gold

Gold prices have surged over the past two months with expectations that the US Federal Reserve will slow its interest rate rises. We have increased our 2023 price outlook slightly based on the faster-than-expected pivot in US interest rate policy and the return of Chinese demand after Beijing’s U-turn on its zero-Covid strategy Gold gains on softer dollar Gold prices fell sharply last year after hitting a record high of above $2,000/oz in March as US dollar strength and central bank tightening weighed heavily on the precious metal. Higher interest rates make gold, which provides no returns, less attractive. Investor appetite for gold also decreased in 2022. Last year was the second consecutive year of decreasing demand for gold exchange-traded funds (ETFs). Investors sold $3bn worth of physically-backed gold ETFs in 2022, a 3.4% decrease to $202.7bn of global holdings at the end of December, according to data from the World Gold Council. But the pre

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 remains soft as US stimulus talks drag on

USD remains soft as US stimulus talks drag on

John Benjamin John Benjamin 08.12.2020 09:09
EURUSD Pulls Back Off Recent HighsThe euro currency was trading soft on Monday with price action closing nearly flat.This comes as the euro continues to post a modest descent after briefly testing above 1.2170 last Friday.For the moment, a local swing low has formed near 1.2080. As long as this low holds, we could see price action resuming the uptrend.However, a close below this low and a potential retracement back to this level could confirm the downside.The key support area is likely to come from the dynamic support of the trend line. This is likely to coincide near the 1.2000 level in the near term.GBPUSD Drops As Brexit Trade Concerns MountThe British pound sterling was trading rocky on Monday as prices were in a steady decline since morning.This comes as the UK and the EU continue with the post-Brexit trade talks which have failed. The GBPUSD fell, as a result, briefly slipping below the 1.3300 level of support.However, price recovered off the lows before managing to close above this level once again.For the moment, it seems like the 1.3300 level will hold out as support. But if price breaches this level, then we could expect further declines.The Stochastics oscillator is currently nearing the oversold levels, which could suggest a possible retracement in the near term.WTI Crude Oil Gives Back GainsOil prices are trading weaker, down about 0.18% on the day. The declines come after oil price posted steady gains into last Friday’s close.However, price action is pulling back after testing new highs of above 46.50. The declines could see price stalling near the 45.26 level of support.As long as this support holds, we could expect the upside to resume. Oil prices will need to break past the previous highs to confirm the continuation to the upside.However, failure to post new highs could signal a move lower.A close below 45.26 could potentially expose oil prices to test the support level of 43.50 next.Gold Prices Rise 1%, Breaking Past 1850The precious metal is posting a strong recovery as price action zoomed past the 1850 handle.The gains come after gold prices managed to settle comfortably above the key price level of 1818.80.With the 1850 level giving way to further gains, gold prices could continue higher.The next key level of interest is the 1911.50. But prices could likely test this level if there is some support forming near the current levels.This could mean that gold prices might retrace back to the 1817.80 or the 1850 levels.
USD rebounds on vaccine and stimulus hopes

USD rebounds on vaccine and stimulus hopes

John Benjamin John Benjamin 10.12.2020 09:40
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.
Gold & the USDX: Correlations

US dollar unmoved as euro brushes aside ECB stimulus

John Benjamin John Benjamin 11.12.2020 09:03
Euro Firms Up After ECB MeetingThe euro currency regains its bullish momentum on the day. The gains came after the common currency posted declines for four consecutive days.This led prices to fall and test the trend line which offered dynamic support. Following this, the euro made a quick rebound and is attempting to rise higher.For the moment, price action will need to challenge the previous lows near 1.2150.If the euro can break past this level, then we expect to see new highs forming.However, if the common currency reverses near this level we expect a possible correction down to the 1.1900 level.GBPUSD To Remain Volatile Into Sunday Brexit MeetingThe GBPUSD currency pair continues to trade volatile, in reaction to the Brexit trade talks.Both the EU and the UK have until Sunday to finalize the deals. We expect the GBPUSD will therefore continue trading mixed into the weekend.For the moment, consolidation is taking place near the 1.3300 level of support.If price action closes firmly below this level, then further downside is possible. The bias remains completely mixed at this point.To the upside, GBPUSD will need to retest the 1.348 – 1-3500 level. Only a strong close above this level could confirm further gains.WTI Crude Oil Attempts To Log New HighsOil prices are trading bullish following days of consolidation near the 45.00 level.The gains are driven by news about two oilfields in Iraq under attack.For the moment, with the support level at 45.00 being establishing oil prices have room to rise.Furthermore, the next key challenge will be the psychologically important 50.00 level. However, the rise to this level is likely to be gradual.Oil prices will need to establish support near the upper levels to continue maintaining the bullish momentum.Gold Prices Continue To Remain Trading FlatThe precious metal did not react much to the news of the ECB’s stimulus expansion. As a result, gold prices remain fairly settled above the 1850 levels for the moment.As long as this support holds, we can expect price action to trade flat.To the upside, gains will be very likely capped near the 1900 -1911 levels.To the downside, if the support level gives way, then gold prices could be looking at steeper declines.Prices will likely fall back to the next key support area near 1817.80.
Is the Vaccine a Game-Changer for Gold?

Is the Vaccine a Game-Changer for Gold?

Finance Press Release Finance Press Release 11.12.2020 16:25
The vaccines are coming – we’re saved! Although the arriving vaccines are great for humanity, they are bad for the price of gold.In November, Pfizer and BioNTech announced that their mRNA-based vaccine candidate, BNT162b2, had demonstrated evidence of an efficacy rate above 90% against COVID-19, in the first interim efficacy analysis. As Dr. Albert Bourla, Pfizer Chairman and CEO, said:Today is a great day for science and humanity. The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent COVID-19.Indeed, the announcement is great news! After all, the vaccine is the ultimate weapon against the virus. There’s no doubt that we will get the vaccine one day. Thank God for scientists – they are really clever people who work hard to develop a safe vaccine! Why can’t we have more of them instead of so many economists? As well, the pandemic triggered unprecedented global cooperation to develop a vaccine as quickly as possible. The funds are enormous, while the bureaucrats eventually decided to behave like decent human beings for once and eased their stance in order to speed up the whole process. Great!But… there is always a “but”. You see, there are some problems related to Pfizer’s vaccine . First, all we know comes from the press release, but the company didn’t provide any data for a review. Second, the efficacy rate announced by the company pertains only to the seven days after the second dose is taken – we still don’t know how effective the vaccine is in the longer term, and how long immunity lasts. Third, we still don’t know the efficacy of the vaccine among the elderly and people with underlying conditions – or, the most affected people by COVID-19. Fourth, the vaccine is based on mRNA technology, and such a vaccine was never approved for human use. There is always a first time, but new technologies always give birth to some concerns, which could ultimately reduce the public’s preference to get vaccinated.Another problem is that this vaccine requires two doses that are taken 21 days apart. It delays the moment of immunization and again reduces the motivation to take the vaccine – yes, some people are so lazy, and/or they don’t like injections so much (for whatever reason; we’re not debating whether it’s justified or not) that they can refuse to be vaccinated.Moreover, Pfizer’s vaccine must be stored at a temperature of about -70°C (-94°F), which is quite low indeed, and can be quite chilly in shorts (unless you are Wim Hof ). The problem is transportation and distribution – you see, many hospitals - to say nothing of rural physicians and pharmacies, and healthcare systems in developing countries - do not have adequate freezers to store the vaccine. Last but not least, even if scientists develop the best possible vaccine, it remains useless unless people accept to take it – and this is far from being certain, given the pandemic denial movement and fear of vaccines.Sure, one could say that all these points are not very problematic. After all, Pfizer is not the only company working on the vaccine. There are actually more than 150 coronavirus vaccines in development across the world. For example, Moderna’s vaccine can be stored at a much higher temperature – a more comfortable -20°C (-4°F), So even if Pfizer’s vaccine turns out to not be the best, other, even better vaccines will arrive on the market – and a lack of any vaccine can transform into a crisis of abundance.That’s true, but the sad truth is that it’s unlikely that any vaccine will be widely available until mid-2021 . Pfizer, for example, announced that it hoped to produce 50 million doses by the end of 2020. As the vaccine needs two doses, only 25 million people could be vaccinated this year. So don’t count on being among this group – countries will prioritize healthcare workers, social workers and uniformed services first, and the elderly next. It means that we will not return to a state of normalcy very soon, and most of us will still need to wear masks, practice social distancing and… wash hands!In the meantime, the U.S. is about to enter Covid hell , as Michael Osterholm, one of Biden’s advisers on the epidemic , said . Indeed, the country is nearing 11 million reported COVID-19 cases, and the coronavirus has already killed more than 240,000 Americans. But the worst can still lie ahead for the U.S. As one can see in the chart below, the epidemiological curve is clearly exponential and the daily number of new cases has touched 200,000! Yup, you read it correctly, about two hundred thousand people are infected each day. You don’t have to be a mathematician to figure out that at such a rate of infections, the healthcare system will collapse soon.What does it all imply for the gold market? Well, although the arriving vaccines are great for humanity, they are bad for the price of the yellow metal. The pandemic greatly supported gold prices. So, the expected end of the epidemic in the U.S. should be negative for the shiny metal.However, there are two important caveats to this statement. First, there is still a long way to go before widespread vaccination and a true end to the pandemic. In the interim, we still need to face the COVID-19 challenge, so gold shouldn’t suddenly fall out of favor.Second, gold reacted not only to the pandemic itself, but also – or even more – to the world response of governments and central banks to the health and economic crisis . The easy monetary policy and accommodative fiscal policy will not disappear only because of the vaccine’s arrival. Actually, the harsh winter or “Covid hell” that awaits America will force the Fed and Treasury to continue or even to expand their stimuli, which is good news for gold prices from the fundamental perspective .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: Analysis. Care. Profits.
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!
PMs: Looking for Key Triggers

PMs: Looking for Key Triggers

Finance Press Release Finance Press Release 09.12.2020 15:15
  The question on everyone’s mind is: when is it a good time to buy some gold or silver after they bottom? The answer to that question is simple: when key triggers are met. Count-trend rallies in gold or silver don’t mean that they have enough energy and momentum to keep climbing. Miners also don’t have enough strength to lead the way in a fresh climb upwards for the PMs, so everything we see now only speaks of corrective action. Gold moved higher yesterday (Dec 8), while silver and mining stocks went in the opposite direction. It seems that the latter moved in tune with the trend, while the move in the former was rather accidental. Why? Because gold already invalidated yesterday’s daily rally at the moment of writing these words (in the overnight trading). Yes, the closing prices matter the most, but if gold was really after an important breakout, it wouldn’t have wiped out the previous day’s entire rally just several hours after the closing bell. I previously wrote that it had been quite possible for gold to rally up to its September lows, and the low in gold futures in terms of the closing prices was $1,866.30. Monday’s closing price for gold futures had been exactly $1,866, and yesterday, gold closed at $1874.90. At the moment of writing these words, it’s trading at $1,864.60. So, did anything particularly bullish happen on the gold market yesterday? Not really. But can gold move even higher from here? As discouraging (or encouraging, depending on one’s perspective) as this answer may be, it’s a “yes”. The US Dollar Index is currently trading at about 90.8, and its downside target is at about 90, so there is room for another short-term slide. Such a slide would be likely to trigger a rally in the yellow metal. How high could the rally go during this final part of the counter-trend corrective upswing? Perhaps to the mid-November high of about $1,900. Even though gold might theoretically rally all the way up to the early-November high, I don’t see this as being likely. Meanwhile, silver formed a tiny reversal yesterday and it’s moving lower today. Silver reversed after touching the declining resistance line, which is also the upper border of the triangle pattern. Did we just see a top in silver? That’s quite likely, but not certain. I wouldn’t be surprised if silver took one final attempt to break higher and rally and topped close to the early November high. After all, silver is known for its fake breakouts . Moreover, please note that silver has a triangle-vertex-based reversal point in the final part of the month, which could imply that this is where silver forms a final, or temporary bottom. This could have implications also for the rest of the precious metals sector, as its parts tend to move together in the short and medium term. Given the bearish post-Thanksgiving seasonality in the case of PMs and the tendency for them to form local bottoms in the middle or second half of December, it seems likely that the above is likely to be some kind of bottom.   Mining stocks moved 0.41% lower yesterday, despite a higher close in gold futures and the GLD ETF . The general stock market moved slightly higher yesterday, so it wasn’t the reason behind miners’ weakness. This lack of strength confirms the points that I made yesterday and further validates the bearish picture: What we see in the PMs is just a correction, not the start of a new, powerful upleg. If it was, miners would have been leading the way higher. We currently see the opposite. Over a week ago, I wrote that miners could move to the previous lows and by moving to them, they could verify them as resistance . The previous – October – low is at $36.01 in intraday terms and at $36.52 in terms of the daily closing prices. Yesterday, miners closed at $36.50. So, while gold closed at its September low (in terms of the daily closing prices), gold miners closed at their October low. If the USD Index declines one more time before bottoming, and gold rallies, miners could also move temporarily higher. How high could they move? I think that the mid-November high of about $38 (intraday high: $38.35, daily close: $38.01) would provide the kind of strong resistance that miners might not be able to breach. Still, this upside is based on two big IFs. The first “if” is if the USD Index declines to 90 or slightly lower – it’s extremely oversold, and the CoT reports confirm it. The second “if” is if the precious metals sector really reacts to USD’s decline with a visible rally. In the past few weeks, gold shrugged off quite a few USDX declines. And miners shrugged off even more positive news. Consequently, it seems that trying to take a profit from the possible, but not very likely, immediate-term upswing is not the best idea from the risk to reward point of view. Thank you for reading our free analysis today. Please note that the following is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the downside 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.
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.
USD subdued on US Stimulus and Brexit deal outcome

USD subdued on US Stimulus and Brexit deal outcome

FXMAG Team FXMAG Team 14.12.2020 08:00
EURUSD Fails To Post New Highs The euro currency’s rebound after the ECB meeting saw prices rising only to highs near 1.2150. Following this, price action retreated, edging closer back to the rising trend line. We expect the trend line support to once again come into the picture. As long as this support holds, the EURUSD might be looking to aim higher. In the event that the common currency loses the trend line support, then we expect price action to fall toward the 1.2050 level, marking the December 9 lows. To the upside, the EURUSD will have to break out above the previous highs of 1.2178 to continue the uptrend. GBPUSD Loses The 1.3300 Support The British pound sterling slipped below the support level of 1.3300 on Friday. This comes as Brexit talks come to a head. For the moment, the lower support near 1.3122 remains the key price point. As long as this support level holds, there is scope for the GBPUSD to push higher. However, prices will need to break out strongly above the 1.3300 level to continue the uptrend. This will then open the GBPUSD to the upper resistance level of 1.3483. To the downside, a close below 1.3122 could open the way for the cable to retest the 1.3000 round number support once again. Oil Prices Pull Back From A Nine-Month High WTI Crude oil prices rose sharply on Thursday to rise close to the 48.00 level. However, prices pulled back into Friday’s close. This comes as the 45.00 level is firmly establishing as support. Thus, a pullback could see this support level being tested once again. The Stochastics oscillator on the 4-hour chart remains mixed. There is enough room for prices to breakout higher. Above the 48.00 level, oil prices will be contending with a retest of the 50.00 level. To the downside, below the 45.00 support area, a correction could bring the commodity down to test the 44.00 handle next. Gold Settles Within The 1850 And 1825 Range The precious metal continues to trade flat for the second consecutive session. As a result, price action is trading within a tight band of the 1850 and the 1825 levels in the near term. The Stochastics oscillator remains biased to the downside. This could mean that if gold prices lose the 1817.80 level of support, then we expect the downside to continue. The next key level of support will be near the 1750 level. It would also mean that gold prices will be moving lower beyond the 30th November lows of 1764.22. To the upside, price action will need to firmly close above 1850 and continue to the 1900 level to establish the uptrend.
Stock Pick Update: Dec. 16 – Dec. 22, 2020

Stock Pick Update: Dec. 16 – Dec. 22, 2020

Finance Press Release Finance Press Release 16.12.2020 14:19
Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included two Energy stocks and one Financials stock again. In the last five trading days (December 9 – December 15) the broad stock market has been trading within a short-term consolidation following its recent record-breaking run-up. The S&P 500 index has reached new record high of 3,712.39 a week ago on Wednesday. Then it retraced some of the advance before going back up on Monday-Tuesday this week.The S&P 500 index has lost 0.31% between December 9 open and December 15 close. In the same period of time our five long and five short stock picks have gained 1.32%. Stock picks were relatively much stronger than the broad stock market last week. Our long stock picks have gained 0.91% and short stock picks have resulted in a gain of 1.73%. So short stock picks’ performance outpaced the benchmark return on the downside.There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.Our last week’s portfolio result:Long Picks (December 9 open – December 15 close % change): XOM (+0.77%), EOG (+0.62%), PGR (+4.73%), BK (+0.51%), MMM (-2.10%)Short Picks (December 9 open – December 15 close % change): LNT (-0.81%), CNP (-1.64%), ABBV (-4.28%), DHR (-0.16%), APTV (-1.75%)Average long result: +0.91%, average short result: +1.73%Total profit (average): +1.32%Stock Pick Update performance chart since Nov 18, 2020:Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, December 16 – Tuesday, December 22 period.We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (December 16) and sold or bought back on the closing of the next Tuesday’s trading session (December 22).We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .The stock market sector analysis is available to our subscribers only.Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:buys: 2 x Energy, 2 x Financials, 1 x Communication Servicessells: 2 x Utilities, 2 x Real Estate, 1 x Consumer StaplesBuy CandidatesXOM Exxon Mobil Corp. - EnergyStock broke above its short-term downward trend line, uptrend continuation playThe support level is at $40 and resistance level is at $44-47 (short-term target profit level)COP ConocoPhillips – EnergyPossible short-term bull flag pattern, uptrend continuation playThe support level is at $42 and resistance level is at $45-50WFC Wells Fargo & Co. – FinancialsPossible short-term bull flag pattern – uptrend continuation playThe support level is at $29.50 and resistance level is at $30.00Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Energy and Financials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today .Thank you.Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care* * * * *DisclaimerAll essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’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. Paul Rejczak, 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

Deceptive Rally? Measuring Silver’s Relative Strength

Finance Press Release Finance Press Release 16.12.2020 17:43
It’s tempting to ride the silver rollercoaster. After-all, gold’s volatile little brother is just that – volatile. Its wilder price swings make some of the investment public believe they can profit from it more quickly. However, it’s important to remember and take note of the fact that silver (or gold and miners for that matter) should not be judged on its own when making a purchasing decision. It’s a bit more complicated and other factors come into play, such as relative strength.One must track the precious metals’ performance against equities or the USD Index. Asking questions is prudent; how is silver doing compared to gold, and why? The USDX is moving lower but the PMs are not rallying? Hmmm, is there enough strength for them to break out? Silver or gold don’t exist in a vacuum. Instead, their performance has to be judged relative to other factors.The white metal closed yesterday’s (Dec. 15) session right at its declining resistance line. It moved sharply higher today, soaring above both: its declining resistance line and its December high.This is exactly what silver tends to do right before significant declines – it’s exceptionally strong – more than gold and mining stocks. Why would this be the case? Because silver is a relatively thin market, where many institutional investors can’t go as there’s not enough silver for them. The “big players” generally go for gold, and silver is favored by the investment public. The silver manipulation theories are making the demand among the investment public even stronger, and the investment public (as a general group, not any individual person) tends to enter the market close to the tops.The above-mentioned factors – along with the relatively small size of the silver market – make the white metal perform very well (too well) near the local tops. Of course, this doesn’t work each and every time, just like any other trading technique, and one should also look for additional confirmations before making a trade (like weak miners , which tend to react differently than silver).It does imply, however, that it’s best not to take silver’s strength at its face value, and definitely not to view it as bullish unless it’s confirmed by the rest of the precious metals sector. Today’s breakout in silver and lack thereof in gold is not a bullish development, but a bearish one.Moving on to the performance of the mining stocks, let’s take a look at the chart below.The GDX ETF – proxy for precious metals mining stocks – moved higher yesterday, more than nullifying the previous day’s decline. But, overall, was it really strong? Absolutely not. In today’s trading on the London Stock Exchange, the GDX is up only a bit above Tuesday’s intraday highs, and it corrected only a bit more than a half of the December decline.Simply put:Gold is relatively weak compared to what’s happening in the USD IndexSilver is relatively strong to gold and breaking above the previous resistance levels without confirmations from neither gold, nor mining stocksGold and silver mining stocks are weak compared to what’s happening in goldThe above is a perfectly bearish combination on the relative strength front. Combining this with USDX’s proximity to its target area makes the overall implications for the precious metals market very bearish.Thank you for reading our free analysis today. Please note that the following is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the downside 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.
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!
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!
Will Biden Trigger Inflation for Gold?

Will Biden Trigger Inflation for Gold?

Finance Press Release Finance Press Release 18.12.2020 17:40
President-elect Joe Biden is expected to increase further government spending. For this and also other reasons, there is a risk that inflation under Biden’s presidency could be higher than under Trump’s. That would be great news for gold.Let’s face it, Biden won’t have an easy presidency. And I’m not referring to the fact that he will be sworn in as the oldest president in U.S. history or that he will have to deal with the coronavirus pandemic and the process of vaccine distribution across the country. I’m referring to Biden inheriting an economy with slow growth and too much public debt . Given the debt burden, it should be clear that under Biden’s presidency, real interest rates will remain at ultra-low levels. This is how a debt trap works – the more the debt grows, the less the economy (Treasury) can afford higher interest rates .Moreover, Biden will have to face the risk of inflation . Actually, some analysts say that the new POTUS could contribute to the rise of prices. Is it true? Will we finally see an acceleration in the inflation rate?So far, consumer inflation has been subdued. As the chart below shows, the CPI overall annual rate has declined from 2.3 percent before the epidemic to 1.2 percent in October.For some people, this is all really surprising given all the money pumped by the Fed into the economy. However, the disinflation is perfectly in line with our predictions from the May edition of the Gold Market Overview : “In the short run, we expect disinflation , but we think that the risk of inflation later in the future is higher than a decade ago.”Indeed, in the short-run, the negative demand shock outweighed other factors, and people simply increased their demand for money because of the enormous uncertainty and limited opportunities to spend money in the offline economy.But didn’t the Fed significantly increase the money supply ? It did, but the central banks create only a monetary base , while the majority (more than 90 percent) of the broad money supply is created by the commercial banks. So, for inflationary trends, what really matters is not the Fed’s balance sheet , but rather the commercial banks’ credit expansion, since whenever the banks grant loans, they also create deposits, i.e., money supply.Hey, wait a moment, but didn’t the pace of expansion of the banks’ credit and broad money supply also rise? They did! Just look at the chart below. And this is the reason why I believe that the risk of inflation in the aftermath of the coronavirus crisis is higher than after the Great Recession , when banks were strongly hit and didn’t want to expand credit.Now the situation is different. However, banks expanded loans not to the consumers but to the entrepreneurs, probably because they needed credit to stay afloat during the Great Lockdown . So, the acceleration in the bank credit could be temporary – indeed, the pace of its expansion has been slowing down recently. But when the pandemic is over, consumers may again tap credit cards and real estate loans.Indeed, this is an important upward risk for inflation . Some economists point out here the pent-up demand, i.e., the strong increase in demand for a service or product, usually following a period of subdued spending. The idea is that consumers tend to hold off their demand during a recession, only to unleash it during recovery. It makes sense; during a crisis, the uncertainty rises, so people try to cut expenses and accumulate cash. When confidence returns to the marketplace, people spend money more freely.The same could happen during the current pandemic – not only did uncertainty rise, but people also had to practice social distancing and obey sanitary restrictions, which forced them to reduce their expenditures. Hence, when the pandemic is over, the demand for cash may fall, while spending could increase, thereby accelerating inflation . Of course, some demand will simply stay unrealized forever (it would be impossible to make up for all these missed opportunities to drink beers with friends), but when the storm is over and vaccines boost people’s confidence, they will spend a substantial part of their extra savings accumulated during the pandemic.Just take a look the chart below – as you can see, the U.S. personal savings rate has increased from about 8 percent before the epidemic to almost 34 percent in April. Now it is staying above 14 percent, so there is still potential to increase consumer spending in the future.In other words, people and businesses have not yet used all the stimulus they got from the Fed or the government. Because of this uncertainty, they spent as little as they could, and saved as much they could. Why this is so important? Because when people decide to spend their mountain of money, inflation could accelerate, boosting the demand for gold as an inflation hedge .Hence, when the pandemic storm is over, the demand for money should decrease, or the velocity of money should increase. Actually, this is what we have observed in the third quarter of this year – the velocity of M2 money supply has rebounded somewhat , as the chart below shows. So, although the second wave of COVID-19 infections would hamper this process, it’s possible that in 2021 we will see a rise in inflation. Higher inflation also means lower real interest rates, which is another piece of good news for the yellow metal.Last but not least, Biden is a supporter of major economic relief, including a second round of stimulus checks, so consumers’ spending power should increase further next year, thus contributing to higher consumer prices. So, although it’s not determined, there is a risk that inflation under Biden’s presidency could be higher than under Trump’s presidency. It would be great news for gold , especially that the Fed’s new regime means that it will not strongly react to rising 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: Analysis. Care. Profits.
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.
Gold and Miners Are Not in Santa's Bag

Gold and Miners Are Not in Santa's Bag

Finance Press Release Finance Press Release 21.12.2020 17:05
Do you feel the Christmas spirit when it comes to the yellow metal and miners? Because we don’t. Multiple signs over the past few days point to bearish weeks ahead for gold and the gold miners. The VanEck Vectors Gold Miners ETF (GDX) - the most liquid vehicle for investors and traders to gain exposure to gold mining companies – is indicating that things are only about to go downhill from here and a lack of action from options traders only serves to confirm that.Despite rallying by 8.7% over a three-day stretch, the GDX traded sharply lower on Friday (Dec. 18), and yet again, failed to recapture its 50-day moving average (unlike gold). Moreover, GDX also closed below its early-December intraday high, while the GLD ETF remained above its analogous price level.The relative weakness (miners underperforming gold) supports the following bearish thesis:While gold corrected about 61.8% of its November decline, gold miners declined only half thereof. In other words, they underperformed gold, which is bearish.The GDX ETF moved to its 50-day moving average – the level that kept its rallies in check since early October. Can miners move above it? Sure, they did that in early November, but is it likely that such a move would be confirmed or followed by more significant strength? Absolutely not. Let’s keep in mind two things:Back in early November, the GDX moved above the 50-day MA, when gold did the same thing, so if the GDX wanted to rally above this MA, it “should have” done so yesterday. It was too weak to do it.The early-November move above the 50-day MA was invalidated in just 2 days.Moreover, please note that the performance of the GDX ETF from late-November to now looks like an ABC correction. This is not a bearish sign on its own, but it fits other indications described today and this week in general. It increases the chance that the top is already in or very, very close.Another important development was the spike in volume during last Thursday’s (Dec. 17) upswing. It resulted in the largest number of GDX shares traded since the November 6 top (on days when GDX is positive), and we all know what happened to GDX after November 6 (As a point of reference, the four other highest volume days since the November 6 top coincided with declines of 6.13%, 2.74%, 3.40% and 4.29%).In addition, options traders aren’t buying GDX’s rally. Despite put options (which profit when GDX declines) trading relatively flat, call options (which profit when GDX rallies) traded at a significant discount last Friday. Please take a look at the table below for details (courtesy of Yahoo! Finance)The lack of demand among options traders is another signal that last week’s rally is unlikely to continue.Lastly, I’d like to share with you some thoughts on price targets.How high could miners go? Perhaps only to the previous lows and by moving to them, they could verify them as resistance . The previous – October – low is at $36.01 in intraday terms and at $36.52 in terms of the daily closing prices. No matter which level we take, it’s not significantly above the pre-market price of $35.76, thus it seems that adjusting the trading position in order to limit the exposure for the relatively small part of the correction is not a good idea from the risk to reward perspective – one might miss the sharp drop that follows. Please note how sharp the mid-November decline was initially.That’s almost exactly what happened – the GDX ETF rallied to $36.92 in intraday terms, and to $36.50 in terms of the daily closing prices. The breakdown was verified in terms of the daily closing prices, which is more important than what happened in intraday terms.Consequently, the outlook is bearish as it seems that miners are ready for another move lower. There’s still a chance that the precious metals sector would move higher based on a possible short-term decline in the USD Index, but this chance is slim, especially given today’s pre-market decline in both the USD Index and gold.The next downside target for the GDX ETF is the February top in terms of the closing prices – $31.05.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.
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.
Stock Pick Update: Dec. 23 – Dec. 29, 2020

Stock Pick Update: Dec. 23 – Dec. 29, 2020

Finance Press Release Finance Press Release 23.12.2020 12:29
Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included two Technology stocks and one Energy stock this time.In the last five trading days (December 16 – December 22) the broad stock market has extended its short-term consolidation following record-breaking run-up. The S&P 500 index reached new record high of 3,726.70 on Friday, before retracing most of last week’s advances.The S&P 500 has lost 0.24% between December 16 open and December 22 close. In the same period of time our five long and five short stock picks have lost 0.04%. Stock picks were relatively slightly stronger than the broad stock market last week. Our long stock picks have lost 3.94%, however short stock picks have resulted in a gain of 3.86%. Short stock picks’ performance outpaced the benchmark return on the downside, but the whole portfolio followed broad stock market very closely.There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.Our last week’s portfolio result:Long Picks (December 16 open – December 22 close % change): XOM (-5.74%), COP (-8.91%), WFC (-2.29%), BK (+0.02%), FB (-2.79%)Short Picks (December 16 open – December 22 close % change): DUK (-3.10%), EVRG (-4.03%), SPG (-5.23%), CBRE (-5.37%), KO (-1.57%)Average long result: -3.94%, average short result: +3.86%Total profit (average): -0.24%Stock Pick Update performance chart since Nov 18, 2020:Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, December 23 – Tuesday, December 29 period.We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (December 23) and sold or bought back on the closing of the next Tuesday’s trading session (December 29).We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .The stock market sector analysis is available to our subscribers only.Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:buys: 2 x Technology, 2 x Energy, 1 x Financialssells: 2 x Utilities, 2 x Real Estate, 1 x Consumer StaplesBuy CandidatesCRM Salesforce.com, Inc. - TechnologyStock remains above its short-term upward trend lineUptrend continuation playThe support level is at $220 and resistance level is at $240-250 (short-term target profit level)NVDA NVIDIA Corp. – TechnologyStock trades above medium-term upward trend linePossible breakout above short-term consolidationThe support level is at $490-500 and resistance level is at $550PSX Phillips 66 – EnergyPossible short-term bull flag pattern – uptrend continuation playThe support level is at $60 and resistance level is at $70Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Technology and Energy sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today .Thank you.Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care* * * * *DisclaimerAll essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’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. Paul Rejczak, 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 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.
Dollar rises as Trump signs Stimulus bill

Dollar rises as Trump signs Stimulus bill

John Benjamin John Benjamin 29.12.2020 08:56
EURUSD Heading LowerThe euro currency attempted to rise higher but gave back the intraday gains. The rebound off the 1.2177 level of support was met with resistance from the trendline.With prices heading lower, the previous support level near 1.2177 comes under pressure.The Stochastics oscillator is also signaling a hidden bearish divergence. This could mean that price action will drift lower if the support breaks.Below 1.2177, the next key area of support will be the 1.2050 level.Given that this support area was not firmly tested before, we expect to see a possible test of this level.GBPUSD Gives Back Gains As Brexit Euphoria FadesThe British pound sterling is down over 0.6% on Monday. The declines come following last week’s rebound above the 1.3506 level of support.But as the trade deal euphoria fades, prices are drifting lower. As a result, the cable is likely to continue pushing lower.The next key level of support comes in at 1.3210. There is a possibility that the GBPUSD could establish minor support ahead of the decline to 1.3210.To the upside, a rebound could see the 1.3506 level being tested once again.If resistance forms here, then we expect to see a possible confirmation of prices heading lower.WTI Crude Oil Could Likely Form A TopOil prices maintained their bullish continuation with prices rising in early Monday trading. However, after rising to intraday highs of 48.94, the commodity gave back the gains, forming a lower high.If prices break down below the pivot lows of 47.76, then this will confirm that a top is in place. The next support level of interest comes near the 47.17 level.Below this minor support, oil prices could be on track to post further declines.The support area near 45.26 will come into the picture.The Stochastics oscillator is overbought at the moment, validating the short term move lower.Gold Prices Trade Flat Near Previous Swing HighsThe precious metal is on track to close flat on the day for Monday. This comes as prices attempted to rise intraday.However, as the momentum fizzled out, gold prices form a lower high. This could potentially trigger a short term decline.For the moment, the initial support level near 1859.50 comes into the picture. As long as this swing low from December 22 holds, there is scope for a rebound.But a failure at this level will open the way for further declines. The 1850 level of support comes into the picture.Despite the short term declines, gold prices are likely to remain supported at or near the 1850 level for the moment.
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.
Stock Pick Update: Dec. 30 – Jan. 5, 2021

Stock Pick Update: Dec. 30 – Jan. 5, 2021

Finance Press Release Finance Press Release 30.12.2020 13:38
Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included two Technology stocks and one Health Care stock this time. In the last five trading days (December 23 – December 29) the broad stock market has extended its record-breaking run-up. The S&P 500 index reached new record high of 3,756.12 on Tuesday following the recent stimulus news.The S&P 500 has gained 0.91% between December 23 open and December 29 close. In the same period of time our five long and five short stock picks have lost 0.07%. Stock picks were relatively weaker than the broad stock market last week. Our long stock picks have lost 0.30% and short stock picks have resulted in a gain of 0.16%.There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.Our last week’s portfolio result:Long Picks (December 23 open – December 29 close % change): CRM (-4.32%), NVDA (-2.36%), PSX (0.00%), FANG (+4.72%), SPGI (+0.47%)Short Picks (December 23 open – December 29 close % change): SO (+0.10%), AES (+0.73%), WY (-1.27%), ARE (-0.88%), CL (+0.52%)Average long result: -0.30%, average short result: +0.16%Total profit (average): -0.07%Stock Pick Update performance chart since Nov 18, 2020:Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, December 30 – Tuesday, January 5 period.We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (December 30) and sold or bought back on the closing of the next Tuesday’s trading session (January 5).We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .The stock market sector analysis is available to our subscribers only.Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:buys: 2 x Technology, 2 x Health Care, 1 x Communication Servicessells: 2 x Utilities, 2 x Energy, 1 x Real EstateBuy CandidatesNVDA NVIDIA Corp. - TechnologyStock trades along medium-term upward trend linePossible breakout above short-term consolidationThe support level is at $490-500 and resistance level is at $550, among othersINTC Intel Corp. – TechnologyStock retraced most of its recent declinesPossible breakout above medium-term downward trend lineThe support level is at $47 and the nearest important resistance level is at $52ABBV AbbVie Inc. – Health CareStock broke above short-term downward trend line – uptrend continuation playThe support level is at $100-102 and resistance level is at $106-108Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Technology and Health Care sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today .Thank you.Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care* * * * *DisclaimerAll essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’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. Paul Rejczak, 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.
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.
Will Central Banks Hold Bitcoin in 2021?

