: the preceding decline lasted for 200 trading days and there were 41 – 42 trading days between the final USDX bottom and the short-term reversals in gold and USDX. Comparing this to the final USDX bottom, we get 7 – 8 trading days.Applying the previous percentages to the length of the most recent medium-term decline in the USD Index provides us with the following:18.02% - 19.79% x 200 trading days = ~36 - ~40 trading days3.53% - 5.65% x 200 trading days = ~7 - ~11 trading daysThe above estimation of about 36 – 40 trading days almost perfectly fits the current 41 – 42-day delay, and the estimation of about 7 – 11 trading days almost perfectly fits the current delay of 7 – 8 trading days.In other words, the analogy to the 2018 performance does not only remain intact – it actually perfectly confirms the validity of the current corrective upswing. Once again, it’s very likely just a pullback, not a big trend reversal.Likewise, a potentially bearish pattern that I have been monitoring – where the USD Index’s price action from July to October 2020 mirrored the price action from December 2020 to February/March 2021– has officially been broken . With the USD Index’s medium-term breakout trumping the former, the potentially bearish pattern has been invalidated and the USD Index is likely to continue its ascension.But to what end?Well, if we look back at 2020, the USD Index attempted to recapture its previous highs. But lacking the upward momentum, the failure was followed by a sharp move lower. Today, however, the USD Index has broken above its previous highs and the greenback verified the breakout by consolidating, moving back toward the previous lows and rising once again. Now, the USD Index is visibly above its previous highs .Taken together, and given the magnitude of the 2017-2018 upswing , ~94.5 is likely the USD Index’s first stop. And in the months to follow, the USDX will likely exceed 100 at some point over the medium or long term.In conclusion, the USD Index went from being on the ropes to winning the crowd. And with the momentum building and the adrenaline rising, it’s only a matter of time before the USD Index lands another haymaker. Moreover, given the precious metals’ negative correlation with the U.S. dollar – combined with the fact that technicals, fundamentals and sentiment are now riding with the greenback – an uprising could leave the gold, silver, and mining stocks battered and bruised. However, after a tough period of soul searching, the precious metals will regain the heavyweight championship once again. Or, if one wants to put it in more technical terms, gold, silver, and miners are likely to start a massive rally, but only after declining visibly first.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Bitcoin is invaluable

Bitcoin is invaluable

Korbinian Koller Korbinian Koller 30.03.2021 08:27
In fact, Bitcoin is a decentralized global digital network which in essence is transforming analog assets into digital assets. It has been growing at 200% a year. Now after 12 years in existence Bitcoin is a digital trillion-dollar network.What supports its long-term stability is that its decentralization and transparency are immune against policy. While we typically at the mercy of policymakers and as such a middleman that can manipulate the use of a payment method, with Bitcoin, the individual is genuinely safe. Looking at the world around us where it is hard to find any field not infiltrated by groups who seek to take advantage, manipulate, and flat out lie, it is a true need one can trust a store of value to benchmark against.BTC-USDT, Daily Chart, Our chart from last week’s chartbook:Bitcoin in US Dollar, daily chart as of March 23rd, 2021.We posted the above short to midterm chart prediction in our last week’s chartbook publication.BTC-USDT, Daily Chart, As anticipated-another leg up:Bitcoin in US Dollar, daily chart as of March 29th, 2021.The market unfolded quite as planned. BTC-USDT, Weekly Chart, Health and sustainability:Bitcoin in US Dollar, weekly chart as of March 29th, 2021.If we analyze Bitcoin prices advancing from last August’s lows, we can find an intact Elliot impulse wave pattern. The Health and sustainability of this trend are derived from the three propulsion proportions. While advancing strongly in the first wave with a 323 % advancement, the pace cooled down to a 99% second leg upward. These stunning advancements followed yet again by a more moderate increase of 44% to its recent all-time highs. This abstinence of a blow-off top or run-away train allows us to believe that prices could march higher.BTC-USDT, Weekly Chart, Bitcoin is invaluable, Projections:Bitcoin in US Dollar, weekly chart as of March 29th, 2021.When examining projections, we like to stack odds by looking at both a time and a price component. The above chart shows this blend using a time cycle approach (vertical lines) and a Fibonacci extension probability measurement. Stacking these projection tools would lead us to a price target near ninety-seven thousand for the mid-next year. Our “conservative” projection is marked with the yellow circle on the top right of the chart.Bitcoin is invaluable:Looking around, and you will find that the Dollar is what around the world most value storage is bench-marked against. It seems frightening to us since the Dollar has no gold standard or otherwise intrinsic value that we still give it this much power only based on a belief. With economic powers shifting towards the east and a lack of political and economic leadership, beliefs can change, and as such, currency stability is endangered. Hedging your store of value through an instrument that holds intrinsic value based on principles over beliefs seems more than logical.Feel free to join us in our free Telegram channel for daily real time data and a great community.If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.By Korbinian Koller|March 30th, 2021|Tags: Bitcoin, Bitcoin correction, Bitcoin mining, crypto analysis, crypto chartbook, crypto mining, low risk, quad exit, technical analysis, trading education|0 CommentsAbout the Author: Korbinian KollerOutstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Intraday Market Analysis – Fading Sell-Off

Intraday Market Analysis – Fading Sell-Off

John Benjamin John Benjamin 30.03.2021 08:31
USOIL sees bearish momentum stallingWTI climbed back in anticipation of extended production cuts by OPEC+ in their upcoming meeting in April. The pullback would be temporary as an RSI divergence showed a loss in the sell-off.Following a rebound from the support at 57.20, an RSI double top in the overbought area suggests that the US crude has been consolidating in search of momentum.The latest breakout above the psychological level at 62.00 is a confirmation that buyers have regained control and the price could be on its way to 65.USDCAD recovers towards supply areaThe recent retreat in oil prices has weighed on the loonie while the US dollar kept the high ground across the board. The pair is grinding higher towards the supply zone near 1.27.However, selling pressure is likely to intensify as the US dollar tests the 20 and 30-day moving averages on the daily chart, within a year-long downtrend.1.2540 is the immediate support and a bearish breakout could further depress the price action.To the upside, 1.2680 is the hurdle to lift before the bulls could press for a reversal.US 30 tests a record highStock markets recouped losses from previous choppy sessions as investors saw the dip as an opportunity.After rallying above the former resistance at 32500, the Dow Jones is making an attempt at the previous high at 33250. A bullish breakout could extend the rally to new record highs.While market sentiment remains positive, an overbought RSI could prompt a pullback driven by profit takings.The demand area between 32500 and 32700 could see strong buying interest if the index cools off.
Has Gold “Ever Given” to You?

Has Gold “Ever Given” to You?