Will Central Banks Hold Bitcoin in 2021?

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 01.01.2021 20:31
Famed cryptocurrency trader and Aike Capital founder Alex Krüger tweeted on Jan. 1 that the bitcoin – gold relationship needs closer examination. Central banks (CB) will hold bitcoin sooner or later, says Krüger. The reason, he says, has to do with gold and how central banks treat it. In a series of tweets, Krüger shows how demand for gold has changed in 2020.  I've changed my mind.Major central banks will eventually hold #Bitcoin as a reserve asset.So let's explore how central banks' gold demand looks like — Alex Krüger (@krugermacro) January 1, 2021Habits Are Hard To Break Krüger starts by showing that central bank demand for gold remained steady for much of the past ten years. However, it dropped tremendously in 2020. He also draws attention to the point that adding liquidity drives gold prices higher. So, who bought gold? Without going into detail as to why CBs cut their gold intake so much, Krüger does point out that institutional investors dominated demand in 2020. Jewelry, on the other hand, fell off, as the demand is price sensitive. The Big ‘If’ At this point, Krüger makes an assumption. He tweets: Assume now in five years central bank's demand for bitcoin stands at 5% of their gold demand. That would generate $1.2 billion in additional bitcoin buying pressure.— Alex Krüger (@krugermacro) January 1, 2021If CBs buy into bitcoin with just 5% of their gold demand, that would increase demand for the leading crypto by over $1 billion. Krüger sees the entry of the first CB as an event with some consequences. Prices would jump on the news, and speculators would pile in. However, CB for gold demand would only rise. As Jorge Schneider put it: Small becomes a tidalwave…— Jorge schneider (@Jorgeschneide64) January 1, 2021Can Krüger Make a Case for It? Can Krüger make a case for central banks holding bitcoin? Central Bank Digital Currencies (CBDCs) are on the horizon. But are they a bitcoin killer?  Regarding CBDCs, the answer is that they are probably not bitcoin killers. In fact, there is the possibility that a digital stablecoin could come of it. But the purpose of most CBDCs currently under testing is to create a viable means of transactions. As BeInCrypto reported, China is testing its digital yuan for retail purchases already. A pilot launch for P2P transfers started in December. So far, the European Central Bank and others are declaring the same: digital currencies extend our ability to make transactions. Bitcoin, however, appears to be a store of value more than anything else. The 2020 bull run was not about buying pizza or coffee with bitcoin. In part, it was connected to the long-predicted increased interest by institutional and enterprise investors such as GrayScale and MicroStrategy. Is Krüger right about CBs investing in bitcoin in five years? Or perhaps even this year? Institutional investors took time to become pro-crypto. Only time will tell whether this store of value becomes interesting for the mother of all buyers as well. The post Will Central Banks Hold Bitcoin in 2021? 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.
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.
Will the Fed Support Gold Prices in 2021?

Will the Fed Support Gold Prices in 2021?

Finance Press Release Finance Press Release 05.01.2021 13:16
Gold ended 2020 at $1,891, partially thanks to monetary policy easing. In 2021, the Fed may not trigger a comparable rally in gold, but it should offer gold prices some support.Welcome to 2021! I hope that it will be a wonderful year for all of you; a much healthier, calmer and normal year than 2020 was. And even more profitable of course! Indeed, at least gold bulls could be satisfied with the last year, in which the price of gold jumped from $1,523 to $1,891 ( London A.M. Fix )! It means that the yellow metal gained more than 24 percent, as the chart below shows.I know that 24 percent does not look impressive compared to Bitcoin , which gained more than 260 percent in 2020, but it’s still a great achievement relative to other assets or gold in the past. Not to mention the fact that gold’s price level looks more sustainable, while the recent parabolic rises in cryptocurrencies suggest a price bubble .One of the reasons behind gold’s rally was the easy monetary policy adopted by the Fed (and other central banks) in a response to the pandemic and related economic crisis . In a way, the Fed reintroduced the quantitative easing first implemented in the aftermath of the Great Recession . So, gold’s bullish move shouldn’t be surprising.However, there are also some important differences in the monetary policy that followed the global financial crisis and the coronavirus epidemic . First, when Lehman Brothers went bankrupt, the Fed went big. But when COVID-19 infections spread widely through America, the Fed went not only big, but also fast!Just look at the chart below. As you can see, it took just about two months for the U.S. central bank to slash the federal funds rate to zero in the spring of 2020, while it took over a year during the Great Recession.Moreover, from February to November, i.e., in just nine months, the Fed expanded its balance sheet by about $3 trillion, while a decade ago, such an increase took over six years!Implications for Gold in 2021What does the difference in the Fed’s stance imply for the price of gold in 2021? Well, on one hand, because the Fed acted aggressively, there is less room for further monetary policy easing . In the aftermath of the Great Recession, the Fed gradually fired from increasingly powerful weaponry, announcing new rounds of asset purchases from 2007 to 2013, while in a response to the coronavirus, the Fed has fired a bazooka at the outset. This decreases the odds for further monetary policy easing, pushing market expectations towards normalization. You see, when you are at the bottom, the only possible move is up.This is my biggest worry for the gold market in 2021: that monetary policy has already become so dovish, that now it can be only hawkish – at least on a relative basis. The real interest rates are so low that – given the prospects of economic recovery on a horizon – they can only go up, especially if inflation does not increase.On the other hand, inflation could really rise in 2021. Additionally, the fact that the Fed went both big and fast means that the U.S. central bank became more dovish than in the past , which should be positive for the yellow metal. Moreover, a decade ago the central banks at least pretended that they would like to tighten their stance and normalize monetary policy. They even said that quantitative easing would be reversed, and the Fed’s balance sheet would return to its pre-recession level.Now, the illusions have dissipated. The central banks will buy assets for years to come, if not indefinitely, and there will be no taper tantrum . The eventual exit from the current easy monetary stance will be ultra-slow and gentle. The Fed has a clear dovish bias, so the interest rates may go down further – after all, given the debt trap , the central banks could be forced to cap the bond yields , which should support gold prices.Therefore, in 2020, the Fed no longer only intervened on a large scale as it did a decade ago, but it also acted quickly. The change of strategy from go big to go big and fast can be positive for gold prices, but only when the market participants do not believe that the Fed is out of ammunition and only when they expect the normalization of interest rates. Although some investors expect an interest rate hike this year, I believe that the Fed will remain dovish and successfully manage market expectations in order to suppress market interest rates. So, although without the next crisis (such as a debt crisis ) or inflation, the price of gold may not rally substantively, it should be supported by the Fed 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: Effective Investment through Diligence & Care
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.
JPMorgan Analysts Call for $146,000 Long-Term Bitcoin Price Target

JPMorgan Analysts Call for $146,000 Long-Term Bitcoin Price Target

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 05.01.2021 13:36
JPMorgan and its CEO Jamie Dimon have seemingly appeared skeptical of Bitcoin for years, but that hasn’t stopped the firm from speculating on a frothy upside target. With the increased institutional adoption of Bitcoin due to worldwide economic and social factors, the leading cryptocurrency can no longer be ignored. According to JPMorgan analysts via Bloomberg, gold may continue to lose market share: “Bitcoin may have the potential for substantial further gains over the long term as it competes with gold for investment flows, according to JPMorgan Chase & Co.” As investors begin to see Bitcoin as a better store of value, transaction system, and hedge against inflation compared to gold, large-scale purchases may continue. The analysts speculate that bitcoin still has some serious upside potential: “A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term, […] a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.” Although the analysts do not predict a quick price run-up to near $150,000, they believe a gradual increase of cash outflows from gold and other assets will inevitably find its way to BTC. JPM traders in London were buying as far back as 2013. I know for fact as someone I know built them trading algo that couldn't be detected by bosses as they weren't allowed to trade it. These traders complained that @maxkeiser kept moving price, forcing them to intervene w/ bot https://t.co/1RE0xJ61FB— Stacy Herbert (@stacyherbert) January 5, 2021JPMorgan Not the Only One Calling the Shots To some users, this may seem like a bold prediction. The firm is one of the largest financial institutions globally and not the first big player to think this way.  In a recent interview with YouTuber Casey Adams, Tyler Winklevoss, Bitcoin billionaire and cofounder of the Gemini exchange, predicted a $500,000 bitcoin price for similar reasons. Winklevoss explains that bitcoin is a fundamentally stronger store of value and hedge against inflation than gold. And since gold has a $9 trillion market cap, bitcoin will likely overtake it one day. Winklevoss continues that if bitcoin established itself as a mainstream transfer of value and not just a store of value, it could be worth even more as it competes against the global fiat market. These are bold long-term predictions, but they don’t seem implausible, at least according to JPMorgan. If institutions continue to choose bitcoin over gold, the proof-of-work coin could ultimately creep towards the long-term predictions given.      The post JPMorgan Analysts Call for $146,000 Long-Term Bitcoin Price Target appeared first on BeInCrypto.
GBPUSD Attempts To Pare Losses

GBPUSD Attempts To Pare Losses

John Benjamin John Benjamin 06.01.2021 08:35
Dollar slips, brushing off ISM dataEuro Trades SubduedThe euro currency is trading subdued following the volatile price action on Monday which closed almost flat.Price continues to remain bullish but a breakout off the current levels is needed.Price action is likely to close with an inside bar on Tuesday. This could mean that a breakout from this range could set the short term momentum in the markets.The bias remains mixed, albeit to the upside. The common currency will need to post higher highs to confirm the continuation of the uptrend.The British pound sterling is posting modest gains on Tuesday following the strong sell-off on Monday. But price action remains subdued in comparison to Monday’s prices.The Stochastics oscillator remains near the oversold levels. However, this bias remains mixed.To the downside, the support area near 1.3500 is likely to come in as support.To the upside, for the uptrend to continue, GBPUSD will need to rise above the previous highs near 1.37.Crude Oil Gains Over 5%Oil prices are bullish on Tuesday, rising over 5% intraday.The gains come on the second day of the OPEC+ meeting. Saudi Arabia, alongside other countries, opposed Russia’s proposal of raising production. The current gains in oil prices will likely push it to the psychologically important level of $50.00 and barrel.Following this, we could expect some profit-taking to push prices back lower. The support level near 49.15 is likely to come in initially.As long as prices hold above this level, we could expect to see a continuation higher.If the 49.15 handle is lost, then a deeper correction could be expected toward the 47.17 level of support.Gold Tests 1950 Once AgainThe gains in the precious metal saw price rising to the 1950 level. This marks the second retest of this level since November 2020.Previously, prices fell back right after testing this level. At the moment, the Stochastics oscillator is in the overbought levels.This could potentially signal another correction lower. The immediate support level is near the 1911 – 1950 level for the moment.In the event that gold prices continue to edge higher, then a higher low needs to form above 1950. Above this level, the next clear challenge will be the psychological level of $2000.
Stock Pick Update: Jan. 6 – Jan. 12, 2021

Stock Pick Update: Jan. 6 – Jan. 12, 2021

Finance Press Release Finance Press Release 06.01.2021 14:04
Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included two Materials stocks and one Energy stock this time.In the last five trading days (December 30 – January 5) the broad stock market has fluctuated following its record-breaking run-up. The S&P 500 index has reached new record high of 3,769.90 on Monday before retracing most of its December advances.The S&P 500 has lost 0.25% between December 30 open and January 5 close. In the same period of time our five long and five short stock picks have lost 0.29%. So stock picks basically followed the broad stock market’s performance last week. Our long stock picks have gained 0.46%, but short stock picks have resulted in a loss of 1.04%.There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.Our last week’s portfolio result:Long Picks (December 30 open – January 5 close % change): NVDA (+3.19%), INTC (+3.05%), ABBV (+1.32%), VRTX (-2.73%), FB (-2.51%)Short Picks (December 30 open – January 5 close % change): DUK (-0.19%), SO (-0.53%), MPC (+2.88%), VLO (+3.07%), SPG (-0.05%)Average long result: +0.46%, average short result: -1.04%Total profit (average): -0.29%Stock Pick Update performance chart since Nov 18, 2020:Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, January 6 – Tuesday, January 12 period.We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (January 6) and sold or bought back on the closing of the next Tuesday’s trading session (January 12).We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .The stock market sector analysis is available to our subscribers only.Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:buys: 2 x Materials, 2 x Energy, 1 x Technologysells: 2 x Real Estate, 2 x Utilities, 1 x IndustrialsBuy CandidatesECL Ecolab, Inc. - MaterialsStock remains above the support level of $212.50Possible breakout above short-term consolidationThe resistance level is at $220-225CE Celanese Corp. – MaterialsPossible breakout above month-long downward trend lineThe support level is at $125.00 and the resistance level is at $137.50KMI Kinder Morgan Inc. – EnergyStock broke above the downward trend line – uptrend continuation playThe support level is at $13.40 and resistance level is at $15, among othersSumming up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Materials and Energy sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today .Thank you.Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care* * * * *DisclaimerAll essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’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. Paul Rejczak, 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.
GBPUSD Gives Back Gains From Previous Day

GBPUSD Gives Back Gains From Previous Day

John Benjamin John Benjamin 07.01.2021 09:47
Dollar recovers from a fresh two and half year lowEURUSD Pares Gains Near Trend-LineThe euro currency is down about 0.20% intraday. The declines come right after the common currency rose to a new two and a half year high.However, the test of the trendline from below indicates strong resistance here. For the moment, the current continuation remains questionable.The euro currency will need to post a strong decline and a lower high to confirm the start of a correction.For now, the initial support is near the 1.2215 level. As long as this level holds, the upside bias in the euro remains intact.The Stochastics oscillator is also quite overbought and gives scope for further declines in the common currency.The British pound sterling is seen giving back the gains made on Tuesday. This puts price action to trade rather flat but increases the downside bias.On the short term charts, the formation of a lower high indicates that the pound sterling could push lower.However, prices will contend with the initial support level near 1.3506. As long as this level holds, there is scope for the GBPUSD to make gains.However, if prices close below this level convincingly, then there is scope for a continuation to the downside.This will bring the sideways range of 1.3500 and 1.3100 back into focus.Oil Gains As Saudi Cuts OutputWTI crude oil touched $50.00 a barrel on Wednesday in the early Asian session. The gains came after the OPEC+ meeting saw Saudi Arabia cutting oil output by one million barrels per day.The rise to $50.00 marks the first time testing this level since February 25, 2020. For the moment, price action is seen retesting the rising trendline from below.If the trendline holds, then we expect to see a possible reversal off the $50.00 handle.A breakout above the trendline could see further gains likely. However, for the moment, oil prices could consolidate between the 50.00 and 47.00 price levels.Gold Price Retreats Off 1950 ResistanceThe precious metal once again failed to breakout above the key 1950 level of resistance.Following the failure, gold prices lost close to 2.30% intraday. The declines push gold prices back to the key support level near the 1900 – 1911 price area.As long as this support level holds, gold is likely to post a rebound.However, if price closes convincingly below the 1900 level then that could potentially put an end to the current rally.For the moment, the bias in gold prices remains mixed.
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
Markets Surge Despite Unprecedented Violence at U.S. Capitol

Markets Surge Despite Unprecedented Violence at U.S. Capitol

Finance Press Release Finance Press Release 07.01.2021 16:11
In a news-filled day, the Dow Jones hit an all-time high on Wednesday (Jan. 6), despite unprecedented unrest taking place in Washington D.C.News RecapThe Dow climbed 438 points or 1.4% and briefly rose more than 600 points earlier in the day. The S&P 500 also gained 0.6% and hit an intraday record, while the Nasdaq fell 0.6%. The small-cap Russell 2000 surged by nearly 4%.The day began with investors focused on the Georgia U.S. Senate special election runoff . Democrat Raphael Warnock defeated incumbent Republican Kelly Loeffler, with other Democrat Jon Ossoff announced as the winner over incumbent Republican Sen. David Perdue later in the day.With a Democrat sweep in Georgia, the party now has control of the Senate. Although it is a 50-50 split (with two independents) in the Senate, both Democrats win, they have full control because Vice President-elect Kamala Harris will serve as the tiebreaker vote.Many believe that because President-elect Biden, a Democrat, has a House and Senate under Democrat control, he could more easily pass higher taxes and progressive policies that may hurt the market. On the other hand, others believe that this Democrat sweep could bring into effect a larger and quicker stimulus relief bill.The real news of the day was what happened at the U.S. Capitol building. After President Trump (and his family) led a “Stop the Steal” rally in Washington, D.C. to protest Congress’ certification of Joe Biden as the next president, angry MAGA supporters did the unthinkable and stormed the Capitol.Wednesday (Jan. 6) was the first time since 1814 that the Capitol building was physically breached by hostile actors.The invasion of the Capitol occurred after Vice President Mike Pence rejected President Trump’s calls to block Joe Biden’s election confirmation. Shortly after, the Capitol went into full lockdown.Later that night, the Capitol was secured and Congress reconvened to officially certify Biden as the president. The CBOE Volatility Index (VIX) moved higher due to the unrest at the Capitol.Caterpillar (CAT) surged 5.5%, while big banks such as JPMorgan Chase (JPM) and Bank of America (BAC) gained 4.7% and 6.3%, respectively. Other names and sectors that could be aided by Biden’s agenda rose as well such as the Invesco Solar ETF (TAN) which boomed 8.4%.Tech lagged on the day due to fears of higher taxes and higher stimulus potential. Facebook (FB) and Amazon (AMZN) each fell more than 2%, while Netflix (NFLX) dipped 3.9%.The 10-year Treasury note yield topped 1% for the first time since March.What a newsworthy day Wednesday (Jan. 6) was. What started as a day focused on Senate runoff elections with the balance of Senate power at stake, ended with President-elect Biden being officially confirmed as the next president. But in between? A mob took over the capitol building! Did you ever think you would read that sentence in your lifetime?Love him or hate him, President Trump is an eccentric character to put it lightly. Scorned, and still convinced that he won the election, Trump and his bruised ego whipped his supporters into a frenzy during a “Stop the Steal” rally and encouraged them to march towards the Capitol and make their voices heard. Somehow the protest turned into a storming of the Capitol after Vice President Mike Pence refused to overturn the election. Pence was later ushered out of the Senate and the Capitol went into lockdown.What’s truly shocking here is that the markets still went up! In fact, the Dow hit yet ANOTHER all-time high! Whether you like it or not, this has to give you some sort of faith in the resiliency of capitalism,The results of the Georgia election can be credited for the market surge.Although some sectors plummeted due to fears of higher taxes and stricter regulations, with full Democrat control of the Presidency, Senate, and House, there is clarity for one, and expectations of further spending and government stimulus.Goldman Sachs expects another big stimulus package of around $600 billion . While this could be bad for the national debt and have long-term consequences, in the short-term, it could send the economy heating. Small-cap stocks surged as a result.I still believe that there will be a short-term tug of war between good news and bad news. Many of these moves upwards or downwards are based on emotion and sentiment, and I believe there could be some serious volatility in the near-term. Although markets on Wednesday (Jan. 6) may have been overly excited from the “Blue Wave” thanks to Georgia, consider this: the Capitol was invaded and the pandemic is still wreaking havoc! Even though the markets gained and the 10-year treasury ticked above 1% for the first time since March, the VIX still rose which means that fear is on the rise.There was no pullback to end 2020 as I anticipated, but I still believe that markets have overheated in the short-term, and 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) that “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.”National Securities’ chief market strategist Art Hogan also believes that we could see a 5%-8% pullback as early as this month.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.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 out of the U.K. and South Africa 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. Can Small-caps Own 2021?Small-caps are the comeback darlings of the week. Although I believed that the Russell 2000’s record-setting run since the start of November was coming to an end, it has rallied over 5% in the last two trading days. Thanks to a Democrat sweep in Georgia and hopes of further economic stimulus, small-cap stocks have climbed back towards record highs.I love small-cap stocks in the long-term, especially as the world reopens. A Democrat-dominated Congress could help these stocks too. But I believe that in the short-term, the index, by any measurement, has simply overheated. Before Jan. 4, the RSI for the I WM 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 72, and I believe that a bigger 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.What this also comes down to is that small-caps are more sensitive to the news - good or bad. I believe that vaccine gains have possibly been baked in by now. There could be another near-term pop due to hopes of further stimulus, but I believe that it’s likely 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.SELL and take Wednesday’s (Jan. 6) 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.
Silver, you got to know how!

Silver, you got to know how!

Korbinian Koller Korbinian Koller 08.01.2021 13:47
We have identified the most commonly made mistake in technical analysis to be the representation. Representation equals psychology! Psychology being the most important aspect of trading means that the way charts are represented is extremely important. Rarely do we see trading supportive setups. Silver, you got to know how!Here are a few tips we find useful to get the best out of your chart space.Less is not always more.In our opinion charts from cell phones are useless. Their aspect ratios and general size do not allow for the professional to translate into a decision-making process that is conducive to execution. While larger handheld devices and small laptops are an upgrade to these stamp size representations, we still vote for a multi-screen trade setup for the following reasons. For back testing and chart analysis you want to see nuances of various time frames represented next to each other.For execution, you want a quiet workspace meaning it isn’t conducive to flip between workspaces or expand and collapse windows. Take small time frames. Sorting and execution windows should be outside your main visual sensory field as they produce a lot of data leading to data exhaustion over time. Split widescreen monitors into halves or thirds because stretched chart windows distort the ratio to the point that trend and range differentiation are hard to make out. This being one of the most important things to read out of a chart.Silver, Monthly Arithmetic Chart. Silver, you got to know how!Silver in US Dollar, monthly chart as of January 7th, 2021.Another aspect little known is the principle on how to use arithmetic versus logarithmic charts. You want to use arithmetic charts for shorter time segments to have an accurate representation of trends and ranges. For long term monthly data, it is advisable to use logarithmic representation. This is due to the fact that event proportions get swallowed once price ranges are stretched.Let us illustrate. If you compare the above arithmetic chart, from exactly ten years ago with the logarithmic one below, you will find a vast difference in how one can interpret price movement at first glance. Looking at a larger time segment with vast price movement the arithmetic representation “swallows” data through compression. What is interpreted as insignificant noise (to the very left of the chart) in the arithmetic chart, with a two-year sideways segment, becomes significant in the logarithmic chart where one can see much more clearly that we had a major downtrend of a 32% price drop.  Silver, Monthly Chart, Logarithmic, Silver, you got to know how!Silver in US Dollar, monthly chart as of January 7th, 2021.Secondly, the logarithmic representation shows much more clearly that from this price drop low at US$4.05 a clear uptrend established. This with two major up legs advancing to US$49.83, representing a 1,130% gain.Silver, Monthly Chart. Starting the year with a large time frame overview:Silver in US Dollar, monthly chart as of January 7th, 2021.Why a correct representation like this is significant becomes obvious when looking at the present time. The recent directional advancement of Silver prices is birthed out of a previous 34% drop. This is even more significant if you include the quick washout, represented by the down wick, which accounts for a 45% drop. Prices have more than doubled since those lows. Enough reason to look in the past of Silver price behavior at the beginning of possible longer trends. Without the use of a logarithmic presentation, one might have not ever noticed a possible similarity.In short, it is essential once looking at larger time stretches on larger time frame charts to consider the use of a logarithmic representation. Otherwise, you might lose analysis opportunity through chart compression.Technology marketing tries to sell us all sorts of gadgets blinding us to believe that technological toys empower a better trading result. Wrong! Do not get lured into trading on the fly from your cell phone while driving. Trading is like a competitive sport. You do not win a gold medal at the Olympics while texting your buddies. If you want to win the game of market participation you need to dedicate your time in a quiet space with appropriate tools.Silver, you got to know how!Execution requires a maximum reduced data density to keep some powder dry for mental capacity in case of surprises, distractions, and other abnormalities to not get into a stress-induced reactionary intuitive field but rather stay focused. Only an anticipatory rule-based execution in this counterintuitive environment leads to success. This principle demands a chart representation as quiet as possible to keep data overloads at a minimum. Automatisch generierte Beschreibung">Outstanding 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.
The Gold Market in 2020 and Beyond

The Gold Market in 2020 and Beyond

Finance Press Release Finance Press Release 08.01.2021 17:48
Was the past year good for the yellow metal? What happened in 2020 and what will 2021 be like for the gold market?Nobody the Spanish Inquisition! And nobody expected a pandemic in 2020! Oh boy, what a year… How good that 2020 has already passed! It was an extraordinary year, unlike any other in many decades. Unfortunately, 2020 was a disastrous time for many people all over the world who suffered from COVID-19 or whose relatives and friends died because of the coronavirus or the collapse of the healthcare system… Our thoughts are with them. Many others lost their jobs or income, and all of us suffered from loneliness and limited freedom during the Great Lockdown . Indeed, it’s good that 2020 is over – and we hope that 2021 will be much better!And what did 2020 mean for gold? Well, it turned out that last year was gracious to the yellow metal. As the chart below shows, gold entered 2020 with a price of $1,515 per ounce, and finished the year at $1,888 (London P.M. Fix as of December 30). It means that the shiny metal rose over 24 percent – that’s not bad considering other assets were hit really hard during the economic crisis !Actually, 2020 was definitely better for gold prices than 2019 , when the yellow metal gained “only” over 18 percent. As I didn’t predict the global pandemic (who did?), I didn’t forecast such strong gains in my base scenario. However, given the inversion of the yield curve in 2019, I expected a kind of economic downturn that would positively impact gold prices. One year ago, in a January 2020 edition of the Gold Market Overview , I wrote:unless anything ugly happens, the macroeconomic environment could be less supportive for gold than in 2019. However, bad things do happen, and, according to Murphy’s law, anything that can go wrong will go wrong. Hence, the gold fundamentals may turn out to be more positive for gold over the year. After all, the yield curve has inverted last year and we are already observing some recessionary trends, especially in the manufacturing sector and among the small-sized companies (…) given the amount of black swans flying just above the market surface, gold might provide us with some bullish surprises as well.And indeed, the black swan (or perhaps a white or gray swan) landed in 2020, pleasing the gold bulls. However, despite gold’s impressive performance, some people complain that gold didn’t rally more during the coronavirus turmoil. I completely understand this disappointment – after all, the world suffered its deepest economic downturn since the Great Depression , larger even than the Great Recession , and gold gained only 24.6 percent?However, the crisis was deep but very short, as we quickly learnt how to live with the virus, while our brilliant scientists swiftly developed vaccines. Moreover, this time banks were resilient and there was no financial crisis . Another factor is that gold actually rallied more than 36 percent until its peak in August (or more than 40 percent counting from the bottom), but it later corrected somewhat.Indeed, we can distinguish a few phases in the gold market in 2020:A pre-pandemic bullish phase caused by easy monetary policy and worries about the coronavirus, that lasted until mid-February, with the price of gold increasing from $1,515 to $1,604 (5.9 percent) on February 19, just before the stock market crash.The bullish period (with a short bearish correction) more closely related to the unfolding pandemic, the stock market crash and central banks’ panic and bold responses. It started on February 20 and ended on March 6, when the price of gold reached $1,684 (gaining 5 percent).The bearish phase caused by investors’ panic selloff of all assets in order to raise cash. It lasted until March 19, when the price of gold reached its 2020 bottom of $1,474 (a decline of 12.5 percent).A super bullish phase that lasted until August 6, when the price of gold reached its all-time peak of $2,067, soaring 40.2 percent in just four and half months. This period can be split into: the bullish phase, caused by the coronavirus shock, that lasted until mid-April; the consolidation period, that came when the financial markets calmed down as the initial doomsday scenarios didn’t materialize, and lasted from mid-April to mid-June; and another bullish phase, caused by disastrous economic data for the first half of 2020, and massive stimulus programs delivered by the central banks and governments.The bearish period , during which the yellow metal declined to $1,763 on the last day of November, or 14.7 percent, due to positive vaccine-related news and reduced geopolitical uncertainty after the U.S. presidential elections.The bullish remainder of the year, during which gold rose to $1,888, or 7 percent, caused by the dark COVID-19 winter, poor economic data, strengthened prospects of another government financial stimulus, and related worries about the rising U.S. debt.So, it’s pretty obvious that the course of the pandemic was one of the most important tailwinds for the gold prices in 2020. Thus, the correction caused by the vaccine breakthroughs is not surprising, given the scale of the previous rally . However, please note that gold reacted not to the pandemic itself, but rather to the investors, governments, and central banks’ reaction to it. The yellow metal gained the most when investors were fearful, and when the Fed and Treasury injected liquidity into the markets.This all bodes well for gold in 2021. After all, the U.S. central bank won’t cease conducting its very easy monetary policy , while a Biden-Yellen duo will continue the dovish fiscal policy inherited from the Trump administration. Such a policy mix should support gold prices. Of course, the scale of accommodation would be lower than in 2020, so gold’s performance in 2021 could be worse than last year. But unless we see a normalization in the monetary policy and an increase in the real interest rates , the bull market in gold shouldn’t end.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.
USD grinds higher despite poor payrolls report