Finance Press Release Finance Press Release 30.03.2021 17:01
Neither the Suez Canal blockade nor the SLR exemption’s expiration should significantly affect gold, whose price is likely to be soon shaped by other factors.Do you think you’ve had a bad day? If yes, then imagine the helmsman of the Ever Given who somehow managed to get his giant container ship stuck in the Suez Canal, disrupting global trade and causing economic damage worth millions of dollars each hour. Sure, the blockade won’t sink the global economy (pun intended), but it won’t help it either. After all, the Suez Canal is the gateway between Europe and Asia, through which around 12-13% of world trade flows, as does 30% of the world's daily shipping container freight. So, every day of obstruction disrupted the movement of goods worth about $9 billion, having a significant impact on global trade.Of course, the world won’t end, and ships can always choose an alternative route around the Cape of Good Hope at the southern tip of Africa, but this route takes several days longer. So, the blockade has significantly delayed the consignments of goods and fuel, and exacerbated the already pandemic-disturbed supply channels. As a reminder, there are shortages of containers, semi-conductors, and other inputs and finished goods, that have significantly lengthened delivery times and pushed prices up. Although the blockade of the Suez Canal was temporary, it added additional disruption on top of existing supply problems. Meanwhile, the central banks and governments interpret everything as demand problems that need to be addressed through easy monetary policy and loose fiscal policy .The accident of the Ever Given won’t significantly impact gold prices. And, as the chart below shows, we haven’t seen any substantial effects so far.However, the blockade could remind investors (if they somehow managed to forget amid the pandemic ) that black swans exist and fly low, and it’s reasonable to have a portion of one’s investment portfolio in safe havens such as gold (for instance, the insurance part of the portfolio ). Additionally, the upward pressure on prices (although limited) could strengthen the appeal of gold as an inflation hedge , especially considering that officially reported inflation is likely to jump next month because of the low base effect and all the recent supply disruptions.Fed Allows for Expiration of SLRAnd now for something completely different. The Federal Reserve Board announced that the temporary change to its supplementary leverage ratio , or SLR, for bank holding companies will expire as scheduled on March 31. What does this mean for the U.S. economy and the gold market?The SLR is a regulation that requires the largest U.S. banks to hold a minimum level of capital. The ratio says how much equity capital the banks have to hold relative to their total leverage exposure (3% in the case of large banks and 5% in the case of top-tier banks). To ease strains in the Treasury market during the Covid-19 epidemic , the Fed temporarily excluded the U.S. Treasuries and central bank reserves from the calculation. In other words, banks could increase their holdings of government bonds and central bank reserves without raising equity capital.But now, with the exemption expired, their equity capital will be calculated again relative to the banks’ total leverage exposure, including Treasuries and central bank reserves. So, it might be the case that the banks will have to either increase the amount of equity (which is rather unlikely) or reduce the amount of government bonds. And if they sell Treasuries, it would add to the upward pressure on the bond yields . This would prove rather negative for gold, which is a non-interest-bearing asset.However, it doesn’t have to be the case. I mean here that the U.S. eight large and systematically important banks wouldn’t fall below their 5% regulatory minimum. Actually, they are said to have a roughly 25% buffer above minimum thresholds, so the expiry of the SLR exemptions doesn’t have to significantly affect the functioning of the Treasury market, at least not immediately. Hence, the impact of the expiration of the SLR exemption could have limited effect on the gold market , if any.It seems that the price of the yellow metal will be rather shaped by the real interest rates , the U.S. dollar, inflation, the level of confidence in the U.S. economy, etc. In the short-term, the focus on economic recovery could continue the downward pressure on gold prices, but in the long-term, the stagflation theme could resurface and push the price of the yellow metal up.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Intraday Market Analysis – Moving Resistance

Intraday Market Analysis – Moving Resistance

John Benjamin John Benjamin 31.03.2021 07:54
EURUSD capped by bearish moving averages The US dollar continues to advance across the board supported by improving economic outlook. After a short pause along the 20 and 30-hour moving averages, the sell-off renewed below 1.1760. A further drop below the psychological level of 1.1700 could drive the price towards 1.1600, a critical support level for the ten-month-long rally on the daily chart. As the RSI falls into the oversold area, a limited rebound could be met with selling pressure between the moving averages and 1.1775. NZDUSD weighed by bearish MA cross The New Zealand dollar is still struggling near its five-week lows as the appetite for growth-sensitive currencies fades. The kiwi has had a timid rally after the RSI went sharply into an oversold situation. It was probably due to profit-taking rather than fresh dip-buying. Buyers’ failure to hold onto 0.7000 suggests a lack of commitment after the daily chart showed a bearish MA cross. 0.6940 is the immediate support and a bearish breakout could trigger a new wave of sell-off towards 0.6900. XAGUSD sees limited bounce Silver slipped again amid rising long-term US yields as holding the precious metal would incur a higher opportunity cost. The price has retreated to January’s low at 24.00. Profit-taking from short-term traders may help lift bids while an oversold RSI recovers into neutrality. However, sentiment would remain bearish as long as the price stays below 24.80. Trend followers are likely to sell into strength in case of a rebound near the moving averages. A drop below 23.60 could trigger an extended sell-off into the 22s.
Stock ATHs and Gold Double Bottom