USD grinds higher despite poor payrolls report

John Benjamin John Benjamin 11.01.2021 09:16
Euro Falls For A Second Consecutive SessionThe euro currency was down over 0.41% into Friday’s close, marking the second session of consecutive declines. The drop comes after the euro touched highs of 1.2284 on Wednesday last week.While it is too early to call for a correction, the current drop remains consistent with the overall view. The EURUSD has been in a strong uptrend with little to no major corrections.For the moment, the line in the sand comes in at the 1.2177 level of support. If the euro loses this handle, then we expect to see a move to the 1.2050 level of support next.While this could weaken the upside bias, there is still scope for a rebound. But a close below 1.2050 will no doubt accelerate the declines to 1.1900 next.GBPUSD Closes Flat As Consolidation ContinuesThe British pound sterling is seen trading flat as the consolidation near the top end of the rally continues.The cable has been in a strong volatile ride since late last year due to the Brexit trade talks. This has pushed the currency to test highs above 1.3650.However, following the gains, price has been trading rather flat. On the short term charts, we see the consistent lower highs forming.This could result in the descending triangle pattern likely to emerge. If the GBPUSD closes below the 1.3500 level of support, then we expect to see further declines lower.The cable will most likely move back within the sideways range of 1.3500 and 1.3150 levels.Crude Oil Rises To A Nine-Month HighOil prices continue to push higher with prices settling near 52.60 last Friday. It marks the highest levels since February.The gains also come with nine weekly consecutive gains so far. With price action cutting past the trendline from below, we expect to see a continuation higher.But if price action retraces the gains, then a correction back to the 49.00 level is quite possible. Establishing support at this level will continue to see the bullish bias intact.The next key level to the upside will come near the 55.00 level which marks a major support/resistance level back in late 2019/early 2020.Gold Prices Push Past 1850The precious metal continues to post strong declines. On Friday, the commodity lost over 3% into the close to settle at 1847.Prices are now trading near a three-week low. The weekly bearish price action candlestick is also likely to signal a continuation lower.The next key level of support comes near the 1817 level. If gold prices lose this handle, then we might get to see a stronger decline.The next main support level will be found near the 1671 level and would potentially mark a strong retracement after testing new all-time highs just a few months ago.
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.
USD extends gains, rising to a three-week high

USD extends gains, rising to a three-week high

John Benjamin John Benjamin 12.01.2021 08:56
Euro Extends Declines For Third Consecutive SessionThe euro currency is posting declines for the third consecutive day. As a result, the common currency fell to a four-week low intraday before recuperating some of the losses.The broadly stronger greenback has pushed the EURUSD lower, which has been pending a correction for quite a while. For the moment, the euro is seen consolidating near the 1.2177 level.With the Stochastics oscillator currently oversold, there is scope for prices to post a rebound. The longer-term hidden bullish divergence could however see price making an attempt to push higher.As long as the previous highs of 1.2343 holds, we expect the overall trend to remain flat.GBPUSD Breaks Down Lower From Descending TriangleThe British pound sterling finally gave way as price broke down from the descending triangle pattern. This comes even as prices broke down past the key support/resistance level near 1.3500.However, following the initial decline to a two week low, the cable is recovering from the intraday lows. We could now expect prices to potentially retest the lower support area near 1.3542 – 1.3500.As long as this level stalls from price posting gains, we could expect to see further downside. The Stochastics oscillator is currently oversold and coincides with the rebound.However, if prices rise above the 1.3542 level, then it would invalidate the descending triangle pattern. We could expect to see the price either consolidating or renewing its bullish momentum.Oil Price Gains Pause After A 4-Day GainWTI crude oil prices are taking a breather following the strong winning stretch from last week. Price action is largely muted, even failing to post any new highs.As a result, oil prices are confined within last Friday’s range. Since the overall bias remains to the upside, there is scope for the commodity to continue to edge higher.However, on the short term charts, we see the trendline coming under a retest once again from below.If the trendline begins to act as resistance, then we could see some downside correction. The immediate lower support level near 49.00 comes into the picture.This should ideally support prices in the near term. But given that the Stochastics oscillator is likely to signal further upside, oil prices are likely to break the trendline to the upside.Gold Trades Flat Following Last Week’s DeclinesThe precious metal is on track to close flat on Monday. Price briefly slipped to test the 1817.80 level before pulling back.Overall, gold prices are currently confined to trade within the 1850 and 1817.80 levels. Only a strong breakout from this range will confirm the next direction.The bias remains to the downside for the moment, but that could change if gold prices manage to rise above the 1850 handle.This will then potentially set the stage for gold to test the 1911.50 level. The Stochastics oscillator remains near the oversold levels and somewhat mixed.
Gold & the USDX: Correlations

Blue (Wave) Beats Gold

Finance Press Release Finance Press Release 12.01.2021 14:15
What a week! First gold soared to almost $1,960, but then its price (London P.M. Fix) plunged to $1,863 on January 8, as the chart below shows.This is quite strange (and bearish) behavior, given what happened last week. First, there were violent pro-Trump protests in Washington D.C. The rioters stormed the U.S. Capitol. During these riots, five people died. Given the chaos in the capital, gold, which is a safe-haven asset , should shine.Second, the December Employment Situation Report came out . It turned out that the nonfarm payroll employment declined by 140,000 last month . The numbers fell short of expectations, as the pundits expected that the U.S. economy would add 50,000 jobs. The contraction in the nonfarm payrolls means that the winter wave of the COVID-19 pandemic hit the U.S. labor market rather significantly.Third, despite the rollout of vaccinations (which is rather sluggish), the epidemic in the U.S. is taking its toll . The number of daily new cases of the coronavirus is above 250,000, the record high, as the chart above shows. So, we see the impact of the winter holidays showing up in the data.Rioting will also not help in limiting the spread of the coronavirus . Furthermore, hospitalizations and deaths are also rising. The past week saw the first time the U.S. reporting more than 3,900 deaths in a single day, as the chart below shows.Lastly, both Democratic candidates won the runoffs in Georgia , which means that Democrats took control over the Senate. The unexpected blue wave raised expectations for higher taxes and larges fiscal deficits , which should be positive for gold.Implications for GoldThese factors should have been bullish for gold and they should have made the price of the yellow metal rally, but they weren’t and they didn’t. It seems that investors generally welcomed the blue wave and focused on a positive side of that development, or it might have been the case that the gold market was reacting to technical developments, not the fundamental ones. In any case, we can see the replay of the 2016 presidential election when everyone expected that Trump’s victory would be bad for the equity markets and positive for the precious metals market. But back then shares soared while gold plunged. We are currently witnessing something similar. Everyone thought that a blue wave would be the best scenario for gold, but the yellow metal dropped again.Why? Well, maybe it was just a “buy the rumor, sell the fact” phenomenon. Or maybe investors just don’t care about the long-term consequences of larger fiscal stimulus, such as rising public debt . Instead, they assumed that more government spending would accelerate GDP growth . This is why the real interest rates rose (see the chart below), which pushed the gold prices lower.Another issue is that when Trump didn’t support the riots, investors assumed that there will ultimately be a peaceful transition of power and started to sell safe-haven assets such as gold. With Democrats taking control of both the White House and the whole of Congress, investors increased their risk-appetite, which created downward pressure on gold prices.Moreover, the minutes of the latest Federal Open Market Committee (FOMC) meeting published last week indicate that further monetary easing is not likely in the very near future.However, sooner or later the Fed will have to step in. The worsening condition of the U.S. labor market and rising bond yields will prompt the central bank to provide further accommodation. After all, the main task of the central banks is to provide the governments with fiscal room. And at some point, investors will start to worry about the rising fiscal deficits and public debt.So, as long as the real interest rates are rising, gold will be in trouble . But at some point the rates should stabilize, or they could even decline again – especially if inflation emerges – which would help the 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!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care
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.
Stock Pick Update: Jan. 13 – Jan. 19, 2021

Stock Pick Update: Jan. 13 – Jan. 19, 2021

Finance Press Release Finance Press Release 13.01.2021 14:23
Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included two Financials and one Materials stock this time.In the last five trading days (January 6 – January 12) the broad stock market has extended its record-breaking run-up. The S&P 500 index has reached new record high of 3,826.69 on Friday following new stimulus package hopes.The S&P 500 has gained 2.40% between January 6 open and January 12 close. In the same period of time our five long and five short stock picks have gained 1.59%. Stock picks were relatively weaker than the broad stock market’s performance last week. However, our long stock picks have gained 3.35% outperforming the index . Short stock picks have resulted in a loss of 0.17%.There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.Our last week’s portfolio result:Long Picks (January 6 open – January 12 close % change): ECL (+1.65%), CE (+3.80%), KMI (+7.87%), VLO (+1.45%), NVDA (+1.98%)Short Picks (January 6 open – January 12 close % change): PLD (-1.43%), SPG (+1.70%), DUK (-1.13%), PEG (+1.97%), HON (-0.27%)Average long result: +3.35%, average short result: -0.17%Total profit (average): +1.59%Stock Pick Update performance chart since Nov 18, 2020:Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, January 13 – Tuesday, January 19 period.We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (January 13) and sold or bought back on the closing of the next Tuesday’s trading session (January 19).We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .The stock market sector analysis is available to our subscribers only.Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:buys: 2 x Financials, 2 x Materials, 1 x Consumer Discretionarysells: 2 x Real Estate, 2 x Communication Services, 1 x Consumer StaplesBuy CandidatesAXP American Express Co. - FinancialsStock remains above its medium- and short-term upward trend linesPossible breakout above the previous highThe resistance level is at $124 and support level is at $113SPGI S&P Global Inc. – FinancialsPossible upward reversal from the support level of $212-213The resistance level is at $325 – short-term upside profit target levelSHW Sherwin Williams Co. – MaterialsStock broke above the short-term downward trend line – uptrend continuation playThe support level is at $710 and resistance level is at $740-750Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Financials and Materials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today .Thank you.Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care* * * * *DisclaimerAll essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’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. Paul Rejczak, 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.
3 Price Drivers in a Globalized World

3 Price Drivers in a Globalized World

Finance Press Release Finance Press Release 13.01.2021 16:02
Do you want to know how gold will be doing soon? Or the USDX? You have to look at the German and French economies. You may ask “What? How can they be tied together?” Well, the globalization of markets is one of the core foundations of the modern world. With everything interrelated, nothing in economics can be examined in a vacuum state. That includes the three precious metals price drivers: stocks, yields and currencies.The EUR/USD currency pair is a perfect example of this interconnectivity. Being the most popular and most traded currency pair in the world, the EUR/USD is influenced by many factors, including the price action in the USD Index as well as the strength of the European and American economies at any given time. The same level of interconnectedness can be applied to the other price drivers.Let’s take a fundamental look at stocks, yields and currencies.As you can see in our Correlation Matrix , the 30-trading-day correlation values are strongly negative in the case of all key parts of the precious metals market (gold, silver, senior miners, junior miners) and the USD Index, while they remain generally positive in case of the link with the stock market. Both links are most visible when we take the 250 trading days into account (effectively about 1 year).Figure 1The closer to -1 the number gets, the more negatively correlated given assets are, and the closer to 1 it gets, the stronger the positive correlation. Numbers close to zero imply no correlation.So, what do these markets tell us about future movements in the price of gold?Future HistoryYesterday , I highlighted the record excess that’s building up across U.S. equities. And as we approach the middle of January, investors are giving new meaning to Paul Engemann’s Push It to the Limit .Last week, the S&P 500’s option Gamma (21-day moving average) reached the top 0.37% of all-time readings. And on Monday (Jan. 11), the 10-day MA set a new record.Please see the chart below:Figure 2Keep in mind, Monday’s record was set on an absolute basis (by analyzing the number of outstanding options contracts). However, relative to the S&P 500’s market cap (which biases the reading lower as stocks move higher), it’s the fourth-highest since 2011. More importantly though, the last three times Gamma exposure reached the current level, the S&P 500 fell by 7.9%, 7.3% and 31.0% over the following two months (the vertical red lines above).From a valuation perspective, the derivatives frenzy has also helped push the NASDAQ (4.17x), S&P 500 (2.85x) and Russell 2000’s (1.49x) price-to-sales (P/S) ratios to their highest levels ever.Please see below:Figure 3 – (Source: Bloomberg/ Liz Ann Sonders)And a day after the milestones were set, U.S. small business confidence (the NFIB Small Business Optimism Index) fell to a seven-month low (Jan. 12).Figure 4 - (Source: Bloomberg/Daniel Lacalle)In addition, while economists expected a print of 100.2 (the red box on the left), the reading came in at 95.9 (the red box on the right), more than two points below the index’s historical average. Furthermore, nine out of 10 survey categories indicated that economic conditions are worse than they were in November.Figure 5As another wonder to marvel at, U.S. Treasury yields are also surging (which I’ve mentioned during previous editions). And because corporate profits are still on life support (due to the lack of real economic activity), the spread between the S&P 500’s earnings yield and the U.S. 10-Year Treasury yield just hit its lowest level in over two years.Please see below:Figure 6 – (Source: Bloomberg/ Lisa AbramowiczTo explain, the earnings yield is the inverse of the S&P 500’s price-to-earnings (P/E) ratio (calculated as earnings divided by price). The percentage is often compared to the yield on the U.S. 10-Year Treasury to gauge the relative value of stocks versus bonds. If you look at the middle of the chart, you can see that the spread between the two peaked at more than 6% in 2019 (as companies’ EPS rose and bond yields fell). However, with the opposite occurring today, the spread between the two has fallen below 2.23%.Thus, with bond yields beginning to breathe new life, Jerome Powell’s (Chairman of the U.S. Federal Reserve) argument that P/E multiples are “not as relevant” in a world of low interest rates is starting to lose its luster.EUR/USD Struggles with RealityDespite bouncing yesterday (as declines rarely happen linearly), the EUR/USD is still treading fundamental water.Over the last few weeks, I’ve been highlighting the increased economic divergence – as a weak U.S. economy is overshadowed only by an even-weaker Eurozone economy (Remember, currencies trade on a relative basis.)And as another data point of validation, yesterday, Bloomberg Economics reduced its first-quarter GDP forecast (for Europe) from a rise of 1.3% to a decline of 4.0%. Furthermore, the team also reduced their full-year GDP growth forecast from 4.8% to 2.9%.Please see below:Figure 7If you analyze the red box, you can see the massive drop in economic activity that’s expected during the first three months of 2021. And even more pessimistic, Peter Vanden Houte, ING’s Chief Economist wrote (on Jan. 7) that he believes “it will take until the summer of 2023 for the Eurozone to regain its pre-crisis activity level.”Also plaguing Europe, please have a look at the sharp decline in the Eurozone household savings rate:Figure 8 – (Source: Refinitiv/ING)To explain, the huge spike in 2020 was a function of government programs to replace lost wages at the onset of the pandemic . However, as the crisis unfolded and the level of government spending became unsustainable, the household savings rate in Germany and France (Europe’s two largest economies) sunk like a stone.Moreover, with Eurozone retail sales plunging by 6.1% in November, and assuming the household savings rate followed suit, you can infer that households are allocating resources to necessities and not discretionary items that boost GDP.The bottom line?The European economy is underperforming the U.S. economy and the deluge of bad data is slowly chipping away at the euro. And as the fundamental damage continues, the EUR/USD should come under pressure and help propel the USD Index higher.As part of the fallout, gold will likely drop below its rising support line and then decline further. Once it bottoms, we’ll have a very attractive entry point to go long in the precious metals and mining stocks.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.
Mild Rally Continues

Mild Rally Continues

Finance Press Release Finance Press Release 13.01.2021 17:25
Have you ever had a stock that's so far in the green that you’d never sell it? Rolling with “House Money?”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.We are now firmly in the second week of 2021. After markets declined to start the week, we saw a muted recovery on Tuesday (Jan. 12).With Democrats gaining full control of both the legislative and executive branches of the government, the prospect of further stimulus has sent stocks soaring to their highest valuations in years. However, the short-term tug of war between good news and bad news will continue.I am especially concerned about overstretched valuations for stocks combined with 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. 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.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. National Securities’ chief market strategist Art Hogan also believes that we could see a 5%-8% pullback by the end of 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). 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.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 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.House money is fun to play with, but trust me - you won’t feel as well if you let it ride through a full correction without taking profits.Best of luck, and happy trading! The Nasdaq’s RSI is Back Below 70...Where Does it Go from Here?Figure 1- Nasdaq Composite Index $COMPI am staying with the theme of using the RSI to judge how to call the Nasdaq. While an overbought RSI does not automatically mean a trend reversal, with the Nasdaq, I always keep a close eye on this . I initially changed my short-term call on the Nasdaq from a SELL to a HOLD on January 5. I liked the Nasdaq’s declines to start 2021, especially after overheating. The RSI was no longer overbought as well.After changing the call back to a SELL on January 11th, the Nasdaq declined 1.45%.Over the last several weeks, this has been a consistent pattern for the Nasdaq. The Nasdaq pulled back on December 9th after it exceeded an RSI of 70, and briefly pulled back again after passing 70 again three weeks ago. We exceeded a 70 RSI again before the new year, and what happened on the first trading day of 2021? A decline of 1.47%. Tech can rally at any time and witness a plunge at any time. Truly, this sector could move sideways before seeing a correction sooner rather than later.Although there are also tailwinds for tech, they are specific to subsectors. Do what you can to find tech sub-sectors that are innovating, disrupting, and changing our world.I am especially bullish on cloud computing, e-commerce, and fintech.The Nasdaq is no longer overbought, and its RSI is now hovering around 64. I like this level more as a HOLD, but I still feel that it has overheated in the short-term.I am generally optimistic and bullish for 2021, but I would like a pullback closer to the 50-day moving average before considering buying back in.I also have some concerns with the Democrats winning Senate control, and its potential consequences for tech. It may not happen in 2021, but a Democrat-controlled Congress could raise taxes and further regulate high growth companies.Additionally, love him or hate him, the censorship of President Trump across social media platforms raises questions about what constitutes free speech, and if Big Tech has too much power.Because the RSI is back in HOLD territory, I’m switching my call again from SELL back to HOLD.If the RSI ticks back up above 70, I’m switching back to SELL. The Nasdaq is trading in a clear pattern.Do not let anyone tell you “this time is different” if fears of the dot-com bubble are discussed. History repeats itself, especially in markets. I have many concerns about tech valuations and their astoundingly inflated levels. The recent IPOs of DoorDash (DASH) and AirBnB (ABNB) reflect this.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.
Higher Yields Hit Gold, But for How Long?

Higher Yields Hit Gold, But for How Long?

Finance Press Release Finance Press Release 14.01.2021 14:38
The price of gold remains at $1,850, and the key drivers are higher bond yields and a stronger risk appetite.Last week, the yellow metal tanked below $1,900 again, and it hasn’t rebounded since the plunge – instead, the price of gold has stayed at around $1,850.What happened? The main driver of the recent weakness in the precious metals market has been the Democratic victory in the Georgia Senate elections. Thanks to this trifecta, the Democrats have taken control of the White House, the House of Representatives, and the Senate. Consequently, there are lower chances of a political gridlock in Washington and higher chances of smooth cooperation between Congress and the incoming administration of Joe Biden. So, the expectations of additional economic support have risen, thereby strengthening hopes for a quicker economic recovery.Hence, investors went euphoric and increased their risk appetite. They sold safe havens such as gold and disposed of treasuries, pushing the bond yields higher (see the chart below), which in turn hurt the yellow metal .However, the interest rates are still historically low, and the real interest rates remain deeply in negative territory. Although some measure of normalization is standard, the return to pre-pandemic levels is unlikely . The unprecedented increase in worldwide debt implies that we are stuck in a high debt and low interest rate trap. After all, all these debts have been sustainable only because the yields have been low, so I doubt whether we will see an important rebound in them.But the recent episode shows how sensitive gold is to the changes in the real interest rates and that gold investors – as we wrote in the latest Gold Market Overview – shouldn’t forget about the possibility of an increase in the real interest rates, which is a serious downward risk for gold.Implications for GoldIs gold doomed now, given that the Democrats swept both the White House and Congress? Not necessarily. The macroeconomic outlook for 2021 might be worse than for 2020, as the economy should recover and monetary policy should be less dovish – but it’s still positive for gold. After all, historically, gold has shined during the early phases of various economic recoveries. Some analysts even claim that we have not reached the phase of an economic recovery yet – as the liquidity crisis has transformed into a solvency crisis.In other words, it’s always important to distinguish the short-term outlook from the longer-term potential. Gold currently suffers because of the higher yields, but the long-term picture seems to be more positive. The real interest rates, which are more important for the precious metals market, have increased to a lesser extent – and they have stayed well below zero (as the chart above shows).At some point, investors will start factoring in that a large fiscal stimulus projected by the Democrats could increase the public debt to uncomfortable levels, thereby increasing the risk of a sovereign debt crisis . They could also begin pricing in the risk of higher inflation and a larger Fed’s balance sheet , as the U.S. central bank and the Treasury wouldn’t welcome much higher interest rates . As a reminder, gold benefited from the easy fiscal policy in the aftermath of the first wave of the coronavirus pandemic , so it shouldn’t go out of favor now. Indeed, the huge fiscal deficit combined with the current account deficit will take the so-called twin deficit to a record 25 percent of the GDP , which shouldn’t be without an impact on the price of gold.Instead, gold still has a material upside in the upcoming months, although it could shine less brightly than it did last year , at least until inflation rebounds, or until the Fed expands its accommodative monetary stance. Yes, the U.S. central bank remains dovish, but it’s not eager right now to shoot from its bazooka again. So, the monetary policy will be relatively more hawkish than it was in 2020, which could limit potential gains in the gold market.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
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.
Our Custom Valuations Index suggests Precious Metals will decline before their next attempt to rally

Our Custom Valuations Index suggests Precious Metals will decline before their next attempt to rally

Chris Vermeulen Chris Vermeulen 17.01.2021 22:50
My team prepares Custom Valuations Index charts to understand how capital is being deployed in the global markets alongside US Dollar and Treasury Yields.  The purpose of the Custom Index charts in this article is to provide better insight into and understanding of underlying capital movements in various market conditions.  Recently, we discovered the Custom Index chart shares a keen alignment with Gold (and likely the general precious metals sector).  Let's explore our recent analysis to help readers understand what to expect next in precious metals.Weekly custom valuations index chartThe first thing that caught my attention was the very clear decline in the weekly Custom Valuations Index recently, as can be seen in the chart below.  The second peak on the Custom Valuations Index chart occurred on the week of August 3, 2020.  Gold also peaked at this very same time.  This alignment started an exploratory analysis of the Custom Valuations Index and the potential alignment with the precious metals sector.The peak in the Custom Valuations Index on March 20, 2020 (near the height of the COVID-19 market collapse) presented a very clear upside target which was confirmed with a second peak level in August 2020.  The fact that the Custom Valuations Index reached that peak level again and that peak level also aligned with the peak price in Gold may just be a coincidence.  As we continue to explore this unique alignment, we'll explore more unique characteristics to see if there is a link that is more than mere chance.There have been two very clear Pennant/Flag formations as you can see on the above weekly Custom Valuations Index chart.  The first one is highlighted in BLUE and the second one is highlighted in GREEN.  In both of these instances, the Custom Valuations Index broke lower and Gold followed this trend.  Currently, the Custom Valuations Index has begun to breakdown into a new bearish trend. This suggests that Gold and Silver may also move lower as this Custom Index attempts to find a bottom.Now, let's do a more in-depth analysis of Gold and the Custom Valuations Index.  In the following charts, we've attempted to highlight key price traits that took place in Gold over the past 9+ years and wanted to see if these key price points were reflected in the Custom Valuations Index chart.  The purpose of this is to identify if our assumption that the Custom Valuations Index chart is aligned to Gold (in some way) shows any additional (past price) alignment to validate our thinking.Weekly Gold chartFirst, we'll start with a Weekly Gold chart that highlights key price points, peaks, bottoms, and breakout/breakdown events.  We want to see if the Custom Valuations Index chart also aligned with these key price moves/dates.The following Gold Futures Weekly chart highlights the Appreciation/Depreciation cycles we've identified in earlier research as well.  The GREEN ARCs near the bottom of the chart show you where each cycle starts and stops.  The RED descending line represents a Depreciation Cycle and the GREEN Ascending line represents an Appreciation Cycle.  We are focusing on the September 2011 peak price in Gold and the key price events after the “Failure Peak” that took place to set up the bottom in early 2015, the rally in early 2016, and the breakout rally in June 2019.  Does the Custom Valuations Index chart show these same characteristics and dates?weekly customs valuation chart and gold price historyThis next chart is the Weekly Custom Valuations Index chart with the same highlighted price points/dates.  The first thing we see from this chart is that the “Failure Peak” (October 2012) was a higher price peak on this Custom Index chart than the setup on the Gold chart at the same time.  Thus, the Custom Valuations Chart represented the extended “excess phase” top in Gold as a continued upward trend.  The downtrend after the October 2012 peak on this Custom Valuations Index chart does align with the big breakdown on the Gold chart (above).Be sure to sign up for my FREE webinar that will teach you how to find and trade my BEST ASSET NOW strategy on your own!Additionally, the early 2015 bottoming on the Custom Index chart represented a very early sign that Gold may be looking for a bottom as well.  Gold did move lower throughout the next 11+ months, but so did the Custom Valuations Index price. It makes sense that the Custom Valuations Index may be representing underlying key market dynamics that could be applied to the Gold chart in some way.The Initial Gold Rally in February 2016 was the first real clear trigger on both these charts that coincided with a breakout/rally trend in Gold.  This rally attempt eventually stalled near the end of 2016 and began an extended “momentum base” setup.  Notice how the Custom Valuations Index chart represented this momentum base as and extended sideways Pennant/Flag formation that ended near June 2019.  Also, notice how the stalling in the Custom Valuations Index chart initiated many weeks before Gold actually peaked in 2016.From the February 2019 Breakout, we can clearly see the impressive rally in the Custom Index chart aligned with a big rally in Gold.  What is interesting is the DUAL PEAK in the Custom Index chart that first setup from the lows of the March 2020 COVID-19 bottom.  Could it be that extreme price move somehow represented a key future target for Gold and for the Custom Index chart? There is very little corresponding data to compare to – so we'll have to continue to try to dig deeper for any confirmation of this unique setup. Yet, we can't underestimate the DUAL PEAK setup on the Custom Index chart and the fact that the second peak, August 2020, also aligned perfectly with the current peak price in Gold. Since that August 2020 peak, both Gold and the Custom Index chart have continued to breakdown and trend lower.  It makes sense that Gold will continue to move lower, in alignment with the Custom Index chart, attempting to find a new bottom/momentum base.  We believe the 200 to 240 level on the Custom Valuations Index chart may be a suitable range for this new bottom.One thing we can say with a moderate degree of certainty is that the Custom Valuations Index chart appears to lead the precious metals in many instances and it appears to perfectly align in other instances.  Our research suggests the US and global markets have recently entered a Depreciation Cycle phase which may last many years.  The Custom Valuations Index chart is suggesting that the US, global and precious metals sectors are weakening and attempting to find/set up a new momentum/base. This would suggest that capital will move away from precious metals as well as major market sectors and attempt to find opportunities in undervalued or other hot sectors.  Eventually, once the new momentum base/bottom is firmly established in Gold and the Custom Valuations Index chart, the US and Global major market sectors will likely resume a very strong upside price trend.The key take-away from this research is that sector rotations related to precious metals, major global markets and potential early warning signs of strength or weakness may be attainable by focusing on how the Custom Valuations Index trends in comparison to Gold and the major indexes.  Currently, the Custom Valuations Index is suggesting that precious metals will move lower and try to find a new bottom/base.  This means other market sectors will perform better than precious metals for a period of time.This is also an important reason to focus your attention on finding the best and hottest sectors for new trade opportunities.  When broad components of the market enter bearish trends, like the Custom Valuations Index is suggesting for precious metals, it is best to have a proven system for identifying the best sector trends and trade opportunities.  While one sector may stall, others are rallying.  Long term success is found by focus your trading capital on the strongest opportunities while avoiding weaker trends.2021 is going to be full of these types of trends and 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. 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. Those who want even more trades use my BAN Hotlist to make sure their trades are going with the momentum to maximize their odds of success.Don't miss the opportunities in the broad market sectors over the next 6+ months.  2021 and beyond are going to be incredible years for traders.  Staying ahead of these sector trends is going to be key to developing continued success in these markets.  As some sectors fail, others will begin to trend higher.  Learn how BAN Trader Pro can help you spot and trade the best trade setups while mitigating risks at every turn. You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.Please take a minute to visit my website to learn about our BAN Trader Pro and our other services and courses that are all designed to give you that edge you need to be a successful trader. Enjoy your weekend!
USD rises to a three-week high despite weak retail sales

USD rises to a three-week high despite weak retail sales

John Benjamin John Benjamin 18.01.2021 08:46
Euro Inches Closer To 1.2050 The euro currency resumes the declines with prices now inching closer to the 1.2050 level of support.The declines come as the euro currency remains in a short term downtrend for the moment. This is evident from the lower highs that have been forming since prices retested the trendline from below on the 6th of January.The current declines to the 1.2050 could see a possible rebound taking place. This will most likely keep the EURUSD within a sideways range of 1.2177 and 1.2050.A break out from this range could possibly set the direction for the next leg.The stochastics oscillator is oversold and therefore coincides with the support level near 1.2050 likely to hold up in the short term.GBPUSD Double Top Pattern In Play The British pound Sterling has formed a double top pattern on the four-hour chart and prices broke down below this level on Friday.As a result, this bearish pattern could possibly see the cable likely to continue to push lower. The previous support level near 1.3506 will likely come in as the downside target.However, considering that the stochastics oscillator is also oversold but a possible rebound is likely to occur. This would see the GBPUSD pushing back to retest the 1.3611 level.Establishing resistance at this level could further validate the downside by his.However, if the cable manages to close above the 1.3611 level, then it would invalidate the double top pattern and as a result, we could possibly see either a consolidation or a possible move higher.Oil Prices Give Back Gains Crude oil prices were down close to 3% on Friday. This comes even as prices attempted to make a rebound earlier in the week on Thursday.However, this rebound led to a lower high emerging. Following this, prices gave back the gains on Friday and lost the support from the trend line as well.For the moment, the bias still remains to the upside. We need to wait for evidence to see a lower high forming in order to confirm the downside.For the moment, the lower target remains the support area near 49.00.In the short term, any rebound in prices could see the previous swing low near 52.30 playing a key role. If there is any rebound, then prices are likely to stall near this level.A strong close above 52.30 could potentially see another short term game in prices.Alternately, if we see a reversal near 52.30 or a continuation from the current levels, then we could expect the retracement towards 49.00.Gold Prices Hold Steady In A Sideways Range The precious metal was also trading weaker on Friday with prices down over 1%.However, price action remains subdued for the moment with the sideways range between 1850 and 1818 levels holding up for the moment.The lack of further bearish momentum is likely to see this possible consolidation resulting in either a strong retracement back to the upside. Alternatively, failure of support near 1818 could accelerate the decline.The stochastics oscillator currently remains well above the oversold levels thus indicating further room to the downside.However, the support level near 1818 is likely to hold up for the moment. As a result, gold prices are likely to continue trading in a sideways range for a while.To the upside, only a strong breakout above the 1850 level is likely to accelerate any gains that might come its way. The next key target will be the 1911.50 level of resistance.
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.
Gold Price Drops Amid Stimulus and Poor Data