Stock ATHs and Gold Double Bottom

Monica Kingsley Monica Kingsley 01.04.2021 15:25
Bullish run in stocks that lost steam before the close – does that qualify as a reversal? Given the other moves such as in the Dow Industrials, Russell 2000 and emerging markets, it‘s unlikely that the S&P 500 met more than a temporary setback. Just look at the rush into risk-on assets as an immediate reaction to the infrastructure and taxation plans – see the high yield corporate bonds moving higher (and this time also investment grade corporate bonds finally) as long-dated Treasuries keep losing ground, and the dollar noticeably wavered.Yes, emerging worries about how this will be all paid for – not that an ideological challenge to modern monetary theory would be gaining any traction, but rather what would be the (quite predictable) effect of steep tax increases? Reduction in economic activity, unproductive moves to outset the effects, decrease in potential GDP? Remember the time proven truth that whatever the percentage rate, the government always takes in less than 20% GDP in taxes. The only question is the degree of distortions that the tax rate spawns.So, the S&P 500 upswing has good prospects of proceeding unimpeded (more profits!) as:(…) Stocks seem immune to the rising yields spell at the moment, meaning that value trades can remain at elevated levels while technology is stuck in no man‘s land and defensives are consolidating recent sharp gains (consolidating until the rising yields come back with vengeance).And there is little reason given the Fed‘s stance why they shouldn‘t. Much of the marketplace is buying into the transitory inflation story, and inflation expectations aren‘t yet running too hot. As the economic growth is stronger than current or future inflation, we‘re still at a good stage in the inflation cycle – everyone benefits and no one pays.Neither the 10-year Treasury yield, nor inflation expectations as measured by TIP:TLT ratio or RINF, are signalling trouble for the stock market. It‘s only commodities ($CRB) that have been consolidating through March – but that‘s of little consequence if you switch the view to a weekly chart (a bullish flag). The path of least resistance remains higher, and that rings true for copper, base metals, agrifoods or oil. If in doubt, look at lumber marching unimpeded to new highs.Precious metals are noticing the changing leadership baton, and have rebounded. Anticipating the copper upswing next? So much of the red metal would be needed in the years to come, whatever the actual rate of car fleet electrification. The same for ubiquitous silver applications well beyond solar panels. The cry in our Roaring Twenties is for more copper, nickel, zinc – just wait when the industrial giants‘ hunger for raw materials turns its focus onto Wall Street as the key sourcing (prospecting) place.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Its InternalsStocks haven‘t genuinely reversed yesterday – the slighly higher volume doesn‘t pass the smell test. Higher highs are the most likely scenario next.A bit mixed picture in the market breadth indicators at first sight, but not more concerning than on a daily basis only. More volume behind the upswings is missing, essentially – and new highs new lows are lagging behind their mid-Mar highs. I expect the situation to be resolved over the coming week, as tomorrow‘s non-farm payrolls won‘t likely disappoint market expectation too much really.Credit MarketsHigh yield corporate bonds (HYG ETF) confirmed the stock market upswing with a bullish move on high volume, closing at daily highs. The slow motion run into risk-on again appears underway.Tech, Value and FinancialsTech (XLK ETF) rose, and so did industrials (XLI) before retreating similarly to consumer staples (XLP ETF) or real estate (XLRE ETF). Value stocks (VTV ETF) and financials (XLF ETF) scored modest declines too, but I chalk it down to the indiscriminate selling wave into the close – it‘s a temporary setback only.Gold in the SpotlightBoth gold and gold miners rebounded strongly yesterday as the futures touched $1,680. Rising volume behind both moves, yet a partial retreat before the close – not really worrying. The key point to note is the higher high miners made when compared to their pre-Mar 08 levels.Gold‘s Force index is likely to cross over into positive territory finally again, and the open question is for how long it remains there. Thus far, there is no reason to doubt the rebound‘s veracity. The missing piece in the puzzle is the copper to Treasury yields ratio, which should better start confirming the upswing so as to lend it more credibility.Silver, Platinum and CopperSilver jumped higher as well, being a little weaker than the yellow metal in comparison, which is fine given the upcoming precious metals upleg being led by the king of metals. The key move happened in copper, which would truly power the upswing once it clears the $4.10 zone. The other side of the coin is where would the 10-year Treasury yield trade at that time, of course.SummaryS&P 500 is likely to challenge the 4,000 mark before too long, and the stock market bull top remains very far in sight thereafter still.Precious metals rebounded, and miners confirm the gold move. Once the commodities consolidation is over and copper joins in the party, the sky would get clearer for both metals sensing the upcoming Fed (yield curve control) move.
Will Biden’s Infrastructure Plan Rebuild Gold?

Will Biden’s Infrastructure Plan Rebuild Gold?

Finance Press Release Finance Press Release 01.04.2021 17:23
Biden just announced an ambitious and expensive infrastructure plan. Will it rebuild gold?Yesterday (Mar. 31), President Joe Biden the big infrastructure plan , the second major legislative initiative after the $1.9 trillion coronavirus relief plan passed in early March. The proposal includes about $2.2 trillion in new spending over eight years, boosting government expenditures even further .Despite the name, the plan assumes that only a part would be spent on infrastructure. To be more specific, Biden wants to spend $600 billion on transportation infrastructure (such as bridges, roads, airports, etc.), and more than $300 billion on improving utilities infrastructure (drinking-water pipes, electric grids, broadband). He also proposes to put more than $300 billion into building and upgrading housing and schools, $400 billion to care for elderly and disabled Americans, and almost $600 billion in research and development infrastructure, manufacturing, and job training.That doesn’t sound bad at all (after all, infrastructure is critical), but there is a catch. The plan assumes that all the spending will be financed by tax hikes. Biden proposes to raise the U.S. corporate tax rate from the 21 percent set by Trump to 28 percent, as well as to eliminate all fossil fuel industry subsidies and loopholes. So, according to the proposal, the tax reforms will add about 0.5 percent of GDP in fiscal revenues, which are believed to fully pay for investments within the next 15 years.Implications for GoldWhat does Biden’s infrastructure plan mean for the U.S. economy? Well, I won’t argue that American infrastructure needs upgrading. There is a bipartisan agreement here. The problem is, however, that government spending programs are usually inefficient, and cost more than initially planned . Additionally, the plan seeks to give the government a significant role in new important areas, and to introduce anti-business and pro-labor unions regulations.So, generally speaking, the proposal stems from Biden’s progressive belief that government can and should be a primary driver for economic growth, which is just plain wrong. As both economic theory and empirics show, the private sector is inherently more efficient than the bureaucrats (you can ask people in the former communist countries whether it’s true). Such a revolution in U.S. economic policy will weaken the allocative efficiency and hamper the long-term pace of economic growth.Last but not least, the idea to raise taxes when the economy hasn’t fully recovered from the pandemic recession is controversial, at least. Higher taxes will weaken corporate America and redistribute resources from the private sector to the public sector, negatively affecting the economy in the long-run. As well, I don’t believe that the tax revenues will fully finance the plan, so the fiscal deficits will increase further, ballooning even more the already mammoth pile of federal debt (see the chart below).And how will Biden’s infrastructure plan affect the gold market? Well, in the long-run, higher government spending, public debts, inflation , and corporate taxes should hamper the pace of economic growth and weaken corporate America and Wall Street. Hence, the proposal could be positive for gold prices, at least from the fundamental point of view .However, Biden’s bold actions seem to be welcomed so far by the financial markets. This is because the fiscal stimulus – and the rollout of vaccination – is strengthening the risk appetite. There are also hopes that the “go big” approach will allow the American economy to recover more swiftly than previously expected and quicker than its European peers. These expectations could propel the bond yields further up (see the chart below), also strengthening the U.S. dollar, and creating additional downward pressure on the gold prices .Therefore, although the Fed will have to step in and ease its monetary policy if the interest rates rise too much, the bond yields have room to move higher. This upward trend could continue to put gold under pressure , unless the yellow metal finds a way to diverge from its relationship with interest rates, for example, by attracting more investors worried about inflation.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Intraday Market Analysis – Rally Overheated