Gold Price Drops Amid Stimulus and Poor Data

Finance Press Release Finance Press Release 19.01.2021 11:27
The price of gold has declined further amid incoming U.S. President Joe Biden’s fiscal stimulus and poor economic data, which is a bearish sign.The weakness in the gold market continued last week. As the chart below shows, the London P.M. Fix declined below $1,840 last Friday (the price of the yellow metal later declined even further, i.e., below $1,830).The downward trend is a bit disturbing given the poor economic data reported last week. First, the jobless claims increased from 784,000 on January 2 to 965,000 on January 9, 2021 , as one can see in the chart below. This increase surpassed market expectations and indicates that there is a long way ahead for a full recovery in the U.S. labor market.Second, U.S. retail sales declined 0.7 percent in December from the previous month . Importantly, the decrease was larger than the expected 0.1 percent drop. Third, the Empire State Index increased 3.5 percent in January. Although the index grew, it rose at a slower pace than in December and below expectations.All these economic reports show that the U.S. economy has slowed down, and that we could see more stimulus coming in an effort to stimulate economic growth. Indeed, on Thursday, Jerome Powell excluded any tapering of the quantitative easing in the near future , saying that he “expect[s] that the current pace of purchases will remain appropriate for quite some time”. The recent weak economic data that show slack remaining in the labor market can only reassure the Fed that it should continue providing accommodation and not think about raising interest rates .Moreover, on Thursday (Jan. 14), Biden unveiled a massive stimulus plan worth $1.9 trillion to support the economy amid the COVID-19 epidemic . The aid package, that would be on top of the $900 billion stimulus adopted by Congress in December, includes $1 trillion in direct checks to Americans, about $440 billion for small businesses particularly strongly hit by the epidemic, and about $415 billion to fight the coronavirus and speed up the distribution of vaccinations.The continuation of the dovish monetary policy and expansion of the easy fiscal policy should theoretically send the price of gold higher.Implications for GoldThey should, but gold has gone south instead. Therefore, the drop in the price of gold amid poor economic data, Powell’s remarks, and Biden’s announcement is a bearish signal .However, it might be also the case that we will see a replay of March, when the first wave of the pandemic initially hit the precious metals market. Investors were stocking up cash then, selling both equities and gold. We observed a similar pattern on Friday, so we could see a reversal after some time.Moreover, Biden’s fiscal aid, if adopted, would increase U.S. government spending, budget deficit and public debt even further. As a reminder, the federal government spent a record $6.5 trillion in fiscal 2020, while the national debt has already risen by almost $7.8 trillion during Trump’s presidency. According to the Committee for a Responsible Federal Budget’s projection from early January, the U.S. fiscal deficit would total $2.3 trillion for fiscal 2021. However, with Biden’s new stimulus, it would be much larger and could even surpass the record deficit of $3.1 trillion for the last fiscal year.So, the ballooning fiscal deficits and debts, together with a recession caused by the pandemic and the Great Lockdown , should be sufficient reasons to be cautious and hold part of one’s investment portfolio in safe-haven assets such as gold . Yet many investors are still turning a blind eye to the negative effects of a fiscal stimulus. But just because they cover their eyes, the elephant will not disappear from the room. Indeed, the gold elephant – and gold bull , his cousin – will not disappear, although they may hide for a while .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
Stock Pick Update: Jan. 20 – Jan. 26, 2021

Stock Pick Update: Jan. 20 – Jan. 26, 2021

Finance Press Release Finance Press Release 20.01.2021 14:13
Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included two Energy and one Financials stock this time.In the last five trading days (January 13 – January 19) the broad stock market has traded sideways. The S&P 500 index reached new record high of 3,826.69 on January 8 following new stimulus package hopes. Since then, it has been fluctuating. Last Friday the index got back to short-term support level of 3,750 before bouncing back higher again.The S&P 500 has lost 0.09% between January 13 open and January 19 close. In the same period of time our five long and five short stock picks have lost 0.32%. Stock picks were relatively slightly weaker than the broad stock market’s performance last week. Our long stock picks have lost 0.62% and short stock picks have resulted in a loss of 0.02%.There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.Our last week’s portfolio result:Long Picks (January 13 open – January 19 close % change): AXP (+4.24%), SPGI (-0.46%), SHW (-2.11%), ECL (-2.95%), HD (-1.84%)Short Picks (January 13 open – January 19 close % change): PLD (+3.19%), WY (+0.12%), DIS (-1.23%), TTWO (+0.14%), EL (-2.11%)Average long result: -0.62%, average short result: -0.02%Total profit (average): -0.32%Stock Pick Update performance chart since Nov 18, 2020:Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, January 20 – Tuesday, January 26 period.We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (January 20) and sold or bought back on the closing of the next Tuesday’s trading session (January 26).We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .The stock market sector analysis is available to our subscribers only.Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:buys: 2 x Energy, 2 x Financials, 1 x Materialssells: 2 x Consumer Staples, 2 x Real Estate, 1 x Communication ServicesBuy CandidatesCOP ConocoPhillips - EnergyStock remains above the previous local highs - uptrend continuation playThe resistance level is at $48 and support level is at $45PXD Pioneer Natural Resources Co. – EnergyPossible uptrend continuation following short-term correctionThe resistance level is at $137.50 – short-term upside profit target levelC Citigroup, Inc. – FinancialsStock trades within a short-term consolidation following the recent run-up – uptrend continuation playThe support level is at $62 and resistance level is at $68Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Energy and Financials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today .Thank you.Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care* * * * *DisclaimerAll essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’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. Paul Rejczak, 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

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.
Here’s Why Gold Recently Moved Up

Here’s Why Gold Recently Moved Up

Finance Press Release Finance Press Release 20.01.2021 15:52
Gold moved higher as the USD Index moved lower in today’s pre-market trading. Before providing you with my thoughts on why that happened and what the implications are, let’s see exactly what transpired.Figure 1 - USD IndexIn yesterday’s (Jan. 19) analysis , I commented on the above USD Index chart in the following way:The USD Index is after a major breakout above the declining resistance lines and this breakout was confirmed. Consequently, the USD Index is likely to rally, but is it likely to rally shortly? The answer to this question is being clarified at the moment of writing these words, because the USD Index moved back to its rising short-term support line that’s based on the 2021 bottoms.If the USD Index breaks below it, traders will view the 2021 rally as a zigzag corrective pattern and will probably sell the U.S. currency, causing it to decline, perhaps to the mid-January low or even triggering a re-test of the 2021 low.If the USD Index performs well at this time and rallies back up after touching the support line, and then moves to new yearly highs, it will be then that traders realize that it was definitely not just a zigzag correction, but actually the major bottom. In the previous scenario, they would also realize that, but later, after an additional short-term decline.The weak performance of mining stocks that we saw last week, and relatively strong performance of silver (up by 1.24%) compared to gold (up by 0.34%) in today’s pre-market trading suggest that PMs are very ready to slide right now. This – as markets are interconnected – might make the strength in the USD Index more likely than not. In this case, the second above-mentioned scenario would be realized, and the price moves that I’ve been describing for some time now, would gain momentum quickly.In either case, it seems that the outlook for the precious metals market remains bearish for the short and medium-term. It is only the immediate and very short term that have any notable differences. Therefore, it seems to make sense to keep the short positions in the mining stocks intact.The USD Index moved lower, and at the moment of writing these words, its trading slightly below the rising support line. Is the more bearish (on a temporary basis) forecast for the USDX and more bullish forecast for gold being realized?Let’s take a look at gold.Figure 2 - COMEX Gold FuturesGold is rallying today, but overall, it remains in a back-and-forth consolidation pattern, which continues to be similar to what we saw in November after a very similar (yet smaller) sharp decline.Gold moved slightly above its September low in intraday terms, but not in terms of the closing prices.Figure 3 - VanEck Vectors Gold Miners ETF (GDX)Miners were barely affected yesterday. They moved slightly higher, but it seems to have been just a pause, similar to what we saw in mid-November – nothing more than that.Ok, so that’s what happened. Before stating that the USD’s breakdown and gold’s strength today are game changers for the very short term, let’s think about the possible explanation for these price moves. Is anything special happening today that makes today’s session at least a bit different than other sessions? Something that could be affecting the USD Index and gold?Of course, there is something like that! It’s the U.S. President’s inauguration day!In any case, such a day could affect the temporary market movement, but this year it’s particularly the case, because of the recent Washington D.C. riot and popular conviction that “something might happen” that would prevent the inauguration and effectively allow Donald Trump to remain the U.S. President.As I explained previously, I think that the probability for seeing the above is extremely low, but at this time, the markets and investors might be worried that this really is something that’s at least somewhat possible. If so, then the USD Index should be moving temporarily lower and gold – being a safe-haven asset – is likely to be moving higher. Of course, only temporarily, because it will soon become clear that the inauguration takes place without any major obstacles. There might be some local protests etc., but nothing that would change the situation in any meaningful manner. Consequently, this is most likely the day when the uncertainties and tension regarding the transfer of power in the U.S. start to decrease. At the same time, it’s likely that they will peak right before decreasing. Therefore, what we’re seeing in the USD Index and gold right now is perfectly understandable and natural. And likely temporary.This means that the breakdown in the USD Index could be invalidated soon – perhaps even tomorrow (or later today) and the opposite would be likely in the case of gold and silver’s strength. They might fade away quite quickly. Either way, the outlook remains bearish in my view.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.
Dollar muted as Joe Biden sworn in as president

Dollar muted as Joe Biden sworn in as president

John Benjamin John Benjamin 21.01.2021 08:10
EURUSD Reverses Near 1.2144, Will It Push Lower? The euro currency is trading with some modest losses on Wednesday. The declines come after price action made a rebound just a few pips above the 1.2050 technical support.This rebound pushed prices to test their technical resistance level near 1.2144. Following this small rally, price action reversed gains.At the moment, prices remain stuck within the 1.2144 resistance and 1.2050 support. With the stochastics oscillator moving out from the overbought levels, we expect to see a retest back to the 1.2050 level, a bit more firmly.If the euro currency loses the support near 1.2050, then we expect a gradual decline towards the 1.1900 level next.To the upside, a close above the 1.2177 – 1.2144 level, will open the way to further gains.GBPUSD Briefly Rises Above 1.3700 But Fails To Hold The British pound sterling continued its bullish rally with prices briefly rising above the 1.3700 handle once again.However, the intraday gains were quickly scaled back as prices pulled back later in the day. As a result, the GBPUSD is currently trading within the sideways range of 1.3700 and 1.3611.The stochastics oscillator is currently overbought but is likely to head lower. This would mean that if the cable loses the support near 1.3611, then we expect to see price action falling back to the previous lows.This would open up the way towards 1.3506 level of technical support.In the medium-term outlook, we expect the GBPUSD to maintain a sideways range between 1.3700 and 1.3500.WTI Crude Oil Gains Lose Steam Near 53.77 WTI crude oil prices continue to hold a bullish front with price once again testing the 13th January and 15th January highs near 53.77.However, the strong pace of gains is showing signs of weakening. Price action has failed to make any significant highs beyond this level.The failure to close above 53.77 could potentially open the way for a move back lower. This would mean that the previous swing low formed near 51.85 is likely to be the short term support for the moment.If price action breaks down below this level of support, then we could expect to see further continuation lower.For the moment, given the bullish momentum in oil markets, we might see another attempt being made to the upside.In the event that crude oil prices close above 53.77, then it would open the way to further gains.Gold Prices Rise To An Eight-Day High The precious metal has managed to rise to an 8-day high following a close above the 1850 handle on an intraday basis.The Stochastics oscillator currently looks somewhat bullish with the possibility that the overbought conditions may persist.If price closes above 1850 on a daily basis, then we expect to see further gains. The next key technical resistance for gold is the 1911.50 level.In the near term, gold prices will need to establish support once again near the 1850 handle. Given that there has been a strong consolidation taking place near this technical support, there is a good chance that price action might continue to push higher.To the downside, a close below the 1850 handle will open up to the 1817.80 level of technical support.
Will Biden Inaugurate Gold’s Rally?

Will Biden Inaugurate Gold’s Rally?

Finance Press Release Finance Press Release 21.01.2021 16:12
The price of gold increased on Inauguration Day, arousing investors’ hopes for a new bullish phase.Ladies and gentlemen, it’s official now – Joe Biden and Kamala Harris have been sworn in as the President and Vice-President of the United States, respectively. What does this imply for America?Well, before we move on to Biden, let’s say goodbye to Trump. You can love him or hate him, but there is no denying that the 45th presidency was excellent for the price of gold . As the chart below shows, the price of the yellow metal rose more than 50 percent since January 2017 (although gold initially declined after the election results).But Trump is now out of the White House, while Biden is in. What are the economic implications of this change? Well, I used to claim that people generally overestimate the impact that politics and the power of Presidents have over economic developments. However, this time may be different for two reasons.First, Biden is going to quickly reverse many of Trump’s decisions . For instance, he is going to reverse the construction of the border wall, the travel ban targeting mainly Muslim countries, and the withdrawal from the Paris climate accord as well as from the World Health Organization. Biden will also impose a mask mandate on federal property, reversing Trump’s ambiguous stance on the epidemic in the U.S.Second, the 46th presidency could be remembered in the future as having been fiscally lavish – and Biden seems to be determined to overshadow Trump in that matter. He has already proposed to spend $1.9 trillion to stimulate the economy – on top of previous aid packages worth more than $3 trillion. Importantly, Biden calls his mammoth plan just “the first step” and he is going to soon announce a plan for spending on infrastructure and clean energy which could be worth more than $2 trillion. Additionally, Janet Yellen , likely the next U.S. Treasury Secretary, has recently confirmed the stance of the new administration, saying that the government should act “big” to jump-start the economy, as “the benefits will far outweigh the costs” of being bold.Implications for GoldWhat does Biden’s presidency imply for the gold market? Well, we have already covered this theme in the two latest editions of the Gold Market Overview (and we will continue this topic in the next issue), but let us repeat that, from the fundamental point of view, Biden’s presidency looks promising for the price of gold . Although larger government expenditures can boost the GDP in the short run (the long-term economic impact could actually be negative), they will also expand the fiscal deficits and the federal debt .Higher debts not only makes the economy more fragile and prone to debt crises , but they also make the normalization of monetary policy more difficult. The truth is that the U.S. simply cannot afford higher interest rates. You see, the higher the debts, the lower the interest rates must be to handle the debt servicing costs. Welcome to the debt trap . So, the Fed will have to maintain the federal funds rate at practically a zero level for a long time. The lower the real interest rates , the better it is for gold.Oh, and did I mention inflation already? With the massive amount of stimulus injected into the U.S. economy, there is an overriding risk of overheating and increase in inflation, which would be positive for the gold prices.So, as long as there is a strong risk appetite, hope for better politics (“this time will be different and this president will be different than everyone else and everything will change for the better”) and faster economic growth, gold may struggle.However, when the honeymoon ends and investors acknowledge risks related to the higher fiscal stimulus, or when some economic crisis arrives and the risk appetite vanishes, gold will shine. Indeed, gold investors didn’t appear to be afraid of President Biden, as the price of gold increased on Inauguration Day.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
New administration spurs risk on sentiment

New administration spurs risk on sentiment

John Benjamin John Benjamin 22.01.2021 09:17
EURUSD Gains On A Weaker Dollar And ECB Meeting The euro currency made a rebound, led by a weaker greenback and the ECB meeting on Thursday.The central bank did not make any changes which saw the euro rising as a result. However, the gains were capped near the familiar resistance area between 1.2177 and 1.2144 levels.This has led to another bearish signal from the intraday Stochastics oscillator. As a result, if the euro fails to close above 1.2177, then a drop is likely.This opens the way for the common currency to test the lower support at 1.2050. However, the daily price action looks somewhat bullish at this point. Therefore, only a close above 1.2177 will confirm further gains.This potentially puts the 1.2050 level into the picture at the moment.GBPUSD On Track To Settle Above 1.3700 The British pound sterling continues to keep a bullish hold. After failing to break out above 1.3700 level, prices managed to do so on Thursday.With intraday gains pushing the GBPUSD somewhat higher, we expect the 1.3700 level to hold for the moment.This will potentially open the way for the currency pair to post further gains. The next key target will of course be the 1.3950 level which was briefly tested as support back in April 2018.However, the gains will continue only on a strong continuation to the upside.At the current levels near 1.3700, price action is testing the support from 2018 March. Therefore, with this level now likely to act as resistance, we could see a decline.WTI Crude Oil Settles Into A Sideways Range Crude oil prices trade mixed as the developments on the ground unfold. With the new President Biden being quick to rejoin the Paris climate accord, speculators expect further changes on fossil fuel.President Biden was quick to announce new curbs on the US oil industry. The current sideways range in the oil markets reflect this sentiment. Speculators remain on the sidelines for now in order to ascertain more data.As a result, WTI crude oil prices are likely to maintain a sideways range within 53.77 and 51.87 levels for the near term. Only a strong breakout from this range will set the next direction.The intraday Stochastics oscillator is also currently turning flat. To the downside, a close below 51.87 will open the way toward the 49.03 level of support.While to the upside, a close above 53.77 could see oil prices building up the bullish momentum.Gold Prices Trade Flat As Investors Weight Stimulus Prospects The precious metal is giving back some of the gains made on Wednesday, after rising to a nine-day high on an intraday basis, prices are pulling back.This comes as investors wait on further announcements from the new Biden administration. Speculation is high that the new Democrats government, which also now holds a thin majority in Senate could announce new stimulus measures.For the moment, price action in gold remains flat in anticipation of the news. The current pullback could see gold prices retesting the 1850 level.If strong support is established here, then we expect further gains. The 1911.50 level of resistance becomes the next upside target.If the 1850 handle is lost, then gold prices are likely to head lower. The 1817.80 level comes in as support.
Why You Shouldn’t Get Excited About Gold’s Mini-Rally

Why You Shouldn’t Get Excited About Gold’s Mini-Rally

Finance Press Release Finance Press Release 22.01.2021 16:49
Gold seems to be sleeping off its latest mini-rally and lacks the momentum to reach new highs. What happens from here? Has the USD bottomed? And what does it mean when we factor in the EUR/USD pair and poor economic indicators from Europe into the equation?Not much happened yesterday (Jan. 21), but what happened was relatively informative. And by “relatively” I mean literally just that. Gold moved lower yesterday and in today’s pre-market trading, doing so despite another small move lower in the USD Index. The moves are not big, but they are meaningful. They show that gold’s inauguration-day rally was likely a temporary blip on the radar screen instead of being a game-changer.Figure 1 – COMEX Gold FuturesLooking at the above gold 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.Besides, there’s also a declining resistance line just around the corner.And that’s not even the most important thing. The most important thing is that based on the similarity to how things developed between 2011 and 2013, gold’s downward trajectory is likely to have periodic corrections at this time – up to a point where it simply plunges.Figure 2 - GOLD Continuous Contract (EOD)When the current situation is compared to what we saw about a decade ago, it shows what one should expect, assuming that the history repeats itself.Gold kept on declining with corrections along the way until April. In April, the decline accelerated profoundly. The biggest problem with the latter was that practically nobody expected this kind of volatility. Those who were thinking that it’s just another move lower that will be reversed were very surprised.Right now, you know in advance that a bigger move lower is likely just around the corner, and you won’t be surprised when it comes. Whether we have to wait an additional few days or first see gold rally by $10 or $30 is not that important, if it’s about to slide $150 and then another $200 or so.I would like to add that gold is declining today and based on the similarity to the November consolidation, it’s exactly the day when we should expect to see a decline. Of course, the similarity doesn’t have to persist, and the history doesn’t have to repeat itself to the letter, but what’s happening right now seems to be confirming the analogy in a considerable way. This means that more declines are likely just around the corner. If not immediately, then shortly.Figure 3 - COMEX Silver FuturesSilver turned south after reaching (approximately) the price level that stopped the rally in July and November 2020, and also earlier this year. This seems relatively natural and the outlook for silver remains bearish for the next several weeks.Silver corrected a bit more of this year’s downswing than gold, which is normal given the bearish outlook. The same goes for miners’ underperformance. Let’s keep in mind that silver’s “strength” is temporary – once the decline really starts, and it moves to its final part, silver is likely to catch up big time.Figure 4 - VanEck Vectors Gold Miners ETFAs 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 yesterday.Please note that the November – today consolidation is quite similar to the consolidation that we saw between April and June (see Figure 4 - green rectangles). 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.However, does the GDX have to first rally to $37 or $38 to decline? Absolutely not. It could turn south right away, thus surprising most market participants.Figure 5 – USD IndexIn Tuesday’s (Jan. 19) analysis , I commented on the above USD Index chart in the following way:The USD Index is after a major breakout above the declining resistance lines and this breakout was confirmed. Consequently, the USD Index is likely to rally, but is it likely to rally shortly? The answer to this question is being clarified at the moment of writing these words, because the USD Index moved back to its rising short-term support line that’s based on the 2021 bottoms.If the USD Index breaks below it, traders will view the 2021 rally as a zigzag corrective pattern and will probably sell the U.S. currency, causing it to decline, perhaps to the mid-January low or even triggering a re-test of the 2021 low.If the USD Index performs well at this time and rallies back up after touching the support line, and then moves to new yearly highs, it will be then that traders realize that it was definitely not just a zigzag correction, but actually the major bottom. In the previous scenario, they would also realize that, but later, after an additional short-term decline.It’s now clear that the former scenario is being realized. The support levels that could trigger the USD’s reversal are based on the potential inverse head-and-shoulders pattern – the red line that’s slightly above 90, and the horizontal line that’s slightly below it. It’s also possible that the USD Index tests it yearly lows. None of the above would be likely to change the outlook for the precious metals sector, at least not beyond the immediate term.Later yesterday (Jan. 21) and also in today’s overnight trading, the USD Index moved to the upper of the above-mentioned support lines. Is the bottom already in? This seems likely, but it’s not crystal-clear yet. However, it doesn’t really matter, because the precious metals market responded to the USD’s strength for just one day (in a meaningful way that is) and taking a closer look at that day reveals that it was not the USDX’s performance that gold reacted to, but to the underlying news – the inauguration-day-based uncertainty. So, even if the USD Index declines some more here before soaring, gold doesn’t have to move significantly higher. In fact, it would be unlikely to do so.Stocks have rallied, and based on this rally, the weekly RSI moved close to 70 once again.Figure 6 – S&P 500 IndexThis is important because the last two major declines were preceded by this very signal. We saw the double-top in the RSI at about 70, exactly when the stock market started its big declines, and we’re seeing the same thing right now. If this was the only thing pointing to much lower stock values on the horizon, I would say that the situation is not so critical, but that’s not the only thing – far from it. Before moving to these non-technical details, let’s recall why the stock market analysis and the USD index analysis matters for precious metals investors and traders.The analyses matter because gold, silver, and mining stocks are likely to decline in parallel with a decline in stocks and the USD’s rally. This is likely to take place up to a certain point, when precious metals show strength and refuse to decline further despite the stock market continuing to fall and the USDX continuing to rally. This kind of performance happened many times, including in the first half of last year.Since the S&P 500 futures are down in today’s overnight trading, perhaps we have indeed seen a top. Even if not, it doesn’t seem that one is very far away, based on how excessive the situation looks from the fundamental point of view. Let’s discuss some of those non-technical issues.Mind Over MatterDespite Janet Yellen’s recent assertion that “the United States does not seek a weaker currency,” her tongue-in-cheek comments are actually doing just that. The newly minted U.S. Treasury secretary urged lawmakers to “act big” with regard to prospective stimulus, saying that the benefits “far outweigh the costs.”And since her worst-kept secret became public on Jan. 18, the USD Index has been under fire ever since. Furthermore, as her words instill the EUR/USD with borrowed confidence, the precious metals are displaying the same bold behavior.Please see below:Figure 7However, despite the narrative overpowering reality, the Eurozone fundamentals don’t support the recent rally. And why is this important? Because as you can see from the chart above, as goes the EUR/USD, so go the PMs.Yesterday, European Central Bank (ECB) President Christine Lagarde revealed that the Eurozone economy likely shrank in the fourth quarter – all but sealing a double-dip recession.Please see below:Figure 8 – (Source: Bloomberg/ Holger Zschaepitz)In contrast, the Federal Reserve Bank of Atlanta’s GDPNow forecasting model (as of Jan. 21) has the U.S. economy expanding by 7.5% in Q4. Furthermore, even if we take the Atlanta Fed’s estimate with a grain of salt, the Blue Chip consensus (forecasts made by private-sector economists) is for growth of nearly 4.0% (tallied as of early January). And even more telling, economists with a bottom 10% Q4 GDP forecast ( see Figure 9 - the shaded light blue area below) still expect positive growth.Figure 9The bottom line?We can now add the Eurozone GDP to the long list of relative underperformances.Expanding on the above, European consumer confidence (released yesterday) went backwards again in January and is now less than 10 points above its April low. Furthermore, the current reading is still well-below the long-term average.Figure 10On Jan. 8, I highlighted the significant divergence between European CPI and U.S. CPI (inflation). For context, European CPI was – 0.30% in December (negative for five-straight months), while U.S. CPI was 0.40% in December (positive for seven-straight months).I wrote:Weak CPI is a precursor to a weaker euro. Why so? Because since asset purchases fail to produce any real economic growth, the ECB will be forced to lower interest rates to stimulate the economy. As a result, the cocktail of paltry economic activity and lower bond yields leads to capital outflows as foreign (and domestic) investors reallocate money to other geographies (like the U.S.). Thus, capital will likely exit the Eurozone and lead to a lower EUR/USD.And today?Well, it’s exactly what the ECB is doing.Due to the economic malaise confronting Europe, the ECB is targeting its bond-buying activity toward financially weaker counties (like Italy) as opposed to financially stronger countries (like Germany). Essentially, it’s conducting a shadow operation of yield curve control (YCC).Please see below:Figure 11If you analyze the red box above, you can see that Europe’s weighted-average bond yield has increased in 2021. And why is this happening? Because as Europe’s economic deterioration merges with Italy’s fiscal plight, this cocktail has made European bonds riskier, and thus, investors demand a higher interest rate. And while higher interest rates are bullish for a country’s currency when they’re a function of economic growth, a crisis-like spike in yields (due to solvency concerns) means the exact opposite.Furthermore, if you follow the gray bars at the bottom-half of the chart, the ECB actually decreased its bond purchases toward the end of December (2020), Then, once January hit (2021), it was back to business as usual.As a result, the ECB’s attempt to scale back its asset purchases was (and will be) short-lived. And as the economic conditions worsen, the money printer will be working overtime for the foreseeable future.To that point, Bloomberg Economics expects the ECB to purchase €15 billion worth of bonds per week until 2022 – more than doubling its pandemic emergency purchase program (PEPP) to nearly €1.85 trillion.Please see below:Figure 12And in real-time?Well, the ECB’s balance sheet hit another record-high on Friday (Jan. 15) – with total holdings still at 69% of Eurozone GDP (nearly double the U.S. Fed’s 35%).Figure 13And why does all of this matter?Because, as I highlighted on Jan. 12, the ECB’s relative outprinting is a precursor to a lower EUR/USD.Figure 14I wrote:Turning to the second chart (Figure 6 - on the right), notice how the EUR/USD tracks the FED/ECB ratio? To explain, the ratio (the light blue line) is calculated by dividing the U.S. Federal Reserve’s (FED) balance sheet by the European Central Bank’s (ECB) balance sheet. Essentially, its direction tells you which monetary authority is printing more money. If you analyze the EUR/USD (the dark blue line), it trades higher when the FED is out-printing the ECB (the light blue line is rising) and trades lower when the ECB is out-printing the FED (the light blue line is falling). The key takeaway? With the light blue line falling, it means that the ECB is outprinting the FED . And if this dynamic continues, the EUR/USD (the dark blue line) should move lower as well.The top in the FED/ECB total assets ratio preceded the slide in the EUR/USD less than a decade ago and it seems to be preceding the next slide as well. If the USD Index was to repeat its 2014-2015 rally from the recent lows, it would rally to 114. This level is much more realistic than most market participants would agree on.In conclusion, the EUR/USD’s recent strength is built on a foundation of sand. Instead of following the hard data, traders are letting the narrative cloud their judgment. Moreover, due to their strong correlation with the EUR/USD, gold and silver are falling into the same trap. However, once the semblance of strength evaporates, a decline in the EUR/USD is likely to usher a move lower for the PMs. Furthermore, with gold already approaching the upper trendline of its November consolidation channel, the momentum may wane sooner rather than later.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.
Will Inflation Make Gold Shine in 2021?

Will Inflation Make Gold Shine in 2021?