Intraday Market Analysis – Rally Overheated

John Benjamin John Benjamin 02.04.2021 08:56
USDCHF sees rally over-stretchedThe US dollar tanked after an increase in US jobless claims tempered market optimism. The pair has met stiff selling pressure at 0.9470 since last July.The RSI has repeatedly ventured into the overbought area and suggested that the rally could have overextended itself.0.9400 is the immediate support and a bearish breakout could trigger a broader sell-off to 0.9350. Below that, a deeper pullback may lead the price action towards the medium-term support level at 0.9220 on the daily chart.AUDUSD bounces back to resistanceThe Aussie has found support from better-than-expected retail sales of -0.8% versus a consensus of -1.1%.Following the pair’s fall below the daily trendline and the key floor at 0.7580, the market has turned into a consolidation mood.An oversold RSI has triggered some short-covering, but the current rebound may attract more sellers in the supply zone around 0.7660.A bullish breakout could raise offers to 0.7750. Failing that, the price action would remain in a downward trajectory and test 0.7530 once again.EURNZD looks for Fibonacci supportThe euro is struggling to keep its balance between upbeat PMI and new lockdowns.The pair has been trying to rebound from last March’s bottom near 1.6330. After establishing a base around 1.65 the price action has surged with solid momentum.The current retracement is testing the 50% Fibonacci level (1.6730). A deeper correction would test the 61.8% level.1.6890 is a critical resistance on the upside, and if buyers succeed in clearing the way the euro could extend the rally above the psychological level of 1.7.
S&P 500 Fireworks and Gold Going Stronger

S&P 500 Fireworks and Gold Going Stronger

Monica Kingsley Monica Kingsley 05.04.2021 15:13
Bullish run in stocks is on, driven by tech gains and value swinging higher as well. Throughout the markets, risk-on has been making a return as long-dated Treasury yields retreated, dollar fell and commodities continue their bullish flag formation. As I have tweeted on Thursday, it were the investment grade corporate bonds that signalled the turnaround in yields spreading to TLT next. Given such a constellation, the dollar‘s appeal is taking a dive as the bond market gets its reprieve. When nominal yields retreat while inflation (and inflation expectations) keep rising, real rates decline, and that leads to dollar‘s decline.Stocks are more focused on the tidal wave of liquidity rather than the tax increases that follow behind. So far, it‘s still reflation – tame inflation expectations given the avalanche of fresh money, real economy slowly but surely heating up (non-farm payrolls beat expectations on Friday), and not about the long-term consequences of tax hikes:(…) Reduction in economic activity, unproductive moves to outset the effects, decrease in potential GDP? Remember the time proven truth that whatever the percentage rate, the government always takes in less than 20% GDP in taxes. The only question is the degree of distortions that the tax rate spawns.And as the falling yields were embraced by tech with open arms, the sector‘s leadership in the S&P 500 upswing is back. As you‘ll see further on, the market breadth isn‘t pitiful either – slight non-confirmation yes, but I am looking for it to be gradually resolved with yet another price upswing, and that means more open profits (that‘s 7 winning stock market 2021 trades in a row).The Fed thus far quite succeeded in passing the inflation threat off as transitory, but the rebalancing into a higher inflation envrionment is underway – just look at the bullish consolidation across many commodities.The crucial copper to 10-year Treasury yield ratio is slowly turning higher as the red metal defends gained ground, oil rebound is progressing and lumber is moving to new highs. And don‘t forget the surging soybeans and corn either. Apart from having positive influence upon S&P 500 materials or real estate sectors, precious metals have welcomed the turn, rebounding off the double bottom with miners‘ leadership and silver not getting too hot yet. And that‘s positive for the white metal‘s coming strong gains – let alone the yellow one‘s.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Its InternalsSlightly lower volume during the whole week and Friday is merely a short-term non-confirmation. It isn’t a burning issue as stocks closed the week on a strong note. The bullish price action on the heels of improving credit markets and technology-led S&P 500 upswing, has good chances of going on.See by how much market breadth improved vs. Thursday – both the advance-decline line and advance-decline volume turned reasonably higher, and given the tech leadership in the upswing, new highs new lows merely levelled off. For them to turn higher, value stocks would have to step to the fore again.Credit MarketsThe high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio confirmed the stock market upswing with its own bullish move, and the two are overlaid quite nicely at the moment. No whiff of non-confirmation here.Tech and ValueTech (XLK ETF) rose strongly, and value stocks (VTV ETF) stocks more than defended prior gains. Even financials (XLF ETF) moved higher, regardless of the rising Treasuries. The breadth of the stock market advance isn‘t weak at all, after all.Gold in the SpotlightLet‘s quote the assessment from my Easter update:(…) There had been indeed something about the gold decoupling from rising Treasury yields that I had been raising for countless weeks. The rebound off Mar 08 low retest is plain out in the open, miners keep outperforming on the upside, and the precious metals sector faces prospects of gradual recovery, basing with a tendency to trade higher before the awaited Fed intervention on the long end of the curve comes – should the market force its hand mightily enough. Either way for now, given the rising inflation and inflation expectations, a retreat in nominal rates translates into a decline in real rates, which is what gold loves.That‘s the dynamic of calm days – once the Fed finally even hints at capping yields, expect gold fireworks. Remember, the ECB, Australia and others are in that fight at the long end of the curve already. And with so much inflation in the pipeline as the PPI underscores, an inflationary spike is virtually baked in the cake.Another weekly gold chart, this time with miners overlaid. Since the Mar 08 bottom, their outperformance has become very apparent, and miners made a higher high as gold approached the bottom last week. Coupled with the waning power of the sellers, these are positive signs for the precious metals sector.Gold‘s daily chart reveals the rebound‘s veracity – just as sharp as the dive to the second bottom was. Silver moved higher, scoring smaller gains than the yellow metal, which isn‘t however an issue as the white metal tends to outperform in the latter stages of precious metals upswings. We aren‘t there yet, and haven‘t seen it outperform in mid-Mar either.SummaryS&P 500 has challenged and conquered the 4,000 mark, and the upswing‘s internals keep being aligned bullishly. No sharp correction in sight indeed.Precious metals rebound lives on, accompanied by the miners‘ outperformance. Copper and many commodities keep consolidating, which is actually bullish given the retreat in yields. Another confirmation of the approaching upleg in commodities and precious metals as inflation starts running hotter and hotter.
Bitcoin is invaluable - 06.04.2021