Finance Press Release Finance Press Release 22.01.2021 16:51
Inflation will be one of the greatest upside risks for gold this year. Will it materialize and make gold shine?The report about gold in 2021 would be incomplete without the outlook for inflation . We have already written about it recently, but this topic is worth further examination. After all, higher inflation is believed to be one of the biggest tail risks in the coming months or years, and one of the greatest upside risks for gold this year .Most economists and investors still believe that inflation is dead. After all, the only way to justify the central banks’ unprecedentedly dovish actions is the premise of low inflation. And the only way to justify the buoyant stock market amid the new highs in the number of Americans in hospital with COVID-19 is the expectation of an inflationless economic recovery this year. In other words, many people forecast the return to the Goldilocks economy after the end of the pandemic .On the surface, it seems that they might be right. We haven’t seen double-digit inflation since the end of 1981. And last time the CPI annual rate was above 3 percent was in January 2012. Actually, in the last ten years, inflation was below the Fed’s 2-percent target most of the time, as the chart below shows.Moreover, the inflation rates dropped significantly during the U.S. epidemic and the Great Lockdown when people distanced socially and limited their spending. So, given the strength of the negative demand shock and the following plunge in inflation, why should we worry about the risk of higher inflation?Well, shouldn’t it be obvious after experiencing a pandemic, i.e., an improbable but impactful event? Even a small probability of a surge in inflation should be worrying, especially given the pile of debt and, thus, limited room for central banks to hike interest rates to prevent inflation.Moreover, the likelihood of an increase in inflation is not so small . As I’ve explained several times, the case for higher inflation is stronger today than in the aftermath of the Great Recession . The first reason is that the broad money supply has surged . This is because the banks haven’t been hit so far (in contrast to the financial crisis where banks suffered greatly), so they have been lending freely, as the chart below shows.Second, in contrast to the previous economic crisis where people did not spend money because they had no income or they decided to repay their debts, this time, people didn’t spend money because they were stuck at home. But when the health crisis is over and people get vaccinated, some consumers may go on a spending spree . The realization of pent-up demand may overwhelm the firms’ capacity, leading to an increase in prices. There are already some signs of bottlenecks, or supply falling behind demand, such as the increase in prices of some commodities like iron ore.In other words, when the world returns to normality, the private sector will find itself flush with cash. And I bet that some households will try to make up for all the time not spent in movie theatres, restaurants and hotels during the last year.Third, there might also be some structural shifts in the global economy, which will reverse the current disinflationary forces . As Charles Goodhart and Manoj Pradhan argue in their book The Great Demographic Reversal , the era of low inflation, caused by globalization, is now ending. You see, in the 1980s and 1990s, China, India and post-communist countries from Europe and Central Asia, entered the global economy. As a consequence, the global labor supply for production of tradeable goods rose enormously, leading to weak inflationary pressure. But all this is going into reverse. Globalization is now weakening and there are no big countries in the queue to enter the global economy. Actually, ageing in China and other countries reduces the global labor supply, thus strengthening inflationary pressure.Last but not least, the politicians and central bankers have become more complacent . The thoughtless and irresponsible stance of politicians is unsurprising, especially given the temptation to inflate away the public debt . However, the central banks also stopped worrying and embraced the inflation bomb. For example, the Fed has changed its monetary regime in 2020, announcing that it would tolerate overshooting of inflation above its target for a undetermined period of time.The bottom line is that inflation should return in the coming months (more precisely, in the second half of the year, when the distribution of vaccines will be widespread). We shouldn’t experience double-digit rates, but the markets don’t expect a deflationary crisis either. As the chart below shows, inflationary expectations have already returned to pre-pandemic levels.All this is good news for price of gold . The case for reflation in the global economy is definitely stronger than after the global financial crisis of 2007-2009. The present risk of higher inflation should support the demand for gold as a hedge against inflation . And the increase in inflation expectations lowers the real interest rates , thereby positively affecting the yellow metal. Although gold will face some important headwinds this year, inflation expectations are likely to outpace the increase in nominal bond yields, which would put downward pressure on the real interest rates and support gold prices.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.
GBPUSD Remains Steady Within The Bullish Channel

GBPUSD Remains Steady Within The Bullish Channel

John Benjamin John Benjamin 25.01.2021 09:16
Dollar likely to push higher after FOMC and GDPEURUSD Closes With A DojiThe euro currency continued its attempts to break out from the resistance area near 1.2177 and 1.2144.However, price action closed somewhat flat, resulting in a Doji close on Friday. The Doji pattern in the resistance area could see a possible reversal.However, the sentiment remains mixed for the moment. A strong bullish close could see the euro currency rising above 1.2177.This will open the way forward for the EURUSD to retest the 6th January highs of 1.2349. Alternately, a bearish close following the Doji could signal a possible move back toward the 1.2050 level of support.There is also an ascending triangle pattern emerging near the resistance area. A successful upside breakout puts the near term target toward the 6th January highs, if not closer.The British pound sterling closed on Friday with losses, although price action remains firmly within the ascending price channel.The support level near 1.3500, clearly remains the major line in the sand. Further upside is likely to continue upon establishing firm support near this level on a daily and weekly basis.To the upside, a possible continuation may see the GBPUSD attempting to test the 16th April 2018 highs near 1.4376.Watch the minor rising trendline, which if breached could see the correction back to the 1.3500 handle.But the Stochastics oscillator is likely to signal another short term momentum to the upside.If the GBPUSD fails to break past the 21st January highs of 1.3745, then we might see a possible pullback.WTI Crude Oil Closes Flat On A Weekly BasisThe recent bull run in the oil markets is slowing down with the commodity posting a flat close for two consecutive weeks now.On Friday, oil prices were testing the lower end of the sideways range between 53.77 and 51.87. This comes after the second minor rising trendline was breached.While there was a small pullback into the weekly close, the overall bias remains mixed. This sideways range could continue especially if the current rebound off the floor could see prices attempting to rise back.But in the event that oil prices break down below the 51.87 level, then we expect a correction toward the 49 – 50 region in the short term.The confluence of the major rising trendline alongside the horizontal support could put a lid on the declines.Gold Prices Steady In A Sideways RangePrice action in gold remains stuck within a sideways range with the 1818 level of support holding up for the moment. The overall trend remains flat after gold price touched a new all-time high on 7th August 2020.This sideways shift could either see the trend beginning to change or a possible pause before the bullish run picking up pace.The overall bias remains mixed within this sideways range of the 1950 and 1818 levels.For the moment, price action has formed a lower high and is currently pushing lower. Therefore, a retest of the 1818 level is quite likely.A break down below this support area could see a possible shift in the trend.To the upside, unless the 1950 level gives way, prices might remain stuck in the range.
Surprise! Nasdaq Leads Weekly Gains

Surprise! Nasdaq Leads Weekly Gains

Finance Press Release Finance Press Release 25.01.2021 17:08
In a surprise twist, the Nasdaq surged by a healthy 4.2%, managing to close the week at an all-time high. What’s happening to tech stocks?Surging, gaining...come again?Wasn't tech supposed to wither away and die thanks to be big bad Democrat boogeymen? Wasn’t the radical Biden tax agenda and regulatory framework supposed to send your favorite tech stocks plummeting? Wasn’t Biden’s tax plan supposed to take an estimated 5-10% off the earnings per share?For now, it seems like the market is putting more of its hopes into Biden's $1.9 trillion stimulus plan and ignoring his tax and regulation plans. As Treasury Secretary and former Fed Chair Janet Yellen claimed, Biden's primary focus is aiding American families (i.e., stimulus, low-interest rates) and, for now, not raising taxes.But nothing is for sure with this stimulus. Republicans will resist it, and some moderate Democrats may do so as well. With Vice President Kamala Harris as the only tiebreaker for a Democrat majority in the Senate, Biden needs all the support he can get to pass this aggressive stimulus.I maintain my view that the market is too complacent, and that we are about to enter a correction at some point in the short-term. It still reminds me of the Q4 2018 pullback ( read my story here ).For one, valuations are absurd. Tech IPOs are a circus, the S&P 500 is at or near its most-expensive level in recent history on most measures, and the Russell 2000 has never traded this high above its 200-day moving average.While stimulus could be useful for stocks in the short-term, it could almost certainly mean the return of inflation too by mid-year. The worst part about it? The Fed will likely let it run hot. With debt rising and consumer spending expected to increase as vaccines are rolled out to the masses, the Fed is undoubtedly more likely to let inflation rise than letting interest rates rise.Others, however, believe that the market reflects optimism that the global economy will recover with the eventual lifting of COVID-related restrictions and more widely-available vaccines. John Studzinski , vice chairman of Pimco, believes that market valuations are strong and reflect expectations of this eventual reopening and economic recovery by the second half of the year.All of this simply tells me that the market remains a pay-per-view fight 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 last 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.We have a critical week ahead with the Fed set to have its first monetary policy meeting of the year and big earnings announcements on the horizon. Best of luck, have an excellent trading week, and have fun! We'll check back in with you all mid-week. Are We in a Tech Bubble or Not?Figure 1- Nasdaq Composite Index $COMPSome of the hottest performing tech stocks announce earnings this week such as Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), Tesla (TSLA) (yes I consider Tesla more of a tech stock than a car stock), and more.Pay very close attention.Although I am bullish on specific tech sectors such as cloud computing, e-commerce, and fintech for 2021, I’m concerned about the mania consuming tech stocks.Tech valuations, and especially the tech IPO market, terrify me. It reminds me a lot of the dot-com bubble 20-years ago. Remember, the dot-com bubble was a major crash in the Nasdaq after excessive speculation and IPOs sent any internet-related stock soaring. Between 1995-2000 the Nasdaq surged 400%. By October 2002, the Nasdaq declined by a whopping 78%.I have no other words to describe it besides the Nasdaq right now as a circus. Will the bubble pop now? That remains to be seen. But the similarities between now and 2000 are striking.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, this appears to have been a consistent pattern over the last few weeks.The Nasdaq pulled back on December 9 after exceeding an RSI of 70 and briefly pulled back again after passing 70 again around Christmas time. 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%.The Nasdaq has an RSI of around 72 again, and I’m switching the call back to SELL. The Nasdaq is trading in a precise pattern and I am basing my calls on that pattern.I still love tech and am 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.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.
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.
Will Biden’s Executive Blitzkrieg Defeat Gold?

Will Biden’s Executive Blitzkrieg Defeat Gold?

Finance Press Release Finance Press Release 26.01.2021 12:22
A new sheriff is in in town, and he’s making some rearrangements. Will the new order of things support the price of gold?What a blitzkrieg! Joe Biden certainly wastes no time in signing executive orders. Since inauguration, he introduced several policies, including mandating masks on federal property, in airports and on certain public transportation, and the end of a travel bank on some countries. Biden also terminated the construction of the wall at the Mexican border, halted the withdrawal from the WHO and placed the U.S. back on the path to rejoining the Paris climate accord.We’re seeing a reversal of many of Trump’s policies. The new President’s actions shouldn’t materially affect the gold market , but if they manage to restore widespread confidence in the U.S. government, they could limit the safe-haven demand for gold .Biden also modified the government’s stance on the epidemic in the U.S., treating it very seriously. He undertook several executive actions intended to speed up the production of COVID-19 supplies, thereby increasing testing capacity, and hopefully reducing the spread of the coronavirus . Biden also started a “100 days mask challenge”, urging Americans to wear masks, and announced a “National Strategy for COVID-19 Response and Pandemic Preparedness”, arguing that “America deserves a response to the COVID-19 pandemic that is driven by science, data, and public health — not politics”.All these actions show that combatting the pandemic will be Biden’s priority and that he intends to deliver a more centralized federal response to the epidemiological threat. It’s high time! As the charts below show, the coronavirus has already infected almost 25 million Americans while killing more than 400,000.Figure 1Figure 2The U.S. equity markets welcomed Biden’s actions by reaching new record highs. However, these gains and increased risk appetite among investors didn’t prevent the modest jump in gold prices in the aftermath of the inauguration. As the chart below shows, the price of the yellow metal increased to above $1,860 on Thursday (Jan. 21).Figure 3Implications for GoldBut what do Biden’s rearrangements imply for the gold market in the medium and long run? Well, mainstream economists and the markets expect that Biden’s actions, including fiscal stimulus, will speed up the fight with the pandemic and will revive the economy. This positive sentiment could be negative for the yellow metal.However, I believe that people overestimate the positive economic impact of the upcoming stimulus. After all, many people have money, but they can’t spend it due to widespread lockdowns, and there will be a huge price to pay for aid coming in the form of a ballooned fiscal deficit and public debt . But the problem is that neither money nor debt constitute the real wealth, so I remain skeptical about the benefits of another government’s fiscal package.Of course, my opinion is irrelevant here. What is important is that Mr. Market likes the idea of additional stimulus, so the bonanza in the financial markets can last. The expectations of higher economic growth and accompanying stronger risk appetite could be negative for gold .However, at some point, the fragility and limitation of the debt driven growth will become clear – you cannot print wealth – and investors will face the harsh reality of a debt trap . It will be delayed, but there will be a reaction to the increased debt and the risk of higher inflation . This reaction, in turn, should be beneficial for the yellow metal.Not long ago, I was afraid that U.S. fiscal policy will be less dovish in 2021 – however, with Biden’s fiscal stimulus in the cards, the fiscal policy could actually become even more lavish this year than it was in 2020. It should also be a supportive factor for the price of gold, especially considering that it would force the Fed to remain very accommodative as well.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
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.   
Stock Pick Update: Jan. 27 – Feb. 2, 2021

Stock Pick Update: Jan. 27 – Feb. 2, 2021

Finance Press Release Finance Press Release 27.01.2021 14:13
Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included two Consumer Discretionary and one Energy stock this time.In the last five trading days (January 20 – January 26) the broad stock market has extended its long-term uptrend. The S&P 500 index reached new record high of 3,870.90 yesterday, as investors awaited big-tech quarterly earnings releases. The S&P 500 has gained 0.88% between January 20 open and January 26 close.In the same period of time our five long and five short stock picks have lost 4.22%. Stock picks were relatively much weaker than the broad stock market’s performance last week. Our long stock picks have lost 6.12% and short stock picks have resulted in a loss of 2.32%. The Energy sector has been the strongest in the previous month, but last week there have been significant declines in oil stocks. Hence that relatively big drawdown of our portfolio.There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.Our last week’s portfolio result:Long Picks (January 20 open – January 26 close % change): COP (-10.11%), PXD (-8.09%), C (-9.59%), SPGI (+0.42%), APD (-3.25%)Short Picks (January 20 open – January 26 close % change): WBA (+2.56%), MNST (-1.48%), SPG (+7.28%), EQR (+3.85%), TTWO (-0.62%)Average long result: -6.12%, average short result: -2.32%Total profit (average): -4.22%Stock Pick Update performance chart since Nov 18, 2020:Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, January 27 – Tuesday, February 2 period.We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (January 27) and sold or bought back on the closing of the next Tuesday’s trading session (February 2).We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .The stock market sector analysis is available to our subscribers only.Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:buys: 2 x Consumer Discretionary, 2 x Energy, 1 x Health Caresells: 2 x Industrials, 2 x Consumer Staples, 1 x MaterialsBuy CandidatesMCD McDonalds Corp. - Consumer DiscretionaryStock may break above two-month-long downward trend lineThe resistance level is at $217.50 and support level is at $207.50ORLY O’Reilly Automotive, Inc. – Consumer DiscretionaryPossible upward reversal following the recent correctionThe resistance level is at $465 – short-term upside profit target levelWMB Williams Cos., Inc. – EnergyStock trades within a consolidation following downward correction – uptrend continuation playThe support level is at $20.75 and resistance level is at $22.75Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Consumer Discretionary and Energy sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today .Thank you.Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care* * * * *DisclaimerAll essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’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. Paul Rejczak, 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.
Short Squeeze Mania - Stocks Swoon

Short Squeeze Mania - Stocks Swoon

Finance Press Release Finance Press Release 27.01.2021 15:24
It's officially "stonk season" in the markets. The IPO market continues to baffle, and SPACs continue to pop-up like weeds in your front yard.Plus if you’ve seen GameStop (GME), AMC Entertainment (AMC), and Blackberry (BB) lately, you know the Robinhooders are at it again.These speculative gambles are ridiculously frothy right now as hedge funds and institutions continue to try and cover their shorts. The moves these stocks are making are more detached from reality than the guy in a buffalo headdress at the Capitol 3 weeks ago.Complacency is the most significant near-term risk to stocks by far, and I have been warning about this for weeks. It also reminds me of the Q4 2018 pullback ( read my story here ).It’s also earnings season (for those who care, like analysts), and it’s time for some big swings and volatility.Well, not entirely. Monday (Jan. 25) saw a sudden mid-day plummet and subsequent recovery, and Tuesday (Jan. 26) traded slightly down. Wednesday (Jan. 27) looks set to open lower - we will see how that ends up.Earnings have so far impressed, though, and there were some big moves from individual stocks.General Electric (GE) popped over 9% thanks to a healthy outlook for 2021 and better than expected industrial free cash flow.Johnson & Johnson (JNJ) also saw a nice 3% gain after beating earnings. Investors are also eagerly anticipating results from its vaccine’s trial. Johnson & Johnson’s vaccine is one dose and does not require any crazy storage protocols like Pfizer (PFE) and Moderna’s (MRNA). Strong results and FDA approval could genuinely change the tide of the pandemic and vaccine rollout.Earnings from Microsoft (MSFT) and Advanced Micro Devices (AMD) also came in after the closing bell and impressed as well. Microsoft posted record quarterly sales, and AMD exceeded $3 billion in revenue.Does this mean we're all clear now and can party like it's 1999?Not exactly. Plus, if you're a stock nerd like I am, you don't want to party like it's 1999. Because that means 2000 will come—the end of one of the biggest parties, investors have ever seen. I'm talking about the dot-com bust.Fair warning: the S&P 500 is still at or near its most-expensive level in recent history on most measures, and the Russell 2000 has never traded this high above its 200-day moving average.The more GameStop pops, the more of a circus I think this market is. GameStop a $15+ billion company? Really? A correction at some point in the short-term would not be shocking in the least.John Studzinski , vice chairman of Pimco, believes that market valuations are sound and reflect expectations of this eventual reopening and economic recovery by the second half of the year.I agree on some level about the second half of the year. Outside of complacency, though, I have other short-term concerns.For one, trillions in imminent stimulus could be useful for stocks but bring back inflation by mid-year. The worst part about it? The Fed will likely let it run hot. With debt rising and consumer spending expected to increase as vaccines are rolled out to the masses, the Fed is undoubtedly more likely to let inflation rise than letting interest rates rise.All of this tells me that the market remains a pay-per-view fight 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 last 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.We have a critical week ahead with the Fed set to have its first monetary policy meeting of 2021 and more earnings announcements. I wish you the best of luck. We'll check back in with you at the end of the week. Small-caps are Too Hot to HandleFigure 1- iShares Russell 2000 ETF (IWM)As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks underperformed the larger indices on Tuesday (January 26). The RSI is no longer technically overbought, but I still think that the Russell has overheated in the short-term. Stocks don’t just go up in a straight line without experiencing a sharp pullback. That’s just the nature of the beast.Barron’s also claims that the Russell 2000/S&P 500 ratio has entered a powerful 15-year resistance area .Nobody knows what will happen during this critical week of earnings, but I called a decline after the IWM began the week over a 70 RSI. Indeed the IWM is having a down week to this point, but it’s not sharply down enough for me to switch my call. Not even close.I love small-cap stocks in the long-term, especially as the world reopens. Small-caps are also the most likely to benefit from Biden’s aggressive stimulus plan.But the index has overheated. Period.Before January 4, the RSI for the IWM Russell 2000 ETF was at a scorching hot 74.54. I called a sell-off happening in the short-term due to this RSI, and it happened.After the RSI hit another overbought level of approximately 77 two Wednesdays ago (January 13), the IWM declined by another 1.5%. I said that Russell stocks would imminently cool down because the RSI was too hot, and precisely that’s what happened.Consider this too. In its entire history as an index, the Russell has never traded this high above its 200-day moving average.Small-caps may have priced in vaccine-related gains by now, and some stimulus optimism may have been priced in too.I hope small-caps decline before jumping back in for long-term buying opportunities. I love where these stocks could end up by the end of the year.SELL and take profits if you can- but do not fully exit positions . If there is a deeper 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.
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.
US Stock Market Rolls Lower After 18% Rally Since November 2020

US Stock Market Rolls Lower After 18% Rally Since November 2020

Chris Vermeulen Chris Vermeulen 28.01.2021 03:23
Price action is usually conducted in a series of up and down price phases – or waves/cycles.  Typically, price will move higher or lower in phases- attempting to trend upward or downward over time. This type of price action is normal.  Extended upward trends with very little downward price retracements happen sometimes – but not often.  They usually happen in “excess phase” rallies or after some type of news event changes expectations for a symbol/sector.Putting Concerns Into Perspective – Still BullishSince early November 2020, the US stock market has continued to rally in a mode that is similar to an excess phase rally – showing very little signs of moderate price rotation. While price volatility has continued to stay higher than normal, you can see from the SPY Daily chart below that it has rallied from $324.40 to $385.95 (over 18%) in just under 90 days.  At some point in the future, a moderate price rotation/retracement will happen that may be in excess of 6% to 11% - as has happened in the past.The purpose of this research post is to alert readers that the markets appear to have started a period of downside price rotation – which is normal. This SPY Daily chart, above, highlights the upward support channel originating from the March 21, 2020, COVID-19 lows (CYAN line) and also the upward support channel originating from the early November 2020 lows (YELLOW line). It is important to understand that any downside price retracement which stays above the CYAN line level should be considered a normal range price rotation within a bullish trend.  This suggests a -3% to -4% downside price trend from current levels would simply qualify as downward price rotation within a bullish trend – nothing more.If price were to break below the CYAN upward trending support channel, then we would become more concerned that a deeper price downtrend is setting up which may target lows from Mid-November 2020 (-6.5%) or the late October 2020 lows (-13% to -14%) from current SPY price levels.  Obviously, a deeper downside trend targeting the October 2020 lows would suggest the US stock markets are potentially entering a new phase of trending – possibly a sideways consolidation trend.TRAN Testing Support Near 12,180The following Transportation Index daily chart shows a very clear picture of how this “rollover” in the markets has setup and where real support is likely to be found.  The early January lows, near 12,180 are the most likely immediate support level on the TRAN Daily chart, below.  If the US stock market attempts to find immediate support to sustain the current bullish rally trend, then this level in the TRAN will likely hold up well over the next few days/weeks. Otherwise, if the TRAN breaks below this level, then the next viable downside target become the November 2020 lows (or somewhere close to those levels).Be sure to sign up for my FREE webinar that will teach you how to find and trade my BEST ASSET NOW strategy on your own!Using Fibonacci Retracement Theory from the early November 2020 lows to recent highs, we achieve the following levels:25% retracement: 12,628.9238.2% retracement: 12,331.4450% retracement: 12,065.4761.8% retracement: 11,799.51The 12,180 level we are suggesting will turn into critical support is just above the 50% Fibonacci Retracement level.  Therefore, any further downside trending would be predicated by a breach of both the 12,180 level and the 12,065.47 level.  If price holds above either of these support levels confidently, we would consider further downside risks unlikely.VIX Spike Higher BeginsThe upward spike in the VIX recently is indicative of how volatile the markets have become after nearly 90 days of continued upward trending.  Whenever the US stock market enters a decidedly bullish price trend for an extended period of time, the VIX naturally “normalizes” into a lower boundary and becomes hypersensitive to moderate price rotations.  We've seen this happen many times in the past.Because of the way the VIX is calculated, when these breakout moves happen while the market is conducting a relatively normal price rotation/correction, the VIX can sometimes spike above 35 or 45. To put this into perspective, the 2008-09 market crash prompted a VIX move to near 95.  The COVID-19 market crash prompted a VIX move to near 85. Many other moderate market downtrends over the past 10+ years prompted VIX moves above 30~40.  Three of the biggest “normal range” VIX moves happened in August 2011 (VIX level near 48),  August 2015 (VIX level near 53.50), and February 2018 (VIX level near 50).If another big market rotation were to take place in the near future, we believe early February would be the time/place for it to happen based on our predictive modeling system's expectations (see this research article: (https://www.thetechnicaltraders.com/what-to-expect-in-2021-part-ii-gold-silver-and-spy/).  We also believe this downside price swing will end fairly quickly and that a continued bullish price trend will resume in March or April 2021.The potential for a broader market rotation and trend “reset” is aligning with our December 2020 predictions for 2021.  Quite possibly, the downside price trending we are seeing now is the start of a 15 to 25+ day market rotation which will likely “reset” the bullish trending bias and allow for broader market trends to continue higher. We consider this an opportunity for traders to take advantage of this rotation in major markets and sectors.2021 is going to be full of these types of trends and setups.  Quite literally, hundreds of these setups and trades will be generated over the next 3 to 6 months using the Best Assets Now strategy.  Are you ready for these big market rotations expected in 2021? You can trade my BAN ETF strategy 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 without doing the research yourself, then you need to subscribe to BAN Trader Pro newsletter service to get my daily BAN Hotlist, my pre-market video walkthrough of the charts every morning, and my BAN strategy trade alerts.Happy Trading!
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.
S&P 500 and Gold Bulls, Get Ready to Meet the Bears

S&P 500 and Gold Bulls, Get Ready to Meet the Bears

Monica Kingsley Monica Kingsley 28.01.2021 09:08
Yesterday‘s recovery ended on a weak note as stock bulls gave up the opening gap. Disappointing in the very short run, especially given that other key markets acted likewise weak. Neither corporate bonds, nor gold, nor oil could get their act together, and are hanging in the balance. Inviting the bears to probe the defences, how far south will they be able to get? 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. While Monday‘s hanging man candlestick predictably didn‘t bring follow through selling on Tuesday, I am looking for the bulls to get tested today. Once the dust clears, we can go on making new highs, but the short-term storm (storm in a teacup, more precisely) hasn‘t started yet. In today‘s article, I‘ll examine the S&P 500 standing, look into precious metals, and finally answer a pointed question about gold. Let‘s start (charts courtesy of www.stockcharts.com). S&P 500 Outlook Stocks are hanging in the short-term balance following yesterday‘s weak close. Unconvincing volume, inviting a premarket push to the low 3800s as we speak. The aftermath of the Fed will set the tone for the coming sessions, but I would look for early credit market clues before buying any dip. Credit Markets High yield corporate bonds (HYG ETF) had a weak day yesterday, missing the opportunity to rise. Quite to the contrary, they traded relatively weaker than the S&P 500 did. Any time corporate bonds start underperforming stocks, I am watching closely, and often from the sidelines. Investment grade corporate bonds (LQD ETF) closed about unchanged while Treasuries paused and didn‘t really advance compared to Monday. They appear waiting for the Fed, unwilling to move before discounting possible hawkish surprise (positive assessment of the economy would do that trick) as a false alarm. The ratio of high yield corporate bonds against short-term Treasuries (HYG:SHY) with the S&P 500 overlaid (black line) shows the very short-term vulnerability in stocks. How low will these go as the greed sentiment gets taken down a notch? You see, yesterday I did strike an optimistic tone in the runup to the regular session‘s open, but the bulls missed a good opportunity to act, and the resultant signals favor the bears to step in now. That‘s the essence of my trading style – neither a permabull, nor a permabear, and always ready to turn on a dime should the facts change. The market breadth indicators show we‘re on the doorstep of a push lower. Instead of holding ground, new high new lows solidly declined, while both the advance decline line and advance decline volume muddled through. That‘s not exactly a bullish constellation. Precious Metals in Focus Gold also appears to be acting a bit weak in the short run. No surprise as I don‘t see the lengthy consolidation as quite over yet. This one will more likely wear you out than scare you out. Simply put, the gold bulls better wait for spring to usher in another precious metals upleg as the miners to gold ($HUI:$GOLD) ratio isn‘t sending any kind of confirmation that the sector has made a turn. The gold to silver ratio keeps treading water, and isn‘t declining below its early September lows. On the other hand, it‘s not trading too far from them either, which translates into silver not acting at its weakest exactly. That‘s a bullish sign, showing that this 5-month long consolidation is really getting long in the tooth. Completing the picture, miners (GDX ETF) reveal lackluster short-term performance. Long upper knot and volume as low as could have been, mean that we better brace ourselves for a down session today. From the Readers‘ Mailbag Q: Hi Monica, congratulations and best wishes on your new venture and I look forward to following your work. I'm an English working class boy, now very Grey who follows the gold market like a hawk. I'm a longterm investor in PM's sector and I have a largish position in PM miners (still in profit on most) but the last six month are playing havoc with my nerves. The best metaphor I have that describes my current situation is that I have a large bowl of golden soup with a big fly swimming in it and its name is Mr Radomski. His latest missive of 25 Jan outlines "where to now Gold" with a possible/probable decline of gold to between $1500 - $1600. I was rather hoping you might comment on his analysis and on how you see things developing over the coming months. I appreciate that you don't give financial advice but his very bearish view is discomforting given the mad world we have around us and if Gold could crash to these levels in the current situation it begs the question why bother investing in PM's. A: Thank you for the question and for authorizing me to print it just the way it arrived. I‘ll answer solely from my personal perspective, and won‘t comment on personalities. I understand your frustration with gold being unable to really move, but as I tweeted already yesterday, this months-long correction is one to wear you out, not to scare you out. Please check my Aug 07 article written for Sunshine Profits called S&P 500 Bulls Meet Non-Farm Payrolls, where in the section Calling out gold, I discuss the yellow metal‘s prospects. Compare that with my Monday‘s article Rosy February for S&P 500? Not So Fast to see how things turned out in the sector precisely. It‘s with the same conviction that I say today again that this long consolidation in gold is in its latter stages. For now, gold is still rangebound, and I don‘t see a deflationary crash repeating that would bring it to said $1,500 - $1,600 levels. Definitely not. Looking at the real world around us, the Fed is becoming more active in expanding its balance sheet, new stimulus checks are coming (money flowing directly into the real economy, not sitting on commercial banks‘ balance sheets), and fiscal policy isn‘t tame exactly either. Inflation is making a steady return, and it‘s a question of time (think months) before it becomes broadly acknowledged. In such an environment, a gold drop would be bought with both hands, thank you very much. Copper is rising, base metals aren‘t doing badly, and food price inflation is hot. We‘ve entered a decade of commodities, which would outperform paper assets. Who could tell me why gold would crash, even temporarily? What kind of mayhem in the bond markets would have to trigger that? Make no mistake, no single market moves in a vacuum. Quite to the contrary, I look at gold and Bitcoin as the safe haven plays, with Bitcoin being the wild and volatile one. I am saying that Bitcoin has clearly decoupled, and once gold does the same, it means a vote of no confidence in the financial system. But this is not where we are currently. Gold is taking its cues from interest rates, real ones to be precise. The king of metals is also doing well during times of rising inflation. Take the Fed keeping rates as low as can be for as long as eye can see (practical view of things), rising inflation bringing down opportunity costs of holding precious metals, and you have a great driver of higher gold prices. Given the economic policy steps, how likely is a deflationary shock now? Instead, look for the newly created money to keep entering the real economy, battling the high savings rate. Once you see the velocity of money to pick up, that would be the cherry on the cake. Gold unbound next. For now though, arm yourself with patience, and don‘t let any gloomy forecasts not matching your real world experience of what‘s truly going on in this Brave New World, drive you to abandon your prior decision. Have the facts, the rationale changed? Constantly evaluate these, honestly and truthfully without getting scared. No, the answer is that the drivers are still in place, and will be gaining an upper hand increasingly more over time. I see gold as breaking higher from this lengthy consolidation in spring, and as I‘ve explained in Monday‘s article, miners are set to outperform the metal early in this move when it comes, because they‘ve been beaten down quite sufficiently already. Look also at the gold to silver ratio. Spikes in favor of gold are what I would look for in the next monetary crisis, or liquidity crunch. Currently, none is on the horizon. Summary Time has come for another daily downswing in stocks, and it remains to be seen whether it entices the buyers to act. Technology, communications and consumer staples were among the best performing sectors yesterday, which doesn‘t paint a picture of broad short-term strength. Repeating the final sentence of yesterday‘s summary, the nearest days may (see today‘s session for proof) bring another push lower that won‘t however jeopardize the bull market in the least.
Gold & the USDX: Correlations

Powell: Inflation Can Rise In 2021 – So What Happens to Gold?