Bitcoin is invaluable - 06.04.2021

Korbinian Koller Korbinian Koller 06.04.2021 10:10
In fact, Bitcoin is a decentralized global digital network which in essence is transforming analog assets into digital assets. It has been growing at 200% a year. Now after 12 years in existence Bitcoin is a digital trillion-dollar network.What supports its long-term stability is that its decentralization and transparency are immune against policy. While we typically at the mercy of policymakers and as such a middleman that can manipulate the use of a payment method, with Bitcoin, the individual is genuinely safe. Looking at the world around us where it is hard to find any field not infiltrated by groups who seek to take advantage, manipulate, and flat out lie, it is a true need one can trust a store of value to benchmark against.BTC-USDT, Daily Chart, Our chart from last week’s chartbook:Bitcoin in US Dollar, daily chart as of March 23rd, 2021.We posted the above short to midterm chart prediction in our last week’s chartbook publication.BTC-USDT, Daily Chart, As anticipated-another leg up:Bitcoin in US Dollar, daily chart as of March 29th, 2021.The market unfolded quite as planned. BTC-USDT, Weekly Chart, Health and sustainability:Bitcoin in US Dollar, weekly chart as of March 29th, 2021.If we analyze Bitcoin prices advancing from last August’s lows, we can find an intact Elliot impulse wave pattern. The Health and sustainability of this trend are derived from the three propulsion proportions. While advancing strongly in the first wave with a 323 % advancement, the pace cooled down to a 99% second leg upward. These stunning advancements followed yet again by a more moderate increase of 44% to its recent all-time highs. This abstinence of a blow-off top or run-away train allows us to believe that prices could march higher.BTC-USDT, Weekly Chart, Bitcoin is invaluable, Projections:Bitcoin in US Dollar, weekly chart as of March 29th, 2021.When examining projections, we like to stack odds by looking at both a time and a price component. The above chart shows this blend using a time cycle approach (vertical lines) and a Fibonacci extension probability measurement. Stacking these projection tools would lead us to a price target near ninety-seven thousand for the mid-next year. Our “conservative” projection is marked with the yellow circle on the top right of the chart.Bitcoin is invaluable:Looking around, and you will find that the Dollar is what around the world most value storage is bench-marked against. It seems frightening to us since the Dollar has no gold standard or otherwise intrinsic value that we still give it this much power only based on a belief. With economic powers shifting towards the east and a lack of political and economic leadership, beliefs can change, and as such, currency stability is endangered. Hedging your store of value through an instrument that holds intrinsic value based on principles over beliefs seems more than logical.Feel free to join us in our free Telegram channel for daily real time data and a great community.If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.By Korbinian Koller|March 30th, 2021|Tags: Bitcoin, Bitcoin correction, Bitcoin mining, crypto analysis, crypto chartbook, crypto mining, low risk, quad exit, technical analysis, trading education|0 CommentsAbout the Author: Korbinian KollerOutstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
New S&P 500 Highs or Metals Rising?

New S&P 500 Highs or Metals Rising?

Monica Kingsley Monica Kingsley 06.04.2021 15:59
Bullish run in stocks is on, driven by tech gains and value not yielding an inch. A rare constellation given the the long-dated Treasuries performance especially – as if the narratives were flipped, and value „could“ move up on rising yields. Well, liquidity and bets on the stocks benefiting from the coming infrastructure bill. Any way you look at it, the market breadth is positive and ready to support the coming upswing continuation, even though I look for a largely sideways day in stocks on Tuesday given the aptly called fireworks to happen yesterday. Sizable long profits in stock market trades #6 and #7 have been taken off the table – 149 points in my Standard money managements, and 145 points in the Advanced money management that comes on top.Both the VIX and put/call ratio are at extended levels – the first below 18 (formerly unimaginable to stock market non-bulls), the second approaching local lows again. As I have written yesterday:(…) Throughout the markets, risk-on has been making a return as long-dated Treasury yields retreated, dollar fell and commodities continue their bullish flag formation. As I have tweeted on Thursday, it were the investment grade corporate bonds that signalled the turnaround in yields spreading to TLT next. Given such a constellation, the dollar‘s appeal is taking a dive as the bond market gets its reprieve. When nominal yields retreat while inflation (and inflation expectations) keep rising, real rates decline, and that leads to dollar‘s decline.It‘s the (extra Archegos related?) liquidity that has helped to erase quite steeper intraday decline in the long-dated Treasuries (TLT ETF) but the dollar took it on the chin. Quoting my yesterday‘s dollar observations:(…) As I have tweeted on Thursday, it were the investment grade corporate bonds that signalled the turnaround in yields spreading to TLT next. Given such a constellation, the dollar‘s appeal is taking a dive as the bond market gets its reprieve. When nominal yields retreat while inflation (and inflation expectations) keep rising, real rates decline, and that leads to dollar‘s decline.The Fed thus far quite succeeded in passing the inflation threat off as transitory, but the rebalancing into a higher inflation envrionment is underway – just look at the bullish consolidation across many commodities.Apart from oil, there have been quite a few commodity moves up yesterday – copper leading the rebound out of its sideways pattern, lumber reaching for new highs, agrifoods far from breaking below consolidation lows. These are the pockets of strength as the $CRB index moved down yesterday.Not the case of precious metals, if a joint view is taken. The rebound off the double bottom goes on, miners are in the pool position (senior ones, that is), and silver isn‘t reaching for the stars yet.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookQuite an overshoot above the mid-Feb and mid-Mar highs, daily indicators are quite extended, and sideways trading today would be a bullish achievement. The upswing continuation next isn‘t in jeopardy in the least though.Credit MarketsThe high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio is trading in lockstep with the stock market upswing, sending no warning signs.Tech, Finance and UtilitiesTech (XLK ETF) rose strongly, and financials (XLF) as one of the value stocks (VTV ETF) bellwethers moved higher regardless of the intraday turn in TLT, which was however embraced by defensives such as utilities (XLU ETF). Quite good market breadth still.Gold and SilverGold not moving much while miners rose still, which is bullish for the full precious metals sector – the upswing simply continues, and as each of the resistances ($1,760s being the next one) is cleared, the odds of no retest of the second bottom rise. Needless to say, seeing gold and miners roll over from here, wouldn‘t be a bullish development at all.Silver didn‘t rise yesterday, which is of little consequence though, as the white metal is famed for moving in bursts at times. Given the copper performance, especially in the face of barely budging Treasury yields, both precious metals stand a good chance of rising today. The degree of miners‘ outperformance would provide further clues.SummaryS&P 500 run above 4,070 is likely to be consolidated but I‘m not looking for a sharp correction starting here in the least. Tech could face short-term headwinds now given its upcoming resistance test, but that‘s about it.Precious metals rebound goes on, with the miners still outperforming. Copper though appears pointing the way higher now too as the approaching upleg in commodities and precious metals in response to inflation running hotter and hotter, gains traction.
Ladies and Gentlemen, Mr. Dollar is Back