Finance Press Release Finance Press Release 28.01.2021 16:51
The first FOMC meeting in 2021 has concluded without any changes in monetary policy, while Powell sent a few dovish signals during his press conference.The FOMC released on Wednesday (January 27) its newest statement on monetary policy . Generally speaking, the statement was little changed. The main alteration is that the U.S. central bank has acknowledged that “the pace of the recovery in economic activity and employment has moderated in recent months”. Wow, how did they notice that? They really must hire professionals! All jokes aside, this modification in the FOMC statement is dovish . Consequently, when analyzed separately, it’s positive for the price of gold.Another change is that the FOMC now believes that “the ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook”. In December, the Fed thought that the pandemic would impact inflation only in the “near term”, with risks to the outlook “over the medium term”.However, when considered holistically, the January statement is rather bad for the yellow metal , as the Committee neither changed the federal funds rate nor expanded its quantitative easing program . So we have another month without any additional easing of the U.S. monetary policy. Luckily, the ECB also didn’t loosen its stance, but still, the lack of any fresh dovish moves by the Fed is not helpful for gold.Luckily, Powell comes to the rescue! Although he generally sounded rather neutral during his press conference , the Fed Chair has sent a few important dovish signals. First, he clearly excluded the possibility of premature tapering and the replay of 2013’s taper tantrum , saying that “the whole focus on exit is premature if I may say. We’re focused on finishing the job we’re doing, which is supporting the economy, giving the economy the support it needs.” The continuation of the quantitative easing, which will take years, is positive for gold.Second, Powell acknowledged that inflation will increase in 2021, admitting that the Fed will not react to this rise, as it would be only transitory: “We’re going to be patient. Expect us to wait and see and not react if we see small, and what we would view as very likely to be transient, effects on inflation”. This is great news for gold, which is considered by many investors as an inflation hedge . Higher inflation, with the central bank behind the curve, also implies lower real interest rates , which will support gold prices.Implications for GoldWhat does the recent FOMC meeting imply for the gold market? Well, so far, it has reacted little to the Fed’s statement on monetary policy. The reason is simple: the lack of any moves was widely expected, so the markets got no surprises and reacted weakly.However, the easing of the monetary policy could provide a fresh bullish signal that gold seems to need right now. Without such a spark, gold may continue its bearish trend for a while (see the chart below). And, although the markets did not expect any significant announcements from the Fed, some analysts speculated that the U.S. central bank could provide some guidance about the yield curve control. But it didn’t – so further declines wouldn’t be surprising in the short-term.Some analysts even say that the gold’s price pattern of 2020-2021 resembles the period of 2011-2012. If true, it would be a terrible news for the gold bulls. However, history never repeats itself, but only rhymes. The current fundamental outlook is different. Why? Well, this time, in addition to quantitative easing and ZIRP , we also have a very easy fiscal policy with ballooning federal debt and new large fiscal deficits in the pipeline.Another difference is the Fed’s stance. Right now the U.S. central bank openly admits that there is a possibility of upward pressure on inflation , but ask the markets to “expect us to wait and see and not react” (emphasis added). Well, the rise in inflation may be indeed only transitory – but, hey, didn’t they say the same before the 1970s stagflation ?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
Dollar gives back gains after Fed meeting

Dollar gives back gains after Fed meeting

John Benjamin John Benjamin 29.01.2021 07:29
Euro Trades Mixed As Trend-Line Being Tested From BelowThe euro currency is attempting to pare losses from Wednesday. However, price action remains biased to the downside.The short term intraday bounce led the common currency to briefly rise to the 1.2144 level of resistance.A confluence of both the trendline and the horizontal resistance level is keeping prices capped below this level.We expect the EURUSD to probably consolidate within 1.2144 and 1.2050 levels for the near term.Given the fact that the support level near 1.2050 has not been tested yet, we expect prices eventually sliding to test this support level.GBPUSD Rebounds Amid A Mixed BiasThe British pound sterling is posting gains after a rebound from the trendline.Prices remain confined within the ascending wedge pattern. A breakout above the previous highs could confirm further upside.For the moment, price action is likely to range within the ascending wedge pattern.The trend line is currently being tested and a close above this level could signal further gains.However, if price retreats near the trend line, then this will open the risk to the downside.A break down from the ascending wedge pattern will open the way for the GBPUSD to test the 1.3500 level next.Oil Prices Drift Between 53.77 And 51.87WTI crude oil prices continue to maintain a sideways range within the said levels. Prices attempted to make some modest gains, but at the time of writing, oil prices are giving back those gains.The current slide could see the lower end of the range being tested once again. With the previous uptrend now coming to a halt, the current consolidation could see a breakout.The overall bias remains mixed, but a breakout below the 51.87 level could see a possible correction down to the 49.00 level of support.To the upside, above the 53.77 level, we could expect price to test the 55.00 level next.Gold Prices Manage To Recover LossesThe precious metal is seen recovering from the losses from Wednesday. After losing the 1850 handle, gold prices are back above this level once again.However, the pace of the rebound remains weak and we could see price losing the 1850 handle once again.In the medium term, gold prices are firmly above the 1817.79 level of support. As long as this support holds, we expect the precious metal to possibly rise toward the 1874 handle.But in the near term, we could see price action consolidating around the 1850 level for a while.
A million reasons to buy Silver

A million reasons to buy Silver

Korbinian Koller Korbinian Koller 29.01.2021 10:05
Silver, Weekly Chart, Multiyear range break, significant trend, range, and?Silver in US Dollar, weekly chart as of January 28th, 2021.We are at such a significant point in history where fundamentals are more important for long term wealth preservation prediction than usual. Here is why:U.S. debt is at US$27 trillion.With the transition of the current presidency and the need to print enormous amounts of money to fund national vaccinations, future monetary expansion is inevitable.Silver is the only deflationary asset that’s left that has lost value since the 1980s. While some investors might think this is a good reason not to buy Silver, a contrarian or counter-intuitive approach would find an opportunity in something so undervalued.The greater the amount of currency in circulation, the greater the potential money flow they can trail into precious metals. When the economy collapses and cashflow comes flowing out of the stock market, it will find its way back into precious metals, and prices will rise.  Gold/Silver Ratio, Monthly Chart, Still room to catch up:Gold-Silver Ratio, monthly chart as of January 28th, 2021.But this isn’t all. As of December 11, 2020, Silver’s one-year price change is up 41.94%, and gold’s one-year price change is up 24.75%. Looking at the monthly Gold/Silver-Ratio chart above, we can see that there is still plenty of room for Silver to catch up. We even have support here right now, which would point out that gold runs first again, and then Silver is under pressure to follow.Monthly Chart of Silver, Forecast:Silver in US Dollar, monthly chart as of January 28th, 2021.Silver is looking very bullish by not having retraced deep in its sideways range since March of last year (27.5%). Therefore, we find it sensible to look at fundamentals more closely when it comes to larger timeframe target projections. Metal prices are strongly correlated with the economic meltdown. Hence, if the banks are too big to fail and keep forestalling inevitable problems into the future by ongoing money printing, we can continue to see prices remain less than stellar. Only when fear strikes the masses will the money leave the stock market and ultimately find itself into precious metals. Is COVID-19, the pandemic, that catalyst?A million reasons to buy Silver:The disparity between economic conditions in corporate earnings will not post well for equities forever. Investors are building up alternative hedges. We have seen massive profits in Bitcoin. If “exotics” get attention like this, a more radical shift in common alternatives like Silver might be ahead.JP Morgan has decreased their short positions after years of accumulating Silver. It leads one to believe that with rumors of J.P. Morgan’s massive silver accumulation, it’s relinquishing recent silver short positions. It could portend a future where silver prices can no longer be manipulated as they once were, as the main manipulator has decided to cash in.With history changing so fast and a million reasons for owning Silver, it is wise to look at markets from both sides. A fundamental and a technical one. More than ever! Automatisch generierte Beschreibung">Outstanding 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.
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.
Here’s What’s More Important than the Recent Reddit Mania

Here’s What’s More Important than the Recent Reddit Mania

Finance Press Release Finance Press Release 29.01.2021 16:36
GameStop! Reddit! Silver manipulation (that’s been discussed for over two decades)! It’s exciting but pay attention to these more important factors.Is the above really the key thing that’s happening in the markets right now? No, it’s only the most interesting thing. I admit, what we’re seeing on the Internet right now is truly absorbing, but one should realize that it’s what used to happen multiple times in history. This time it’s simply more visible as the conversations and associated images are publicly available and widely distributed.In yesterday’s intraday Alert , I commented on the issue of the likely implications of these cumulative purchases on the precious metals market as a whole and what difference they are likely to make over the course of the following months and weeks – next to none.Well, there is one effect that I’m expecting to see. It’s the increased volatility during the following price declines – likely proportionate to what was so vigorously bought in the last few days.Figure 1 – GameStop Corporation (GME) - NYSEThe above GameStop chart shows a near-vertical rally, and it also shows the spike in volume. The purchasing power seems to have dried up and the price – as expected – fell. Those, who bought at $300, were already at a 33% loss as of yesterday’s close.The various forums (other forums joined in, it’s not just Reddit anymore) are filled with messages and images encouraging to “hold”. But sooner or later people will realize that without fresh buyers the price is going to fall, and one by one, they are likely to panic and sell – especially knowing that they won’t be “punished” by the “forum community” in any way, as it’s not known to the forum participants who is selling and when.The topic of silver manipulation , paper silver and paper gold really is older than 20 years, and it’s been mostly the same argument over all those years. The price managed to rally from below $5 to about $50 – if there was a massive long-term manipulation, then it wasn’t particularly effective. If it didn’t prevent silver from rallying so far, then why would it prevent silver from rallying from below $20 to $200? Anyway, this topic is too broad to be fully discussed, even in a lengthy Alert – the point that I want to make here is that nothing new happened in the silver market – it just got more spotlight.So, what’s more important and timelier than the above topics, even though it doesn’t get as much attention – and can herald a decline in the precious metals?Figure 2 – S&P 500 (ES.F)First, the almost-confirmed medium-term breakdown in stocks!On Wednesday, the S&P 500 futures moved visibly below the rising support line and closed below it for the first time. Despite yesterday’s strength, stocks were unable to rally back above it and so far, today, stocks are moving lower. If the S&P 500 futures close today below this line, the breakdown will be confirmed by both: three consecutive daily closes and a weekly close. This will be a bearish sign for the short term.If stocks slide further shortly, it will be particularly bearish for silver and mining stocks, which means that those who bought yesterday based on forum messages etc. would be likely to find themselves at a loss relatively soon. This, in turn, means that the decline could be quite volatile.Second, there is also another market that could ignite the powerful decline in the PMs and miners – the rallying USD Index.Figure 3 – USD Index (DX.F)Despite the intraday decline, the USDX is once again close to its 2021 highs.The USD Index is testing its previous 2020 highs, and it might (!) be forming the right shoulder of a short-term head-and-shoulders pattern. The key word here is “might”. If the USDX rallies above its previous highs (about ~91), this pattern will be invalidated and the short-term outlook for the USDX will be clearly bullish. This would also serve as a breakout above the inverse head-and-shoulders pattern (mid-Dec. low being the left shoulder, the early 2021 low being the head, and the recent low being the right shoulder), which would have even more bullish implications (with the price target above 92).Would this be enough for gold to decline to $1,700? It might not be enough, but it might be enough for the miners to move to my above-mentioned initial downside targets ($31 and $42.5 for GDX and GDXJ, respectively).So, the bearish storm seems to be brewing. How are the precious metals responding? Let’s take a look at gold.Figure 4 – COMEX Gold Futures (GC.F)Gold shrugged off yesterday’s “exciting news” coming from the internet’s forums. It rallied initially, almost touched its declining resistance line, and then reversed, thus erasing the previous gains. It’s now trading pretty much at the same levels where it was trading two days ago. The outlook remains bearish and yesterday’s reversal actually makes it even stronger.Figure 5 – COMEX Silver Futures (SI.F)Silver is visibly stronger than it was a few days ago, but if the precious metals sector is about to head lower (especially given the breakdown in stocks) this would be normal even without the entire “let’s buy silver” forum theme.And miners?Figure 6 - VanEck Vectors Gold Miners ETF (GDX)Miners invalidated the breakdown below the neck level of the head and shoulders pattern. Invalidations of these breakouts tend to be “buy” signals. BUT yesterday’s session has “ this time really was different” written all over it.Part of the purchase encouragements on forums were for mining stocks. While silver has indeed rallied yesterday (and so did AG, which was particularly promoted), the GDX ETF moved higher only somewhat. It still closed more or less at its mid-January low and it didn’t manage to erase Tuesday’s decline.Overall, I think that the proper context is the relative weakness of miners and not the direct implications of the technical invalidation.Moreover, please note that if the symmetry in terms of shape between both green boxes on the above chart is to be upheld, then it shouldn’t be surprising to see a quick volatile upswing that’s very short. In fact, since the volatility now is smaller than it was in late April 2020, what we saw yesterday might have already been the analogy to what had happened back then.All in all, the outlook for the precious metals market remains bearish for the following weeks, regardless of what the next few days will bring.Also… Do you remember about bitcoin? Some time ago, I wrote that the bitcoin situation made the overall situation in currencies similar to late 2017 / early 2018.Figure 7 - Bitcoin Vault (BTC.V)Just as we saw back then, bitcoin soared while the USD Index plunged. Then both markets reversed .Figure 8That was also the time when precious metals and miners (and stocks) topped.So, what’s new?We just saw another clear confirmation that this is the very final inning of the rally. You probably heard that in the final part of a bull market, everything that’s in it soars. If it’s a gold bull market, then even stocks that have “gold” in their name will likely rally even though they might have nothing to do with the precious metals market. People don’t care to check, and emotions are too high to bother checking what they are actually buying.Well, there’s a cryptocurrency that started as a joke, but then became a relatively big market.Dogecoin .The reason why I’m mentioning it is that dogecoin just soared…Figure 9And it had previously soared in this way in early 2018, a few weeks after bitcoin topped.This is exactly what one would expect to see at a market top, based on common sense (analogy to buying just about anything close to the top), but the fact that we already saw pretty much the same thing in bitcoin, dogecoin, and the USD Index at the top 3 years ago should be flashing a big red light even for the most bearish of USD bears and most bullish crypto bulls.Remember, early 2018 was also the moment when the stock market and PMs topped.The above indications are on top of myriads of other factors pointing to lower precious metals and mining stock prices – this is all much more important than forum posts – even very convincing ones.Please note that today’s volatility is somewhat expected - it’s Friday (options expire) and it’s also the final session of the month. Quite many people and entities might want to push prices and indices in their favor, so that options expire on their preferred side of their options’ strike prices. So, whatever happens today might easily be erased in early February.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.
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!
How Will Silver’s (SLV) Recent Spike End?

How Will Silver’s (SLV) Recent Spike End?

Finance Press Release Finance Press Release 01.02.2021 16:11
When Joe Public buys shares during a wave of euphoria, they do it close to a market top or before the beginning of a decline. Looking at you, SLV!Silver rallied on Friday (Jan. 29), gold reversed its direction before the end of the day and so did miners, with the latter slightly underperforming gold. I wrote this before, and I’ll stress this once again today – the above is a perfectly bearish indication of an upcoming downturn in the precious metals market. This is not the first time it’s happening, and this combination of relative strengths worked reliably in the past. And we are not only just seeing that happening – we are seeing that at precisely the moment that is similar to previous patterns that were followed by sizable declines, which means that the relative bearish factors are even stronger.This also applies to the huge inflows to the SLV ETF that we just saw most recently. Let’s take a look below.Figure 1The inflows were huge, which means that a lot of capital poured into this particular silver ETF . No wonder – it was very popular among Reddit (and other forums) participants last week. Naturally, these investors are – in general – not professionals and they are not institutions either. They are part of the “investment public”, which tends to buy massively close to market tops and/or before important price declines.This indication might work on an immediate basis, but it could also work on a near-term basis – it depends on other circumstances. Did this work previously? Let’s check – after all, there were two other cases when we saw big spikes in SLV inflows – at the end of 2007 and at the beginning of 2013.What did silver do back then? I marked those situations with blue, vertical lines on the chart below.Figure 2The beginning of 2013 was when silver was not only already after its top, but was also in the final part of the back-and-forth trading that we saw before the bigger declines in that year.In late 2007, silver was still rallying, but it topped soon after that and subsequently plunged. At the 2008 bottom, silver was well below the levels at which the huge SLV inflows occurred.Consequently, the spike in inflows is not a bullish sign. It’s a major bearish sign for the medium term, especially knowing that it was the investment public that was making the purchases.Also, please note that the late-2007 spike wasn’t preceded by sizable inflows, but both the early 2013 and 2021 spikes were. Also, back in 2013, silver was already after a major top (just like right now) while in early 2007 it was breaking to new highs.As of now, silver just broke to new highs, but since this move is not confirmed yet, it seems that the current situation is still a bit more similar to what we saw in 2013 than in 2007. Therefore, the scenario in which we don’t have to wait long for silver’s slide is slightly more probable.The current volatility in silver suggests that the price moves are likely to be quick in both directions, so when the white metal tops it might be difficult to get out of one’s long position at prices that were better than one’s entry prices (provided that one joined the current sharp run-up).Especially since stocks just declined visibly and confirmed the breakdown below the rising support line in terms of three consecutive trading days, a weekly close, and a monthly close.Figure 3Stocks have also invalidated their breakout above their rising red support/resistance line. And it all caused the RSI to form a double-top near the 70 level, which preceded the two biggest price declines in the previous years.Figure 4It seems that while the bigger investors head for the hills, the individual public continues to focus on Gamestop and its recent gains. However, remember that they have to cash in above their entry price to make a profit, which is not that probable.The most important detail that we saw on Friday was the relatively low volume, on which Gamestop rallied. The buying power seems to be drying up and it seems that it won’t be long before everyone that wanted to buy, will already be “in”. And then, the price will start to slide as that’s what it simply does when there are no buyers and no sellers. Afterwards, a part of the public will sell, further adding to the selling pressure, which will see more declines, and so on. And as the final stock buyers turn into sellers, the top in stocks could be in.If stocks slide further shortly, it will be particularly bearish for silver and mining stocks , which means that those who bought yesterday based on forum messages, etc., would be likely to find themselves at a loss relatively soon. This, in turn, means that the decline could be quite volatile.Figure 5On a short-term basis, silver showed strength – also today, when it rallied slightly above the early-September high. Perhaps the final part of those who might have been inclined to buy based on the “ silver manipulation ” narrative and the forum encouragements in general, have decided to make their purchases over the weekend, and we’re seeing the result in today’s pre-market trading.This, coupled with the miners’ relative weakness means that the bearish outlook remains intact. If it “feels” that the precious metals market is about take off, but the analysis says otherwise (please remember about the first chart from today’s analysis), then it’s very likely that the PMs are topping. That’s what people see and “feel” at the top.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.
Expectations for Silver given the GameStop price action and the Reddit Revolution

Expectations for Silver given the GameStop price action and the Reddit Revolution

Chris Vermeulen Chris Vermeulen 01.02.2021 21:40
Near the end of 2020, my research team identified trends, pullbacks, and overall upward/downward trends in US major markets as well as those for Gold and Silver.  It is time we revisited these early 2021 predictions in relation to what is happening in the markets currently. You can revisit our original publication entitled What To Expect in 2021 Part II - Gold, Silver, and SPY.At the time we made these predictions, we were unaware of the global phenomenon, the Reddit #wallstreetbets movement, that was taking place.  Our expectations are based on our advanced predictive modeling system and what it sees as the highest probability outcome for price.  The recent news that this Reddit group has targeted a number of symbols (GME, AMC, BB, amongst others), as well as SILVER, may change the dynamics/liquidity of the markets very quickly.What we are witnessing is the incredible strength of the retail trader when they act in a “pack-form”.  The retail traders of the world, using a social media platform, have found new strength as the global markets continue to struggle with COVID-19 and institutional weakness. In a way, these retail traders are focusing on an institutionally authorized “exploit”, like a game exploit, where short-sellers have been permitted to overrun many smaller traders and companies over the past decade or so – ever since the “Uptick Rule” was removed.  This has created an environment where excessive risks were allowed by many institutions as short sellers were able to enter short positions far in excess of the floating shares available.  With extreme leverage in place, these positions were ticking time-bombs waiting to explode. And then along comes the Reddit group – hungry, happy, and en mass.  They identify this structural weakness, which was legally allowed to happen, and begin their “autist wave” of buying these heavily shorted symbols.  Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!Gamestop became a “shot across the bow” for these hedge funds and has sent a liquidity ripple across the global markets.  Is the financial system at risk because of excessive leverage, derivatives, and institutional manipulation?  What would it take to completely disrupt these hedge funds and what are the consequences of these short-squeeze runs?  Is this issue bigger than many people expect?  Could it turn into a “liquidity trap”?These are all questions that are certainly going to be answered over the next 6+ months and no one really has a true understanding of how the “deleveraging process” will take place.  If push comes to shove and institutional shorts are forced into excessive losses, then we may see a bigger corrective trend setup in 2021 as a result of this capital/liquidity trap that has sprung.Now, before we continue to review some of our 2021 expectations, let's review a couple of important charts...SPY Must Hold Above SupportThe following Daily SPY chart highlights the major support channel originating from the March 2020 lows.  If this channel is breached, we may begin a deeper downside trend that could align with a volatility/liquidity trap event.  Losses generated by these excessive, leveraged, short positions will prompt firms to pull profits from other symbols/sectors.  This wave of volatility may be just starting.Silver Targets $55 Or HigherSilver has recently been targeted by the Reddit group as one of the most heavily shorted precious metals on the planet.  Currently, silver has rallied above $30 in early trading on Monday, February 1, but has come down closer to the opening (which gapped significantly).  If Silver rallies above $35 and continues to trend, $50 to $55 is the next target level.  After that level is reached, we move into uncharted territory (above $55) and the sky's the limit for Silver and Gold.revisiting our 2021 ExpectationsNow, onto our 2021 Expectations and how this new dynamic of volatility and liquidity may change things. If the increased volatility and liquidity issue persists beyond February 2021, we would expect the global markets to begin to immediately reflect a transition away from excessive risks and leverage.  This would take place by off-loading positions in at-risk and in-profit trades throughout the world to position portfolios in a means to mitigate 3x+ std deviation risks.  This deleveraging process may prompt a huge upside move in precious metals because any global deleveraging event, if it aligns with a moderate price correction event, may push institutions to urgently address leverage issues.  This urgency, in combination with the retail trader revolt, may prompt an excessive liquidity trap in certain sectors/symbols – almost like a “flash-rally” event.Overall, we believe the global markets will settle back into our expected 2021 ranges – although Gold and Silver may rally far beyond our upside 2021 expectations if the Reddit group continue to push Silver higher like they did with Gamestop.  So, at this point, be prepared for massive volatility ranges and continued upside price trends in Gold and Silver while the markets address these global institutional and leverage issues.What this means for traders is that we should expect to see some really big trends through almost all of 2021.  Most importantly, we will end up with more rational price trends and a potentially reduced leverage environment for many sectors and symbols.  This should prompt various market sectors to initiate or resume trends as capital is put to work in sectors that have a stronger growth potential over the next few years.2021 is going to be full of these types of trends and 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 yourself with no proprietary indicators or algorithms just by taking my FREE one-hour BAN tutorial. For those who believe in the power of relative strength, market cycles, and momentum but don't have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you. In addition to trade alerts that can be entered into at the end of the day or the following morning, subscribers also receive a 7-10 minute video every morning that walks you through the charts of all the major asset classes. For traders that want more trading than our 20-25 alerts per year, we provide our BAN Trader Pro subscribers with our BAN Hotlist of ETFs that is updated each day.Happy trading!
Bitcoin - Consolidation brings new opportunities

Bitcoin - Consolidation brings new opportunities

Florian Grummes Florian Grummes 02.02.2021 08:33
ReviewSource: Messari December 31st, 2020After a massive rally from the beginning of October, Bitcoin almost reached prices around US$20,000 on December 1st. Despite a heavily overbought situation, the bulls only needed a two-week breather. The successful breakout immediately caused a further acceleration, so that bitcoin prices continued to explode until January 8th 2021 and were able to rise to almost US$42,000. Bitcoin had thus increased more than tenfold in less than 10 months since the Corona crash! Looking at 2020 as a whole, Bitcoin pretty much outperformed everything, gaining 318%.Source: Dan Held on TwitterOver the last three weeks, however, there was, not surprisingly, a wave of profit-taking hitting the bitcoin market. Hence, prices retraced all the way back down toward just under US$29,000. This rapid correction represented a drop of 31% in just 14 days. In the big picture, however, this is not unusual. Instead, bitcoin has seen countless corrective price moves like this over the past 10 years. In the last bull market between autumn 2015 and December 2017, there were a total of six sharp pullbacks, all of which amounted to sell offs between 29% and 38%.Source: Dan Tapiero on TwitterIn the bigger picture however, volatility is still relatively low. Rather, the relative volatility indicates that the range of fluctuation is only just slowly beginning to rise again and should spike towards the later stages during the course of this current bull market.Overall, bitcoin has been in a new bull market since the Corona Crash in March 2020 and is likely to head for much higher price regions in the coming 10 to 24 months. Daily fluctuations of US$10,000 and more will then become increasingly common.Technical Analysis For Bitcoin in US-DollarBitcoin, Weekly Chart as of February 2nd, 2021. Source: TradingviewWith the breakout above the all-time high around US$20,000 on December 16th, 2020, the Bitcoin rally that had been underway since March 2020 already accelerated once again significantly. Although the market was already heavily overbought on all timeframes, bitcoin doubled within the following four weeks and reached a new all-time high at around US$42,000 on January 8th, 2021. After such a price explosion, it takes time to digest this strong rise. The pullback towards and slightly below US$29,000 is therefore perfectly normal and healthy.From the perspective of the weekly chart, however, there are no clear signs for an end of that correction yet. Looking at the “old” support zones and the overbought stochastic oscillator, a return to the breakout level around US$20,000 would be quite conceivable. Beyond that, there are two long-term upward trend lines that could also act as possible targets on the downside.Using the classic Fibonacci retracements from the low at US$3,850 to the recent high at US$42,000, the 38.2% retracement at US$27,425 would be the minimum correction target. If bitcoin can continue to hold above this retracement, this would be an extremely bullish sign of strength. A first retest of the recent lows at US$29,000 was also successful and thus far created a nice double low which might already have marked the turning point. However, prices below those lows would confirm a larger and deeper type of correction. Prices around US$27,500 and lower towards US$20,000 to US$22,000 would then become increasingly likely.However, since bitcoin is undoubtedly in an established bull market and in an overarching uptrend, the surprises are generally happening to the upside. Therefore, the only thing to note here is that new prices above US$40,000 would probably signal a continuation of the steep rally. In this case, prices around the next psychological level at US$50,000 should follow quickly.To summarize the weekly chart remains bullish above US$20,000. At the same time, there are still no signals for an end to the recently started pullback. In view of the relatively fresh stochastic sell signal, there is a distinct possibility that the correction of the last four weeks could extend significantly. However, if the bulls can keep the prices above US$29,000, the rally can continue at any time.Bitcoin, Daily Chart as of February 2nd, 2021. Source: TradingviewOn the daily chart, the correction of the last three weeks had created a pretty oversold situation and thus a low-risk entry opportunity. Now that bitcoin quickly recovered from those lows around US$29,000, the good low-risk set up is certainly gone. Especially since a third attack pullback US$29,000 would now have to be interpreted as weakness.But although the 200-day moving average (US$16,738) as well as the established support zone at US$20,000 are far away from current pricing around US$34,000, the setup looks promising. Based on the principle that a trend in motion is more likely to continue than to suddenly turn around, it is important to look for entry opportunities on the long side only (“buy the dip”). Bitcoin now has to surpass its recent high above US$38,600 to establish a short-term series of higher lows and higher highs. This would shift the daily chart clearly back into bullish territory.Overall, the daily chart is coming out of an oversold setup recovering quickly, but somehow is still stuck in a downtrend short-term. However, bitcoin has now been trading around and above USD 30,000 for more than four weeks already. This means that a base is being formed from which the rally should continue rather sooner than later.Sentiment Bitcoin – Consolidation brings new opportunitiesBitcoin Optix as of January 24th, 2021. Source: SentimentraderThe quantitative sentiment indicator “Bitcoin Optix” signaled a short-term exaggeration at the end of December and then especially at the beginning of January. However, the sharp pullback in the order of 31% completely cooled down any excessive optimism and even created a small panic among the weak hands in the short term.Crypto Fear & Greed Index as of February 1st, 2021. Source: Crypto Fear & Greed Index The much more complex Crypto Fear & Greed Index, on the other hand, continues to measure an increased level of greed in the entire crypto sector. However, such conditions did persist for many months in the past.Crypto Fear & Greed Index as of January 24th, 2021. Source: SentimentraderIn a long-term comparison, however, the Crypto Fear & Greed Index has also declined significantly and currently reflects a rather balanced sentiment picture.Overall, the overly optimistic sentiment has been cleared up surprisingly quickly due to the price decline from US$42,000 down to US$29,000. Hence, nothing stands in the way of a continuation of the rally from a sentiment perspective. Seasonality Bitcoin – Consolidation brings new opportunities –Bitcoin seasonality. Source: SeasonaxFrom a seasonal perspective, bitcoin has been most often moving sideways from mid o January until mid-April. Accordingly, the recently started correction could well drag on for at least a few more weeks.Bitcoin seasonality in bull market years. Source: SeasonaxHowever, if we only use the price development in bull market years, the data set shrinks to the years 2010, 2012, 2013, 2016 and 2017. But at the same time, it becomes clear that in these years bitcoin always found an important low between mid-January and mid-February.Overall, one would be well advised not to expect any exaggerated price explosions in the coming weeks. Statistically, these tend to occur in the months of April to June and October to December. However, the seasonal outlook for the next one to two months is not really unfavorable either.Sound-money: Bitcoin vs. GoldSound Money Bitcoin/Gold-Ratio as of January 25th, 2021. Source: ChaiaWith current prices of US$33,650 for one bitcoin and US$1,864 for one troy ounce of gold, the bitcoin/gold ratio is currently around 18.05, i.e., you currently have to pay more than 18 ounces of gold for one bitcoin. In other words, one troy ounce of gold currently costs only 0.055 bitcoin.Goldbug´s Achilles Heel, Source Midas Touch Consulting January 25th, 2021.This means that bitcoin´s outperformance against gold has clearly intensified in the past two months. An end to this major trend is not in sight. Quite the contrary, despite possible short-term fluctuations and countertrend moves, gold and silver are more likely to lose further against bitcoin.You want to own Bitcoin and gold!Generally, buying and selling Bitcoin against gold only makes sense to the extent that one balances the allocation in those two asset classes! At least 10% but better 25% of one’s total assets should be invested in precious metals physically, while in cryptos and especially in Bitcoin one should hold at least between 1% and of 5%. If you are very familiar with cryptocurrencies and Bitcoin, you can certainly allocate much higher percentages to Bitcoin on an individual basis. For the average investor, who is normally also invested in equities and real estate, more than 5% in the still 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 you have a complimentary unit of a true safe haven for the 21st century. You want to own both! – Florian GrummesMacro OutlookSource: Investing.comWith the inauguration of Joe Biden, the political circumstances in the USA have shifted significantly, but the loose monetary policy of the last twenty years is likely to continue and intensify significantly. The prices for gold and silver, as well as for bitcoin, will therefore continue to be driven upwards in the medium term by the constant expansion of the money supply.US Total Debt, © Holger Zschaepitz. Source Twitter @Schuldensuehner, 20. Januar 2021The monetary policy, backed by nothing but the blind trust of the citizens, had already led to an unprecedented debt orgy in the USA since the end of the gold standard in 1971. The record-high US national debt was further exacerbated by the Corona crisis in 2020 and is now rising parabolically. The same applies to pretty much all other countries and currency zones on our planet.Global Stock Market Cap, © Holger Zschaepitz.. Source Twitter @Schuldensuehner, 24. Januar 2021Driven by the constant currency creation, the market capitalization of global stock markets therefore continues to rise. It is important to realize that the stock markets no longer reflect the real economy as they used to. The only thing that matters is the constant expansion of liquidity via central bank balance sheets.Source: Bitcoin ResourcesThe unregulated and decentralized Bitcoin is therefore increasingly a thorn in the side of central bankers and politicians. After all, the irresponsible central bank policy can be recognized quite easily here. One can even say that in view of Bitcoin prices above US$30,000, the hyper-inflationary tendencies of fiat currencies are already becoming visible here. Whereas in the gold market one can always intervene in a depressing way on prices via so-called paper gold, the short-selling attacks on the Bitcoin markets are collapsing like a soufflé due to the digital scarcity. The decentralized structure of bitcoin is also a phenomenon that the technocrats will not be able to deal with, even with a ban.However, we have to assume that in the coming months or years there will be a concentrated attack on bitcoin by central bankers and politicians. However, the more institutional capital is invested in Bitcoin, the more difficult this undertaking will be.Source: Flipside CryptoA real point of criticism, on the other hand, is the extremely unbalanced distribution of the Bitcoins mined so far. Slightly more than 2% of the wallets hold 95% of the Bitcoins. This threatens to create a new power structure that can manipulate Bitcoin prices in its favor at will.Bitcoin – Consolidation brings new opportunitiesSource: Messari December 28th, 2020Bitcoin is undoubtedly in the middle of a new bull market. The final top has not yet been reached by a long shot. Prices around US$100,000 and possibly even above US$300,000 are quite conceivable in the next 10 to 24 months. The main drivers will be an institutional buying spree, as these institutional investors will come under an increasing pressure due to rising prices.Of course, there will be some brutal pullbacks on the way to higher prices. To be able to profit from this bull market, you need to be patient. And you really need to have internalized the so-called “Hodl” strategy.In summary, bitcoin is consolidating at high level trying to build a new base. This consolidation may well last a few more weeks and could also bring lower prices. More likely, however, is a continuation of the rally towards US$50,000 in the near future already.Source: Regard NewsAlso, it more an more smells like “altcoin season”. Bitcoin prices have already doubled from the old all-time high. Then, in the last four weeks, Ethereum also reached its December 2017 high around US$1,400. In the next phase, Ethereum should outperform Bitcoin. Afterwards, the smaller altcoins will explode. This time, the highflyers are likely to be in the booming DeFi sector. However, anyone who wants to play along here has to practice tough risk management and take profits regularly and quickly.Analysis sponsored and initially published on January 26th, 2021, by www.celticgold.eu. Automatisch generierte Beschreibung">Florian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 20 years of experience in financial markets. He is specialized in precious metals, cryptocurrencies and technical analysis. He is publishing weekly gold, silver & cryptocurrency analysis for his numerous international readers. He is also running a large telegram Channel and a Crypto Signal Service. Florian is well known for combining technical, fundamental and sentiment analysis into one accurate conclusion about the markets. Since April 2019 he is chief editor of the cashkurs-gold newsletter focusing on gold and silver mining stocks. Besides all that, Florian is a music producer and composer. Since more than 25 years he has been professionally creating, writing & producing more than 300 songs. He is also running is own record label Cryon Music & Art Productions. His artist name is Florzinho.Florian GrummesPrecious metal and crypto expertwww.midastouch-consulting.comFree newsletterSource: www.celticgold.eu
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.
2021 Should See Improved Gold Demand

2021 Should See Improved Gold Demand

Finance Press Release Finance Press Release 02.02.2021 16:16
The World Gold Council recently published two interesting reports. Gold demand plunged in 2020, but 2021 should be positive for the yellow metal.On Thursday (January 28), the WGC published its newest report about gold demand trends: Gold Demand Trends Full Year and Q4 2020 . The key message of this publication is that the gold demand of 783.4 tons (excluding over-the-counter activity) in the fourth quarter of 2020 was 28 percent lower year-over-year. As a result, it was the weakest quarter since the midst of the Great Recession in Q2 2008. The weak quarter made the whole year quite disappointing, as the annual gold demand in 2020 dropped by 14 percent to only 3,675.6 tons, making it the lowest level of demand since 2009 .The main driver of this decline was the COVID-19 pandemic, that triggered the Great Lockdown and the subsequent surge in gold prices. In consequence, jewelry demand plunged 34 percent to 1,411.6 tons, the lowest annual level on record. It shows that – contrary to popular opinion – consumers are price takers, not price setters, in the precious metals market.So, what is really interesting for me is that the investment demand, the true driver of gold prices, grew 40 percent to a record annual high of 1,773.2 tons . Although there was a slight increase in bar and coin investment, the surge in investment demand was caused mainly by the great inflow into global gold-backed ETFs , whose holdings grew by 877.1 tons last year, a record level.These inflows were, of course, fueled by the spread of the coronavirus and the fiscal and monetary policies that followed in response. Gold was actually one of the best performing major assets in 2020 amid high uncertainty and low real interest rates . Importantly, there were net outflows from the gold ETFs in the Q4, but they were concentrated in November, so the worst may be behind us.When it comes to other categories, the central banks added a net 273 tons in 2020, the lowest level since 2010, as some central banks sold gold amid recession to obtain liquidity. It confirms gold’s role as a safe-haven asset and portfolio-diversifier . Indeed, gold had one of the lowest drawdowns during 2020, reducing investors’ losses. The technology demand fell seven percent in the last year to 301.9 tons due to the economic disruptions of the pandemic . Total supply fell four percent to 4,633 tons, the first annual decline since 2017, as the pandemic disrupted mine production.The WGC’s demand report is, as always, interesting, but it should be taken with a pinch of salt . The reason is that the WGC wrongly defines the demand and supply for gold, narrowing it to the annual supply and its use, and omitting the great bulk of transactions in the gold market. In consequence, the report contradicts simple economic logic. According to the WGC, gold supply fell four percent, while gold demand declined 14 percent – but the average yearly price of gold gained 27 percent (see the chart below)! Whoa, when I learnt economics, the drop in demand (higher than the decrease in supply) was pushing the prices down!Implications for GoldBut let’s leave the past and now focus on the future! In January 2021, the WGC also published its gold outlook for the new year . Not surprisingly, the industry organization is generally bullish , but it notices the headwinds as well . According to the WGC, the hope of economic recovery and easy money will increase the risk appetite, creating downward pressure on gold prices.However, the WGC believes that the low interest rates and potential portfolio risks will support the investment demand for the yellow metal. In particular, ballooning fiscal deficits , the growing money supply and the possibility of higher inflation and the risk of the stock market correction (who knows, maybe the GameStop saga will trigger some broader bearish implications?!) should support gold prices.The WGC’s conclusion turns out to be similar to my own 2021 outlook for gold: that it could be a positive year for the yellow metal, but less so than 2020 – at least under the condition that the global economy will experience a steady recovery without too much inflationary pressure. But inflation may arrive, ending the era of the Goldilocks economy – and possibly starting the year of gold. Only time will tell!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
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.
EUR and Silver: Going Down a One-Way Street

EUR and Silver: Going Down a One-Way Street

Finance Press Release Finance Press Release 03.02.2021 17:25
Since the precious metals like to ride along with the EUR/USD, and the latest Eurozone data looks grim, what are the implications for the PMs?Just when everyone and their brother thought that silver was going straight to the moon… it plunged. And that’s not the end of the decline.Figure 1 – COMEX Silver FuturesI previously emphasized that silver’s volatile upswing is likely just temporary, and I discussed the Kondratiev cycle which implies much higher gold prices but not necessarily right away, because the value of cash (USD) would be likely to soar as well. The latter would likely trigger a temporary slide in gold – and silver.Well, was silver’s rally just temporary?This seems to have been the case. The white metal declined back below not only the 2020 highs, but also back below this year’s early high. Please remember that invalidations of breakouts have immediately bearish implications and we just saw more than one in case of silver.So far today (Feb. 3), silver is quiet, but let’s keep in mind that back in September, it took only a few sessions for the white precious metal to move from approximately the current price levels to about $22.Will silver slide as much shortly? This is quite likely, although the downswing doesn’t have to be as quick as it was in September.Terms like the silver shortage , the size of the silver market and silver manipulation became incredibly popular in the last couple of days, which - together with huge SLV volume, and this ETF’s inflows - confirms the dramatic increase in interest in this particular market. This is exactly what happens close to market tops: silver steals the spotlight while mining stocks are weak. I’ve seen this countless times , and in most cases, it was accompanied by multiple voices of people “feeling” that the silver market is about to explode. For example, please consider what happened in early September 2020 on both (above and below) charts. Silver jumped and almost reached its August 2020 high, while the GDX was unable to rally even to (let alone above) its mid-August high.Don’t get me wrong, I think that silver will soar in the following years and I’m not shorting silver (nor am I suggesting this) right now and in fact I haven’t been on the short side of the silver market for months. In fact, I expect silver to outperform gold in the final part of the next massive upswing, but… I don’t think this massive upswing has started yet.Gold had it’s nice post-Covid panic run-up, but it didn’t manage to hold its breakout above the 2011 highs, despite multiple dovish pledges from the Fed, the open-ended QE, and ridiculously low interest rates. Plus, while gold moved above its 2011 highs, gold stocks have barely corrected half of their decline from their 2011 highs. Compare that to when the true bull market started about two decades ago – gold miners were soaring and multiplying gold’s gains in the medium run.Let’s take a look at mining stocks, using the GDX ETF as a proxy for them.Figure 2 – VanEck Vectors Gold Miners ETF (GDX)Are miners weak right now? Of course, they are weak. It was not only silver that got attention recently, but also silver stocks . The GDX ETF is mostly based on gold stocks, but still, silver miners’ performance still affects it. And… GDX is still trading relatively close to the yearly lows. Silver moved a bit above its 2020 highs – did miners do that as well? Absolutely not, they were only able to trigger a tiny move higher.And based on yesterday’s decline, most of the recent run-up was already erased.Interestingly, the most recent move higher only made the similarity of this shoulder portion of the bearish head-and-shoulders pattern to the left shoulder ( figure 2 - both marked with green) bigger. This means that when the GDX breaks below the neck level of the pattern in a decisive way, the implications are likely to be extremely bearish for the next several weeks or months.Due to the uncanny similarity between the two green rectangles, I decided to check what happens if this mirror-similarity continues. I used purple, dashed lines for that. There were two important short-term price swings in April 2020 – one shows the size of the correction and one is a near-vertical move higher.Copying these price moves (purple lines) to the current situation, we get a scenario in which GDX (mining stocks) moves to about $31 and then comes back up to about $34. This would be in perfect tune with what I wrote previously. After breaking below the head-and-shoulders pattern, gold miners would then be likely to verify this breakdown by moving back up to the neck level of the pattern. Then, we would likely see another powerful slide – perhaps to at least $24.All in all, it seems that silver’s run-up was just a temporary phenomenon and the next big medium-term move in the precious metals and mining stocks is going to be to the downside.Having said that, let’s take a look at the markets from the fundamental point of view.EUR-on to SomethingFor weeks , I’ve been warning that the fundamental disconnect between the U.S. and Eurozone economies could pressure the EUR/USD.And on Jan. 29, I wrote:The economic divergence between Europe and the U.S. continues to widen. On Jan. 28, the U.S. Bureau of Labor Statistics (BLS) revealed that U.S. GDP (advanced estimate) likely expanded by 4.0% in the fourth-quarter.Figure 3Making its counter move, Eurozone fourth-quarter GDP was released on Feb. 2, revealing that the European economy shrank by 0.7% (the red box below). Even more revealing, France and Italy – Europe’s second and third-largest economies – underperformed the bloc average, contracting by 1.3% and 2.0% respectively (the blue box below).Figure 4 - Source: EurostatIn addition, German retail sales (released on Feb. 1) declined by 9.6% in December – well below the 2.6% contraction expected by economists. And why is this relevant? Because the month-over-month decline was the largest since 1956 and speaks volumes coming from Europe’s largest economy.Please see below:Figure 5If that wasn’t enough, Spain’s (Europe’s fourth-largest economy) Q4 GDP inched up by only 0.40% (the red box below). And not only did the figure come in well below the Spanish government’s December estimate (of an increase of 2.40%), the country’s exports declined by 1.4%, while business investment plunged by 6.2% (the blue boxes below).Figure 6 - Source: Instituto Nacional de Estadística (Spain’s National Statistics Institute)Moreover, as the fiscal situation worsens across Europe’s four-largest economies, the European Central Bank (ECB) has no choice but to pick up the slack. As of Feb. 2, the ECB’s balance sheet now totals more than 70% of Eurozone GDP (up from 69%). More importantly though, the figure is more than double the U.S. Federal Reserve’s (FED) 34.5% (down from 35%).Please see below:Figure 7Thus, while the ECB’s money printer works overtime relative to the FED’s, the dominoes are lining up for a material fall:The ECB’s relative outprinting causes the FED/ECB ratio to declineA declining FED/ECB ratio causes the EUR/USD to declineA declining EUR/USD causes the precious metals to declineTo explain, please see below:Figure 8The red line above depicts the movement of the EUR/USD, while the green line above depicts the FED/ECB ratio. As you can see, when the green line rises (the FED is outprinting the ECB), the EUR/USD also tends to rise. Conversely, when the green line falls (the ECB is outprinting the FED), the EUR/USD tends to fall.As it stands today, the FED/ECB ratio has declined by 0.26% week-over-week and is down by nearly 18% since June. And if you analyze the right side of the chart, you can see that the EUR/USD is starting to notice. As the FED/ECB ratio tracks lower, the EUR/USD is starting to roll over. And if history is any indication, the EUR/USD has plenty of catching up to do.Also signaling a profound EUR/USD decline, I warned on Jan. 27 that the EUR/GBP could be the canary in the coal mine.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 9More importantly though, a break in the EUR/GBP could be an early warning sign of a forthcoming break in the EUR/USD.Figure 10If 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).As it stands today, the wheels are already in motion. On Feb. 2, the EUR/GBP made another fresh low and the initial support level is all but gone.Figure 11Furthermore, notice how the EUR/USD is tracking the EUR/GBP lower? Despite being a fair distance from the ~1.08 level, the euro’s weakness relative to sterling is a sign that the Eurozone calamity is finally starting to weigh on its currency.If you analyze the chart below, you can see that the EUR/USD has already broken below its December and January support.Figure 12More importantly though, we could be approaching a point of no return.Figure 13Barely breaking out of a roughly 12-year downtrend, the EUR/USD has yet to invalidate the declining long-term resistance line. As a result, and with the EUR/USD already rolling over, a break below the 1.16/1.17 level puts ~1.08 well within the range of the 2015/2016 lows.And how could this affect the PMs?Well, notice how they like to tag along for the EUR/USD’s ride?Figure 14Despite silver’s short squeeze providing a short-term reprieve, it’s no surprise that the EUR/USD’s weakness has been met with angst by the PMs.Please see below:Figure 15As a result, the floundering euro is ushering the PMs down a one-way street. And while they may veer off to view the scenery from time to time, they all remain on a path to lower prices. Thus, yesterday’s sell-off highlights the superficiality of Monday’s (Feb. 1) surge. But while finding a true bottom requires time and patience, once it occurs, the PMs long-term uptrend will resume 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.
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.
USD strengthens on the back of strong economic data

USD strengthens on the back of strong economic data

John Benjamin John Benjamin 05.02.2021 07:29
EURUSD Falls To A Two-Month Low The euro currency continues its descent, now for the fourth consecutive session. The declines accelerated following two days of subdued price action earlier this week.The current pace of decline opens the downside target to the 1.1900 level of support. But in the near term, the common currency could reverse losses.A retest of the 1.2050 level to establish resistance will be ideal.This will also potentially confirm the downside as the Stochastics oscillator is very oversold under current market conditions.GBPUSD Rebounds On BoE Meeting The British pound sterling reversed losses in one single session, intraday. Price action posted strong gains following the BoE coming out slightly hawkish than expected on negative rates.As a result, the GBPUSD was back near the ascending wedge breakout level of 1.3678.While this coincides with the Stochastics oscillator recovering from just off the oversold conditions, prices are struggling to breakout higher.Therefore, if the GBPUSD fails to move above 1.3678 then we could expect prices to continue to drift lower.But with the recent swing low forming near 1.3585, we could expect this level to hold in the near term.Oil Rally Takes A Pause WTI Crude oil prices are trading weaker following the previous strong bullish sessions.Price action is reversing gains after testing the 56.00 level. The declines could, however, see near term gains once again.For the moment, the bullish bias remains in place. If the declines continue, then oil prices could be testing the 53.77 level of support in the near term.Establishing support here could potentially confirm the long term bias to the upside.For the moment, above 56.00, oil prices could be testing the 57.35 level of resistance next.Gold Prices Fall To A Two-Month Low The precious metal is down over two percent on an intraday basis.The declines accelerated after the precious metal lost the footing near 1817.89 support.The sharp declines could see the precious metal touching down to 1764.22 where the next key support level resides. This will put gold prices down to a three-month low.The formation of a lower low will no doubt change the bias in gold prices to the downside.However, we expect the declines to hold near the 1764.22 level in the medium term.
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.
The profit maze of Silver

The profit maze of Silver

Korbinian Koller Korbinian Koller 07.02.2021 10:35
We took for many months the stands of a Permabull in Silver and still do. Our primary call for acquiring physical Silver might find some hurdles. You might not get any. When we started in March of last year at the price of US$12 to urge for acquiring physical Silver holdings, we already experienced the vast percentage difference between the spot price and the actual acquisition price of Silver. This phenomenon persists to the present day. And what to do if one can’t purchase real Silver anymore?We look at the markets primarily from the perspective of risk. As long as you do not have too dramatic pullbacks (= a homogeneous equity curve), you can always recover from a temporary setback. After all, not every investment idea might work out.If Silver’s physical acquisition should come to a halt, we find mining stock ownership to be an excellent second choice.Here is why. Leveraged positions like ETFs, futures, and options allow special restrictions made by brokers and clearinghouses tied with their firms’ positions. Large players like this can also go belly up, especially in six sigma events. In that case, it is essential to find liquidity, the ability to transfer positions from one broker/clearinghouse to another, and mostly to liquidate positions. An option they may deny you through their regulative powers.Sil, Global Silver Miners ETF, Weekly Chart, ETFs might look good, but they aren’t:SIL Global X FDS Global X Silver Miners ETF in US Dollar, weekly chart as of February 4th, 2021.  Monthly Chart of Silver, Think long term and win:Silver in US Dollar, monthly chart as of February 4th, 2021.While Silver’s smaller time frames can be intimidating at times due to their volatility and recent limelight in the news, the larger monthly time frame clearly shows the health of the trend in motion and the long term opportunity.With this bigger picture in place, mining stocks will follow the uptrend.Daily Chart, Reyna Silver Corp in Canadian Dollar, The profit maze of Silver:Reyna Silver Corp in Canadian Dollar, daily chart as of February 4th, 2021.There is a vast array of choices to participate in mining stocks. You can employ various strategies like buying the market leaders or underdogs, for example. In this field, evaluation can change quickly based on depository discoveries, soil sample quality and many other factors. Another point of consideration is the accessibility of stock depending on the country you are trading from, which exchanges you can access.The above chart depicts the stock price of our sponsor Reyna Silver which we find undervalued and very attractive as a long-term investment. Stocks in this price range have the advantage that not too much of your money is parked long term. And still percentage returns can be substantial. (Disclaimer: Please note that Reyna Silver is the sponsor of our weekly silver chartbook).In this specific case, you can see that there is excellent support at CA$0.98 from a volume analysis perspective, right below where prices trade for a low-risk entry on a long-term time horizon.The profit maze of Silver:While we hold physical Silver in the highest regard to risk-averse wealth preservation (next to Gold and Bitcoin), additional investments in mining stocks are prudent. As a stockholder, you are a part-owner of a company with the acquired rights by law. From all the choices out there to participate in the Silver boom, mining stocks seem to be the ones with the smallest risk potential.With a goal of long term investing and wealth preservation, it is essential to look at investments from a risk perspective rather than leverage.Besides, many mining stocks pay dividends. That additional income flow can be reinvested, and one participates in the 8th miracle of the world: “Compound interest.” Automatisch generierte Beschreibung">Outstanding 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.
Stimulus bets rise as labor market continues to remain weak

Stimulus bets rise as labor market continues to remain weak

John Benjamin John Benjamin 08.02.2021 07:45
EURUSD Snaps A Four Day Losing Streak The euro currency posted gains on Friday, marking an end to four consecutive daily declines. The rebound comes after price reversed near a three-month low of 1.1951.As a result, prices pared losses to close on Friday near 1.2050. This level initially served as support.If price action forms resistance here, then we expect to see the EURUSD trading within the price band of 1.2050 and 1.1951.A breakout from this range will further set the direction.To the downside, the next support level is at 1.1900. To the upside, a strong close above 1.2050 could open the way for price to test the 1.2144 level next.GBPUSD Price Action Invalidates Ascending Wedge Pattern The British pound sterling continues to hold a strong bullish momentum. The strong reversal after price fell to a two-week low has now invalidated the ascending wedge pattern.This keeps price action biased to the upside. After Friday’s close, the GBPUSD is trading back close to the three and half year high.The currency pair has also now closed with bullish gains for four consecutive weeks.Still, the momentum is slowing and unless the GBPUSD closes strongly above 1.3755, we expect price action to remain flat near the current highs.Oil Prices Settle Near A 13-Month High WTI Crude oil prices continued to advance with price action closing near a 13-month high. Prices briefly traded close to the next key resistance level of 57.35.We could expect a push higher for the commodity to test this level firmly. Further gains can be expected only on a strong breakout above this level.This means that a reversal near 57.35 will potentially see a possible retracement coming.The previously held resistance level near 53.77 remains the initial downside target for the moment.The price level near 40.55 however marks the 61.8 Fibonacci retracement level for the decline from 65.62 in January 2020 through the zero level on 20th April.Therefore, the correction, if applicable could see a stronger pullback.Gold Prices Pull Back From A Three-Month Low The precious metal managed to recover some of the losses on Friday. Price action closed with over one percent gains on the day, after falling to a three-month low previously.The retracement puts gold prices close to the 1817.80 level where resistance could form.Unless we see a strong close above 1817.80, gold prices could hold a sideways range between 1817.80 and the recent lows near 1784.81.Despite the current pullback, gold price closed on a bearish note for the week. Therefore, a continuation to the downside cannot be ruled out.
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.
What’s Next for the Silver Roller Coaster?

What’s Next for the Silver Roller Coaster?

Finance Press Release Finance Press Release 08.02.2021 16:32
After a frenzy of Reddit induced activity that captivated everyone, silver painfully gave back what it gained. What’s next for the white metal?As the precious metals’ version of moral hazard, silver tipped over the flowerpot, and left gold to clean up the mess. After silver’s short squeeze mania ended in tears on Feb. 2, the white metal gave back 97% of its squeeze -induced gains. Conversely, bearing the brunt of the market’s wrath, gold gave back 237% of the momentum-induced gains.Please see below:Figure 1As a result, silver is doing what it normally does near market tops: outperforming among comments regarding silver shortage .Positioning itself for an epic blow-off top, silver’s Feb. 1 surge ended in less than 24 hours. In addition, silver is approaching two triangle-vertex-based reversal points – which could come to a head by the end of February or early March. However, given the two set ups, they could be signaling one climactic reversal or two separate reversals of differing magnitudes. As it stands today, it’s still too early to tell.Figure 2 - COMEX Silver FuturesHowever, supporting the argument of a single blow-off top, I mentioned last week that the iShares Silver Trust ETF (SLV) took in nearly $1 billion in daily inflows on Jan. 29. For context, that was nearly double the previous record.Please see below:Figure 3 - Source: Bloomberg/Eric BalchunasBut because too much of a good thing can often be bad, the frantic buying mirrored an ominous period in SLV’s history.Please see below:Figure 4 - COMEX Silver FuturesIf you analyze the volume spikes at the bottom of the chart, 2021 and 2011 are a splitting image. To explain, in 2011, an initial abnormal spike in volume was followed by a second parabolic surge. However, not long after, silver’s bear market began.SLV-volume-wise, there's only one similar situation from the past - the 2011 top. This is a very bearish analogy as higher prices of the white metal were not seen since that time, but the analogy gets even more bearish. The reason is the "initial warning" volume spike in this ETF. It took place a few months before SLV formed its final top, and we saw the same thing also a few months ago, when silver formed its initial 2020 top.The history may not repeat itself to the letter, but it tends to be quite similar. And the more two situations are alike, the more likely it is for the follow-up action to be similar as well. And in this case, the implications for the silver price forecast are clearly bearish.Based on the above chart, it seems that silver is likely to move well above its 2011 highs, but it’s unlikely to do it without another sizable downswing first.In conclusion, if silver meets its maker, the white metal is likely to lead gold and the miners to slaughter. Moreover, silver is well known for its false breakouts and its relative strength is often a precursor to substantial declines. As a result, last week’s short squeeze was much more semblance than substance. In contrast, once the metals rebase and trade at more appropriate levels, an attractive buying opportunity will emerge.For more insight, let’s look at the relative performance of gold, silver and the gold miners, and compare how they’re impacted by the USDX and the SPX. If you analyze the chart below, you can see that the precious metals all broke down in September, after the USDX broke above resistance.Figure 5To explain, I wrote on Jan. 18:Like traffic lights flashing red, notice how the HUI Index (proxy for gold stocks) is trading well below its early 2020 highs? In stark contrast, gold remains moderately above its early 2020 highs, while silver is significantly above its early 2020 highs. The misaligned performance – with silver outperforming and gold miners underperforming – puts a bow on this bearish package.The bottom line?It is not only the case that silver was strong and miners were weak in the last several days – it’s been the case over the past several months as well. The implications are bearish.Also troubling is that the stock market that’s soaring in the medium term, hasn’t shined its light upon the PM market. Contrasting the mantra that ‘a rising tide lifts all boats,’ equity market strength hasn’t triggered a sustainable rally in silver or the gold miners. And this “should have” been the case – both are more connected to stocks than gold is. Gold stocks because they are, well, stocks. Silver, due to multiple industrial usesAll in all, based on what we saw in silver recently, it doesn’t seem that we’re likely to see much higher precious metals prices without seeing a major decline 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.
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.
Soft inflation data keeps USD pressured

Soft inflation data keeps USD pressured

John Benjamin John Benjamin 11.02.2021 08:41
EURUSD Rises To A Two-Week High The euro currency continues to push higher, rising for the third consecutive day, to a two-week high.The gains, however, are slowing as price moves closer to the 1.2144 – 1.2177 level of resistance. We also continue to see the hidden bearish divergence on the chart, which could suggest a pullback.To the downside, price is likely to stall near the 1.2050 level of support for the moment. However, a close below this level could see the Feb 5 lows of 1.1952 come into the picture.If the current bullish moment continues, then the euro currency will need to break out above 1.2177 to confirm further upside.GBPUSD Pushes Higher But Gives Back Gains The British pound sterling continues to rise higher, marking a new high of 1.3866 intraday. But price action is pulling back after testing this level.The Stochastics oscillator is firmly in the overbought levels supporting the upside bias. For the moment, the downside remains limited until we see a lower high forming.Given the current pace of gains, the GBPUSD is seen testing the support area of 1.3790.A strong close on a weekly basis above this level is needed to confirm further upside.For the moment, the untested support level near 1.3759 will be the likely downside target in case of a correction.Oil Price Grinds Higher To A New 13-Month High WTI crude oil prices continue to maintain a strong bullish moment.Price action rose to fresh highs of 58.73. This makes price action likely to test the unfilled gap from January 20 last year at 59.47However, with price now trading below the trend line, this could act as a potential resistance for price action.To the downside, the support level at 57.35 is already tested albeit only slightly.Therefore, any declines could see this level coming under a firm re-test. Only a strong close below 57.35 will confirm a move down to the 53.77 level of support.Gold Prices Rejected Near 1850 The precious metal is struggling to breakout above 1850 as price action was firmly rejected near this level intraday.Overall, gold prices remain trading subdued compared to the gains made in the previous sessions.We expect the precious metal to maintain a sideways range between the 1850 resistance and 1817.80 level of support in the near term.The Stochastics oscillator is also starting to move a bit down from the overbought levels currently. This will likely mark an end to a three-day winning streak in gold.
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
Dollar steadies after a four-day decline

Dollar steadies after a four-day decline

John Benjamin John Benjamin 12.02.2021 08:39
EURUSD Reverses Near 1.2144 Resistance Level The euro currency is giving back the gains made from Wednesday as price action failed to rise above the technical resistance level near 1.2144.As a result, price action is quite bearish, amid the hidden bearish divergence as well. However, given the fact that price action has broken out from the falling price channel, this decline could merely be a retracement to the breakout level.We could see EURUSD retest the breakout level near 1.2080 to the downside. Below this level, the lower support area near 1.2050 is also likely to hold the declines.In the near term, we could expect the EURUSD to move in a sideways range between 1.2144 and 1.2080 levels.GBPUSD On Track To Retest 1.3590 The GBPUSD currency pair is giving back the gains made from the previous day with prices turning lower.On the intraday charts, we see prices trading currently below the 1.3821 swing low. A confirmed daily close below this level could potentially see price action testing the previous untested support level near 1.3790.As long as this support level holds, we could expect to see further upside. But for price action to continue higher, we would need to see the GBPUSD rising past the current highs above 1.3850.However, if the GBPUSD loses the 1.3759 level of support, then we could expect further declines in the near term.This would also potentially open the way for the currency pair to slide towards the 1.3500 level of support.WTI Crude Oil Rally Takes A Pause The recent pace of strong gains in the WTI crude oil market is seen to be slowing with prices likely to close flat for a second consecutive day. This could potentially see the onset of a short term correction in the markets.The initial support level near 57.35 is likely to be tested in the short term. As long as this support level holds, we could expect crude oil prices to maintain the upside bias.However, in the event that oil prices lose the 57.35 support, then we might expect to see a steeper correction. Below this level, the next main support comes in near 53.77.Given the recent bullish momentum in the oil markets, there is also strong evidence of a bearish divergence building up.Therefore, this could see a short-term correction which can only be confirmed upon a daily close below the 57.35 support level.Gold Prices Slip To A Three-Day Low The precious metal is down nearly 1% intraday as the short term bearish momentum is strong. Price action is likely to retest the support area near 1817.80.The stochastics oscillator on the intraday charts are also signaling further room to the downside. However, the declines might stabilize after testing the 1817.80 level.In the event that gold prices breakdown below this level, then we might expect to see further declines.The initial price level to watch will be the 1785.25 level which marks the lows from the 4th of February.A close below the swing low could potentially open the way for gold prices to test 1764.22 next.
Gold During the Pandemic Winter