Ladies and Gentlemen, Mr. Dollar is Back

Finance Press Release Finance Press Release 06.04.2021 16:43
Previously dismissed, the USDX may now be back with a vengeance. Sentiment is swinging away from shorts and there is an uncanny historical pattern.With a potential bearish pattern already broken, the USDX is resuming its journey northward. And why is it geared to do well? Is it because the U.S. economy is ripping head? Definitely not - that’s not happening. It’s rather because other regions (think Europe and Japan) are doing even worse.The dollar’s imminent rise doesn’t mean that gold can’t still experience some very short-term upswing, but for the medium-term, the precious metals continue to face bearish headwinds.With the greenback laying back and enjoying a well-deserved Easter vacation, gold, silver and the gold miners avoided a dollar-drama for at least another day. However, with the USD Index working to regain its supremacy, along with investors’ respect, the ‘death of the dollar’ narrative has quietly dissipated from the investing zeitgeist.Case in point: the USD Index has broken above its monthly declining resistance line and has already made four new highs since the New Year. More importantly though, because the precious metals have a strong negative correlation with the U.S. dollar, the upward momentum has coincided with an 8.78% drawdown of gold, a 6.18% drawdown of silver and a 6.41% drawdown of the GDX ETF.Please see below:And showing no signs of slowing down, with a well-rested USD Index itching to get back to work, we could see ‘business as usual’ in the coming days. On Apr. 2, I warned that a short-term correction could usher the USD Index back to its March high.That’s exactly what happened yesterday (Apr. 5).However, with the corrective culmination approaching the finish line, the USD Index remains poised to resume its uptrend.Adding to the optimism, the tide has already gone out on a sea full of USD Index shorts. And because Warren Buffett once said that “only when the tide goes out do you discover who's been swimming naked,” highly leveraged speculators could be the next to follow.Please see below:To explain, notice how oversold periods in 2014 and 2018 – where net-speculative short interest as a percentage of total open interest (based on the CoT data) was extremely high – preceded sharp rallies in the USD Index? Thus, with 2021 the most extreme on record, the forthcoming rally should be significant.How significant? Well, let’s take a look at how things developed in the past – after all, history tends to rhyme.Wayback PlaybackLet’s focus on what happened when the net speculative positions were significantly (!) negative and then they became significantly (!) positive, so without paying attention to tiny moves (like the one that we saw last summer), let’s focus on the more meaningful ones (like the one that we see right now – the net positions just became visibly positive – over 16%, after being very negative for quite some time.In short, that’s how the following profound rallies started:The big 2008 rally (over 16 index points)The big 2009 – 2010 rally (over 14 index points)The 2011 – 2012 rally (over 11 index points)The 2013 rally (“only” over 5 index points)The big 2014 – 2015 rally (over 20 index points)The 2018 rally (over 15 index points)The current rally started at about 89, so if the “normal” (the above shows what is the normal course of action) happens, the USD Index is likely to rally to at least 94, but since the 5-index point rally seems to be the data outlier, it might be better to base the target on the remaining 5 cases. Consequently, one could expect the USD Index to rally by at least 11 – 20 index points, based on the net speculative positions alone. This means the upside target area of about 105 – 114.Consequently, a comeback to the 2020 highs is not only very likely, but also the conservative scenario.Moreover, let’s keep in mind that the very bullish analogy to the 2018 rally remains intact. Please see below:To explain, I wrote on Friday (Apr. 2):What we saw yesterday definitely qualifies as a small correction. In fact, even if it was doubled it would still be small. And – more importantly – it would be in perfect tune with what happened in 2018 during the big rally.After rallying visibly above the:93 level200-day moving average61.8% Fibonacci retracement level based on the final part of the declinethe USD Index moved back below the 93 level. This happened in May 2018 and it happened last week.Since both rallies are so similar, it’s nothing odd that we see a pullback in a similar situation.Back in 2018, the pullback was small and quick. It ended without the USD Index reaching its 200-day moving average. The pullback ended when the USDX moved approximately to its previous high and slightly below the 61.8% Fibonacci retracement.Applying this to the current situation (previous high at about 92.5, the 61.8% Fibonacci retracement at about 92.7, and the 200-day moving average at 92.66), it seems that the USD Index would be likely to find its bottom in the 92.3 – 92.7 area.Because of this, the outlook remains profoundly bearish for the gold , silver , and mining stocks over the medium term (even though the next few days are relatively unclear, especially due to gold’s triangle-vertex based reversal that’s due this week ). If you analyze the table below, you can see that the precious metals tend to move inversely to the U.S. dollar.The 2017-2018 AnalogueBut as the most important development affecting the precious metals, the USD Index’s 2017-2018 analogue is already unfolding before our eyes. With this version likely to be titled ‘The Resurgence: Part 2,’ while history often rhymes, it’s rare for it to rhyme with this level of specificity . For context, in 2018, the USD Index’s breakout above its 50-day moving average is exactly what added gasoline to the USDX’s 2018 fire. And after the 2018 breakout, the USDX surged back to its previous high. Today, that level is 94.5.Even more ominous for the precious metals, when the USD Index turned a short-term decline into consolidation in mid-2018, can you guess what happened next? Well, the USD Index moved significantly higher, while gold moved significantly lower.Please see below:USDX Broke a Potential Bearish PatternLikewise, a potentially bearish pattern that I had been monitoring – where the USD Index’s price action from July to October 2020 mirrored the price action from December 2020 to February/March 2021– has officially been broken . With the USD Index’s medium-term breakout trumping the former, the potentially bearish pattern has been invalidated and the USD Index remains on a journey to redemption.But to what end?Well, if we look back at 2020, the USD Index attempted to recapture its previous highs. But lacking the upward momentum, the failure was followed by a sharp move lower. Today, however, the USD Index has broken above its previous highs and the greenback verified the breakout by consolidating, moving back toward the previous lows and rising once again. Now, the USD Index is visibly above its previous highs .Taken together, and given the magnitude of the 2017-2018 upswing , ~94.5 is likely the USD Index’s first stop. And in the months to follow, the USDX will likely exceed 100 at some point over the medium or long term.No, not because the U.S. is doing so great in economic terms. It’s because it’s doing (and likely to do) better than the Eurozone and Japan, and it’s this relative performance that matters, not the strength of just one single country or monetary area. After all, the USD Index is a weighted average of currency exchange rates and the latter move on a relative basis.In conclusion, while the USD Index’s decline on Apr. 5 created a goldilocks environment for the precious metals, the latter should have enjoyed a much larger upswing. However, with the U.S. 10-Year Treasury yield jumping by another 2.37% and the precious metals still shaken from a string of false breakouts, their relatively weak performance was quite revealing. Think about it: if gold, silver and the gold miners can’t make up ground when their main adversary retreats, how are they likely to respond when the USD Index regains its mojo? As a result, with the USD Index’s attitude about to shift from accommodating to unkind, gold, silver and the gold miners will likely see lower levels before forming a lasting bottom.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit?  Part II

Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II

Chris Vermeulen Chris Vermeulen 06.04.2021 20:49
In this second part of our exploration of the recent US Dollar rally and what it may be reacting to in relation to the current US stock market highs and continued rally, we will explore some of the underlying factors that are translating into US Dollar strength while the US stock market continues to push higher.In the first part of this research article, we highlighted the US Dollar reaction to the 2008-09 credit market crisis and how the US Dollar actually started to bottom/rally in early 2008 – just as the rollover top in the US stock markets continued to setup.  The way the US Dollar reacts to stress factors in the global markets is to strengthen as a safe haven as capital is constantly seeking the best environment for investment and profits.  When the markets enter a period of turmoil, the US Dollar typically begins to strengthen before the global markets really begin to react to the fear or turmoil.The recent news of large financial institutions and hedge funds taking large losses and closing operations is somewhat similar to the Lehman event of 2008.  These types of larger corporate debt collapses have wide-range global market effects.  Sometimes, these events can ripple into other global corporations who engaged in this level of financing or credit functions.  For example, Credit Suisse's attempt to recoup potential losses from the Greensill collapse may be a very complicated and fruitless process according to a recent Wall Street Journal article.Weekly US Dollar Shows Uptrend StartingThe current US Dollar Weekly chart, below, shows how the US Dollar has strengthened over the past 3 months and how this current uptrend aligns with the $89 lows from early 2018.  One of the most interesting aspects of this chart is the peak in early 2020, as the COVID-19 virus market collapse bottomed, which was followed by an extended decline.  As mentioned earlier, the US Dollar acts as a safe haven during times of uncertainty and chaos.  Obviously, the initial COVID-19 market selloff prompted quite a bit of uncertainty and chaos, prompting the US Dollar to rise nearly 9% in just two weeks.  Does the current upside trending in the US Dollar translate into more uncertainty and chaos in the markets?Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!The recent bottom on this Weekly US Dollar chart happened on January 6, 2021. This was the day that Congress certified the US state electors.  It was also the day that chaos took place in Washington DC.  From that point onward, the US Dollar began a decidedly upward price trend.  Since that low on January 6, the US Dollar has risen over 4.60%.  Over that same time, the SPY has rallied more than 7.5%, which obviously fails to show any US or global market concerns.Weekly Smart Cash vs. US Dollar CorrelationsThe following chart shows the US Dollar (as a GOLD line) and our Custom Smart Cash Index (as a BLUE line) and highlights the threshold of the US Dollar that usually prompts a breakdown in price in the stock market.  The ORANGE threshold level on this chart for the US Dollar is 94.10 and the PURPLE threshold level on this chart 99.50.  Once the US Dollar reaches levels above the ORANGE threshold, the SPY becomes much more volatile and tends to retrace lower over time.  Once the US Dollar reaches above the PURPLE threshold, it appears the US Dollar reaches major resistance, stalls, and contracts, which prompts a fairly large upside price trend in the SPY.Currently, the US Dollar Index is trading just above 93.00 and it just 1.1 away from the ORANGE threshold.  Should the US Dollar continue to rally over the next few weeks and months, our research suggests the US stock market will enter a period of increased volatility with broad sector trending/rotation.  As you can see on this chart, near the end of 2018, the US Dollar Index rallied above the ORANGE threshold while the Custom Smart Cash Index entered a period of extended price volatility (2019 through the COVID-19 bottom in 2020).  Once the US Dollar Index fell back below the ORANGE threshold (July/August 2020), the Custom Smart Cash Index began to rally estensively.The current rally in the US stock market will likely continue until the US Dollar Index moves comfortably over the ORANGE threshold, there is a strong possibility the US stock market will enter a period of extended volatility and trending.  That means that the current bullish price trend may enter a broader rally phase – targeting a new excess phase peak.  Or, it may shift into more of a sideways price trend with a broad range of price rotation – like what happen in 2015 to 2016.Interestingly enough, near the end of 2016, as the US stock market bottomed and began to rally, the sectors that lead that rally included precious metals, miners, utilities, regional banking, and technology (later in 2017).  This suggests we need to watch metals & miners as well as utilities and regional banking sectors later in 2021.Currently, the leading sector trends are Real Estate, REITS, US Financials, Global Infrastructure, Global Natural Resources, Technology, Consumer Services, and Aerospace & Defense.  These leading sectors suggest many traders/investors believe the next few years will be filled with various advantages in technology, raw materials, consumer activities and infrastructure/defense spending.  Get ready for some really big trends in various sectors and be prepared to jump into some of these bigger trends.Don’t miss the opportunities to profit from the broad market sector rotations we expect this year, which will be an incredible year for traders of my Best Asset Now (BAN) strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. Staying ahead of sector trends is going to be key to success in volatile markets.For those who believe in the power of trading sectors that show relative strength and momentum but don’t have the time to do the research every day, let my BAN Trader Pro newsletter service do all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my BAN Trader Pro subscribers.Happy Trading!
On the Verge of Stocks Pullback

On the Verge of Stocks Pullback

Monica Kingsley Monica Kingsley 07.04.2021 15:51
S&P 500 is still consolidating Monday‘s sharp gains, showered with liquidity. Yet it seems that eking out further gains is getting harder as the price action took the index quite far from its key moving averages. If I had to pick one sign of stiffer headwinds ahead, it would be the tech sector‘s reaction to another daily retreat in Treasury yields – the sector didn‘t rally, and neither did the Dow Jones Industrial Average. Value stocks saved the day, and it appears we‘re about to see them start doing better again, relatively speaking.Yes, the risk-reward ratio for the bulls is at unsavory levels in the short run. What about being short at this moment then? It all depends upon the trading style, risk tolerance and time horizon. I‘m not looking for stocks making a major top here as the bull run is intact thanks to:(..) Well, liquidity and bets on the stocks benefiting from the coming infrastructure bill. Any way you look at it, the market breadth is positive and ready to support the coming upswing continuation, even though I look for a largely sideways day in stocks on Tuesday given the aptly called fireworks to happen yesterday. Sizable long profits in stock market trades #6 and #7 have been taken off the table – 149 points in my Standard money managements, and 145 points in the Advanced money management that comes on top.My prognosis for yesterday‘s session materialized, and we have seen quite a record number (around 95%) of stocks trading above their 200-day moving averages, which is similar to the setup right after the post-dotcom bubble bear market 2002/3 lows, or 1-2 years after the bull market run off the Mar 2009 lows. Hard to say which one is more hated, but I see the run from Mar 2020 generational low as the gold medal winner, especially given the denial accompanying it since.Gold made a run above $1,740 in line with retreating yields and copper not giving up much gained ground, but the immediate run‘s continuation to the key $1,760s or even better above $1,775 looks set to have to wait for a few sessions. I don‘t expect today‘s FOMC minutes release to change that. While the metals are likely to take their time, the healthy miners‘ outperformance supports its continuation once the soft patch we appear entering, is over.The Thursday called dollar downswing is playing out, putting a floor below the commodities, which are undergoing a much needed correction from their late Feb top. It‘s not over yet, and the shy AUD/USD upswing is but one clue. Given the oil price meandering around $60 (by the way, not even the unlikely decline to $52 would break black gold‘s bull run), the USD/CAD performance as of late is disappointing, as the greenback got mostly stronger since mid Mar. More patience in the commodities arena appears probable as we‘re waiting for both Treasury yields and inflation expectations to start rising again.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe SPX headwinds are readily apparent, and a brief pullback would be healthy. Don‘t look though for too much downside.Russell 2000 and Emerging MarketsSmallcaps are still underperforming for now, but emerging markets scored gains thanks to improving yield differentials and another down day in the world reserve currency.Focus on TechnologyTech (XLK ETF) was the key retreating sector yesterday – little wonder the mid Feb resistance it‘s approaching. The big names ($NYFANG, black line) are lagging behind still, showing that the sector got a little ahead of itself on a short-term basis.Gold and SilverGold‘s Force index finally crossed into positive territory, but the yellow metal isn‘t taking yet advantage of retreating yields in a visually outstanding way. Quite some resistance in the $1,740s needs to be cleared first, which would likely take a while, but the rally‘s internals are still on the bulls‘ side.Gold miners keep strongly outperforming the yellow metal, with the seniors (GDX ETF) doing particularly great – better than gold juniors or silver miners. Seeing signs of the silver sector getting too ahead, wouldn‘t likely be bullish at all unless sustained – at the current stage, I can‘t underline these words enough in the ongoing physical silver squeeze.Gold to Silver RatiosSince the gold bottom was hit in early Mar (that‘s still the leading hypothesis), the precious metals‘ leadership has moved to the yellow metal – and it‘s visible in both the gold to silver ratio and gold miners to silver miners one. The time for the white metal to (out)shine would come, but clearly isn‘t and won‘t be here any day now.SummaryS&P 500 is likely to keep consolidating gained ground, and (shallow) bear raids wouldn‘t be unexpected here – in spite of solid corporate credit markets performance. Yet, it‘s the extraordinary nature of VIX trading and put/call ratio moves, that point to the bull market run as intact and merely in need of a breather.Precious metals are likely to run into short-term headwinds before clearing out the next major set of resistances above $1,760s. The upswing though remains healthy and progressing, and will be led by the gold sector.
Intraday Market Analysis – Deeper Correction

Intraday Market Analysis – Deeper Correction

John Benjamin John Benjamin 08.04.2021 08:14
USDJPY continues to pull back The US dollar struggles to find buyers amid dovish FOMC minutes. The pair has met stiff selling pressure near the psychological level of 111.00 from last March. An RSI divergence was an indication that the rally was already losing steam. A breakout below 109.30 could trigger a deeper correction to the demand area between 108.40 and the 30-day moving average found on the daily chart. A rebound will need to lift offers around 110.55 first before more buyers would commit their chips. USOIL awaits breakout Oil prices came under pressure after data showed an increase in US oil production at the end of March. The upbeat sentiment has softened after the US crude dipped below the 20 and 30-day moving averages for the first time in four months. The bearish MA cross may attract more sellers. On the hourly chart, the price action is currently in a rectangle consolidation between 57.20 and 62.20. A bearish breakout could trigger a broader sell-off towards 52s, while 64.70 would be the immediate target on the upside. UK 100 tests major resistance The FTSE 100 has reached a three-month high after Boris Johnson confirmed that the UK’s economy would reopen next week. The index is rising along the 20-hour moving average and is heading towards the previous high at 6960. A breakout above that major resistance could open the door to the pre-covid level (7400). The RSI has entered the overbought area and may draw a temporary pullback. In this case, the resistance-turned-support 6805 would be the level to watch for trend followers.
Will Upcoming Inflation Take Gold With It?

Will Upcoming Inflation Take Gold With It?

Finance Press Release Finance Press Release 09.04.2021 16:25
Inflation is coming. Gold may benefit from it, especially if inflation turns out to be more long-lasting than central bankers and markets believe.Brace yourselves, inflation is coming ! Importantly, not only grumblers such as myself are talking about rising prices right now, but even the Fed officials themselves admitted that inflation will jump this year. Indeed, in the latest dot plot , the Federal Open Market Committee (FOMC) expects that the PCE annual percent change will soar from 1.3 percent in December 2020 to 2.4 percent at the end of this year. Importantly, their projections increased significantly in the last three months when they amounted to 1.8 percent.And remember, we are talking here about the official inflation figures. The real inflationary pressure, which also affects asset prices, is much stronger. Furthermore, the pandemic changed the composition of consumption, as people are buying more goods and less services. And guess what, the prices of goods are rising more than the prices of services, so many people’s actual consumption baskets have become more expensive than official ones, implying that true inflation is higher than the officially reported one, as the IMF has recently admitted .Does this mean that the FOMC members have all suddenly become monetary hawks worried about higher inflation? Not at all. The Fed believes that inflation will be temporary, caused by the base effects (very low inflation readings in the second quarter of 2020) and by the reopening of the economy that will trigger higher consumer spending and some increases in prices.The U.S. central bank might be right. After all, there will be some temporary forces at play. There always are, but – oh, what a funny thing! – the Fed always cites “transient effects on inflation” when it’s increasing, but not when it’s declining. The problem is, however, that the markets don’t believe the U.S. central bank . Please take a look at the chart below, which displays inflation expectations over the next five and ten upcoming years.As you can see, both medium-term and long-term inflation expectations have significantly increased in the last few months. It means that investors don’t only expect a temporary rise in inflation – on the contrary, they forecast a more persistent increases in prices . Indeed, Mr. Market believes that inflation will be, on average, 2.5 percent in the next 5 years and almost 2.3 percent in the next 10 years, significantly above the Fed’s target of 2 percent.Of course, it might be the case that Mr. Market is wrong, and Mr. Powell is right. But what is disturbing is the Fed’s confidence – or, rather overconfidence – that it can contain inflation if it turns out to be something more than only a temporary phenomenon. Such a conceit led to stagflation in the 1970s. Gold shined at that time.Then, as today, the central bank focused more on the maximum employment than inflation, believing that it can always control the latter by raising the federal funds rate if necessary. But, as Robert J. Barro, from Harvard University, points out , “the problem is that hiking short-term rates will have little impact on inflation once high long-term expected inflation has taken root.”And the recent Fed’s actions, including the new monetary framework, according to which the U.S. central bank tries to overshoot its target for some time, may easily waste the reputational capital that was created by Paul Volcker and de-anchor inflation expectations.In other words, a negative shock can be accommodated by the central bank without long-lasting effects, as people understand that it’s a unique one-off event, after which everything will return to normalcy. But the Fed is far from normalizing its monetary policy . On the contrary, it has recently signaled that it wouldn’t raise interest rates preemptively to prevent inflation, as it could hamper the economic recovery. The risk here is that if people start to view exceptional as the new normal, their inflation expectations could shift, and become unanchored.To sum up, it might be the case that markets are overstating short-term inflation risks. But it’s also possible that politicians and central bankers understate the longer-term inflati