Gold During the Pandemic Winter

Finance Press Release Finance Press Release 12.02.2021 14:36
The pandemic winter will take longer than we thought. The longer we struggle with the coronavirus, the brighter gold could shine.A long, long time ago, there was a bad virus, called the coronavirus , that killed many people all around the world and severely hit the global economy. Luckily, smart scientists developed vaccines that defeated the coronavirus and ended the pandemic . Since then, humankind lived happily – and healthy – ever after.Sounds beautiful, doesn’t it? This is the story we were all supposed to believe. The narrative was that the development of vaccines would end the pandemic and we would quickly return to normalcy. However, it turns out that this was all a fairy tale – the real struggle with the coronavirus is more challenging than we thought .First, the rollout of vaccinations has been very, very slow . As the chart below shows, on February 1, 2021, only about 1.77 percent of Americans became fully vaccinated against COVID-19.Of course, full protection requires two doses, so it takes some time. But in many countries, the share of the population which received at least one dose of the vaccine is also disappointingly low, as the chart below shows.It means that our progress towards herd immunity is really sluggish . At such a pace, we are losing the race between injections and infections. And we will not reach herd immunity until the second half of the year or even the next winter…Second, there is the problem of mutations . The new strains are rapidly popping up which poses a great risk in our fight with the coronavirus. One of these new variants was identified in the United Kingdom and quickly spread through the country. Although it’s not more lethal, it’s more infectious, which makes it more dangerous overall. And the more variants emerge, it’s more likely that we could see a mutation resistant to our current treatments and vaccines. Indeed, some of the mutations change the surface protein, spike, and have been shown to reduce the effectiveness of combating the coronavirus by monoclonal antibodies.The really bad part is that these two problems are strongly connected. The longer the vaccinations take, the more active cases we have. The more active cases we have, the more mutations happen, as each new infection implies more copies of the coronavirus, which gives it more chances to mutate. The more mutations occur, the higher the odds of a really nasty strain. Therefore, the longer the vaccination process takes, the more probable it is that it will not work and that vaccine-resistant variants might emerge.Given that in many countries vaccinations are practically the only rational strategy to fight the virus, the vaccine-resistant strain would be a serious blow. Surely, some vaccines could be relatively easily updated, but their rollout would still require time – time we don’t have.What does it all imply for the gold market? Well, the more sluggish the vaccinations, the higher the risk that something goes wrong and that our battle with COVID-19 will take more time. The longer the fight, the slower the economic recovery. The longer and bumpier road toward herd immunity, the slower lifting sanitary restrictions and social distancing measures, and the later we come back to normalcy. The longer we live in Zombieland, the easier fiscal and monetary policies will be, and the brighter gold will shine.Another issue is that we shouldn’t forget about the possibility of the pandemic’s long economic shadow. A recent paper has examined the effects of 19 major previous pandemics, finding a long shadow of the economic carnage. Although financial markets are still (wrongly, I believe) betting on a V-shaped recovery, the history suggests that a double dip is likely, as eight of the last 11 recessions experienced it. Recessions sound golden, don’t they?However, there is one caveat here. The sensitivity of economic activity to COVID-19 infections and restrictions has significantly diminished since the Great Lockdown in the spring of 2020. There are three reasons for that. First, people fear the coronavirus less. Second, epidemic restrictions are better targeted and implemented. Third, entrepreneurs adopted better to cope with the epidemic.The greater resilience of the economy means a smaller downturn and fewer long-term scars, which will limit any upward COVID-19 related impact on gold prices . But a softer economic impact also implies a quicker recovery, which – together with the upcoming big government stimulus – could increase consumer prices, thus supporting gold prices through the inflation channel. Indeed, commodity prices have been surging in 2021, so gold may follow suit.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.
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.
Gold & the USDX: Correlations

The profit maze of Silver - 13.02.2021

Korbinian Koller Korbinian Koller 13.02.2021 15:55
We took for many months the stands of a Permabull in Silver and still do. Our primary call for acquiring physical Silver might find some hurdles. You might not get any. When we started in March of last year at the price of US$12 to urge for acquiring physical Silver holdings, we already experienced the vast percentage difference between the spot price and the actual acquisition price of Silver. This phenomenon persists to the present day. And what to do if one can’t purchase real Silver anymore?We look at the markets primarily from the perspective of risk. As long as you do not have too dramatic pullbacks (= a homogeneous equity curve), you can always recover from a temporary setback. After all, not every investment idea might work out.If Silver’s physical acquisition should come to a halt, we find mining stock ownership to be an excellent second choice.Here is why. Leveraged positions like ETFs, futures, and options allow special restrictions made by brokers and clearinghouses tied with their firms’ positions. Large players like this can also go belly up, especially in six sigma events. In that case, it is essential to find liquidity, the ability to transfer positions from one broker/clearinghouse to another, and mostly to liquidate positions. An option they may deny you through their regulative powers.Sil, Global Silver Miners ETF, Weekly Chart, ETFs might look good, but they aren’t:SIL Global X FDS Global X Silver Miners ETF in US Dollar, weekly chart as of February 4th, 2021.  Monthly Chart of Silver, Think long term and win:Silver in US Dollar, monthly chart as of February 4th, 2021.While Silver’s smaller time frames can be intimidating at times due to their volatility and recent limelight in the news, the larger monthly time frame clearly shows the health of the trend in motion and the long term opportunity.With this bigger picture in place, mining stocks will follow the uptrend.Daily Chart, Reyna Silver Corp in Canadian Dollar, The profit maze of Silver:Reyna Silver Corp in Canadian Dollar, daily chart as of February 4th, 2021.There is a vast array of choices to participate in mining stocks. You can employ various strategies like buying the market leaders or underdogs, for example. In this field, evaluation can change quickly based on depository discoveries, soil sample quality and many other factors. Another point of consideration is the accessibility of stock depending on the country you are trading from, which exchanges you can access.The above chart depicts the stock price of our sponsor Reyna Silver which we find undervalued and very attractive as a long-term investment. Stocks in this price range have the advantage that not too much of your money is parked long term. And still percentage returns can be substantial. (Disclaimer: Please note that Reyna Silver is the sponsor of our weekly silver chartbook).In this specific case, you can see that there is excellent support at CA$0.98 from a volume analysis perspective, right below where prices trade for a low-risk entry on a long-term time horizon.The profit maze of Silver:While we hold physical Silver in the highest regard to risk-averse wealth preservation (next to Gold and Bitcoin), additional investments in mining stocks are prudent. As a stockholder, you are a part-owner of a company with the acquired rights by law. From all the choices out there to participate in the Silver boom, mining stocks seem to be the ones with the smallest risk potential.With a goal of long term investing and wealth preservation, it is essential to look at investments from a risk perspective rather than leverage.Besides, many mining stocks pay dividends. That additional income flow can be reinvested, and one participates in the 8th miracle of the world: “Compound interest.” Automatisch generierte Beschreibung">Outstanding 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.
Silver protection against exuberance

Silver protection against exuberance

Korbinian Koller Korbinian Koller 14.02.2021 10:46
Weekly Chart of Silver, The trend is your friend:Silver in US Dollar, weekly chart as of February 11th, 2021.First and foremost, remove yourself from the noise. There is no need to read every news item. Turn those notifications on your phone off to not let media frequently trigger fear and uncertainty emotions within. Make a longer-term plan that excludes short-term uncertainties and, as such, escapes temporary exuberance hype. Once your mind has settled down, approach the market with a simple but sound wealth preservation strategy first and wealth creation second. It is much harder to make back what you already earned once lost.Looking at the chart above, you find silver in an uptrend. Trend-following strategies are the most common and quite powerful.  Daily Chart of Silver, Silver protection against exuberance:Silver in US Dollar, daily chart as of February 11th, 2021.Next, we find physical silver holdings a lot more attractive than any other Silver investment derivatives. Yes, the physical Silver purchase’s actual price is much higher, as indicated in this chart versus the spot price. Since this phenomenon has persisted already for nearly a year and as such is a trend, it should only be interpreted that physical Silver is in higher demand than any holdings where your rewards are paid out in a fiat currency. After all, you want to have wealth preservation against fiat currencies since money printing is also in exuberance. So do not shy away from this factor in regard to the acquisition.Weekly Chart of Silver, Price projection:Silver in US Dollar, weekly chart as of February 11th, 2021.We find there to be a fair chance that Silver spot prices might advance to the mid fifty range within this year. We would not be surprised for this trend to have a total of five legs reaching just short below three-digit numbers within the upcoming years.Silver protection against exuberanceThere are other ways to protect yourself, like Gold, for example. As much as we find Silver to be very attractive here, the most we care about is illustrating that a proactive stand with a quiet mind is an opportunity right now. Finding yourself shell shocked in hopes the overwhelm might settle and circumstances return to a familiar previous point in time is a dangerous one. We see multiple confirmations in the market that point towards a different future to unfold. Acting on a longer time frame to buy “insurance” for possible hyperinflation and other monetary threats could be a wise decision to ensure your nest egg.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 12th, 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

GBPUSD Rebounds, Brushing Aside Weak GDP Numbers

John Benjamin John Benjamin 15.02.2021 07:23
Slow start to the week with China and US markets closedEURUSD Recovers From A Three-Day Low The euro currency touched a three-day low on Friday at 1.2080 before recovering. Price action is subdued for the past three sessions with a lower high currently forming.This comes after price slipped to a three-month low at 1.1951 on February 5th. The downside bias is starting to build up.The common currency will need to rise above the recent swing high of 1.2187 in order for the upside bias to hold.Failure to do so could potentially open the way for further declines, especially if the swing low of 1.1951 gives way.For the moment, the support area near 1.2050 will be critical to the downside. The Stochastics oscillator is moving up and could signal another test to the resistance area near 1.2144 – 1.2177.The British pound sterling made a sharp recovery with price action on Friday posting a strong rebound.The gains put the GBPUSD back near the previous highs at 1.3866. But with the Stochastics oscillator signaling a lower high, we could see a pullback.The support level near 1.3759 remains in scope to the downside. As long as the cable holds gains above this level, there is room for further gains.But a close below this level could potentially see a larger correction taking place.For the moment, the uptrend remains intact with price making consistently higher lows.Oil Advances To A New Eleven-Month High WTI Crude oil prices resumed the bullish momentum following three days of subdued trading. Prices settled at 59.55 on Friday, marking a new 11-month high.The rebound comes after oil prices briefly fell to the support area near 57.35. This potentially cements the 57.35 level as a strong support area in case of any downside.Despite the gains, oil prices are now nearing a multi-year resistance area between the 65.5 and 61.5 levels.Price action has on previous occasions failed to break past this level.Therefore, unless there is a strong momentum led breakout, we could see price action consolidating in this resistance area.Gold Prices Find Support Near 1817.89 The declines in the precious metal stalled after prices once again tested the 1817.89 level of support. A retest of this level, alongside the Stochastics oscillator attempting to move out from the oversold levels, could keep prices to the upside for the moment.This will mean that gold prices will continue to maintain a sideways range between 1850 and 1817.89 levels in the near term.On the daily charts, gold prices closed flat following the losses from the previous day.Therefore, if price action turns bearish today, we could expect to see the previous lows at 1784.81 from 4th February coming under test once again.To the upside, price action needs to post a strong close above the 10th of February highs of 1855.30 for any signs of further gains.
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.
Bitcoin, be a contrarian

Bitcoin, be a contrarian

Korbinian Koller Korbinian Koller 16.02.2021 10:50
It is easier said than done since we like seeing the confirmation. We enjoy seeing prices go up and then would be willing to commit to buying. Unfortunately, it is too late to participate at that point since the risk is increasing the more prices advance. The result is that many novices trade breakout trades. This is one of the most apparent form of market participation. Since the whole world can identify such a trade, it is a low probability technique.A real edge is created by conditioning oneself to ask the right questions at the right time. When prices retrace within a general uptrend having a clear rule set of participation is very useful. When prices go up, using a supporting exit strategy like our quad exit to take partial exits and generally asking oneself where to get out is the right behavior.The following three charts describe the essential scenarios we see for Bitcoin to progress further.BTC-USD, Weekly Chart, Minor dip with high risk:BTC-USDT, weekly chart as of February 15th, 2021.As much as a minor retracement would point for the most aggressive trend direction from a risk perspective regarding mid and long-term market participation, we see no low-risk entries to take part in. In this case, we prefer the price to penetrate 50k successfully and would like to enter on a bounce of this significant number. BTC-USDT, Weekly Chart, Consolidation zone below US$50,000:BTC-USDT, weekly chart as of February 15th, 2021.The next way prices could unfold is consolidation below the larger 50k marker. We find entries on the low end of the trend rage attractive as participation by taking partial profits on the range box’s upper rim and possible continuation of the remaining position size to all time new highs.BTC-USDT, Weekly Chart, Bitcoin-be a contrarian:BTC-USDT, weekly chart as of February 15th, 2021.The real contrarian opportunity would lay in a larger retracement to fade for the well-prepared trader. Bitcoins’ nature has been to show substantial retracements. A move like this would evoke emotions of doubt. Contrarian to these emotions, the larger the decline, the more aggressive an entry in position size should be.All three scenarios require a well-prepped plan. Instead of following the market’s evolution with emotional observation, focus on the prepared battle plan and engage only if your preconceived ideas are matched by price behavior.Bitcoin, be a contrarianIf you follow prey to your intuitive, emotional response, you will find yourself in the urge of wanting to get into the market once prices show a clear direction. This is also precisely at that spot where “fear of missing out” comes into play, another emotional trigger. Conscious efforts have to be made to overwrite these non-quality questions from a market participation perspective. Write notes into your charts and rehearse quality-question-timing for market participation until they become second nature. A low-risk entry methodology starts with these quality questions, and doing so within a trade, is one of the best performing trading methods out there. Be a contrarian to market direction and be a contrarian to your emotions.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 15th, 2021|Tags: Bitcoin, 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.
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.
Here’s What’s Eating Away at Gold

Here’s What’s Eating Away at Gold

Finance Press Release Finance Press Release 16.02.2021 16:53
Gold is dodging bullets, as it comes increasingly under fire from rising U.S. interest rates and a USD that is poised to surge.Catching unsuspecting traders in yet another bull trap , gold’s early-week strength quickly faded. And with investors unwilling to vouch for the yellow metal for more than a few days, the rush-to-exit mentality highlights a short-term vexation that’s unlikely to subside.Please see below:Figure 1Destined for devaluation after hitting its triangle-vertex-based reversal point (which I warned about previously ), the yellow metal is struggling to climb the ever-growing wall of worry.Mirroring what we saw at the beginning of the New Year, gold’s triangle-vertex-based reversal point remains a reliable indicator of trend exhaustion.And when you add the bearish cocktail of rising U.S. interest rates and a potential USD Index surge, $1,700 remains the initial downside target , with $1,500 to even ~$1,350 still possibilities under the right curcumstances.Please see below:Figure 2 - Gold Continuous Contract Overview and Slow Stochastic Oscillator Chart ComparisonTo explain the rationale, I wrote previously:Back 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.In addition, as a steepening U.S. yield curve enters the equation, I wrote on Jan. 27 that the bottom, and subsequent move higher, in U.S. Treasury yields coincided with a USDX rally 80% of the time since 2003.Figure 3 - Source: Daniel LacalleAnd while the USDX continues to fight historical precedent, on Feb. 12, the U.S. 30-Year Treasury yield closed at its highest level in nearly a year. As such, the move should add wind to the USDX’s sails in the coming weeks.Please see below:Figure 4In conclusion, gold is under fire from all angles and dodging bullets has become a near impossible task. With the USD Index likely to bounce off its declining resistance line (now support), a bottom in the greenback could be imminent. Also ominous, a steepening U.S. yield curve signals that the yellow metals’ best days are likely in the rearview. However, as the situation evolves and gold eventually demonstrates continued strength versus the USD Index, its long-term uptrend will resume once again.Before moving on, I want to reiterate my previous comments and explain why $1,700 remains my initial target: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 or 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 5 - 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 .Figure 6 - Relative Strength Index (RSI), GOLD, and Moving Average Convergence Divergence (MACD) ComparisonIf you analyze the red arrow in the lower part of the above chart (the weekly MACD sell signal), today’s pattern is similar not only to what we saw in 2011, but also to what we witnessed in 2008. Thus, if similar events unfold – with the S&P 500 falling and the USD Index rising (both seem likely for the following months, even if these moves don’t start right away) – the yellow metal could plunge to below $1,350 or so. The green dashed line shows what would happen gold price, if it was not decline as much as it did in 2008.However, as of right now, my initial target is $1,700, with $1,500 likely over the medium-term. But as mentioned, if the S&P 500 and the USD Index add ripples to the bearish current, $1,400 (or even ~$1,350) could occur amid the perfect storm. ~$1,500 still remains the most likely downside target for the final bottom, though.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.
Gold & the USDX: Correlations

USD trades mixed on comments from Fed officials

John Benjamin John Benjamin 17.02.2021 07:49
Euro Gives Back Intraday GainsThe euro currency rose to a four-week high after GDP numbers came out better than forecast.But price action soon gave back the gains as the resistance level proved too hard to breach.Price action briefly rose past 1.2144 before retreating from the resistance level between 1.2177 and 1.2144. For the moment, the EURUSD remains well above the 12th February lows.However, a close below this level could see further short term declines. The main support level at 1.2050 remains the downside target for the moment.GBPUSD Slips But Upside Remains IntactThe British pound sterling continues to post steady gains. Price action was seen trading a bit weaker after testing highs of 1.3951 on Tuesday.But a quick recovery from the intraday lows is keeping the upside bias intact.Further gains could likely see the cable testing the 1.4000 round number level in the near term.To the downside, the current intraday lows near 1.3869 and the highs from 10th February at 1.3866 form the initial support.Only a strong close below this level will open the downside toward the 12th Feb lows at 1.3775.Crude Oil Retreats From 60.92WTI crude oil prices are giving back the gains after prices touched a new 13-month high earlier this week.The declines come after prices fell to fill the gap from last Friday at 59.55. With most of the intraday declines already pulling back, the upside could resume.The fundamentals remain bullish for oil markets especially with the cold winter in the US. This could see oil prices likely to test the 61.00 level next to the upside.Any corrections could likely stall near the 57.35 level for the moment. Establishing support here could also further strengthen the potential for more gains.Gold Slips Below 1817 Technical SupportThe precious metal lost the 1817.79 technical support on Tuesday.However, after prices fell to intraday lows of 1789.37, there was a quick recovery.The current pullback could see gold prices retesting the 1817.79 level once again. The bias remains mixed as we could see some consolidation taking place near this level.Only a strong close below 4th Feb lows of 1784 will see further downside.The next key target for gold is near the 1764.22 level of support. To the upside, gains could be limited to the 1850 handle once again.
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.
GBPUSD Advances Higher Again, But Can It Hold The Gains?

GBPUSD Advances Higher Again, But Can It Hold The Gains?

John Benjamin John Benjamin 19.02.2021 08:00
USD weaker after a two-day gainEuro Attempts To Pare LossesThe euro currency is making a solid recovery, in a bid to recoup the losses from Wednesday.Price action is posting a reversal after it broke out from the long term daily trendline for the second time.However, the current pace of gains coincides with likely resistance from the trendline and the 50-day moving average.If the euro fails to close above Wednesday’s highs of 1.2107, then we might expect to see a continuation lower.For the moment, the support level near 1.2050 might help to stall further declines in the currency pair.But a daily close once again below this level will confirm further downside.The British pound sterling posted a strong reversal snapping a two-day losing streak. Price action was bullish as it broke past the previous highs near 1.3950.On an intraday basis, the GBPUSD rose to highs of 1.3985 before giving back some of the gains.Further upside is likely to continue as the GBPUSD approaches the key 1.4000 round number level.But given the current set up of the Stochastics oscillator, the bullish momentum might be losing steam.For the moment, the line in the sand is the Tuesday high of 1.3950. A daily close below this level could keep either prices moving sideways or a drop to Wednesday’s lows of 1.3829.Crude Oil Down Over One PercentOil prices are down over one percent on Thursday. The declines come after the commodity rose to intraday highs of 62.22 before giving back the gains.The overall bias in crude oil remains to the upside. Therefore, unless there is strong evidence of a correction, price action is likely to remain bullish.For the moment, the immediate trendline will be key to watch. A break down below this trendline could potentially accelerate short term declines.The main support level is near the 57.35 level. A close below 60.87 could potentially see the short term correction taking place.However, if oil prices manage to reverse the current gains, we could expect to see further upside in the near term.Gold Prices Steady Above 1764The precious metal is trading flat on Thursday following the sharp declines from the day before. Price action has not yet tested the 30 November lows of 1764.22.For the moment, we expect gold prices to consolidate between 1817.80 and 1764.22 levels. A breakout below 1764.22 could however extend declines down to the next key level near 1750.On a weekly basis, prices are consistently posting lower lows.However, the support level around the 1764 region is holding up. A weekly close below this level could open the way for further downside in the precious metal.
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.
FOMC Minutes Disappoint Gold Bulls

FOMC Minutes Disappoint Gold Bulls

Finance Press Release Finance Press Release 22.02.2021 17:26
The recent FOMC minutes are hawkish and negative for the price of gold, but the Fed will remain generally dovish for some time.Last week, the Federal Open Market Committee (FOMC) published minutes from its last meeting in January . They reveal that Fed officials became more optimistic about the economy than they were in December. The main reasons behind the more upbeat economic projection were the progress in vaccinations, the government’s stimulus provided by the Consolidated Appropriations Act 2021, and the expectations of an additional sizable tranche of fiscal support in the pipeline:Most participants expected that the stimulus provided by the passage of the CAA in December, the likelihood of additional fiscal support, and anticipated continued progress in vaccinations would lead to a sizable boost in economic activity.The Committee members were so convinced that the longer-run prospects for the economy had improved, that they decided to skip reference to the risks to the outlook in their official communications:in light of the expected progress on vaccinations and the change in the outlook for fiscal policy, the medium-term prospects for the economy had improved enough that members decided that the reference in previous post-meeting statements to risks to the economic outlook over the medium term was no longer warranted.Hence, the recent minutes are generally hawkish and bad for gold . They show that the FOMC participants turned out to be more optimistic about the U.S. economy over the medium-term, as they started to expect “strong growth in employment, driven by continued progress on vaccinations and an associated rebound of economic activity and of consumer and business confidence, as well as accommodative fiscal and monetary policy.”And, although they acknowledged that inflation may rise somewhat in 2021, the Fed officials generally were not concerned about strong upward pressure, with “most” participants still believing that inflation risks were weighted to the downside rather to the upside. In other words, they expect more growth than inflation.Implications for GoldThe Fed officials that have become more optimistic about the economy are proving negative for gold prices. Gold shines most when the Fed is pessimistic about GDP growth and the labor market, as these two factors are more prone to loosen the Fed’s monetary policy . In other words, gold prices need more inflation than economic growth in order to grow. Alternatively, gold needs the Fed to do something and expand its monetary accommodation.Indeed, the last week hasn’t been good for the price of the yellow metal. As the chart below shows, it declined below $1,800 to $1,773 on Thursday (Feb. 18), the lowest level since November 2020.Of course, the decline in the gold prices was more related to the significant selloff in the U.S. bond market than to the FOMC minutes. The bond yields increased sharply. For instance, the 10-year TIPS yields rose from -1.06 on February 10 to -0.87 on February 18, 2021, as one can see in the chart below.However, both events clearly show elevated expectations about the medium-term economic growth. Both investors and central bankers have become more optimistic about the future amid progress in vaccinations and greater prospects for additional fiscal stimulus. The strengthened risk appetite has supported equity prices, making some investors head for the exits in the gold market .Having said that, although gold prices still have some room to go lower – especially if real interest rates rally further – the fundamentals are still positive . I’m referring here to the fact that the U.S. economy has fallen into the debt trap . Both private and public debt is enormous. In such an environment, the interest rates cannot significantly increase, as they would pose a great risk to an overvalued equity market and Treasury. So, the Fed wouldn’t allow for really high interest rates and would intervene, either through expanding its quantitative easing program or through capping the yield curve .Another issue is that the Fed is not going to change its dovish monetary policy anytime soon. Even in the recent, relatively upbeat minutes, Fed officials acknowledged that economic conditions were far from the central banks’ targets:Participants observed that the economy was far from achieving the Committee’s broad-based and inclusive goal of maximum employment and that even with a brisk pace of improvement in the labor market, achieving this goal would take some time (…) Participants noted that economic conditions were currently far from the Committee’s longer-run goals and that the stance for policy would need to remain accommodative until those goals were achieved.Moreover, the Fed’s staff assessed the financial vulnerabilities of the U.S. financial system as being notable . The asset valuation pressures are elevated, and vulnerabilities associated with business and household debt increased over the course of 2020, from levels that were already elevated before the outbreak of the pandemic . So, given all these fragilities, it is unlikely that we will see a really hawkish Fed or significantly higher interest rates. There is also a possibility of the next financial crisis, given the high debt levels. All these factors should support gold prices in the long-term, although more declines in the short-term are possible of course, due to the more positive sentiment among investors and rising bond yields.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
USD falls for the third consecutive day

USD falls for the third consecutive day

John Benjamin John Benjamin 23.02.2021 07:15
EURUSD On Track For A Three-Day GainThe euro currency is on track for a three-day back to back gain. Price action is recovering sharply following the declines during the middle of last week.For the moment, price action will be challenging last week’s highs of 1.2168. A convincing breakout above the resistance area of 1.2177 will put the bullish bias back on the table.Currently, the 4-hour chart is also shaping up to show an inverse head and shoulders pattern. Therefore, a successful breakout above 1.2177 will push the euro currency toward 1.231 level at the very least.This will mark a lower high comparing to the highs from January this year.GBPUSD Maintains Its Impressive RallyThe British pound sterling maintains a strong hold on the bullish momentum with six consecutive weekly gains so far.Price action is nearing the April 2008 highs of 1.4376. The strong uptrend could be further cemented if the cable breaks out sharply from the rising price channel.The immediate support to the downside is near the 1.3951 level at the moment. However, with the current pace of gains, we expect prices to continue rising above the 1.4000 level.On the daily chart as well, price action remains biased to the upside following the strong bullish reversal pattern on Thursday last week.Crude Oil Attempts To Pare LossesWTI crude oil prices are looking bullish with price action posting a strong recovery after the declines from Thursday and Friday last week.For the moment, price is yet to breakout above last Thursday’s highs of 62.22. But this is essential for the commodity to maintain its bullish position.Following the reversal in the direction on Monday, we expect the minor support near 58.85 to hold prices from declining further.To the upside, oil prices will be battling the confluence of the horizontal resistance level and the trendline around the 60.87 region.If price fails to close out above this level, we could see a correction down to the 57.35 level eventually.Gold Prices Rise To A Four-Day HighThe precious metal is posting strong gains on Monday, capitalizing on a weaker greenback. As a result, price action is up over 1.5% intraday and is trading near a four-day high.Despite the current gains, XAUUSD will need to breakout above the 1817.79 level of resistance. A breakout above this level will also push price action out from the falling price channel.This could potentially signal the end of the correction in gold prices as the upside resumes.However, ahead of further gains, a high low within the 1817.79 – 1764.22 levels could give it more upside bias. This will potentially confirm the end of the current declines.Above 1817.79, gold prices will challenge the 1850 levels next.
Gold & the USDX: Correlations

Bitcoin, supreme beauty in motion

Korbinian Koller Korbinian Koller 23.02.2021 11:19
Bitcoin surpassed another milestone trading well over 50k last week. Even the strongest doubters start joining in. All professionals have begun to take a bite, and we are far from speculating if this idea has merit. Now the question is how long it will hold steadfast under the attack of possible government coin inventions.It isn’t easily replaced since it already has a history. New inventions might not become an immediately acceptable standard. After all, the large part is trust. We are always rushing to Gold and Silver because of its long historical trust established as a means of barter. With a world much more intertwined geographically, we need a third payment method to allow for large-distance transactions. Something Gold and Silver cannot easily provide.BTC-USD, Weekly Chart, When to get in:BTC-USDT, weekly chart as of February 22nd, 2021.The question isn’t any longer if Bitcoin will make it or whether it is a bubble or whether it is a temporary thing. The question all that are not holding Bitcoin should be asking is: “Where can I get in?”With bitcoin´s past volatility, it is safe to say we will find ourselves in a retracement in the not-to-distant future where entries near US$51,500 and at the levels below of US$47,500 and US$37,500 are entry zones to keep an eye on. No need to bet the farm but ignoring Bitcoin to wait for another round of next advances isn’t advisable. BTC-USDT, Hourly Chart, Know when to get out:BTC-USDT, hourly chart as of February 22nd, 2021.One can tell what type of money has entered the arena by the way price is advancing. When breakout trades in frequency dominate all other chart pattern formations, it is evident that less-educated funds entered the arena. Last Friday, we advised channel members in our free Telegram channel to take partial profits at US$55,500, a smart point of exit. Yes, prices did advance even higher to US$58,352, but we perceive markets not from maximizing profits but from a risk perspective. This chart shows how volatile noise came in right after these price levels and bears and bulls started their struggle. A time where one would want to be exposed with less position size and stay sidelining from an entry perspective.BTC-USDT, Monthly Chart, Bitcoin, supreme beauty in motion:BTC-USDT, monthly chart as of February 22nd, 2021.One might think that 58k is high. Especially looking back that Bitcoin at some point could be acquired for less than US$2. Those exposed for a more extended period to this investment vehicle, remember the fierce retracements of up to 80-90%. The future does not have to equal the past. With most of the money from a volume perspective not being allocated yet, we still find an immense potential for much higher price levels than Bitcoin trading right here. Yes, we might find ourselves in a steep retracement once this first bull wave is over. All this should be perceived is as an opportunity and not feared of Bitcoin going away. It won’t.With second legs typically being much larger than the first and a three-leg advancement being modest, we find our projections conservative.Bitcoin, supreme beauty in motion:In times where hyperinflation again destroys much that some hoped for and others worked for, by over-borrowing, the need for a barter method that cannot be diluted, Bitcoin fits like a glove. Its mathematical standard of limitation to the number of twenty-one million allows for the trust given not to be disappointed. Like times where we had the gold standard, one can rely on its stability. It found its stable place alongside precious metals to be a safe haven and a way to continue doing business and measure one’s wealth against. Its mathematical beauty provides the safety and freedom needed to return to truthful value exchange.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 22nd, 2021|Tags: Bitcoin, 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.
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.
Bonds And Stimulus Are Driving Big Sector Trends And Shifting Capital

Bonds And Stimulus Are Driving Big Sector Trends And Shifting Capital

Chris Vermeulen Chris Vermeulen 25.02.2021 03:36
Falling Bonds and rising yields are creating a condition in the global markets where capital is shifting away from Technology, Communication Services and Discretionary stocks have suddenly fallen out of favor, and Financials, Energy, Real Estate, and Metals/Miners are gaining strength.  The rise in yields presents an opportunity for Banks and Lenders to profit from increased yield rates. In addition, historically low interest rates have pushed the Real Estate sector, including commodities towards new highs.  We also note Miners and Metals have shown strong support recently as the US Dollar and Bonds continue to collapse.  The way the markets are shifting right now is suggesting that we may be close to a technology peak, similar to the DOT COM peak, where capital rushes away from recently high-flying technology firms into other sectors (such as Banks, Financials, Real Estate, and Energy).The deep dive in Bonds and the US Dollar aligns with the research we conducted near the end of 2020, which suggested a market peak may set up in late February. We also suggested the markets may continue to trade in a sideways (rounded top) type of structure until late March or early April 2021.  Our tools and research help us to make these predictions nearly 4 to 5+ months before the markets attempt to make these moves.  You can read this research here:2021 MAY BE A GOOD YEAR FOR THE CANNABIS/MARIJUANA SECTORPRICE AMPLITUDE ARCS/GANN SUGGEST A MAJOR PEAK IN EARLY APRIL 2021 – PART IIWHAT TO EXPECT IN 2021 PART II – GOLD, SILVER, AND SPYIf our research is correct, we may have started a “capital shift” process in mid-February where declining Bonds, rising yields and the declining US Dollar push traders to re-evaluate continued profit potential in the hottest sectors over the past 6 to 12+ months.  This would mean that Technology, Healthcare, Comm Services and Discretionary sectors may suddenly find themselves on the “not so hot” list soon.Bonds Collapsing While Yields Continue To RiseThe following TLT Weekly chart highlights the extended downward trend taking place in Treasury Bonds.  This downside pricing pressure would usually support a rising stock market and moderately weaker precious metals.  But given the way the US Dollar is also declining, we are seeing fear become more of an issue as the high-flying stock market starts to look quite a bit over valued.  Rising yields also puts Financials and banking/lending near the top of the list for future profit potential.US Dollar Struggling To Find SupportThe Invesco US Dollar ETF, (UUP) Weekly below chart shows how weak the US Dollar has been after the COVID-19 price rotation.  The continued decline in price levels after May 2020 is a very clear indication that the US Dollar is reacting to the continued stimulus efforts as well as the decreased economic expectations.Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!Combined, the Bonds and US Dollar decline are raising the fear-factor among global investors and causing many to rethink where future growth and profits will originate.  Many are landing on the Financial and Energy sectors right now.Financial Sector Begins To Skyrocket HigherThe following Direxion Financial Bull 3x ETF (FAS) Weekly chart shows the incredible advance in the Financial Sector over the